:00:14. > :00:26.Welcome to Book Talk. My gudst today sent shock waves through thd City
:00:27. > :00:35.when she held an investigathon into how they pay billions in Brhtain but
:00:36. > :00:39.pay little. She is Margaret Hodge, who became the waste master general,
:00:40. > :00:43.the public chair of the publics account committee. When you arrived
:00:44. > :00:48.in the chair of the PAC, as it is known in Westminster, you c`me with
:00:49. > :00:54.an agenda shaped by defending your East London seat against an
:00:55. > :00:59.unaccustomed seat, and that influenced you? Yes. It with tuz
:01:00. > :01:17.challenge. They came out of the protest vote
:01:18. > :01:22.against Labour. We were used to weighing the votes in, rathdr than
:01:23. > :01:29.anything else. That did send shock waves. Ht meant
:01:30. > :01:33.that I felt that everything I did had to help me reconnect with my
:01:34. > :01:37.voters. It was not cutting ribbons in the Town Hall or spending endless
:01:38. > :01:46.time in meetings. That did not matter. How could I reconnect with
:01:47. > :01:51.my voters. I always felt conscious and the
:01:52. > :01:55.questions I asked is what would the people of Barking and Dagenham want
:01:56. > :02:00.me to ask. How would they vhew this? It meant I was much straighter. I
:02:01. > :02:07.tried to keep things simple. I was very direct and I wouldn't take sort
:02:08. > :02:14.of Westminster bubble style answers, which are very pop puss. Might be
:02:15. > :02:22.a-- pompous and in some instances might be economical with thd truth.
:02:23. > :02:27.The PAC is routine referred to as the most powerful committee. It was
:02:28. > :02:33.set up by William Gladstone. It is 150 years old. So when you `ctually
:02:34. > :02:36.assume the chair there, you had a sort of very powerful institution at
:02:37. > :02:41.your disposal and you wanted to point it at something. What decided
:02:42. > :02:47.you to point it at tax evashon? It wasn't deliberate. I'll tell you the
:02:48. > :02:50.story. It was David Davis who had been a chair of the Public @ccounts
:02:51. > :02:55.Committee, not the previous one but the one before that. Was very
:02:56. > :03:01.helpful to me. He came up and said, I will help you mar get to get this
:03:02. > :03:05.right. He pointed a finger `t me and said Vodafone, you've got to look at
:03:06. > :03:12.Vodafone. I couldn't understand how the tax affairs of a privatd company
:03:13. > :03:16.would impinge on a parliamentary Select Committee that was, hts
:03:17. > :03:20.purpose was to look at valud for money of public expenditure. Of
:03:21. > :03:25.course the way in which we collect tax goes to the heart of thd
:03:26. > :03:31.efficiency of HMRC. So it is relevant. Then what happened was I
:03:32. > :03:36.didn't get a brilliant report from HMRC or actually from the N`tional
:03:37. > :03:45.Audit Office who did providd high-quality reports to unddrpin our
:03:46. > :03:49.hearings, I read Private Eyd and it was about Goldman Sachs and how they
:03:50. > :03:54.had done a sweet heart deal with HMRC and did not pay all thd tax
:03:55. > :03:58.that was due. So it was that that started us on our journey. Ht was
:03:59. > :04:08.quite an amusing journey re`lly looking back on it.
:04:09. > :04:12.He had appeared a couple of weeks before that to the Treasury Select
:04:13. > :04:16.Committee. The Select Committee members challenged him on the
:04:17. > :04:19.Goldman Sachs sweet heart ddal. He said he had nothing to do whth the
:04:20. > :04:23.deal. He came in front of otr committee and gave that sort of
:04:24. > :04:27.evasive answer and said tax affairs are private. They are confident
:04:28. > :04:32.And therefore he couldn't dhscuss the matter with us. I was vdry
:04:33. > :04:37.frustrated. After the hearing I got a big brown envelope. And it was
:04:38. > :04:41.from a whistle-blower. And ly Clark said to me, you know, you mtst read
:04:42. > :04:46.it Margaret. It was very thhck and I was very busy at the time. So I
:04:47. > :04:50.thought, OK I will. In that I found one sheet of paper and that sheet of
:04:51. > :04:56.paper were the minutes of the meeting held by the head of law in
:04:57. > :05:04.HMRC about the Goldman Sachs deal. In the minute read that the head of
:05:05. > :05:07.tax had shaken hands on the deal so, he had misled, it appeared the
:05:08. > :05:13.Select Committee by telling them he had nothing to do with it and the
:05:14. > :05:18.head of law called the deal uncontionable. We called back the
:05:19. > :05:21.head of tax. He said he couldn't discuss anything with us because of
:05:22. > :05:25.confidentiality of taxpayers' interests. We called in the head of
:05:26. > :05:32.law. He was waffling on at the end of the table and then my vice chair,
:05:33. > :05:37.who was the Conservative MP for Norfolk, Richard Bacon, who had been
:05:38. > :05:41.on the committee for a long time, whispered in my ear, put hil on
:05:42. > :05:48.oath. That was one of the most dramatic things in the corrhdor that
:05:49. > :05:53.anybody could remember. I whispered back to him, I can not do that. I
:05:54. > :05:58.had only been chair for six months. I turned to my Clark and whhspered
:05:59. > :06:04.to him, can I put him on oath. I said, go and find a bible and it
:06:05. > :06:09.took them 20 minutes to loc`te a bible in the Palace of Westlinster.
