Councils take action against tax avoidance
Paul Monaghan outlines the unexpected success of a campaign to persuade local authorities to use their buying power to reward tax paying companies
In January, Christian Aid and the Fair Tax Mark launched the ‘Sourced campaign’ – urging local councils to use their purchasing power to tackle corporate tax avoidance. In particular, we urged that bidders for council contracts should be asked to account for their past tax record. We’re delighted to say that the response to date has been outstanding.
In a few short months, councils across the country have not only debated the issue, but actioned substantive changes to their procurement procedures. A powerful development, given councils in England alone spend some £45 billion a year buying goods and services from companies.
Who’s taking action?
London has been a growing centre of support for the campaign. Lambeth and Southwark have debated and passed motions, with Lewisham going the extra mile and requiring themselves to: “audit our contractors and suppliers on how many meet the Fair Tax Mark standards, pay the Living Wage and meet appropriate standards on apprenticeships.”
Pioneering cities Belfast, Oxford, Cambridge and Birmingham have all either passed or are considering Sourced campaign motions, as have Cheshire East, Hastings and Wirral Councils. Durham County Council has mandated: “the setting up of a cross party working group to explore how we can encourage the development of the Fair Tax Mark and to consider how best to promote the Fair Tax Campaign and transparency in all tax dealings.”
In Scotland, UNISON have suggested to the Scottish Parliament Finance Committee Inquiry that: “only companies who have shown a commitment to meet their social responsibilities, by signing up to the Fair Tax Mark or similar, should qualify for contracts. Companies should be able to demonstrate they are operating within both the letter and spirit of the law at all times without use of artificial tax avoidance schemes or tax havens to reduce tax liabilities.”
Manchester leading the way
Manchester City Council was one of the first to take action. They quickly established a Tax Avoidance Task and Finish Group to look at the matter, and concluded in February that change was merited. The Council opted to tackle this via an emerging Ethical Procurement Policy with requirements such as the mandatory exclusion of businesses that have “breached their tax or social security obligations (until the supplier has rectified the breach) within a period of five years prior to the procurement.”
This is particularly welcome given Manchester was recently recognised by Social Enterprise UK as the UK exemplar council when it comes to ‘procuring for good’. But better yet, at Manchester’s behest, these matters are now being considered by the Greater Manchester Combined Authority (GMCA), which involves a further nine councils in the region (which together have a combined economy greater than that of Wales!).
That isn’t to say that the other nine councils have been sitting on their hands. Oldham Council has debated the issue and is progressing a way forward, and Salford City Council has not only passed a Sourced campaign motion, but stated that it “aims to become a Fair Tax Mark Organisation.”
Credit to councillors
The volume of activity has been truly amazing, but so has the political breadth of the councillors that have tabled motions: which includes Labour, Co-operative, Green, Liberal Democrat and Conservative elected representatives. They all recognise the justice inherent in hurting tax dodgers via the loss of lucrative contracts, whilst incentivising those paying a fair share of tax – especially at a time when local government is faced with so many painful cuts to local services.
It’s especially welcome that we are now seeing the Fair Tax Mark regularly flagged as an example of enlightened business practice and a demonstration that there are many businesses who whole-heartedly accept that they need to pay the right amount of corporation tax in the right place at the right time.
Oh, and a big, big thank you to the Joffe Charitable Trust, who helped Fair Tax Mark work on this campaign – motivated by the fact that corporate tax evasion and avoidance are having an incredibly damaging impact on the world’s poorest countries, to such a level that it is costing them $160 billion a year – far more than they receive in aid.
If you think this might be something your local council might be interested in getting involved with, please do contact the Fair Tax Mark – or check out the model Council motion on our website.
Further reading: See our tax justice section on our website