A TREASURY minister has warned that the British population will pay the price if Britain becomes hostile to business.
Speaking during a visit to Leeds, David Gauke told The Yorkshire Post that “anti-business rhetoric” coming from the Labour Party “could ultimately cost us growth and jobs”.
A war of words has broken out between the Opposition and some business leaders following suggestions by the head of retail giant Boots that a Labour government could be a “catastrophe” for the UK.
Mr Gauke said it was “for voters to take their own view” on whether they should listen to the views of a Monaco-based billionaire on what is right for the country.
But he added: “The point that he made and indeed many other business people have made over recent days that the anti-business rhetoric coming from the Labour Party is one that is dangerous for the UK and could drive business away.”
Business leaders including Digby Jones, Stuart Rose, Luke Green and Brent Hoberman joined Stefano Pessina, the chief executive of Walgreens Alliance Boots, in criticising Labour this week.
Mr Gauke said: “Businesses have choices as to where they locate a lot of their activities and if the UK doesn’t provide an environment that is attractive for businesses, that provides them with certainty and stability, with competitive tax rates and a general sense that we are welcome to investment, then the cost of that will be paid by the British people who will find fewer opportunities for jobs and we won’t see the investment we need to drive productivity, growth and jobs.”
As Financial Secretary to the Treasury, the former City lawyer is responsible for oversight of the UK tax system and HM Revenue and Customs.
Mr Gauke said: “We have done a lot as a Government on ensuring that all taxpayers, including multinationals, pay the tax they should do under the law.
“A lot of this is about how the international tax system works and we have been a leading voice in trying to reform that.
“For the past year or so the OECD (Organisation for Economic Co-operation and Development) has been involved in a project called Base Erosion Profit Shifting and we are already implementing elements of BEPS.
“That is moving in the right direction and it was very much David Cameron and George Osborne who instigated that.
“We are also taking measures at a domestic level and at the Autumn Statement we announced the diverted profits tax.
“That’s where multinational business engage in contrived and artificial arrangements to export their profits to a low-tax jurisdiction.
“Where they engage in such a behaviour they could face a 25 per cent charge on those profits, as opposed to corporation tax, which is a rate that is coming down to 20 per cent in April.”
Mr Gauke claimed that a balance can be struck between being friendly to business and also ensuring that multinationals make a fair contribution.
He said: “Yes to having competitive tax rates but we don’t expect people to get out of paying those tax rates because of contrived and artificial arrangements which are not consistent with the spirit of the law, the way we intended those arrangements to be put in place.
“That’s not fair on the vast majority of businesses who do play by the rules and the spirit of the rules and it is right that we take action to deal with that.
“That’s why we have also given HMRC the resources to ensure that large businesses are properly scrutinised and pay the taxes due as well as the various law changes... domestically or internationally.”
During his visit, Mr Gauke met with representatives from SMEs who he said were cautiously optimistic about their prospects although some manufacturers were concerned about the situation in the euro zone.
He said there was a lot of optimism about the tech sector and “the sense that Yorkshire and Leeds in particular is moving in the right direction and upfront and increasingly is a very attractive place to do business”.
Mr Gauke also visited the Morley and Outwood constituency of Shadow Chancellor Ed Balls.
No comment from Labour, but here’s what they said earlier
The Labour Party did not respond to calls for comment from The Yorkshire Post, but earlier this week defended its remarks about business and its responsibilities.
Labour leader Ed Miliband said Stefano Pessina, the acting CEO of Walgreens Boots Alliance, “ought to pay his taxes” rather than “lecture people” on how to vote.
Mr Miliband also vowed to stand up to “powerful forces who aren’t paying their taxes”.
The Monaco-based billionaire had prompted outcry in the Opposition ranks by suggesting a Labour government would “not be helpful” and could lead to “catastrophe”.
Business Secretary Chukka Umunna told The Guardian that Labour is “not spoiling for a fight or seeking a confrontation with business”.
He said: “Everyone should be rewarded for their effort, but you cannot demand government deliver infrastructure, a skilled workforce and deal with the deficit, and not pay your fair share of taxes.”
Katja Hall, at the Confederation of British Industry, said business people should not be deterred from entering political debate.