25/01/2016 Newsnight

Can we really blame Google for not paying more tax?

We have low taxes in Britain, but those taxes are paid. This never

happened when there was a Labour Government in office, so you hear

them complaining about it, but they should have done something when they

were in office. Who's got it right? We speak live to the Shadow

Chancellor, John McDonnell. Take your eyes off Trump and look

at the Democrats for a moment - what once seemed like an easy race

for Hillary Clinton is now looking We speak to one of her closest

allies about her battle There are plenty of male politicians

who have outright scandals that happened to them and they overcome

them. So I see some of this through a gender lens, I can't help it.

We ask some of those experiencing it.

We don't pluck money off trees like they think. You have people back

home calling you and asking you for money. You are in London, you are

rich. They should come and see some of the jobs we are doing.

Boris Johnson wrote today - "...blame a shark for eating seals.

It is the nature of the beast and it's the law."

He was talking about Google and its tax bill.

His point was simple: How absurd to blame a company for attempting

to minimise the amount it pays out to the Government,

when it lies at the very root of what any finance director

So tonight, we step back from one company and one bill and ask if that

Is it immoral to use a loophole to your company's advantage?

And what should this whole debate tell us about our attitude

to taxation and the message our legislators send out

In a moment we'll talk to Labour's Shadow Chancellor,

John Mcdonnell, who called the Google settlement of ?130

million pounds "relatively insignifcant".

If you look closely enough and have the right equipment, you can even

see the apparently tiny sums that multinational corporations pay in UK

tax. Under the political microscope

today, the ?130 million settlement Google has paid in back taxes

in a deal with Her Majesty's Revenue According to the Shadow Chancellor,

this is a derisory sum. The Chancellor has managed to create

an unlikely alliance between myself, the Sun newspaper, the Mayor

of London and, according to reports, All of us think that this deal is

not the "major success" the Chancellor claimed at the weekend.

a lab that fights against malaria, rejected Labour's analysis.

I think it's good news is that we are collecting tax

That's thanks to the action that this

Government has taken to make sure that yes,

we have low taxes in Britain, but those taxes are paid.

But is the real problem that our tax system hasn't kept pace

According to the House of Lords economic affairs committee,

corporation tax in a given country is now largely voluntary

And that is particularly true of high-tech

Most of its value is created by intangibles.

And that is something the current tax

Google, for example, uses a manoeuvre known as the double

Irish, shifting profits between Ireland,

with low corporate rates of tax, and Bermuda, with no corporate

The problem for nation states is, this is all perfectly legal,

and as our economies evolve, more and

more companies will be able to do it.

What constitutes the correct amount of tax is becoming an elastic

Google is the symptom, but they're probably not the cause.

particularly the corporate tax system,

if we're to protect the tax base for the next 25 years.

Because even if the executives of a company woke up one day

and decided out of the goodness of their hearts

that their corporations should pay vastly more tax,

well, the people who own those companies

of perhaps the Labour Party, then they could face

where the shareholders would accuse them

So how might we change the tax system

so that companies can't shift their profits and costs

Well, one answer is to tax something

we will always be able to see where the sales are.

So we will be able to link the activity of the company

with taxation, something we are not able to do now.

The science of getting companies to pay more is far from simple.

The twin forces of globalisation and computerisation

make national boundaries, even in activities as mundane

as ordering a coffee, buying a book or hailing

I'm joined by Shadow Chancellor, John McDonnell.

Thanks for coming in. This payout by Google hasn't impressed you. No.

Independent assessors have assessed it at about 3%. In comparison with

that, the corporation tax during this period was between 20% to 30%.

Other taxpayers, particularly businesses in this country, will be

startled and offended. What should it have been then? You go back to

the corporate tax rate, what should that rate be now? Again, independent

assessors have said if Google were paying what others were paying

throughout that period, instead of the 200 million they've paid for ten

years, on average they'd pay 200 million a year. You can see why

people across the House, it was all parties today, MPs from all parties

were expressing their concern. It was described by Boris Johnson

himself as derisory. The biggest question is whether the current tax

system itself works. You heard there, the correct amount of tax is

an elastic concept. Did you agree that the system is ripe for reform?

