New Times,
New Thinking.

  1. Business
  2. Economics
3 December 2012

Osborne isn’t increasing funding for HMRC – he’s cutting it

The Chancellor's £154m "blitz" on tax avoidance will do little to compensate for £2bn of cuts.

By George Eaton

With two days to go until his Autumn Statement, George Osborne is attempting to convince the public that he’s launched a “blitz” against tax avoidance. The Chancellor has announced £154m of funding for HMRC to draft in an “army of investigators” to target those companies, like Google, Amazon and Starbucks, who, in the words of the Commons public accounts committee, pay “little or no corporation tax here”.

Osborne said:

The government is clear that while most taxpayers are doing their bit to help us balance the books, it is unacceptable for a minority to avoid paying their fair share, sometimes by breaking the law. We are determined to tackle this problem and HMRC are making good progress, but we are giving them additional tools to bring in more.

But what the Chancellor won’t say is that the £154m will barely begin to compensate for the cuts he’s made. In the Spending Review in 2010, Osborne announced that funding for HMRC would be reduced by 16.5 per cent (£2bn), including 10,000 job cuts. By 2015, staffing levels will be at an all-time low of 56,100, significantly limiting HMRC’s ability to collect taxes. A report earlier this year by the public accounts committee found that job cuts among revenue officials meant the government collected £1.1bn less in tax than it would otherwise have done. “We are not convinced that the decision to reduce staff numbers working in this area in the past represented value for money for the taxpayer,” it said.

The cuts didn’t begin under Osborne – staff levels fell from 97,073 in April 2005 to 66,992 in November 2010 as a result of spending reductions made by Labour – but he has made the problem worse. So, while £154m of funding is welcome, as far as these things go, it’s unlikely that Google will be losing any sleep. 

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com
Visit our privacy Policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

Content from our partners
The Circular Economy: Green growth, jobs and resilience
Water security: is it a government priority?
Defend, deter, protect: the critical capabilities we rely on