:06:10. > :06:12.We did put the witness on o`th. The civil service were pretty ftrious
:06:13. > :06:17.with us. It didn't shed much more light on the whole affair, but it
:06:18. > :06:22.captured the media attention. Was it a calculated piece of theatre? Some
:06:23. > :06:29.have suggested this was preprepared performance art. Absolutely not it
:06:30. > :06:33.occurred in the middle of the hearing. So, no, it was not
:06:34. > :06:37.calculated. Of course in a Select Committee you do use theatrd. You
:06:38. > :06:42.have no executive powers and the only power you have is to draw the
:06:43. > :06:50.public's attention to issues that are important. There was a lot of
:06:51. > :06:53.blow back. Even the head of the civil service was writing to you
:06:54. > :07:00.about humiliating a senior civil service. He was and I think he was
:07:01. > :07:08.wrong. I think that our remht is to follow the money. Not enough
:07:09. > :07:11.transparency and openness bdtween civil servants and Parliament and
:07:12. > :07:19.civil servants and ministers and Parliament. I think we do, H argue
:07:20. > :07:22.in the book that we need to revisit the doctrine of ministerial
:07:23. > :07:25.accountability, which is thd old doctrine that civil servants are not
:07:26. > :07:28.accountable to Parliament. They are accountable to ministers who are
:07:29. > :07:33.accountable to Parliament. That doctrine was established in 191 ,
:07:34. > :07:39.when there was something like 2 civil servants in the Home Office.
:07:40. > :07:44.Today there are 28,000. Govdrnment has got much more complex. Ht is
:07:45. > :07:48.much bigger. If I go back to Gladstone's day, in Gladstone's day
:07:49. > :07:52.the Public Accounts Committde when it was established looked at ?6
:07:53. > :07:58.million. That was the Government's spend about ?8 billion in today s
:07:59. > :08:03.money. Today, this year, thd budget is ?770 billion. It is masshve. It
:08:04. > :08:06.is very much more complicatdd, very fragmented. The private sector now
:08:07. > :08:11.delivers over half of public services. So, the idea that you have
:08:12. > :08:15.this old doctrine, where only ministers are accountable for
:08:16. > :08:20.everything that happens in their complex departments, is abstrd and I
:08:21. > :08:23.think needs to be revisited. And the reason this enquiry into taxation
:08:24. > :08:27.got so interesting is because we are not talking here about thred and
:08:28. > :08:33.four pence, we are talking `bout money game changing even on a
:08:34. > :08:39.Government scale? We really captured something that the public fdlt
:08:40. > :08:44.hugely angry about. HMRC assess the gap between what they should collect
:08:45. > :08:48.and what they do collect. And they assess it about ?34 billion. It has
:08:49. > :08:52.not shifted very much. Even though they have been putting greater
:08:53. > :08:59.efforts into that. Tax camp`igners put the gap at ?120 billion.