Andrew's announced a review by the Treasury Select Committee today of

the tax system. We've instituted one for the Labour Party already. I did

that at my conference speech last September. The system's not working.

A couple of problems - one, the lack of transpatience yr and openness.

The Chancellor -- transparency. The Chancellor didn't come to the House

today. He sent a junior minister. We need complete openness and

transparency. We need international agreements of country by country

reporting, so individual countries are reported what their profits are

country by country. I raised with the minister today, we cannot keep

on cutting and demoralising the staff at Midnight Mass Iraq. These

are the -- HMRC. These are the people who collect the taxes.

Transparency at the heart of this. Labour's plans to plans the books

will be aggressive, you said at conference, we will force people

like Starbucks, Amazon, Google to pay their fair share of taxes, what

does that mean to go after them aggressively? It means we cannot

allow deals like this in the future. We must design our tax system so

it's effective. If anyone owe fends against that we make sure they're

brought to book. That's the end of the double Irish, the end of

loopholes, what would you do with the corporate tax rate? This is what

I thought George Osborne was supporting, international agreements

which ensures that we don't have these schemes in place. This scheme

undermines those very international agreements we're putting forward,

because it's a one off that sets a precedent. What would you do, you

use the word "aggressive" in terms of what you would change now, what

are the loopholes that just vanish under Labour? It's making sure they

report their activities on the ground. They can't shift profits.

Where they make them in one country, remember Google made ?1 billion

worth of profits in 2014, they then shift those profits and other areas

of activity to other countries. Should for example Starbucks be

taxed on each individual outlet, each of the profits of an individual

coffee shop, is that what you'd like to see? Part review is to define

what economic activity is. If the profits are made within a country,

they should be taxed within that country. We need to do this by

international agreement, otherwise we'll find that people are using

devices to shift their burdens elsewhere and reduce their tax

burdens overall. Going back to that idea, would you like to see, for

example, Starbucks as an individual outlet taxed on profits or would you

like to see local authorities refuse planning permission to Starbucks

until they agree to pay what is right? I think we need, first of

all, national legislation reform. We need international agreement. So

it's not down to the individual sanctions of individual authorities.

