At times like this we need an equality of misery. Yet public spending is slashed while Revenue & Customs caves in to the wealthy
Many years ago I accidentally put a tax invoice into my May file instead of the previous March, thus missing the relevant tax year. When the discrepancy emerged, an Inland Revenue inspector said he would “let me off” with no more than the tax, the interest and, as I recall, a £1,000 fine.
After reading today’s Commons report on tax avoidance, I realise my mistake. I should have told the inspector I worked for Goldman Sachs, invited him to Le Gavroche and suggested a hundred quid would settle the business, plus a partnership when he retired. It is the old story. When you owe the Revenue a thousand pounds you have a problem. When you owe it a billion pounds, the revenue has a problem, but also a solution.
In good times such stories merely water the envious eye. In bad times they induce blind rage. Why the hell should people be expected to lose their jobs, their houses, their lifestyles, when the government is a soft touch for the rich and powerful? This is not a matter of left or right, socialist or capitalist. Britons are now embarking on a journey into a dark night of economic gloom. Nothing will make them less inclined to co-operate than the sight of a lucky few rowing to safety in gold-plated lifeboats.
The coalition government has made a wholly justified attempt at fairness in certain areas of its spending. Those on phoney sickness benefit should not take money from those in honest work. Those on public salaries should not enjoy pension rights beyond the dreams of those in the private sector. Those who choose large families should not live subsidised in smart houses at the expense of those who cannot afford such places.
But fairness cuts both ways. Today’s report on the tax leniency shown by the Revenue towards big corporations indicates that toughness towards the poor is not replicated by toughness towards the rich. The estimate was of some £25bn in taxes gone missing, the bulk of it concealed by an insistence on “commercial confidentiality”, otherwise known as incompetent secrecy.
Goldman Sachs appeared to have paid £20m less than it should on bonuses alone, and was excused with a £10m payment ex gratia and a “handshake” with the boss of the Revenue. Vodaphone paid just £1.25bn towards a tax bill that should have been some £6bn. The reasonable assumption is that these cases were tips of an iceberg. Meanwhile the relevant inspectors were being wined, dined and offered jobs by the grandees of the accountancy firms overseeing the scams.
This government, so draconian towards spending in public, is proving as casual towards dodgy money in private as were Tony Blair and Gordon Brown. Earlier this month the Olympics boss, Lord Coe, moseyed into Downing Street and said that his opening and closing ceremonies were looking a bit mean at £40m. Could he double it to £81m for more tinsel? Rather than scream and kick him downstairs, David Cameron said: my dear chap, but of course. I wonder what the prime minister would have said if his lordship had been asking for a care home, a library or a clinic.
Much of the trouble comes down to the inexperience of ingenue ministers, and their susceptibility to the pestilence of lobbying now infecting Westminster. On this occasion the hapless Olympics minister, Hugh Robertson, claimed that the extra £41m was “worth £2-5bn in advertising revenue alone”, a rate of return so fanciful as to suggest a lobbyist’s lunch beyond all imagining. Robertson also claimed to need another £271m for games security (not to mention 10,000 troops, warships and surface-to-air missiles), despite it being “not in response to any specific security threat”. It was just money.
This was merely the climax of naivety. In their first month in office, ministers were told – and believed – that it would be “more expensive” to cancel two new aircraft carriers than to build them. Ministers were told it would cost £2bn to cancel Labour’s crazy NHS computer rather than dump it in the nearest skip. Chris Huhne, darling of the renewables industry, wants to give it £8bn a year to rescue the planet, one of the quickest ways of transferring money from poor consumer to rich landowner yet found. The chancellor, George Osborne, was told by lobbyists he could save £3bn a year by giving away commercial planning permissions. All this was statistical rubbish.
If local government behaved as credulously as Whitehall it would be summoned before the audit commission and subject to surcharge. When ministers pay out such sums it is “in the national interest”, and the Treasury and national audit office nod in sage agreement. It may be a corny adage, but it remains glaring that almost no holder of high office in Britain at present has ever met a payroll, run a business or cut a corporate budget. They are children playing with sweets.
Osborne is the scourge of public sector unions and condemns tax avoidance, yet he refuses to end the scandal of crown tax havens, from Jersey to the Caymans, that enjoy the benefits of British citizenship while enabling individuals and corporations to evade British tax. Last week the European Union lectured Britain on financial regulation, while harbouring on its borders such fiscal black holes as Monaco, Liechtenstein and Switzerland. The thesis, accepted by governments of all parties, that the rich should be allowed to escape tax for their “wealth-creating potential” has surely been exploded by the credit crunch. It is not the kind of wealth Britain can afford. If Goldman Sachs dislikes paying British taxes it should go to Dubai, not just the first-class lounge at Heathrow.
The control of public expenditure is never perfectly equitable. It is war by other means. But when large sections of the public are being asked to bear the burden of cuts in their standard of living – largely through the action and inaction of government – they are entitled to see at least a semblance of fair play.
Just because lobbyists say bonuses and tax havens are “essential to Britain’s recovery” does not mean they are. The government’s tolerance of both is more than stupid. It induces cynicism in the public realm and recruits fair-minded people to the cause of St Paul’s protesters and public sector strikers. Nothing is more crucial to national wellbeing at a time like this than a sense of equality of misery. The British government derides Greece and Italy as countries where taxpaying is “voluntary”. It appears to be voluntary in Britain too.
Simon Jenkins