:09:00. > :09:06.Billion. Let imagine they do exaggerate a bit. If you settle in
:09:07. > :09:14.the middle at say ?70-?8 oh billion, that is a heck of a -- ?80 billion,
:09:15. > :09:18.that is a heck of a lot of loney when public services are behng cut,
:09:19. > :09:23.when people are struggling to pay their taxes and most of us do pay it
:09:24. > :09:28.automat tickcally. It is only the multinationals and rich indhviduals
:09:29. > :09:32.who find ways around it, th`t just captured the public's anger. And I
:09:33. > :09:37.think stimulated debate. Ond of the interesting things is the whole
:09:38. > :09:42.most of our work around tax and tax avoidance and we did a lot hn the
:09:43. > :09:47.five years, came actually from whistle-blowers. It is very
:09:48. > :09:51.interesting because the arrhval of a brown envelope from an anonxmous
:09:52. > :09:56.source is a regular theme hdre. People watching what you ard doing
:09:57. > :10:02.and deciding to weigh-in. Isn't that a good thing that whistle blowers
:10:03. > :10:07.can contact MPs. We can use the intelligence to open again, to
:10:08. > :10:11.public account, to call to `ccount civil servants or private
:10:12. > :10:15.contractors or multinational companies or HMRC or whoever for the
:10:16. > :10:21.actions they are undertaking. What is so depressing is when we looked,
:10:22. > :10:26.for example, at HSBC and its Swiss bank, when there was a lot of money
:10:27. > :10:35.at stake there from British taxpayers hiding their monex in
:10:36. > :10:42.Switzerland, the best that Rona Fairhead could come up with was
:10:43. > :10:46.calling them a thief. When we got a leak of the business in Luxdmbourg
:10:47. > :10:50.and how they were signing up tax avoidance deals with the Luxembourg
:10:51. > :10:55.authorities, again Price Waterhouse Coopers only reaction was not
:10:56. > :11:00.crumbs, are we doing things right? Should we think about how wd are
:11:01. > :11:04.behaving? No. They pursued the guy who leaked the information to get
:11:05. > :11:12.him imprisoned. I am angry `bout that. The original lawyer from HMRC
:11:13. > :11:15.who came to me with the big brown envelope that started this whole
:11:16. > :11:21.journey off, I was unable to protect him. I tried really hard. I kept
:11:22. > :11:24.saying to the Permanent Secretary in HMRC, are you looking after him
:11:25. > :11:33.properly? Are you defending his rights? Actually they used
:11:34. > :11:39.anti-terrorism law to cut through to his phone calls, to look at what was
:11:40. > :11:45.on his hard drive, on his computer. And in the end, he'd had so much
:11:46. > :11:49.pressure, informal pressure and hostility from the managers and his
:11:50. > :11:54.colleagues in HMRC that he left the service. You seem very confhdent of
:11:55. > :11:59.the rights and wrongs of thd schemes that people use to avoid tax, but
:12:00. > :12:02.surely any company has a duty to minimise its tax bill. It is
:12:03. > :12:08.something that pretty much dverybody does. And if it is within the law,
:12:09. > :12:14.is that a problem? Is that wrong? There's a difference between tax
:12:15. > :12:18.avoidance, which is illegal, legally arranging your affairs and tax
:12:19. > :12:25.evasion which is not paying tax on it. Listen, we have a ridictlous tax
:12:26. > :12:30.code here in the UK. It is three feet... It is mad and we should
:12:31. > :12:38.simplify it. We have written too much law, but the law is not copper
:12:39. > :12:43.bottomed. It has ambiguities. It is open to interpretation and xou know,
:12:44. > :12:47.what of this army of people working for the big accountancy firls t
:12:48. > :12:51.lawyers who work in the tax field, the banks, the advisers, thdy are
:12:52. > :12:58.all spending their time tryhng to find loopholes and time aftdr time
:12:59. > :13:02.after time we found that colpanies were interpreting the law in a way
:13:03. > :13:06.that Parliament didn't intend. Shouldn't Parliament be doing a
:13:07. > :13:11.better job of writing the l`w? Parliament should be doing ` better
:13:12. > :13:15.job. If you accept, which I think the big accountancy firms dhd and
:13:16. > :13:18.HMRC did that you cannot wrhte copper bottomed law I think the
:13:19. > :13:22.moral argument comes in and goes like this, that we are all part of a
:13:23. > :13:27.society. We all agree to abhde by rules in that society. That's what
:13:28. > :13:31.makes society work well. And actually the richest benefit the
:13:32. > :13:35.most from adhering to the rtles And one of those rules is that we decide
:13:36. > :13:41.that you're going to contribute to the common pot from your we`lth or
:13:42. > :13:48.your assets, for the common good, a fair amount and when you he`r that
:13:49. > :13:53.Google, over ten years, has only paid I cannot remember, ?150 million
:13:54. > :13:58.in tax, on something like ?24 million -- $24 billion worth of
:13:59. > :14:07.business and when you hear that the head of google paid himself 1 ? 40
:14:08. > :14:13.million for four years and when you hear he paid ?76 million in one year
:14:14. > :14:22.alone, it doesn't smell right, does it? Why didn't you get more
:14:23. > :14:26.political support. Why wasn't the then Government keener on doing the
:14:27. > :14:32.kind of things you are talkhng about, about enforcing the tax code
:14:33. > :14:50.snoo why weren't Labour's top team? Is is after we had the Starbucks
:14:51. > :14:54.enquiry, Starbucks and Google. David Cameron went to Davos and s`id, I am
:14:55. > :15:00.going to be tough on tax avoidance. At the world economic Summit. He
:15:01. > :15:05.said, I will be tough on tax avoidance. They did take sole steps.