This an early day motion sponsored by Jeremy Corbyn, your leader and

signed by you. That's right. Has that changed in your mind? Not at

all. We've been campaigning on this for 15, 20 years. We were looking at

different devices to raise the publicity around that. That was one

of the ideas that was come up with. It's just to raise publicity then,

it wasn't serious? It was to ensure that the range of activities on the

agenda that we can explore when we go into Government. What about a tax

on sales? What about taxing the activity of a company, its revenue

or sales? At the moment, the Government defines this taxation

based upon economic activity within the country. The problem with the

Google settlement - We know it's taxed on profits. Let's be clear,

what the Government is saying is that it's taxed on economic

activity. They would not define today in the Google settlement what

exactly that economic activity was. That's why we're saying there's got

to be openness and transparency. What should it be? We define

economic activity by the basis of the profits that you secure within a

country. It's down to profits. the profits that you secure within a

asking you one step further - can you imagine a system which actually

worked off the revenues a company was making or the sales it was

making, rather than the profits is that the direction to go in? We've

always worked on the basis that you seek to tax on the economic

activity, based on identification of profits within a country itself. If

we can secure openness and transparency, we can identify what

the economic activities of that company is within the country, what

the profits are, and then we can determine the level of taxation that

we need to basically to ensure we have our services paid for. Also we

need international agreement so there isn't this transfer and

avoidance of tax. From one to another. Yes. I'm thinking back to

the phrase you used at conference, "new politics requires new

economics". There will be people expecting you to come in and do

economics". There will be people something radically different, to

rely re-- really reset the button between the relationship with the

corporate giants that seem to be getting away with it and with the

Government in waiting, which you want to be. This sounds like more of

the same. Not at all. You said transparency, debate, we'll look at

this. I don't see anyone saying we're going to do things radically

different. This is radical. Making sure companies open their books and

we can have complete openness and transparency. So it's just about

transparency. You're not saying put up the corporate tax rate. Wait for

it. Once you have openness, you can determine the economic activities,

the profits they're making. Then we can set the tax rates on the basis

what have we think is fair. What's unfair is companies out there across

the UK filling in their tax forms, as are individuals, what they're

paying is rates of tax, corporation tax 20%, higher on income tax, then

Google paying 3%. That's unacceptable, unfair. We need to

make sure the corporations cannot use tax avoidance measures to avoid

their responsibilities to pay in for the public services, for example the

education and training of their workforce. There are people who felt

at one time they should boycott Starbucks if they didn't agree with

the tax. Would you boycott Google? I've been involved in a range of

boycotting campaigns. Do you boycott Google? The problem, is that a

number of the IT companies have virtual monopolies, so most of us

use it. We have to make sure where they are in such a dominant place -

You carry on using Google broadly, there's nothing that you can do that

would scare off people? Because they're so dominant within the

market that's the reality of what we're dealing with. That's why you

design a tax regime so you ensure those monopolies pay their full

taxes and contribute towards the society they operate in. You don't

think there's anything to scare Google off? Yes, it is. It's going

to be John McDonnell and the Labour Party? It's society as a whole. We

saw the Government isolated today on a cross-party basis people saying

we've had enough of this, we want a fair taxation system and we're going

to achieve it. Corporate tax at 18%, that's where it's headed is that the

right amount to you? No, it isn't. That's too low. We would bring it

back to 20%. We believe 18% is too low. In addition, they're reducing

taxation, yet a large number of corporations and companies are

sitting on earned income and not investing it. We want to ensure they

invest in our society. Thank you. Thanks for coming in.

The US presidential race has - for the past few months -

been dominated by the politically-implausible,

larger-than-life character of Donald Trump,

which means much of what's happening in the Democratic race

But if that race once looked like the coronation

of Hillary Clinton, now it's looking more like a proper fight.

Her challenger, Bernie Sanders, a self-declared socialist

from Vermont, currently leads the polls in the first two electoral

Now the former Mayor of New York, Michael Bloomberg -

a man whose coffers make Donald Trump look like a pauper -

suggested he might enter the race for the White House if the contest

came down to a fight between Sanders and Trump.

In a moment, we'll hear from Anne-Marie Slaughter,

one of Clinton's closest political allies.

First, a reminder of the race to date.

Sometimes, an attack is the biggest compliment a politician can

So Bernie Sanders has clearly gone up in Hillary Clinton's estimation

if this jab at his healthcare plan is anything to go by.

In theory, there is a lot to like

about some of his ideas. But "in theory" isn't enough.

A president has to deliver in reality.

The Sanders surge has also prompted another politician

Former New York City Mayor Michael Bloomberg is hinting that he'll get

into the race if Donald Trump or Ted Cruz

wins the Republican nomination, and Bernie Sanders becomes

For his part, Mr Sanders appears to welcome a Bloomberg bid.

If Donald Trump wins and Mr Bloomberg gets in,

you'll have two multi billionaires running

for President of the United States against me.

And I think the American people do not want to see our nation

where billionaires control the political process.

Meanwhile, the Republican race frontrunner Donald Trump has

been laying out how bullet-proof his popularity really is.

They say I have the most loyal people,

I could stand in the middle of Fifth Avenue and shoot

somebody and I wouldn't lose any voters.

To reflect on this, I spoke to Anne-Marie Slaughter,

former senior adviser to Mrs Clinton.

You've worked very closely with Hillary Clinton,

who for years, to the world, seemed like she had the Democratic

nomination pretty much in the bag this time.

Now, suddenly, there is the spectre of what happens in Iowa

and New Hampshire if Bernie Sanders pips her to the post.

Well, I am still pretty confident that she will have

the Democratic nomination and I do think it is not a bad thing

for her to be challenged, because the American voters do not

like a coronation, whether it is a man or woman,

particularly, probably, if it is a woman.

So she will fight for it and as she fights, that is part

She is tough and experienced, and I think she will

If she didn't, I for one would look at this and think,

I'm not sure we're going to have a woman

You can't get more qualified than she is.

Of course, there have been lots of issues in her life.

