Green Party Co-leader Adrian Ramsay. Wikipedia CC.
The IFS (The Institute for Fiscal Studies) have today warned that 250,000 children will be hit by the two-child benefit cap next year, rising to an extra half a million by 2029. Green Party Co-Leader, Adrian Ramsay, responded saying,
“Greens have unequivocally pledged to scrap the two-child benefit cap in our fully costed manifesto.
“Today I am urging the Labour Party to show real strength and conviction and join us in making this pledge.
“This one decision could lift 250,000 children out of poverty.
“The power to do this will be in Labour’s hands.
“But I want to be very clear.
“If they fail to do this, elected Green MPs will not let this rest.
“We will push them every day of the next parliament demanding that they do what is right.
“That is what a Green vote will enable – voices in parliament to keep Labour honest on these important issues.”
The bank has funded the companies behind a controversial pipeline and aggressive oil expansion as part of their commitment to fighting climate change
Barclays has been branded “totally dishonest” by one of its investors for calling tens of billions of dollars for fossil fuel companies “sustainable finance”.
The UK high street bank says it is helping to address climate change by raising $1 trillion in sustainable and transition finance by 2030. This includes sustainability-linked loans and bonds, in which a company agrees to meet certain climate-related targets or else face a higher interest rate.
But these targets can be weak and the penalties for failing to meet them paltry. The company can also use the money raised how it sees fit, meaning supposedly sustainable finance could fund polluting activities.
Andrew Harper of Epworth, an investment manager owned by the Methodist church that invests in Barclays, said: “We’re concerned because the bank is making such a substantial claim and the public thinks the climate emergency is being worked towards being solved. Meanwhile, the problem is getting worse and worse. We think it’s totally dishonest.
“If they are calling the financing of any fossil fuel companies sustainable finance, that to me is greenwash.”
Barclays said: “We are committed to being transparent and report separately on the green finance, sustainable finance and the sustainability-linked finance mobilised towards our $1 trillion target, so stakeholders and investors have a clear understanding of what we are reporting.” It said it set out very clear requirements for energy clients’ targets and transition plans in order to access finance.
‘Deeply problematic’ deals
Barclays helped raise $41bn in sustainability-linked finance for fossil fuel companies last year, according to an analysis by the Bureau of Investigative Journalism of data from LSEG, the financial markets group. The $41bn figure covers the total value of the deals Barclays worked on alongside other banks. Barclays itself counts only the funding it is directly responsible for, which it said was $10.9bn across all sectors last year.
Katharina Lindmeier, responsible investments manager at the publicly owned workplace pension scheme Nest, which also invests in Barclays, said TBIJ’s findings were “very concerning”. She added: “We’ll be raising this research with their management team directly at the next opportunity.
“Regulators are looking closely at the issue of greenwashing and if there is any uncertainty, it’s better to be cautious than to mislead customers. Any loans which help companies expand oil and gas infrastructure should not be classed as sustainable.”
The Financial Conduct Authority, the UK regulator, wrote to banks last year highlighting concerns about this type of loan, including weak incentives, potential conflicts of interest, and low ambition. It said that these may lead to accusations of greenwashing.
Anders Schelde, chief investment officer of AkademikerPension, another Barclays investor, said sustainability-linked finance for oil and gas companies is “in most cases deeply problematic”. He said: “We don’t count sustainability-linked bonds and loans as green investments in our own accounting because we know there are so many problems with them. The penalties are low and the targets often insufficient.”
Last year, Barclays helped raise $3bn worth of sustainability-linked loans and bonds for Enbridge, a company that is dramatically expanding oil and gas infrastructure across North America.
Enbridge is behind the construction of a controversial 1,000-mile pipeline that cuts through Indigenous land in the US to pump tar sands oil. It paid US police to crack down on protesters and has been fined millions of dollars for repeated environmental violations.
Barclays classifies the Enbridge debt as sustainable because the company has set a target to cut emissions from its own operations. In part, it intends to do this by using solar power to pump oil through its pipelines.
“The real source of emissions from a company like Enbridge will be from the oil and gas its pipelines help transport,” said Jeanne Martin from responsible investment charity ShareAction. “We do not need greener pipelines, we need to stop the reckless expansion of the fossil fuel industry.
“If the conditions that a bank sets to provide financing to oil and gas transport companies don’t tackle oil and gas, the bank will be accused of greenwashing.”
Barclays also helped raise a $2.8bn sustainability-linked loan for Harbour Energy, the UK’s largest oil and gas producer. Harbour extracted the equivalent of nearly 70m barrels of oil last year, which if burned would produce the equivalent of eight coal-fired power stations’ annual emissions.
Scientists agree that developing any new oil and gas fields will derail climate targets and push global heating beyond 1.5 degrees – which the UN says will threaten lives, food sources and economies worldwide.
It seems that Harbour is aggressively exploring for new oil and gas as it hopes to extract a further 880 million barrels of reserves in the coming decades. It does not appear from Harbour’s public statements that the company has any plans to shift its focus to renewables.
