Procurement action on tax dodging

Today I was speaking at the Holyrood conference on sustainable procurement. The Scottish Government has been consulting on a Procurement Bill. It was going to be a 'sustainable' Procurement Bill, but the 'sustainable' was dropped and the consultation focuses primarily on the processes of procurement.

However, all is not lost, as Part IV of the consultation does recognise the wider purpose of procurement to deliver economic, social and environmental benefits. UNISON Scotland's response to the consultation covers several of these including: workforce protections, blacklisting, Scottish Living Wage, sustainable procurement and tax justice. The main focus of my presentation was tax justice.

At a time of massive public spending cuts it is outrageous that some £120 billion of tax is not being collected. The Scottish share of that would be more than a quarter of the total Scottish budget, every year! The UK Government should be doing more with stronger anti-tax-avoidance legislation, more tax staff and greater transparency in company accounts. The Scottish Government can also play its part by encouraging companies to change their ways through procurement.

The Scottish Government could start by improving transparency through extending the scope of Freedom of Information to all public contracts. The Procurement Bill should set out some general principles including a clear statement that public bodies should have regard to the tax status of companies bidding for contracts.

The detail would be in regulations and guidance and would cover issues such as an independent assessment of a companies tax record including convictions and actions by the HMRC on aggressive tax avoidance. This should include the historical track record of companies as that is the normal way of evaluating likely performance in future. Not a popular proposal with the Big 4 accountancy companies, but we must be consistent here. We should also make country by country reporting a condition and debar companies registered in tax havens. A number of PFI contract companies would be covered by this. There could also be higher accountancy standards and disclosure provisions.

There is considerable cross party support for action to tackle tax dodging. SNP, Labour and Liberal Democrat MP's have supported a Westminster motion on the issue. This reflects public opinion as shown in a recent Christian Aid public opinion survey, which found that 80% are angry about firms not paying their fair share of tax and a third are boycotting companies over it. Even the Chief Secretary to the Treasury Danny Alexander has said, ‘Taxpayers’ money should not be funding tax dodgers."

Scottish Government ministers have indicated support for this approach in the Forth Bridge procurement and there is an international movement of public bodies taking action. Cities like Paris, Malmo and Helsinki are inserting procurement clauses and closer to home, the City of Hull is moving in the same direction.

At today's conference, Catherine Stihler MEP updated us on progress with the EU review on procurement. As anticipated it is going slowly and this is one factor causing the delay with the Scottish Bill. There was also some concern from procurement professionals over their capacity to deal with further criteria. There certainly is a shortage of staff and therefore capacity does need to be expanded and clear practical guidance produced to minimise the workload.

I suspect action at UK level will be the predictable 'light touch' regulation, therefore the time is right for Scotland to act against tax dodging companies. They need to understand very clearly that if you want to chase the taxpayer pound you have to pay your taxes like everyone else.