04/06/20

UK: No Public Bailouts for Tax Dodging Corporations.

Press release from the office of Dame Margaret Hodge MP on Wednesday 3 June, 2020.

Rishi Sunak faces demands for tougher conditions and increased transparency for large corporate bailouts. Dame Margaret Hodge, Labour MP for Barking and former chair of the Public Accounts Committee, has written to the Chancellor and called for bold and decisive action to stop the Government’s COVID-19 financial support schemes from being abused by shameless companies.

Sunak has placed some restrictions on large corporate borrowers from handing out dividends, buying back shares, and excessive executive pay. Dame Margaret has challenged the Treasury to apply tougher conditions and proposed further changes.

Dame Margaret recommends:

1. HMRC currently rates companies on their tax compliance behaviour. Those deemed to be a risk by HMRC should be denied access to financial assistance.
2. Corporations use intra-company loans that require hefty interest payments to export profits and avoid tax.  Companies that borrow public money must halt the interest payments on intra company loans.
3. The Government has agreed to publish a list of companies borrowing over £50m through one of its schemes. For transparency, all Government loans and bailouts to large corporations (including the furlough scheme) must be made public.

“Supporting jobs and saving livelihoods is the right thing to do” said Dame Margaret. “But if a company does not pay their fair share in the good times, they should have no access to public bailouts when times are tough.”

Dame Margaret is proposing changes to a number of schemes accessed by larger firms, including the Job Retention Scheme, the Coronavirus Large Business Interruption Loan Scheme (CLBILS), and the Bank of England’s Coronavirus Corporate Financing Facility (CCFF).

On 4 June the Government will publish the details of big corporations that have benefitted from the CCFF. So far firms have shared the spoils of £18.7 billion in publicly-backed loans from this scheme. Dame Margaret is urging the Government to go further.

In a letter to the Chancellor, Dame Margaret said:

“We must not reward companies that avoid their obligations and we must make sure that no public support is abused.

While for many these schemes will be a financial lifeline, for unscrupulous corporations they will be viewed as easy pickings.

It is high time that the Government puts regular taxpayers before corporate shareholders.”