The following press release was issued by Christian Aid this morning. I warmly welcome what they are doing:
A growing number of UK councils are taking companies' tax records into account when deciding how to award contracts worth tens of billions of pounds, in a trend welcomed by Christian Aid.
In December, members of Oxford City Council voted unanimously to investigate whether and how the council can include rigorous questions about companies' tax practices in council procurement procedures.
Detailed tax compliance questions have already been adopted by Belfast and Lisburn and Castlereagh city councils in Northern Ireland, as well as by the University of Oxford.
This month, Christian Aid launches its Sourced campaign to encourage other councils in England and Northern Ireland to follow suit.
Local authorities in England alone spend around £45 billion a year on buying goods and services from third parties.
“We hope to see more and more councils deciding that when awarding contacts, they will take companies' tax records into account and discriminate in favour of those which have been socially responsible,” said Helen Collinson, Senior Public Advocacy Adviser at Christian Aid.
“Councils spend tens of billions of pounds on goods and services. This is taxpayers' money, so it is only right that councils choose to work with firms which pay their fair share of tax.”
The law already requires local authorities to ask potential suppliers whether they have been found guilty of tax evasion. Christian Aid wants local authorities to go further and also ask companies whether they have been found to have improperly avoided tax, in the UK or other countries (see notes to editors for more detail).
Ms Collinson added: “Christian Aid is pleased to see a growing number of UK councils demanding that companies seeking contracts must reveal whether they have been in trouble about tax, anywhere in the world. We hope to see many more do so in 2016.
“That's because companies' tax decisions have a major impact on people's lives, both in the UK and even more so in developing countries. When they use accounting tricks to pay less tax, there is less funding for public services at local and national level, including for schools and health services.”
Jean Fooks, councillor for Summertown Ward in Oxford, proposed the motion that was passed by the City Council. She said: “I am delighted that the motion was supported unanimously by the City Council. At a time when councils are struggling with ever deeper cuts to our budgets, it makes sense that we use our spending power to favour companies that pay their taxes. After all, it is companies' and individuals' tax payments that ultimately fund council budgets. I hope that councils across the UK will agree.”
Notes:
- Regulations made in 2014 require central government departments to ask would-be bidders detailed questions about tax - but they are optional for local authorities. Christian Aid's new Sourced campaign aims to persuade many more local authorities to choose to apply the 2014 regulations. The 2014 regulations say that companies seeking central government contracts worth £5 million or more must reveal whether they have been found guilty of tax evasion and whether their tax returns have been found to be `incorrect' by tax authorities in the UK or other countries, including developing countries. Companies are banned from bidding for national government contracts if they have committed certain tax crimes and they can be banned for lesser wrongdoing, at the discretion of the body awarding the contract. Further regulations in 2015 require companies bidding for local council contracts to reveal if they have been found guilty of tax evasion - but not avoidance.
- Christian Aid works in some of the world's poorest communities in around 40 countries at any one time. We act where there is great need, regardless of religion, helping people to live a full life, free from poverty. We provide urgent, practical and effective assistance in tackling the root causes of poverty as well as its effects.
- Christian Aid's core belief is that the world can and must be changed so that poverty is ended: this is what we stand for. Everything we do is about ending poverty and injustice: swiftly, effectively, sustainably. Our strategy document Partnership for Change www.christianaid.org.uk/images/partnership-for-change-summary.pdf explains how we set about this task.
- Christian Aid is a member of the ACT Alliance, a global coalition of more than 130 churches and church-related organisations that work together in humanitarian assistance, advocacy and development. Further details at http://actalliance.org
- Follow Christian Aid's newswire on Twitter: http://twitter.com/caid_newswire
- For more information about the work of Christian Aid, visit http://www.christianaid.org.uk
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I’m intrigued as to what “whether their tax returns have been found to be incorrect” means in the notes. Any idea? Presume this includes an adjustment in a comp for expenditure which should have been disallowed, but presumably includes allowable expenditure which was mistakenly disallowed?
It does, I am sure, mean the making of material adjustments
I am not au fait with the details but I recollect briefly skim reading something before Christmas about a current Government announcement/initiative which would prevent Local Authorities from applying such (ethical) criteria to procurement and other policies, including pension fund investment decisions, on the grounds that such actions are at variance with Central Government foreign policy.
