Margaret Hodge is a Member of UK Parliament affiliated with the Labour Party. She spoke with the HPR about her efforts to revamp taxation policies in the UK.
HPR: You are currently the Chair of the Public Accounts Committee. What would you say were some of your greatest accomplishments while on this committee?
MH: We have shined a light on the issue of whether or not there is a fair tax system and whether or not global corporations and high network individuals pay their fair contributions for the common good. We have stimulated a debate both in the UK and elsewhere on taxation. Have we changed the world? Not yet. But we have changed the nature of the debate so that corporations don’t automatically think they can use extreme and excessive tax avoidance policies.
HPR: Your committee has been prosecuting multinational corporations such as Amazon, Google, and Starbucks for taking advantage of global tax structures. Do you think that this is the fault of the companies or the fault of the governmental institutions that created the laws that enabled these types of abuses?
MH: I think it’s both. Clearly governments establish a tax to encourage a certain behavior and achieve a purpose. If that then gets abused, it’s partly our fault for devising the law badly. But the law is not black and white. Were it so, you wouldn’t have an army of consultants and lawyers running around devising new ways of avoiding taxes. It’s a bit of a David and Goliath battle where tax authorities are not well funded whereas the top four private firms have three times as many experts and resources.
I’ve been arguing that taxation is not much of a moral issue but more of a legal issue. And the onus is on us to get the law better and simpler. But there is also a duty on multinational companies to pay their fair share of profits into the common good. They need the common good.
HPR: What can we expect to see come in the near future from your committee?
MH: We’ve got to carry on working really hard right up to the election. We are looking very closely at welfare reform, which is in a mess. We are unraveling that and exposing that to the public gaze.
We will carry on with tax reform and tax relief. Lots of money is lost in the Treasury and in ways that isn’t intended. There are over 1000 tax reliefs in the UK tax code at the moment, and that is just mad. So we will be doing a lot of work on that. We are not ready to give up on that.
We always have to pick up scandals that occur. There has been a scandal recently over the way in which the government has tried to privatize the recruitment of people to its armed services. It has been a complete disaster, and we have to pick that up and do a quick report on that. Similarly, we will be looking at transportation and infrastructure in London where the contract failed to deliver what was intended and has brought massive increase in costs.
HPR: How would you compare politics in the UK versus politics in the United States?
MH: I did a very quick trip with my committee to Congress to see how scrutiny was carried out there. I think you are much more partisan than we are. My committee is always chaired by a member of the opposition, in this case Labour, and it reflects Parliament so the majority of my members are Conservatives. Yet we produce about 50 reports a year that are all unanimous. We try and leave our crude party politics at the door and really work for interests of the taxpayer.
Both parties have a commonality of purpose. The Left believes in the worth of public expenditure and equal life chances. The Right wants to cut public spending so they can get the best value they can in a smaller and more efficient state. But, we are much less partisan than you are, and I think that is a strength in the UK system. There is not as much unquestioning party loyalties. People are much more willing to think for themselves and for the interests of their constituents rather than being tribal.
You are much more resourced, however. I have nothing. Out of my parliamentary allowance, I have one researcher. That is very frustrating.
This interview has been edited and condensed.