You can't be in the public eye for that long

and not have lots of issues, but there are plenty of male

politicians who have plenty of outright scandals that happened

to them, and they have overcome them.

So I do see some of this through a gender lens,

I can't help it, because I am looking at her and thinking,

what more could you want in a president?

The interesting dichotomy is that she should be

the ground-breaking candidate, the first woman, and she doesn't

seem like the ground-breaking candidate, because

America feels that they know her almost too well.

She feels like the establishment to many people.

We saw that with Obama, too, this disgust with the system,

rightly in many ways, because the system is broken.

Yes, they have cast her as the establishment,

but I also think it is because younger women

don't realise how revolutionary it is to have a woman being taken

seriously as a presidential candidate.

Did you see Obama's recent comments that he

thinks Hillary Clinton has got unfair scrutiny,

and that he even regrets the tone of the battle they had in 2008?

I did not see that, but I was furious with him

back when he said, "You're likeable enough, Hillary".

I did think he patronised her in the 2008 election,

and it was one of the things, I wanted him too, but in the end

I supported her, because I think she was treated in a very

and good for him for saying that now.

When you look at the race, and the suggestion that Bloomberg

might come into it, could you see that?

Is that a good move as an independent?

Well, I look at this and think, wait a minute,

between two white male billionaires, really?

Is that what American politics has come down to?

I don't know whether he will do it. I don't think he should.

This is not a professional view, but I don't think

it would be good for American politics to have a kind of

very wealthy, white knight ride to the rescue,

because a woman, what? That she can't win?

Let's have this election, and let's give her a chance,

and I also think if there is another attack,

if there are any other national-security events,

and there will be, voters are going to think,

who do you want in charge when that happens?

Can you see a scenario in which Donald Trump wins

the nomination and wins the presidency?

I can see a scenario in which he wins the nomination.

But not the presidency, you cannot imagine President Trump?

But I have a lot of confidence in Hillary Clinton.

We could be looking at the first female presidency by November.

Do you think that would feel different?

Should it feel different if a woman is the president?

I think it will feel enormously different.

We can say women have got there, but in fact, in the corridors

of power, and let's face it, the Oval Office is the ultimate seat

of power, certainly in the United States and in many

ways in the world, having a woman in that

position does say to every woman and every girl,

His lifelong hero was Earnest Shackleton,

across the Antarctic that Henry Worlsley was trying

to recreate - with the huge, added challenge that Worsley

Like Shackleton, his bravery and his willingness to endure

endless, uncharted terrain led him into a desperate race for survival

The British explorer died of organ failure,

tragically, when the end of the mission was almost in sight -

just 30 miles remained of his 1,000-mile journey.

Prince William has led the tributes to the former SAS officer,

who died raising money for wounded soldiers.

All alone in Antarctica, Henry Worsley kept an audio diary of his

extraordinary trek. He hoped to achieve what his great hero, Sir

Ernest Shackleton, had failed to do a century earlier, and cross this

great white wilderness. On earlier accompanied adventures, Worsley

settled down for the long evenings with Shackleton's writing. We would

read the heart of Antarctica every night, and pick out bits of his

diary that are absolutely spot on to where we have got two on the

journey. Very meaningful, brings it all to life, particularly the

description of the views he can say and the trouble he is having with

his ponies, and even the weather. He had worse weather than we are

having. Shackleton is one of the great romantic figures of British

exploration. His epic mission failed after his ship was crushed by ice,

but he kept his men alive. They all came home again. He is remembered in

an exhibition at the royal geographical Society in London. I

think it has a lot to do with the psyche of the British public in

terms of the storytelling that goes with all of these expeditions,

because they are handed down to us through generations. There is always

a willingness for somebody to give up something for others. Those were

the equivalence of Nasa sending men into space. They have a sense of

where they were going. They had all the equipment and the skills they

could have individually, but ultimately, it was the men in the

wilderness environment. On his earlier journey in the South

Pole, Henry Worsley reached the spot where Shackleton decided he couldn't

go on. The decision to turn back must be one of the greatest

decisions taken in the whole annals of exploration, particularly polar

exploration. He came so close. He pioneered this route, 850 miles.

