Treasury anger over Margaret Hodge 'grandstanding'

 
Margaret Hodge

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There is anger within the Treasury that what they see as grandstanding by a senior Labour MP is putting off big businesses from relocating to the UK.

The work of Margaret Hodge's Public Accounts Committee - which scrutinises spending - is "having an impact" on foreign investment, sources claim.

Mrs Hodge, who has chaired the committee since 2010, described the criticism as "completely fallacious."

She also said officials should "have the guts" to make comments to her face.

The MP grabbed headlines last year when she branded Google's tax record "evil".

Treasury sources say senior ministers have been warned by businesses that the prospect of public humiliation in front of MPs and the television cameras makes them think twice about where to invest.

Boycott

"Companies looking at Britain are being put off the idea of moving their headquarters here because they fear the level of public exposure for behaving perfectly legally.

"There is no doubt it is having an impact. We are trying to show we have one of the most competitive corporate tax regimes in the world, but the message is being sent out if you come here you will be exposed to this sort of criticism from Margaret Hodge and her committee.

"The head of a company looking to move here would see the way other people have been hauled in front of MPs and subjected to criticism and will think: 'I'm not doing that.'

Margaret Hodge in quotes

  • To Matt Brittin, Vice-President Google UK: "You are a company that says you 'do no evil'. And I think that you do do evil."
  • To Andrew Cecil, Director of Public Policy at Amazon Europe: "The idea that you come here and simply don't answer the questions and pretend ignorance is just not on. It's awful".
  • To Troy Alstead, Starbucks chief financial officer: "It doesn't ring true Mr Alstead, that's what frustrates taxpayers in the UK. Are you lying to your shareholders?"

"The likes of Starbucks and Amazon will always be here, but other companies looking at Britain are being put off the idea of moving their headquarters here."

The government believes it faces a tricky balancing act between offering a competitive tax regime which draws international firms in, while also being seen to take action against companies which do not pay what they owe.

Last year Margaret Hodge led the questioning of executives from Starbucks, Google and Amazon over tax avoidance and said at the time that she thought it was right for customers to boycott the three companies. Clips of the session were picked up by foreign media and circulated on YouTube.

'Damaging impact'

Reacting to criticism from inside the Treasury about the work of her committee and the confrontational nature of the public hearings it holds, Mrs Hodge told me that companies looking to relocate looked at a range of factors, of which tax was just one.

"The skills of the workforce, the timezone we're in and the quality of the public services they would rely on are just as important," the Labour MP told me, "and those public services need to be paid for.

"To assume you can entice companies purely by a race to the bottom on tax is mistaken," she added, saying it was "unfair on British firms with British workers" if multinationals could "get away with paying less tax than they do."

Since the coalition came to power, ministers have emphasised their desire to ensure that drumming up business for the UK is a priority of foreign policy.

In July 2010, two months after becoming prime minister, David Cameron said: "I want to refashion British foreign policy, the Foreign Office, to make us much more focused on the commercial aspects, making sure we are demonstrating Britain is open for business. I think it is a big opportunity. As we come out of recession and into recovery we have got to pay our way in the world and I want to reorientate the Foreign Office to be much more commercially minded."

But there is growing frustration in government that public grillings of senior business leaders, often widely publicised abroad, are posing a problem.

In a speech in November, the Treasury Minister David Gauke said: "When legitimate and legal tax behaviour is wrongly presented to the public as illegitimate, or illegal; it can have a very damaging impact.

"'What's the problem?' Some people might ask. 'Surely it keeps individuals and companies on their toes? If they know they'll be under this scrutiny, surely they're less likely to do anything suspect?' But what we have to remember is this.

"If companies are worried that their reputations will be unfairly damaged. That perfectly legal and perfectly legitimate behaviour might be presented to the public as something different. Then it is quite understandable that this could put them off moving here, or investing here, or creating jobs here."

Mrs Hodge told the BBC: "I'm perfectly happy to have a public debate about the issue of who should pay tax, but I'm not prepared to do it on the back of anonymous Treasury sources."

She added: "Whoever has been saying that in the Treasury ought to have the guts to come forward."

 

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  • rate this
    -10

    Comment number 23.

    An incompetent career politician who knows nothing about business, just promoting herself to cash in on the gravy train.
    More damage than good is what comes to mind
    Another relic from the most incompetent 'government' this country has seen for decades.
    Part of the cabal that left us and our children, with a huge mess

  • rate this
    0

    Comment number 22.

