The Public Accounts Committee has spoken: the relationship between the Big 4 firms of accountants and HMRC is far too close and is a threat to the objectivity of UK tax policy.
I agree. Having been on a Treasury committee recently as an 'outsider' it was quite a shock to get so many mails from Big 4 firms who were supposedly the HMRC 'insiders' in the process. Those seconded don't even change their email addresses when undertaking government business, which also means that we now have the absurd position that government business takes place through the file servers of the Big 4.
This situation is wholly unacceptable - unless you're the Big 4, who the Guardian quote, and who seem entirely happy with the arrangement.
I have said time and again that it is wrong that HMRC is now chaired by someone whose career was as a KPMG tax partner, that a former PWC partner is also on the HMRC Board and that big business totally dominates the whole of the rest of its non executive direction. This is corporate capture of a regulator that is bound to erode confidence in its impartiality, at best, and actually be corrupting at worst. And when a large part of HMRC's policy is now not just driven by lobbying from big business, but is actually written by it by supposedly seconding staff into HMRC then that process of capture is almost complete.
The process undermines democracy.
It undermines the civil service.
It undermines HMRC.
And in the process it undermines the likelihood of our society surviving.
The Big 4 may be very relaxed about that. I am not. And nor should anyone in the 99% be so.
Margaret Hodge has done us all a service by highlighting the issue.
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From what I read, it’s not just the treasury that is being affected by the ‘entry-ism’ of the corporations.
The Big 4, as predators, shouldn’t be relaxed about it either. If their prey cease to exist who will they profit from?
Absolutely agree with you Richard. Professional firms should have an ethical code and practice whose aim is to uphold values and not sell out their skills and knowledge to undermine a country or the public sector. I left the profession many years ago because I was unhappy with its culture and values. A change of ethics would lead to better people leading the profession. The Big 4 are primarily businesses driven by profit and standards have gone by the wayside.
Good to see you here Atul
So how do the Treasury and HMRC get the senior staff to man their offices to enable fair and democratic tax legislation? The only answer is to make it worth their while to move to the democratic institution – Treasury & HMRC – with a salary and entitlement incentives that will be far in excess of their returns gained from say the the Big 4 accountancy firms. Possibly a form of blackmail?
Since when was fair pay blackmail?
They would still eventually return home. As Margaret Hodge puts it: poacher turned game keeper turned poacher – having fixed things nicely on the way.
It gets worse… http://peoplesplaindealer.blogspot.co.uk/2013/04/ed-balls-has-subcontracted-labours.html
It does indeed. The advice will be the same that the government gets, so this is a fruitless exercise. Message to Ed Balls…look elsewhere for your advice or don’t bother just recycle. The latter option will at least save £600K!
I think the treasury has already responded by calling the PAC report absurd. Given the amount of evidence they had the report is rather short I have to say. What is absurd is the criticism of the amount of TP people engaged by the big 4. It is a legal requirement for companies to have documentation (including benchmarking studies) to support their tax returns , yet the PAC seem surprised that there are a couple of hundred people helping companies do this. Clearly they have never seen Hmrc conduct a tp enquiry
Of course they’ve criticised it
They’ve been captured by the Big 4
This is the Orwellian state
If I was to come across a situation like this in the plot of a novel or a film then I would think, hang on that’s a bit far fetched. But no, this is reality. The media is busy telling us about greedy welfare recipients with too many bedrooms while these super crooks are ripping all of us off. We’re in a mess.
It is simply a national scandal. A public institution affecting the lives of us all is slanted in favour of the 1%. Congratulations to the the Public Accounts Committee for being…, for being…, Wait a minute. Its 2013! Where have the Public Accounts Committee’s eyes and ears been in the meantime?
I hate to say I laughed listening to a car crash, but the hapless guy from KPMG being destroyed by Jim Naughtie on the Today programme this morning, after trying to claim Starbucks made no profits in the UK, was funny!
