It is a disgrace that while millions of ordinary people suffer the privations of wage cuts, unemployment and poverty, a rich minority is avoiding and evading taxes. I am talking about corporates and billionaires. There is indeed one law for the rich and one for the poor, the poor being the great majority of wage and salary earners. They are not necessarily poor in the specific sense, but they pay their taxes—I pay PAYE myself.
The Government’s concerns about the deficit seem hypocritical given that they have failed to collect the taxes that are owed. The estimate of the amount of uncollected tax made by HMRC and the Government is of the order of £40 billion. But estimates by others—including the Public and Commercial Services Union, the trade union that represents the workers in the tax collecting industry, the TUC and Richard Murphy, a noted tax expert I have seen speak on many occasions—put the amount at £120 billion or even more.
Even if we take the £40 billion figure, if the Government collected half of it, that would be an extra £20 billion a year, equivalent to 5p on the standard rate of income tax. I suggest that that would not just bring down the deficit but would give us plenty more to spend on the health service and on decent pay rises for public servants, who have suffered so much for so long.
As for staffing in HMRC, I have spoken out about that under previous Governments as well, not just this one, because that has been a weakness for Government efforts to challenge tax avoidance and evasion for a long period. I will tell a little anecdote. In 1997, when I first came into Parliament, I went to visit my local VAT office. The people there said that if they had more staff, they could collect more taxes. In VAT from local businesses alone, every individual tax inspector collected five times their own salary. Naturally I wrote to the then Chancellor of the Exchequer. I got an answer back from a civil servant, not from the Chancellor, which said that the Treasury wanted to make savings by cutting staff. That is utterly irrational when staff collect many times their own salary.
As I said, with VAT from local firms the amount collected is five times a staff member’s salary. When it comes to the big corporates, extra staff collect many, many times their own salary, and we should have many more tax staff. Perhaps if HMRC did not have such difficulties with staffing, it would be able to work more accurately and would not make the mistakes that have been mentioned.
We have recently seen Vodafone, which apparently owed something like £7 billion in tax, do a cosy little deal with Dave Hartnett, the then boss of HMRC, and pay £1 billion. The rest was siphoned through Luxembourg, I think—wherever it was, large amounts of money were lost from the corporates. Interestingly, Dave Hartnett, who was a public servant and should have been committed to the public interest, retired and finished up as an adviser to corporates on tax avoidance. That is unacceptable. Civil servants should be motivated by the public service ethos and be determined to collect taxes. They should not be cosying up to the corporate world.
Finally, as my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) has pointed out, the 1,000 richest people in this country have seen their wealth double in the past five years from a quarter of a trillion pounds to half a trillion pounds. That is a staggering amount of money. Much of that must be to do with tax avoidance and tax evasion. If we were to collect just some of that, we would have no deficit and plenty more to spend on the health service.
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