Every day, he was seeing new sites. 97 miles to go, and turns round when

such a glorious prize is staring him in the face.

I'm joined by record-breaking Polar explorer, Caroline Hamilton,

and from our Birmingham studio, professional explorer Mark Wood,

who was a friend of Henry Worsley and has completed over 30 major

expeditions around the world, including a solo expedition

Mark, I know you were good friends with Henry and we really got a sense

in that film of the man at the heart of this tragedy. How did you see

him? Well, I met Henry when I arrived at the South Pole in 2012,

after my solo attempt there. I found it extraordinarily difficult to

reach the Pole itself, and when I first met Henry, he was full of

smiles and fun and laughter, and then I found out five minutes later

that he had just completed an 80 day plus expedition himself. So an

extraordinary, strong willed, powerful man, with a deep sense of

humour. Do you understand that need for solo exploration? It seems to be

quintessential to this expedition, that drive to do it alone. Yeah.

Exploring is either about what you walk through and what you see more

or what you feel internally. To do a solo expedition is a different step

altogether. You can't train for it, you just have to be thrown into the

deep end. I can understand why Henry wanted to take up this expedition

historically, but also for personal reasons. That is why we export to

begin with. It all becomes personal. Caroline, how do you explain to

somebody who is not an explorer just why you would take your life in your

hands like this to achieve something like that? I think it is about

challenging yourself. It is there, it is a wonderful thing to do. As

Mark has been saying, when you are out there, you have an inner journey

going on at the same time as the outer journey. And Antarctica and

the Arctic are incredibly beautiful. It is such a privilege to be there.

The whole thing as an assault on every sense. Not just what it looks

like, it is what it sounds like and smells like, and to be able to bend

70 or 80 days, however long you are out there it a huge privilege to be

in a wonderful part of the planet. You are talking about conditions of

-40 or lower. What does the cold do to you mentally and to your actions?

It affects everything. I remember many evenings in the 10th, where you

are melting snow to a quarter to drink and to make your food with --

in the tent. And as you melt the water, you get steam coming out from

the water. You have condensation from your own breath. I remember

days digging in the tent when the whole place would be in a kind of

fog and nobody could give anything to say to each other except how cold

we were. We couldn't see each other. We couldn't think of anything to

say. Mark, when you heard, in the film, Henry describing that moment

for Shackleton, the agony of turning back, does that perhaps tell you

something about why he himself left it so late? It is difficult to say,

but I think if you are travelling as a team, then when you get medical

conditions and you have other people to add their judgment to it, I think

if it was a team approach, the expedition would have stopped

earlier. But because Henry has got this tremendous drive and

determination in him, any injuries that come up, you think you can get

through it. I can't really speak for the situation, but I presume it was

sheer determination, that he thought he could get past it and reach the

final goal. And do you think that ultimately, that was where it went

wrong, that you lose your sense of judgment of how bad things have got?

Yeah, again, it is difficult to say, but I would say that you haven't got

anything to measure it against apart from yourself. So I think he pushed

it as far as he could and then literally, his body said Noel, I

can't do this any more. -- his body said no. The problem with great

explorers like Henry is that he has this real dog-eared British

determination to just go that bit further --. Determination. And it

might have been the ultimate decision, really. Caroline, when you

think how connected we all are all the time, in a way, that is what

makes a journey like this so extraordinary, the idea that you

don't see humankind, you don't have any contact. Is that what makes it

more attractive? That is part of the joy of it. You

are self-sufficient. If you're in a team, you have people to share

problems with and would can help with decision making. But even if

you're a small group, you're entirely self-sufficient in this

amazing wilderness, that is part of the appeal, yes. Thank you both very

much. The writer Ben Judah grew up

in London, but he says it's changed so much in recent years,

he no longer knows whether he loves In a new book, he attempts to get

beneath the surface of this new London, sleeping in subways

and squatting in a dosshouse, getting to know some

of the characters behind He made this film for us,

with some of the many people he met People see this place to be, like,

heaven. They think as soon as you arrive, you start plucking money off

trees and picking them from the floor, whatever. But it's entirely

different. I never dream of London. I can only see the buildings and

about the Royal Family in the movie. If you can call it British dream,

London dream, you name, it I think you can make it. This is the new

London. An immigrant megacity, where nearly 40% were born abroad. I was

born in London but I no longer recognise the city. I'm in search

the stories that make up its new soul. I'm currently working in the

cleaning industry. I'm a cleaner. How long is the commute? Takes me

about an hour. Who are the people on the train in the morning? Well, you

see a lot of people going to work, mostly immigrants. Going to work at

this time of the day. London is changing. Around half the street

sleepers are eastern European tramps. Is London difficult?