    She (Margaret Hodge) showed a massive lack of understanding when talking about the tax affairs of corporate's last year. It seems over the last few years these MP committee's are calling more & more industries in so they can criticise and make out they (MP's) know what to do, what a farce they all ran the country into the ground.

  • rate this
    -1

    Comment number 21.

    I see the loony lefties have started posting.

    Question - have these businesses (Google, Starbucks) broken the law?

    Answer - no, or they would have been prosecuted.

    If it offends Margaret Hodges sensibilities, then she's an MP and should table a motion to change the law.

    We have no right to demand answers from these independent companies unless they are breaking the law.

  • rate this
    +59

    Comment number 20.

    Who cares ? We only want businesses in the UK that pay their corporation tax. If M&S, Sainsburys and John Lewis can pay taxes, how come Starbucks and Amazon don’t ?

  • rate this
    +14

    Comment number 19.

    If companies that attempt to pay no tax are discouraged this is only good for GB eg if Starbucks coffee bars are replaced by others this is good news

  • rate this
    -11

    Comment number 18.

    Good god. Mark from Manchester's comment (#4) got downvoted! The labour brigade are out in force, unable to take any criticism (just like everyone else). The politicians are all a bunch of crooks - Britain needs to join the rest of Europe in forcing companies to pay more tax!

  • rate this
    +3

    Comment number 17.

    Perhaps, the whole tax issue is better debated in the EU, so that a wider solution can be found?

  • rate this
    +33

    Comment number 16.

    So the Government think that she is putting off more companies that could set up here and pay no tax. Terrible. Where will the backhanders come from.

  • rate this
    +9

    Comment number 15.

    if they don't come it must be because they have something to hide...

    lets keep the Hodginator primed at all times...

  • rate this
    +29

    Comment number 14.

    Borrowing a quote from an eminent US President, “If they can’t stand the heat, they should stay of the kitchen.” If these business leaders wilt at the prospect of some incisive and robust questioning from one of our elected representatives, they really need to ask themselves if they’re up to the job.

  • rate this
    -1

    Comment number 13.

    Remeber the last Labour government when we had a new home secretary every ten minutes - one incompetent after another?

  • rate this
    +4

    Comment number 12.

    A business person worth the title should be able to shine at such a "grilling" and turn the event to his or her advantage.
    Those who can't bat slow balls from second-rate politicians should do us all a favour and take up residence on Benefits Street.
    Alan

  • rate this
    +16

    Comment number 11.

    Any comment from HM Treasury is automatically suspect. From what I have seen over they years, it has little understanding of business and believes everything it is told without any attempt to evaluate the information. If the business opportunities are here, firms will come and the idea that a Parliamentary Committee (let alone a single MP) could change that is ludicrous.

  • rate this
    +54

    Comment number 10.

    "Basically Margaret stop giving our mates a hard time" don't you know how much money they paid to sit at my table says Dave.

    If you can't pay your due's in the UK sling your hook your not welcome and not condusive to good competition for home based business who do pay tax and keep the country running.

    The Tories never learn.

  • rate this
    -20

    Comment number 9.

    Soundbites in her kangaroo court may win votes but it will lose trade.

  • rate this
    +145

    Comment number 8.

    I am not a labour supporter but I am 100% behind MH big business must be held to account. Although "legal" the accounting practices of some large corporations are more than questionable and need to be open to scrutiny. We should not want companies that do not pay their fair share of tax.

  • rate this
    +79

    Comment number 7.

    In this story a wind-up?

    Is the Treasury really suggesting that companies won't come to the UK because they will be asked to justify themselves to an elected representative once in a while?

    If a boss of a company is really put off by that, I'd suggest he or she takes up painting or yoga rather than indulging in tax avoidance.

    The poor little lamb might have a better quality of life then.

  • rate this
    +2

    Comment number 6.

    how long before Margaret Hodge is pushed or gagged?

  • rate this
    +43

    Comment number 5.

    Awww shucks. Because absulutely the UK is not profitable enough to do business right? I mean after all, we don't drink enough coffee, spent enough money on phones or use the intenet enough? Time for the government to just grow a pair and demand they pay tax in the UK or go do business somewhere else.

  • rate this
    -1

    Comment number 4.

    More grandstanding from another champagne socialist who never fixed the problems when they had the chance.

    http://www.telegraph.co.uk/finance/businesslatestnews/9668396/Margaret-Hodges-family-company-pays-just-0.01pc-tax-on-2.1bn-of-business-generated-in-the-UK.html

    What next - Jimmy Carr speaks out against the use of off-shore tax havens?

    So who will stop this problem?

 

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