Council votes to probe companies’ tax practices

Southwark Council will in future have to take companies’ tax practices into account when awarding valuable contracts for goods and services under moves agreed by councillors this month.

At a recent council meeting, the borough´s councillors voted unanimously to require potential suppliers to reveal whether they have recently been convicted of evading tax, or using tax avoidance strategies which are now disallowed, in a move championed by international development agency Christian Aid.

Local authorities in England spend around £45bn a year on buying goods and services from third parties. Southwark has already adopted policies on companies paying the London Living Wage and not giving contracts to companies that use trade union blacklisting.  Liberal Democrats have now called on the borough to choose to work only with firms that pay their fair share of tax as part of contracts let by the Council.

The law already requires councils to ask potential suppliers whether they have been found guilty of tax evasion. Christian Aid wants local authorities to go further and also ask whether companies have been found to have avoided tax in the UK or other countries, in line with the requirements made of companies bidding for central government contracts.

The decision will now go to the Council´s cabinet for final agreement.

Southwark Liberal Democrat Finance Spokesperson, Councillor Hamish McCallum, who tabled the motion said:

“Tax avoidance is a growing political issue and there is anger that some big companies find ways to reduce their tax liabilities.  Reduced tax revenue for governments means less available funding for vital public services in Southwark and also foreign aid budgets.

“In response to public concern, the UK Government introduced strict measures to reduce tax avoidance among private companies seeking government contracts.  Now we need to see this extended to local authorities too.

“Liberal Democrats believe in fairness and transparency in taxation and tabled this motion calling on Southwark to become one of the first local authorities in the country to include tax compliance criteria when awarding council contracts. 

“Councillors from all parties have now agreed that Southwark should take into account companies´ tax history when awarding its contracts.  I hope that the Cabinet will now ensure the Council is one of London´s first boroughs to have an ethical purchasing policy.”