In essence any LA policy involving expenditure and investment decisions which apply criteria contrary to Central Government policy – consideration of companies involvement in the arms trade; countries with poor human rights records; predatory corporations etc using ethical criteria such as environmental impact, wage policies, trade union rights, human rights and so on – which resulted in exclusion or boycotting will be made illegal.
This being the case and given recent policy decisions regarding the regulation of HMRC, banking and finance it would seem reasonable to surmise that the above quoted regulations may well not have a great deal of shelf life left.
That related to foreign policy
Tax discretion in procurement is specifically allowed and encouraged by the government and it supposedly does it itself
You are less cynical than I Richard.
Sometimes I have to suspend my disbelief
This sounds to me more like a publicity stunt for Christian Aid. In practice it will be very easy for groups to avoid disclosure – bid for work in a “clean” company and put all the dodgy transactions somewhere else. Good luck to Christian aid though, they always need publicity.
Stunt, I dispute
Serious attempt to encourage sound policy, I think fair
So the government considers that councils cannot set any standards in foreign affairs and may be required just to pick up the pieces (as in resettlements) but are encouraged to have domestic policy standards? Another marvellous inconsistency…
An inconsistency which it is possible to rectify by applying the same criteria to Councils when it comes to domestic policy -ie nothing a Council does must ever contradict, undermine, conflict or otherwise differ from Central Government policy in any area.
Which of, of course, would make it futile for the subjects of the realm (seeing as we seem to be rapidly constructing the necessary apparatus for a technological feudalism) to vote for any political party in Local Government which has a different perspective to the Establishment.
A possible necessary mechanism to assist the TTIP investor protection protocols. Spear and Jackson could well be worth investing in.
Meanwhile, MP for Shipley Phillip Davies (and erstwhile landlord in his own right) is currently bawling like a sploit five year old about legislation, originating from a Labour MP, being discussed in Parliament that seeks to introduce the “burden” onto landlords of regulations ensuring homes they rent out are fit for human habitation.
I know climate change is taking effect (I spotted some wild dandilions flowering the other day) but the silly season seems to be happening at the wrong time of the year. It surely cannot be too long before the regulatory burden of having to pay wages for a days work comes under scrutiny.
That requirement is quite clearly an outrageous interference in the market given right to live in a dank cupboard
The Belfast CC PQQ asks the bidder:
Whether it has been held by a ‘judicial or administrative decision having final and binding effect in accordance with the legal provisions of any part of the United Kingdom or the legal provisions of the country in which your organisation is established (if outside the UK), that your organisation is in breach of obligations related to the payment of tax or social security contributions’.
It is pretty much a repeat of regulation 57(3) in the 2015 Regs, and something along these lines is used in all PQQs I know about. (I don’t live or work in Belfast but have a copy of their standard PQQ).
Is there any local authority NOT including a question along these lines?
It seems most are not
Oddly, Northern Ireland is the almost complete exception to this rule
Are you aware of the Crown Commercial Services standard PQQ?
Local authorities are ‘expected’ to use it. We technically don’t have to, but we have to notify if we use our own.
The CCS PQQ clearly has a section that says:
“You will be excluded from the procurement process if there is evidence of convictions relating to specific criminal offences including, but not limited to, bribery, corruption, conspiracy, terrorism, fraud and money laundering, or if you have been the subject of a binding legal decision which found a breach of legal obligations to pay tax or social security obligations (except where this is disproportionate e.g. only minor amounts involved).
If you have answered “yes” to question 2.2 on the non-payment of taxes or social security contributions, and have not paid or entered into a binding arrangement to pay the full amount, you may still avoid exclusion if only minor tax or social security contributions are unpaid or if you have not yet had time to fulfil your obligations since learning of the exact amount due. If your organisation is in that position please provide details using a separate Appendix. You may contact the authority for advice before completing this form.”
Again, this pretty much repeats the regulations.
Are you saying most local authorities are not using the CCS PQQ (or not using something similar in their own PQQs)?
Can you name even one who doesn’t do this?
I am advised that the 2014 regulations referred to by Christian Aid are little used. They permit more discretion than the standard you refer to as I undrstand it