The Public Accounts Committee’s published a report which found there is £25 billion of outstanding tax which has not been collected from large companies. Meanwhile, small companies, family owned businesses and of course individual tax payers pay their tax in full and many of the hardest working families in this country are struggling to make ends meet. Families face a cut of £1,400 each this year, money which they can ill afford to pay but the Tories and their Lib Dem allies are doing nothing about the massive amount of money owed by big businesses like Vodafone, Top Shop and Investment Bankers, Goldman Sachs, who did a deal with HMRC to avoid paying their taxes. A number of business owners have contacted me to say that the HMRC authorities have refused their requests for a delay in paying tax and are threatening legal action.
Large companies should not get special treatment at the expense of small businesses and individual taxpayers. But Ministers stood by while Revenue & Customs cut a sweetheart deal with Goldman Sachs and other big corporations. They also appear to have failed to ensure that HMRC complied with its own processes, resulting in a substantial amount of money being lost to the Exchequer, money which could have been used to cut the deficit rather than those on low and middle incomes having to bear the brunt of paying off the deficit.
Remember that it was bankers like Goldman Sachs who caused the global financial crisis by irresponsible lending, especially in America. It would be only fair for firms like Goldman Sachs to pay their taxes. Instead, the biggest companies are being allowed to get away with not paying.
It’s time Ministers took responsibility and acted to tackle the tax avoidance happening on their watch.
Labour supports the independent High Pay Commission recommendations. These are backed by many business leaders, as well as being in line with measures in place in the U.S., Germany and other countries to increase transparency and accountability in the boardroom and the City. It is far from clear the Tory-Lib Dem Government will stand up to vested interests and the lobbyists and do the same here for shareholders, our economy and society in general.
That is why we have set three tests for the Government to meet based on the principles of transparency, accountability, and fairness. These include measures to simplify pay awards for shareholders, to publish ratios of executive pay to that of the median salary in a business, to have employee representatives break up the closed circle of board remuneration committees, and to ensure fund managers disclose how they vote on executive pay so pensioners and investors can know if their monies are being used to finance excessive pay deals. We would also have another bankers' bonus tax to pay for 100,000 new jobs and training opportunities for our young people.
Anything less than the full implementation of these measures will fall short of what is required to empower those who ultimately own our businesses, and to secure the trust of the British people in the system. It just won't be good enough.
We need responsibility at the top as well as at the bottom of society. While it is right that those who work hard, generate wealth and create jobs for our country are rewarded, where failure is rewarded or people award themselves huge pay rises that bear no relation to performance or what their companies can bear, trust is severely undermined. This is why reform is needed.
Labour's three key tests which the Government must meet to show it is serious about excessive executive pay:
One salary, one bonus – pay awards have become increasingly complex and it has become difficult for shareholders to know the full value of remuneration packages so, to improve transparency for shareholders and the public, executives should be paid a basic salary with a single performance-related element where justified.
Publish what is paid – Labour has called for firms to publish the ratio of average salaries of employees to executive pay; further to the publication of the ratios we would require the Department of Business, Innovation and Skills to publish a league table of the highest ratios.
Put an employee representative on the remuneration committee of every company.
Empower pensioners and investors - to increase accountability, investors and pension fund managers should be required to disclose how they vote on remuneration decisions so pensioners and investors would easily be able to access information on where their monies are being used to finance big pay deals. The last Labour government legislated in the 2006 Companies Act for this to happen but the new Tory/Lib-Dem Government has refused to bring it in to force.
Labour’s five point plan for growth and jobs already includes a proposal for another round of the bank bonus tax to pay for 100,000 jobs for our young people.