Former finance watchdog chair calls for closed hearings into tax collection

By on 08/03/2016
Margaret Hodge is the former chair of the House of Commons’ Public Accounts Committee

The UK government should allow parliamentary committees to hold closed hearings into tax issues, the former chair of the House of Commons’ Public Accounts Committee said last week. Margaret Hodge argued that this would improve public scrutiny of tax collection without compromising taxpayer confidentiality.

Hodge, who chaired the MPs’ financial scrutiny committee between 2010 and 2015, also argued that HM Revenue & Customs has been “captured” by accountancy and tax advice firms.

“The new man they’ve put in as head of tax, when he was in the private sector 10 or 11 years ago he wrote an article in the Financial Times saying that tax is legalised extortion,” she said in a reference to Edward Troup, the tax assurance commissioner lined up to become HMRC’s new executive chair. “So [HMRC officials are] captured by them, all their advice comes from a very narrow field. And there’s a real problem with HMRC: it is a non-ministerial department, so it doesn’t have a minister, and it won’t share information because of taxpayer confidentiality.”

These concerns around taxpayer confidentiality could be addressed by barring the public from some parliamentary committee evidence-gathering sessions, said Hodge – pointing to the work of Parliament’s Intelligence and Security Committee, which scrutinises the intelligence agencies. “That never leaks – nobody ever hears anything about that – and it would be a way of creating proper accountability,” she said. “At the moment, too many people have lost trust [in the idea] that we’re all equal in front of the tax officers.”

The government should also ban companies that avoid tax from winning government contracts, she said: “We have to reform HMRC so they become much more assertive, aggressive, properly staffed, and really can chase taxpayers. I don’t think we should give contracts to people who don’t pay their tax.”

Speaking at a Strand Group event run by Kings College London’s Policy Institute, Hodge expressed horror at “the sheer extent of mindboggling, unconscionable waste that there is in public expenditure”, and complained that the government is “institutionally incapable of learning from past mistakes, partly because there’s no structure to do that – everybody works in silos, the departments are very separate; there’s no strong financial centre where you could get some learning; the finance function doesn’t in any way replicate the finance function you’d see in a complex organisation in the private sector.”

The civil service lacks the skills to run services and manage contracts, she said: “That old culture of focusing on policy formulation rather than programme delivery still holds too strongly in too many parts of government, so there are too few commercial skills, project management, finance, IT, and nobody stays in a job for long enough – you get promotion in the civil service by moving every couple of years, but a lot of these projects are long term and need you to stay there from beginning to end.”

Politicians are also at fault, she said – with ministers focused on short-term goals linked to the electoral cycle, and the departmental select committees more interested in examining new policies than auditing the effectiveness of past ones. “We as a political class are completely obsessed with new policies,” she said. “We tried really hard to encourage [departmental] select committees to take the reports produced by the National Audit Office and do the sort of exercise that we were doing in much greater depth. But we never got that going, because everybody likes to think about the next policy and the new policy.”

“Value for money ought to matter more to all politicians, and it doesn’t,” said Hodge. “It doesn’t matter to ministers – they all want new initiatives and don’t care about implementation – and actually I’m not sure it matters to civil servants.”

Asked to comment, an HMRC spokesperson said: “The law imposes obligations on HMRC that protect the confidentiality of all taxpayers’ affairs, large or small. That is why we don’t publicly disclose the details of particular tax enquiries or how they are resolved. But HMRC is transparent about how we conduct enquiries and resolve disputes. Every year our tax assurance commissioner [Edward Troup] publishes a report about how we have resolved disputes during the year, which provides transparency about how HMRC is performing in this area.

“We are committed to being as open and transparent as we can within the constraints of our statutory duty of taxpayer confidentiality.”

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See also:

UK departments and professions to win pay freedoms

New ‘PropCo’ heralds spiralling Whitehall rents

About Matt Ross

Matt is a journalist and editor specialising in public services, policymaking, government and management. He was the editor of trade title Civil Service World from 2008 to 2014, serving an audience of senior UK officials; and the features editor of weekly news magazine Regeneration & Renewal between 2002 and 2008, covering urban regeneration, economic growth and community development. He has also been a motoring and travel journalist, and now combines his role as editorial director of Global Government Forum with writing for other publications including The Guardian and Planning magazine.

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