Cads and bounders

Governments over the world have taken vigorous action to support companies against the damage caused by the Covid19 lock-down. UK Chancellor Rishi Sunak has promised to do “whatever it takes”, laying out a mix of tax breaks, employee subsidies (‘furloughing’) as well as grants and loans to business: the Guardian[1] reported the Office for Budget Responsibility’s estimate that the total cost will exceed £100bn, with furloughing alone coming to £60bn[2]. It’s now thought to be up to £200bn. These actions have received broad support from across the political spectrum, but there is controversy about some of the recipients.

TaxWatch UK has analysed the Bank of England’s list of 53 beneficiaries of business loans, and found that 13 companies – receiving 29% of the money – had links to offshore tax havens (including Chanel in the Cayman Islands or Wizzair in Jersey), or sweetheart locations like the Netherlands (where tractor manufacturer JCB is registered). JCB paid family shareholders a dividend of £75m in 2018[3]. The BBC reports that Tottenham Hotspur have secured a low interest loan of £175m, despite being owned by billionaire tax exile Joe Lewis[4].

The Times[5] reported that two of the biggest beneficiaries of Covid emergency funding paid no UK tax at all.  CNH, which owns the Iveco lorry firm, borrowed £600m; the giant German chemicals group BASF claimed £1bn. Both companies claimed credits from the taxpayer in recent years, rather than paying in.  Another claimant, Baker Hughes, is a subsidiary of General Electric which is contesting an HMRC claim of £1bn tax fraud. “The disclosures have raised questions over why overseas corporations and wealthy individuals have been given what is effectively state aid”[6].

All of which refers back to my March post – yes, that long ago – which said we shouldn’t give help to misbehaving companies.  This preserves my reputation as the Cassandra of the blogosphere – the one who gives good advice that is never listened to. Bit like my consultancy career …

[1]  Guardian 30 April 2020 [2] Financial Times 4 June 2020 [3] Times 5 June 2020 [4]  [5] Times 6 June 2020 p45 [6] Times 5 June 2020 p31