LibLink: Simon Hughes – This water tax trickery in the corporate sector is unacceptable

Simon HughesOver in the Observer, Simon Hughes is making his views on tax avoidance perfectly clear.

Every pound lost to tax avoidance, tax planning, tax efficiency, or whatever other euphemism is used, by people who simply don’t want to make their contribution is a pound that cannot be spent on vital services. At a time when we are asking individuals and households to make great financial sacrifices, behaviour of this kind from the corporate sector is simply unacceptable.

He singles out the water industry as “one of the worst cases of widespread corporate misbehaviour that has been exposed so far.”  He goes on:

Thames Water stands out as a particularly disturbing case. One in five people in Britain are Thames Water customers. The need to clean up the Thames by upgrading the Victorian sewer system has been known about for 30 years. And the borrowing spree by Thames Water is one reason why it cannot raise the funds itself to finance the construction of the Thames tunnel, a project designed to stop sewage flowing into the river and projected to cost £4.1bn. Instead Thames Water has come to the government for financial support, and is asking its 13 million customers to stump up an extra £80 a year each. I, and others, such as Sir Ian Byatt, the former director of the regulator Ofwat, have argued that the government should look again at this project and at its support for it.

You can read the full article here.


* Mary Reid is a contributing editor on Lib Dem Voice. She was a councillor in Kingston upon Thames, where she is still very active with the local party, and is the Hon President of Kingston Lib Dems.

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  • Matthew Huntbach 13th Nov '12 - 12:49pm

    Yup, but all this was entirely predictable when these things were privatised in the 1980s, as was the consequence we now see of running down the provision of council housing and trusting “the market will provide”.

    Yet still across the political spectrum it is the norm to portray the path that Margaret Thatcher set this country down in the 1980s as a “good thing”. It is still the norm to suggest that our country was in a big mess in the1980s and Margaret Thatcher and her policies rescued us from that. The Labour Party is seen as having become electable only when under Blair it gave in and accepted this, the Liberal Democrats seem to have been subtly pushed in this direction now, with some among us (or amongst those at the top of the party) even suggesting it is what “liberalism” is all about, and those who don’t like it should leave the party.

    So when is anyone going to have the guts to stand up and oppose outright this idea? In reality, as we now see with the water companies just an example, all these years since the time of Margaret Thatcher have been about a boom based just on debt (well, also on frittering away our North Sea assets), doing things which seemed to get us out of a whole at the time, but are making things worse now. Indeed, as we see with the water companies, the privatisation has led to foreign governments stepping in and gradually buying up control of our country by buying up control of vital infrastructure components. So much for the “Iron Lady”. She made a big thing out of being tough on defence, standing at the front door to stop the Russians marching in with snow on their boots – while leaving the back door open with a sign on it reading “Welcome, come in, take what you want”.

    I shall add my usual comment – I did say all this at the time, I remember suggesting using the front-door/back-door line to counter the Tories in the1980s, but as usual my advice to the party was ignored.

  • You’re in Government so fix the rules….

    The tax rules for the UK are so open to abuse that they need to be virtually ripped up and started again. The other issue is that thanks to competitive tendering companies have to compete with each other on what has become almost a purely cost base. So you have a choice arrange you taxes legally (but immorally) or don’t be competitive. We’re stuck in the latter category at the moment and have lost public sector contracts, on cost, to organisations we suspect are not. What do we as an organisation do, lose contracts and therefore jobs or follow suit. Remember avoidance is not illegal, and margins are small and shrinking….

    As a simple first step would be to only grant Public Sector contracts to organisations that pay X% of turnover in corporation tax (in the UK would be preferable but probably breach free trade rules). This percentage should be dependent on size as the tax itself is. Also only grant licenses for utilities on the same basis, and reserve the right to revoke said licenses should the position change.

  • Matthew Huntbach 13th Nov '12 - 2:41pm

    Steve Way

    You’re in Government so fix the rules….

    The Liberal Democrats form one sixth of the government. They are not in a position to fix anything unless they can get over two-fifths of the other party in government to agree. Which, of course, is why the “Rose Garden” and “75% of Liberal Democrat policies implemented” lines coming from the top were so hugely damaging to our party. They gave the impression we had more power within the coalition than was actually the case, so leading to us getting blamed for policies coming through that were not our own and getting blamed for not implementing policies that were our own.

  • George Turner 13th Nov '12 - 11:17pm

    Steve Way,

    At conference Danny Alexander announced that he would look into ways how public sector contracts could not be given to companies which engage in tax avoidance. This came after lobbying from Simon Hughes after he discovered one large public sector contractors engaged in a very aggressive tax avoidance scheme.

    Your views would be really useful in taking this forward so please feel free to get in touch with our office

    George Turner
    Head of Office
    Office of Rt Hon Simon Hughes MP

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