Joan Smith: Another expenses scandal – in lap-dancing clubs

Here's an expenses scandal, if ever there was one: taxpayers are subsidising companies which entertain their employees in lap-dancing clubs.

Taking staff to a club, buying drinks and paying for women to dance is a legitimate business expense, it turns out, and companies can claim back 15 per cent VAT on the bill. This is jaw-dropping stuff, especially under a government that is committed to reducing demand for paid-for sex, so it's good news that Harriet Harman has the lads' culture of corporate "entertainment" in her sights. The Minister for Women and Equality says taxpayers should no longer subsidise evenings out that support the wider sex industry; she points out that parents can't get tax relief for childcare, yet companies are claiming relief for the cost of sending their male employees to watch barely dressed women gyrate on tables and around poles.

Apparently this is regarded by City firms as a team-bonding exercise (though not for the women on the team, presumably). I'm never surprised when I'm reminded that sexism is rife in the corporate world; a recent report from the Equalities and Human Rights Commission exposed entrenched discrimination in the finance sector, including the fact that women received around 80 per cent less in bonuses. What is startling is to find the Treasury colluding in it, not for historic reasons – lap-dancing clubs only really got going in this country in the Nineties – but because it doesn't seem to have occurred to anyone that the rules offer financial support to an industry that is demeaning to women. Lap-dancing clubs perpetuate ancient myths about sex, such as the idea that women love nothing more than taking off most of their clothes and writhing in front of a group of tanked-up, jeering, groping men. There's a brilliant scene in the movie Fish Tank in which a woman takes part in an audition, trying to look as if she's having multiple orgasms, just to get a job in a seedy club.

Lap-dancing clubs sell fantasies that disguise a commercial transaction, one into which students and single mothers are forced because it's more lucrative than the low-paid work available at the job centre. For the punter, it's an expensive form of voyeurism, or at least that's what I thought until I began to appreciate the economics a couple of days ago. According to research carried out by the Fawcett Society, 41 per cent of lap-dancing clubs market directly to companies; one club owner estimated last week that between 75 and 100 per cent of his clients were on business expenses. With a typical night out costing a couple of thousand pounds, no wonder a generous subsidy from the poor old taxpayer is so welcome.

Lap-dancing clubs have proliferated in recent years, encouraged by a ham-fisted piece of legislation, the 2003 Licensing Act, which classed them as part of the leisure industry rather than sexual-encounter establishments. This is ludicrous – lap dancing and pole dancing are clearly part of the commercial sex industry – but the result is that the number of clubs has doubled to 310 in the past four years. They've even opened on residential streets, dismaying local people who dislike the idea of punters emerging drunk and aroused in the early hours of the morning. The legislation was amended this year, but not all councils are aware of the changes, and women's groups would like to see it given more teeth. Ms Harman is already being denounced as a killjoy for targeting the expenses scam which subsidises such clubs, but that's the price of dragging sexist City culture into the modern world.