Tax avoidance is in the establishment’s DNA - Margaret Hodge MP

Posted On: 
12th November 2017

Speaking to PoliticsHome, Labour’s Margaret Hodge argues that the Paradise Papers showed there is one rule for the super-rich and another for everyone else when it comes to paying tax. 

Barking MP Margaret Hodge chaired the Public Accounts Committee from 2010-15.
Credit: 
PA Images

Margaret Hodge has been a powerful voice against tax avoidance and evasion long-before the sensational Paradise Papers were released earlier this month.

As the formidable chair of the Public Accounts Committee from 2010-15, she pressed for a change in culture, greater transparency and tougher punishments for companies and individuals dodging tax.  

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And with the subject firmly back in the spotlight after an investigation revealed high-profile public figures – including the Queen – had invested cash in offshore tax havens, she is once again fighting for change.

For Ms Hodge the momentum created by newspaper headlines could finally prompt a fundamental shift in how the practice is treated, but the establishment must first acknowledge the seriousness of the problem.      

She says: “There is this establishment culture, where there is one law for the establishment and another for the rest of us. They look after each other’s interests and they don’t openly criticise each other.”

The Barking MP continues: “We pursue the benefit scroungers and we hound them through the papers and then you come to the Lord Ashcroft’s of this world.

“I was quite taken aback by that story [of the Queen’s tax arrangements] because what it demonstrated was that the advisors… feel that it’s such an accepted practice to hide your wealth and avoid legitimate taxes that they didn’t think twice about doing it. It never occurred to them that it would tarnish the Queen’s reputation. That demonstrates the extent to which it is in the DNA of the establishment really, and that’s what we’ve got to change.”

PUNISHING TAX DODGERS 

Although she acknowledges that people often don’t know the details of the financial schemes in which their money is invested, Ms Hodge is a strong advocate for taking personal responsibility and sees public exposure as a powerful catalyst.

Referring to her own experience, the Labour backbencher recounts how she responded when her family’s own finances were laid bare.  

“I think people are responsible for how their money is handled. The moment that I personally discovered that my uncle and my father had… we closed them down and in fact the money from one we put into a charity. So, in an odd way, because I’ve been through it… I think you have to be responsible for how your money is handled. So, for Lewis Hamilton to say, ‘I left it all to all my advisors,’ I don’t think it’s good enough. But I am much more interested in getting the systems changed than getting the individuals humiliated.”

She is keen to stress that the real focus should be on those designing the elaborate schemes, who have, so far, largely gone unpunished.

“I think you should be made accountable and I think you should be punished. It should be an offence,” she says.

CHANGING BUSINESS CULTURE 

Beyond the momentary media interest, the Labour backbencher is optimistic that a change in how business views tax dodging could spark real improvements.  

“My sense is that we are beginning to change. The conversation in the boardroom is beginning to change. So, whereas tax avoidance was seen as cool it is now seen as a reputational risk.

“The super-rich have been exposed by it [the Paradise Papers]. So, there are things that we can do in law, there are things we can do in the way we use the law - so that’s how HMRC pursues individuals - and then there are things we have got to do about the culture and we have got to act on all three fronts. One of the really powerful impacts of things like the Paradise Papers – and there will be more – is it just lifts it up. It’s been headline news for three or four days now and it allows that debate to take place and people to think about it and people are absolutely furious.”