Margaret Hodge: ‘Companies have to pay their share. Tax is a moral issue’

As the tax affairs of Google and Amazon have risen up the agenda, one MP has led the charge. So, James Moore asks her, what’s she planning next?

James Moore@JimMooreJourno
Sunday 26 May 2013 20:35
Margaret Hodge strikes fear into the hearts of the ' leaders' of dysfunctional public bodies
Margaret Hodge strikes fear into the hearts of the ' leaders' of dysfunctional public bodies

She has chucked bricks at executives from Google, Amazon, Starbucks. She has eviscerated the top civil servants from HM Revenue & Customs. And she strikes fear into the hearts of the “leaders” of other dysfunctional public bodies.

So they’ll be mightily relieved that Margaret Hodge, the chairman of the House of Commons Public Accounts Committee, is planning a brief cease-fire to weigh up her next move.

What they won’t like is her pledge that she is by no means done. “We’re going to pause for breath for a moment. We want to stop and think where we go from here strategically,” says Hodge of her crusade to name and shame those involved in global tax avoidance.

But corporate Britain be warned. “They hide behind this taxpayer confidentiality,” she says. “For ordinary people, keeping your affairs confidential – that’s only right. But these are very big organisations, public companies. That makes them different.”

Suggesting corporate titans offer full disclosure of their tax affairs will create a storm. The business lobby is preparing its usual accusations that such a move would “damage British business” and “push companies away from Britain”.

“Well if they won’t accept that, there is an option,” says Hodge. “We could have a committee of MPs overseeing them in private, the same way that the Intelligence and Security Committee operates.” Hodge says this would be “second best”. She says doesn’t see any reason why a light should not be cast on the affairs of Britain’s biggest corporations.

One thing Margaret Hodge is very keen to stress, however, is the consensus of the Public Accounts Committee that she chairs. “It is completely unanimous, and there are a majority of Conservatives on this committee.”

When I ask how she finds working with the other side, she says of the Tories on her committee: “They’re great.” And she seems to mean it.

She then rounds on critics who argue that companies are only operating within the law: “This is a moral issue,” she says. “They benefit from being in this country. They profit from being in this country and they benefit from the services that tax provides. They want their staff to be educated, to be healthy. They use the roads, the infrastructure. That has to be paid for and they should pay their share.”

She doesn’t hold with those who argue that these companies already do pay a lot of tax. “Look, you and I pay VAT, we pay national insurance. We can’t then go and say, ‘I don’t fancy paying income tax’. The same is true for them.”

In making statements like that Hodge has tapped into a well of public anger. She doesn’t much care, therefore, if what she does proves controversial with the leaderships of either political party. She argues that one way politicians can reconnect with a public that is increasingly cynical about the political process is to listen to what they are saying on issues like tax.

“I learnt that fighting the BNP. I spent three years fighting Nick Griffin. I had to listen,” Hodge explains. That fight often drew her into controversy, but it ended with her being re-elected with a majority that had doubled. The racist party’s presence on Barking and Dagenham Council was obliterated.

I suggest to Hodge that she is among a handful of senior MPs that have given Parliament back at least some of its teeth, another notable example being Andrew Tyrie, the Conservative who chairs the Treasury Select Committee and the Parliamentary Commission on Banking Standards.

“He’s very good,” she interjects before adding: “I hope so. There was a feeling, after the expenses scandal, that we had to do something to re-establish trust and show the public that what we do is valuable.”

I suggest MPs like her, and Tyrie, are becoming more like US senators, willing to work across the floor and in an independent manner. This draws a wry smile: “The equivalent of this committee in the US has a staff of 120 people, 80 for the majority party and 40 for the minority. We have nothing like that.”

Hodge remains frustrated at what she still sees as a lack of action on the issue of tax. She remains highly critical of her old punchbag, HM Revenue and Customs: “I don’t know what do with them. Do you know the big companies each have customer relationship managers? That’s far too cosy. They’ve never litigated on some of these [tax] cases.”

But she also says the Government has to do more. One example she cites is the recent German government decision to ban companies from utilising financing through intra-company loans at artificially high interest rates from low-tax jurisdictions. The practice is used to depress profits in a higher tax domicile.

“The Germans said, ‘Right, enough’. They banned it. I don’t know why we can’t do something like that.” She also describes as “half-hearted” work around simplifying Britain’s gargantuan tax code and suggests the Government is “running scared” as a result of big companies’ threats to quit if legislators come down too heavily on them.

“I don’t believe that is the case. I don’t think they would. They benefit from being here, they make profits through being here. I think we need to realise that.”

Hodge has gained a fearsome reputation as a result of the televising of her committee’s hearings. In person, however, the diminutive grandmother is charm personified. She smiles easily, and apologises for the difficulties I faced as a disabled person reaching her office. That rather grand office that comes with her position is decorated on one wall with photographs of her predecessors as PAC chair: “I’ll be the first woman there,” she laughs.

One of her more radical notions is allowing MPs to “job share” which she feels might facilitate not only the entry of more women but more disabled people as well.

She tells the story of a meeting in the whips’ office where a photo of her was attached to a dartboard. The whip administering the telling off was throwing at it. It’s one of those unreconstructed Westminster stories. “The culture’s changed since then,” she says. “A bit.”

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