Difficult, yeah. I don't know English. I coming here, it's very

difficult. The people who coming here must speak the English language

first. After they find a job, England have the jobs. Nicolai is

off to find work. When it comes, it won't pay well. On the Romanian

black market, the lowest wage I saw was one chicken and chips for a

day's work. I don't have another solution, so I am on the streets. I

can't bank because I don't have address. When I go to the agency,

they want account bank to pay me. Where I go? I go in the street. He

touts for work on the kerb every day. This is the London I've

conculled, the city of beggars, black markets and doss houses. Why

do they come? Because for men of a trade, for the few, the London dream

can be real. I have literally ?250 in my pocket. I stayed in a room

with a friend of mine, which he was already here. And I went out

literally the next day to look for the job. I would stand on the corner

where you have all other chaps waiting for the work. I speak up

like the other people, that's how it worked those days. Every town in

Poland has its London son, the boy who made it. He inspires 100 more.

When all the Poles were coming, they were cautious about us. Now they're

much more open. They prefer us on the building sites. They prefer us

to do the building for them. Comparing to the native people. Fay

came from your home -- if I came from your home town and I asked -

should I come to London? What would you say? Yes, come over. I own three

companies at the moment. I've got some renting properties. I own a

house. I'm very happy. Do you think your children will be English first

or Polish first? Looks like they're going to be English first, because

we speak Polish at home, but they do speak English to each other. They

speak perfectly Polish, perfect English. But they still, I would

say, they are going to be more English than Polish. But mostly,

migrants clean, wait and guard the golden city, never to enter. Jesy is

from the Philippines. She works as a maid for the absentee owners of a

superflat. I have missed my family very much. I left my daughter when

she was one year and 11 months old. Because back home, I couldn't earn

money to support my family, so I have to make an arrangement with my

husband that one of us has to go and one has to stay to take care of my

daughter. She found work bringing up another child, a little boy. She was

a nanny. When the time came to go, she learned servants are never part

of the family. When it comes to the point that we need to say goodbye,

it's very hard for us this separation. I experienced it. Until

now, this boy still here if my heart. Are you still in touch with

the boy? The parents doesn't want them, doesn't want him to think

about me any more. So they told him that I left London. Yes. Because he

was crying and crying when I left. At night, London myrrh murmurs --

murmurs. To be poor this London is to be tired. For years, Wester

worked two jobs, cleaning day and night.

I had a dream of becoming a system engineer, Microsoft engineer. But

for now, I think I've gone astray. I'm still not giving up on my

dreams. I'm still working on it. I can't complain. I'm doing well in

the cleaning business. So, I can't complain. I'm not hungry. When you

told your friends in Ghana you were going to London, what did they say?

Everybody was happy. Like I said, some people back home think Europe,

once you step in there you become a rich man overnight. And even to

date, you still have some people calling and asking you for money.

Even if you tell them you are broke, no, you are not. When we see you

here, we know you're languishing, you know in riches and all that.

You're just being stingy because you don't want to send us no money. This

is what I want them to know that life is Notts all that milk -- not

all that milk and roses here in London. Did you find work today? I

don't. I don't find. Maybe tomorrow. Maybe tomorrow is another day. Every

day, it's another day, with a chance. The London gives one million

chance every day. Is it scary at night? It's all the crazy people.

Must be careful, in the night. The night is dangerous. London glows in

the villages of Africa, Eastern Europe and Asia, stirring up dreams.

Tempting, like the city of Oz. Senegal's most famous son,

Baba Maal has released his first album in seven years,

and he's in Britain performing it. Hes with us here,

tonight, with this song,