11 May 2016
Lambeth Green Party has expressed disappointment at a move by Lambeth Labour to oppose new rules that would have seen Lambeth Council call tax dodgers to account.
Green Party councillor Scott AInslie has tabled a motion to be voted on at this month’s Lambeth Full Council Meeting (18th May) urging Lambeth Council to probe the tax practices of companies bidding for its business.
The motion is backed by Christian Aid and the Tax Justice Network.
However, Lambeth-Labour have tabled an amendment opposing the requirement, on the grounds that the council is trying to “remove the burden of bureaucracy” from those who are tendering for council contracts.
A growing number of UK councils are taking companies’ tax records into account when deciding how to award contracts worth tens of billions of pounds.
In December, members of Oxford City Council voted unanimously to investigate whether and how the council can include rigorous questions about companies’ tax practices in council procurement procedures.
Detailed tax compliance questions have already been adopted by Belfast and Lisburn and Castlereagh City Councils in Northern Ireland, as well as by the University of Oxford.
Local authorities in England alone spend around £45 billion a year on buying goods and services from third parties.
“It is extremely disappointing that once again Lambeth Labour isn’t listening to local people. It seems intent on pursuing policies you would expect to see from Conservatives. When awarding contracts, we want Lambeth Council to take companies’ tax records into account and discriminate in favour of those which have been socially responsible,” said Green Party councillor Scott Ainslie.
“Lambeth spends tens of billions of pounds on goods and services. This is taxpayers’ money, so it is only right that Lambeth choose to work with firms which pay their fair share of tax. This is what local people have said that they want.”
The law already requires local authorities to ask potential suppliers whether they have been found guilty of tax evasion. Lambeth Green Party wants local authorities to go further and also ask companies whether they have been found to have improperly avoided tax, in the UK or other countries.
Cllr Ainslie continued: “A growing number of UK councils are demanding that companies seeking contracts reveal whether they have been in trouble about tax, anywhere in the world. There is no reason why Lambeth should not be joining them.
“Companies’ tax decisions have a major impact on people’s lives, both in the UK and even more so in developing countries. When they use accounting tricks to pay less tax, there is less funding for public services at local and national level, including for schools and health services.
“At time when councils are struggling with ever deeper cuts to our budgets, it makes sense that we use our spending power to favour companies that pay their taxes. After all, it is companies’ and individuals’ tax payments that ultimately fund council budgets.”
Contact: Jonathan Bartley 07771 598097
The full text of Councillor Ainslie’s motion is as follows:
Council notes that:
• corporate tax evasion and avoidance are having a damaging impact on
the world’s poorest countries, to such a level that it is costing them
far more than they receive in aid
• this is costing the UK as much as £30bn a year
• this practice also has a negative effect on small and medium-sized companies who pay more tax proportionately.
Council further notes that the UK Government has issued Procurement Policy Note 03/14 (PPN 03/14) regarding tax avoidance and evasion. This applies to all central government contracts worth more than £5m.
Council also notes the existence of voluntary schemes promoting tax compliance such as the Fair Tax Mark, which can serve as an independent means of verification.
It further notes that in early 2015 new regulations required public bodies, including councils, to ask procurement qualification questions of all companies for tenders over £173,000 for service contracts and £4m for works contracts. However, these questions are not as detailed as the PPN 03/14.
Council believes that bidders for council contracts should be asked to account for their past tax record, using the standards in PPN 03/14, rather than the lower standards in the recent regulations.
Council therefore calls for procurement procedures to be amended to require all companies bidding for service contracts worth more than £25,000 and for works contracts worth more than £50,000 to self-certify that they are fully tax-compliant in line with central government
practice using the standards in PPN 03/14, applying to contracts of the size specified above.
Council asks the cabinet to publicise this policy and to report on its implementation annually.