It’s a cold day on Oxford Street, at the height of one of the busiest shopping weekends of the year: lunchtime on the Saturday before Christmas. The streets are full of shoppers trying to rack up their final quota of presents before the final few days of Christmas. But at the Topshop flagship store on Oxford Circus, there’s a bit more enthusiasm on display. A crowd of protesters, camped out in the jewellery section, are waving printed-out A4 posters and chanting, ‘Phillip Green! Pay your tax!’ Organized by UK Uncut, the ‘sports day’, featuring whistles and star-jumping, tries to draw the link between school sports cuts and tax avoidance.
Even the police watching the protest from inside the shop are grinning at the chants and the singing. The security guards, though, are grim-faced, although they seem to be enjoying themselves as they drag unco-operative women out through the hosiery department, and eject them out of a back door. It probably beats a Saturday spent eyeing shoplifters, anyway.
Phillip Green has not, technically, done anything illegal. The Arcadia group is registered in the name of his wife, Tina, who is legally resident in Monaco. She picked up a dividend of around £1.14 billion (US$1.7 billion) in 2005, thereby avoiding paying £300 million ($465 million) tax that would have been owed had it gone to Phillip Green directly. For UK Uncut, though, it’s not the legality but the hypocrisy that they object to: the fact that Green is in the position of advising the government on public service efficiency, despite using the vast resources at his disposal to find ways to avoid tax. As Alan Finlayson points out in an article at opendemocracy.net, Green’s argument echoes the one made by MPs over expenses claims – it might have looked bad, but it wasn’t illegal.
A positive public response
A couple of weeks after the Saturday protest, I sit down in the pub with Tony Smith, a teaching assistant at a north-west London primary school and member of UK Uncut. Although newspapers have made much of the attempts to disrupt shopping and close stores on one of the busiest weekends of the year, he believes the response on the high street has been good.
‘We’ve been overwhelmed by the public response. I mean – we are the public in a sense. Everyone who comes to our protests is not part of a group, or part of an organization – they come to these protests because they feel strongly about it. At the first protest we ever did for UK Uncut – we shut down Vodafone, the flagship store – the people walking past on the street could not believe the kind of figures we were talking about. They were such staggering figures.’
It’s not the legality but the hypocrisy that UK Uncut object to: the fact that Phillip Green is in the position of advising the government on public service efficiency, despite using the vast resources at his disposal to find ways to avoid tax
Vodafone’s part in this has been to cut a deal with HMRC (Revnue and Customs) for a long-running tax disagreement over money it made during a deal to buy a German phone network, by channelling funds through banks in the Netherlands. The government won a crucial legal case in 2009, which put it in a strong position to claim back what some have suggested could amount to £6 billion ($9.3 billion) worth of lost tax. The magazine Private Eye found that Vodafone itself had put aside £2.2 billion ($3.4 billion) to pay the bill. Despite strong legal advice from its own team suggesting that the full amount could be recovered, HMRC settled for £1 billion, in instalments.
Unsurprisingly, over a hundred other companies who were waiting to see the outcome of the Vodafone case are now clamouring to be let off their own use of the same loophole. While the court judgement opened the way for the loophole to be closed, the precedent set by HMRC’s settlement with Vodafone has seriously undermined the ability to collect any other tax owed through the same offshore arrangements. It’s been reported that HSBC, for instance, are hoping to make similar arrangements for tax they avoided via offshore transfers.
Since HMRC are at the centre of the tax farrago, I ask Smith if UK Uncut will consider targeting them. He’s not keen on the idea. ‘I agree it’s the government’s job to reclaim that money. Revenue and Customs are in a difficult position. Some members of their staff work incredibly hard and bring a huge amount of money into this country. The government is actually choosing to cut the funding to Revenue & Customs by, I think, a third, which is ridiculous because for every pound invested in Revenue & Customs they’re making back – figures differ, but some people say 60 times that amount, up to a 100 times that amount. The government puts pressure on Revenue & Customs depending on which way it wants to go on these things. So it’s really the government we need to focus on.’
On 6 December the government announced a study group to look at the feasibility of introducing a GAAR (General Anti-Avoidance Regulation), which would give HMRC greater leeway in deciding whether or not a particular tax-avoiding procedure is acceptable or not. For instance, in the case of Australia’s version of the GAAR, if a procedure is performed only or primarily in order to avoid tax, it’s unacceptable. However, the study group is not due to report its findings until October 2011, and even then might find the scheme unworkable, so there are unlikely to be changes soon. Richard Murphy, an accountant and tax justice campaigner who runs taxresearch.org.uk, believes the measure is promising. However, he suggests that it might not come to much: ‘The fact that this issue is on the agenda is promising. It did, however, come from the Liberal Democrats and does not seem to have the backing of most Treasury Ministers, so whether there will be real progress is hard to tell.’
Rhetoric and reality
Since they entered the public eye, UK Uncut have been characterized across the media as, primarily, advocates of tax justice (although they’ve also been called anti-capitalists and anarchists – which might be handy catch-all names for protesters, but seems an odd thing to name a group that calls for the rule of law and government powers to be upheld). Tony Smith insists that although it’s an important message, it’s not their main one.
‘UK Uncut has often been described as a tax justice campaign [which] I think reflects that it’s been tapping into long-running campaigns by NGOs, academics, journalists, against tax avoidance. And we kind of tapped into that and helped push it to the fore. But UK Uncut is primarily a direct action group opposed to the government cuts. That’s the main focus of our attention and that’s where at the moment energy needs to go – that’s where the fight is right now in British politics.’
Linking tax avoidance to public service cuts is a way of pointing out the disparity between the government’s rhetoric of solidarity and the reality: that those at the bottom of the income scale are paying proportionately far more than those at the top
The coalition government’s slogan for the cuts, ‘We’re all in this together’, is the real target for UK Uncut – they want to change the debate around public service cuts. Linking tax avoidance to public service cuts, then, is a way of pointing out the disparity, as they see it, between the government’s rhetoric of solidarity and the reality: that in fact those at the bottom of the income scale are paying proportionately far more than those at the top. As an anti-cuts group rather than an anti-tax-avoidance campaign, they’re mostly interested in making the point that cuts in public services are not necessary (as the government insists they are).
‘I think it’s very important that we highlight specific cuts, but also that we focus on the wider narrative, which is that these cuts are based on a government lie. That these are very much a political choice by the politicians in charge of this country, and not a necessity as they say.’ I ask him whether the protests will continue indefinitely. There are, after all, already protests listed on the UK Uncut website for 8, 14, 15 and 29 January, in different locations across the country, planned by individuals rather than a central group, and organized via Twitter and Facebook. He believes they will only get stronger as public service cuts begin to take effect.
‘We’ve managed to bypass hierarchies by utilizing social networks, to create these horizontal bonds and groups. It’s just incredible to see the amount of networking that’s gone on, in such a small amount of time. Just to suddenly feel like we’re part of something larger and we’re making it ourselves. We’re not waiting for someone to tell us how to proceed, we’re working it out as we go along. We’re not waiting for someone else to organize a march or make speeches – we’re doing it ourselves.’