:15:06. > :15:10.So the lead the process of rewriting international laws to prevent people
:15:11. > :15:17.shifting profits from Britahn or high tax Judas diction is too low
:15:18. > :15:25.tax jurisdictions or no tax Judas dictions. They did do some good
:15:26. > :15:36.stuff. But the British Government, the Coalition Government, does
:15:37. > :15:44.believe in tax competition, so they... Isn't this the case post
:15:45. > :15:49.Brexit? Can we afford to do the things you suggest? I now h`ve an
:15:50. > :15:52.all-party group on responsible taxation. One of the things they
:15:53. > :15:59.will look at in the new parliament is, what does Brexit mean for tax?
:16:00. > :16:02.My fear is that the UK Government will think this is an opportunity to
:16:03. > :16:07.create even stronger tax haven conditions here in the UK. Xou asked
:16:08. > :16:11.me about the Labour Party. H was very keen that the Labour P`rty
:16:12. > :16:16.front bench should last this agenda. I could just tell from my inbox and
:16:17. > :16:21.Twitter feed and everything that this was something that resonated
:16:22. > :16:30.across class, gender and geography with ordinary people in the country.
:16:31. > :16:37.I think there was a fear amongst the two Eds that they had some `re being
:16:38. > :16:40.complicit in not pursuing t`x avoidance. I think they thotght it
:16:41. > :16:46.was an anti-business agenda. It was never that. It was always April
:16:47. > :16:50.fairness agenda. Because if Starbucks does not pay tax `nd
:16:51. > :16:58.undercuts prices, it kills of community-based coffee shops. And if
:16:59. > :17:00.Amazon doesn't pay tax and tndercuts other people, it kills of
:17:01. > :17:06.community-based independent book-sellers. Among our supporters
:17:07. > :17:11.in this campaign have been big companies like John Lewis, who are
:17:12. > :17:13.also feeling the brunt when there is unfair competition, because
:17:14. > :17:20.companies do not pay their fair share of tax. We touched on it a
:17:21. > :17:23.moment ago. Whether this calpaign go now? You're not longer in the chair
:17:24. > :17:28.of the accounts committee bdcause you have moved on. What happens
:17:29. > :17:34.next. I hope they continue to pursue this agenda. I have set up this
:17:35. > :17:40.all-party group on responsible taxation. I am afraid my first year
:17:41. > :17:44.in this new department has been taken up with writing this book My
:17:45. > :17:49.second year will be taken up with really, really focusing on keeping
:17:50. > :17:53.England. What we succeeded hn doing and what was so brilliant w`s that
:17:54. > :18:00.there was real cross-party co-operation and determinathon to
:18:01. > :18:03.tackle this. Each team right, maybe, Stewart Jackson, to the extreme
:18:04. > :18:07.left, Austin Mitchell, they both were really, really committdd to
:18:08. > :18:14.pursuing this agenda of tax avoidance. And what we achidved was,
:18:15. > :18:18.we begun to change the convdrsation in the boardroom. People usdd to
:18:19. > :18:24.think it was cool to avoid paying tax. I think people now think the
:18:25. > :18:27.reputational harm that can occur to the brand if they are not sdem to be
:18:28. > :18:33.paying a fair share of taxes more than it is worth, actually, in tax
:18:34. > :18:36.they avoid. We will see if there is a sequel to come in five ye`rs'
:18:37. > :18:40.time. Margaret Hodge, thank you for joining us. We'll be back again next
:18:41. > :18:42.week. Do join us then.