How Cameron failed developing countries at the G8

From the beginning, the Prime Minister repeatedly failed to show the leadership on tax avoidance and transparency this summit needed.

The G8 meeting was heralded as a unique opportunity to address some of the structural causes of poverty and hunger. It was a chance to both put our own house in order and focus on making a difference to the lives of those in the developing world. Progress was made towards tackling hunger and malnutrition, with substantive funding commitments made by the UK and EU. We also saw a welcome commitment to supporting the UN’s humanitarian appeal for the horrendous crisis in Syria,  which remains staggeringly underfunded. 

David Cameron rightly made tackling tax avoidance and improving transparency a priority. The flawed system of global taxation has a profound impact on not only our revenues but also on the poor in developing countries. The Africa Progress Panel revealed just this week that African countries lose $50bn a year to illicit tax flows. But despite the Prime Minister’s rhetoric, his efforts fell desperately short in achieving the fundamental changes which are necessary.

It was imperative from the beginning that any G8 agreement should not "lock out" developing countries. However, it is unclear how developing countries will benefit from announcements on sharing tax information and whether they will be involved from the start in the Prime Minister’s new deal. This runs the risk of creating a "two-tier" system which allows advanced economies to benefit from transparency but excludes developing nations.

The Prime Minister also said: "Personally, I want to see the whole world moving towards public registries of beneficial ownership." This would allow all countries to benefit from knowing who owns companies and assets and take a step towards to tackling tax avoidance. It was, then, extremely disappointing and a significant U-turn that the agreements only commit the UK to a private registry of British companies and that no G8 country agreed to create a public register. We need far more than secretive lists in the UK of companies' true owners and vague promises of future action if we are to truly make progress towards ending tax secrecy.

The G8 Communique also includes lots of fine words, particularly on introducing country-by-country reporting for multinational companies and reform to rules which allow companies to shift profits out of developing countries, but no concrete action. Labour has repeatedly called for action on these issues which would enable developing countries to collect the taxes they are due and complement measures to build tax revenue collection capacity in these countries.

The Prime Minister could have used the window of opportunity presented by the G8 summit to deliver real action to tackle tax avoidance, not just for the UK, but for countries around the world.

Instead, from the beginning, he repeatedly failed to show the leadership this summit needed. On putting our own house in order, the government has consistently refused to review UK tax rules relating to controlled foreign companies which the evidence show costs developing countries £4bn a year in lost tax revenue. This is unacceptable.  

He has also been repeatedly criticised, as recently as recently as yesterday by the US, for failing to put in the necessary diplomatic and political work in the weeks and months leading up to the summit to secure meaningful deals on tax transparency. In 2005, the UK used the G8 chairmanship at Gleneagles to achieve the historic promise to increase aid by $50bn by 2010 as well as crucial steps on debt relief and climate change. This shows the magnitude of what can be achieved through ambitious hosting of the G8. But this took significant diplomatic effort and political will.

Sadly, this scale of commitment was largely lacking from the Prime Minister's approach this time around. This G8 could have done for tax and transparency what the 2005 G8 did for aid and debt relief. Instead, away from the hype and spin, when history is written, this summit will be seen as a missed opportunity in the fight against global poverty.

Labour wants to see an end to extreme poverty, a reduction in inequality and an end to aid dependency by 2030. A prerequisite to achieving these objectives will be developing countries having access to fair taxes from their citizens, domestic businesses and multinational companies. David Cameron chose the right priorities for the G8 summit but, as on so many other issues, his fine rhetoric and big promises were not matched by the  conviction or hard work necessary to deliver the radical change that we need. It is to be hoped that the G20 later this year will turn rhetoric and the promise of future action into the commitments we had expected to see. 

Ivan Lewis is the shadow international development secretary

David Cameron speaks during a press conference at the conclusion of the G8 summit in the Lough Erne resort near Enniskillen, Northern Ireland. Photograph: Getty Images.
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Martin Sorrell: I support a second EU referendum

If the economy is not in great shape after two years, public opinion on Brexit could yet shift, says the WPP head.

On Labour’s weakness, if you take the market economy analogy, if you don’t have vigorous competitors you have a monopoly. That’s not good for prices and certainly not for competition. It breeds inefficiency, apathy, complacency, even arrogance. That applies to politics too.

A new party? Maybe, but Tom Friedman has a view that parties have outlived their purpose and with the changes that have taken place through globalisation, and will do through automation, what’s necessary is for parties not to realign but for new organisations and new structures to be developed.

Britain leaving the EU with no deal is a strong possibility. A lot of observers believe that will be the case, that it’s too complex a thing to work out within two years. To extend it beyond two years you need 27 states to approve.

The other thing one has to bear in mind is what’s going to happen to the EU over the next two years. There’s the French event to come, the German event and the possibility of an Italian event: an election or a referendum. If Le Pen was to win or if Merkel couldn’t form a government or if the Renzi and Berlusconi coalition lost out to Cinque Stelle, it might be a very different story. I think the EU could absorb a Portuguese exit or a Greek exit, or maybe even both of them exiting, I don’t think either the euro or the EU could withstand an Italian exit, which if Cinque Stelle was in control you might well see.

Whatever you think the long-term result would be, and I think the UK would grow faster inside than outside, even if Britain were to be faster outside, to get to that point is going to take a long time. The odds are there will be a period of disruption over the next two years and beyond. If we have a hard exit, which I think is the most likely outcome, it could be quite unpleasant in the short to medium term.

Personally, I do support a second referendum. Richard Branson says so, Tony Blair says so. I think the odds are diminishing all the time and with the triggering of Article 50 it will take another lurch down. But if things don’t get well over the two years, if the economy is not in great shape, maybe there will be a Brexit check at the end.

Martin Sorrell is the chairman and chief executive of WPP.

As told to George Eaton.

This article first appeared in the 30 March 2017 issue of the New Statesman, Wanted: an opposition