It was Bill Dodwell from Deloitte – someone who has argued I should not be allowed to comment on tax
Here’s the link so others can listen: http://audioboo.fm/boos/1354136-tax-relief-system-too-complicated
When these “smartest guys in the room” kind of people get properly scrutinised as any public figure should, it so often becomes glaringly apparent they have feet of clay. That’s why bankers simply refuse to go on Today or Newsnight any more.
Thanks!
On the blog now
Dodwell has a point. You are a mine of misinformation.
Nonsense: speaking truth to power makes you uncomfortable
But I will do it
Hodge and Naughtie shouldn’t be allowed to comment. All they did was assert that Starbucks made profits, and mock Dodwell for looking at the figures rather than blindly accepting the axioms.
Respectfully, saying people should not be allowed to comment is absurd
That is censorship
And since you add no value here moderation might be applied ….
Fair point – they should be allowed to comment, so long as they bear in mind that they’ll be judged on the quality of those comments. Speaking out about matters you don’t understand is not necessarily wise.
I find it galling that such uninformed comments are given such prominence in the media. But you’re right, they shouldn’t be censored.
If abuse is all you can resort to – you’ve lost the argument
I sugest you resort to using Worstall’s blog for your comments in future – they belong there
Dud Billwell and all his other friends don’t believe in democracy, well at least not for little people.
I’m surprised we haven’t had a “gem” from Mit Allworts, sorry Tim Worstall, today. Best to leave him to entertain the intellectual flyweights that contribute to his blog.
I’ve been waiting for the PAC to catch up with blogs and comments on this matter that have appeared here over the past year, and now they have. That’s good. But two problems now confront doing anything about this situation.
The first is that the views and opinions of Parliamentary Committees can be – and routinely are – ignored by government. That’s not to say they cannot be effective at drawing attention to issues, and we’ve seen the PAC do that this past year or so, as did the Culture, Media and Sport Committee with phone hacking. Ultimately therefore the PAC’s strategy has to be to keep on, and on about this until the government is embarrased into doing something about it.
The second problem is far more fundamental and thus more difficult to tackle. This is that at senior, managerial, levels, in central government (and to a lesser but growing extent in local government and public services more generally) public administration and public policy making in Britain has been turned from serving the broader public interest, to serving the interests of corporate Britain, the 1% and those individuals and organisations (such as the big four accountancy firms)whose role in society it is to promote and support the narrow interests of this ‘elite.’
This has been a long process that started for legitimate reasons in the 1960s and began to expand and speed up once Thatcher came to power. New Labour – as we might expect – continued to encourage the corporate takeover of policy making and public adminstration, with the likes of Mandelson et al happy to go along with the myth that the interests of big business almost always and everywhere serve the interests of the general public (or if they don’t then the public interest is almost always secondary – though often rhetoric would suggest the reverse).
But the developments under Blair and Brown are dwarfed by what we’ve seen happen under the ConDem coalition. Any remaining vestiges of an open and plural policy process – that is, one that allows the views and opinions of multiple stakeholders to be taken into account – went out of the window within the first year (and as the membership of HMRC Board illustrates, the same happened with regulatory agencies). Meanwhile, the ethos, values and practices of commercial management continue to drive out the remaining traces of, and belief in, PUBLIC adminstration and management.
And so we come to what you outline here, Richard. Secondees from commercial organisations who are so confident that their ilk now control government, and that the few remaining civil servants who still see themselves as public servants are so cowed and intimidated that they dare not speak up (e.g. Department for Education, Home Office, HMRC, etc), that they no longer even feel the need to pretend to be working FOR government and the public interest.
And they are right to feel so, of course, because for the first time since the 19th century we have a government that believes absolutely that government by the market – and thus policy making and public adminstration that is driven by those interests and steered by representatives of this ‘class’ – is what representative democracy is all about. It is, as has been noted here before on many occasions, a form of 21st century feudalism. That is what the PAC, you and your blog and others must now fight.
Ivan
I’ll keep going….
R
Thay have a different attitude to the Big 4 in America… http://www.blog.rippedoffbritons.com/2013/01/the-predatory-practices-of-major.html.