Yet Barclays’ loan to Harbour Energy is called sustainable because the company has committed to reducing emissions from the process of extracting oil and gas. This, however, takes no account of the vast majority of Harbour’s emissions, which are generated from burning the oil and gas itself.
Enbridge paid US police to crack down on protesters opposing its Line 3 pipeline Nicole Neri/Bloomberg via Getty Images
The notorious oil trader Trafigura also benefited from more than $5.4bn in loans that Barclays called sustainable finance. Counting its supply chain and all the emissions generated by the oil it trades and transports, Trafigura was responsible for more greenhouse gas emissions last year than Spain.
Trafigura’s interest payments are linked to certain sustainability targets, including a pledge to cut emissions – but only from its own operations rather than the burning of the fuels it trades and transports. This accounts for about 1% of the company’s total emissions.
Trafigura said Barclays was one of 54 banks involved in the deal, and said “sustainability-linked loans are an important tool in incentivising reductions in emissions”. It added that its direct emissions were less than 1% of Spain’s. While it reports its indirect emissions, it does not consider all of them “to be within our current sphere of influence”.
Enbridge said it takes climate change seriously and is committed to reducing its greenhouse gas emissions. It said sustainability-linked finance plays an important role in meeting emission-reduction goals and supporting the transition to a lower carbon economy. The company also said that the 1,000-mile Line 3 pipeline had local and tribal approvals and met the strictest environmental standards, and that payments to law enforcement were made and administered via a third party.
Harbour did not respond to a request for comment.
Barclays said: “Sustainability linked loans and bonds are an important sustainable finance tool, incentivising borrowers, particularly in hard to abate sectors, to achieve sustainability objectives over time.”
Net-zero banking
Barclays has committed to cut its emissions – including of the companies it finances – to net zero by 2050. To reach this target, it will have to stop providing money to companies that refuse to shift away from fossil fuels.
Enbridge’s Line 3 project cuts through Indigenous land Tim Evans/Bloomberg via Getty Images
But a report out today shows that the bank’s funding for fossil fuels increased in 2023 from 2022, which troubled shareholders who have been urging it to reduce lending in line with its climate targets. Barclays was Europe’s top funder of the fossil fuel industry last year, according to the report led by the Rainforest Action Network.
Lindmeier, the Nest investment manager, said: “We want to see Barclays immediately reduce its financing to companies behind new fossil fuel expansion. Any delays could leave the company more exposed to bad loans and potentially cost them millions of pounds.”
Laura Hillis from the Church of England pensions board, another Barclays investor, said: “We are looking for banks to produce a clear climate plan and to see the commitments carry through into lending decisions. Our concern is that these fossil fuel financing figures show that is not happening at the pace we’d like.”
Climate-conscious investors have been putting pressure on Barclays to make good on its net-zero pledge and earlier this year the bank committed to stop providing specific project finance for oil and gas expansion and related infrastructure.
However, less than 2% of Barclays’ funding for oil and gas last year fell under the label of “project finance”. Almost all of it comes in the form of general, unrestricted finance for the companies undertaking those projects.
“Barclays’ new oil and gas policy is an important step forward for the bank but it should have gone so much further,” said Martin from ShareAction, which brought together Barclays shareholders to urge the bank to restrict lending to oil and gas companies.
“Ultimately, the bank has kept the right to finance companies that have plans to massively expand the fossil fuel industry with no strings attached, and that’s a real problem.”
Original article by Ed Siddons republished from TBIJ under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
Experts say authority is failing to punish the architects of tax-dodging schemes
The UK’s tax authority has not fined a single “enabler” of offshore tax evasion or non-compliance in five years despite landmark powers introduced in 2017, new figures reveal.
Industry experts criticised HMRC’s approach as “bizarre” and “bloody pointless” in light of the data, which was released under freedom of information laws to the Bureau of Investigative Journalism (TBIJ).
They say it shows HMRC’s enforcement is failing to target the architects of offshore schemes while it aggressively pursues the clients, some of whom say they are the victims of schemes sold to them as lawful.
The findings follow revelations by TBIJ and the Observer that prosecutions for tax crimes have plummeted. HMRC has also not charged a single company or partnership for enabling tax evasion since laws introduced in 2017 provided expanded powers to crack down on the “enablers” of tax dodging.
Tax evasion and avoidance are key battlegrounds in the forthcoming election. Both Labour and the Conservatives have made ambitious pledges to raise billions through targeted pursuit of tax dodgers and the elimination of tax breaks for non-doms, people living in the UK who claim their permanent home is overseas.
“The neverending stream of new HMRC powers … are bloody pointless if the powers aren’t then used,” said Dan Neidle, the founder of the independent thinktank Tax Policy Associates and former head of tax at global law firm Clifford Chance.
He said in primarily penalising the taxpayers, who in some cases believed the schemes were legal because they were misleadingly marketed, HMRC is failing to address “the root source of the problem: the people offshore pimping these schemes”.
HMRC defines an enabler as “any person who knowingly helps their client to avoid or evade tax”. Targeting them, not just the tax evader, became a central pillar of HMRC’s strategy during the 2010s.
“Enablers were and still are a big focus for HMRC,” said Michelle Sloane, a tax disputes partner at law firm RPC. “But these figures show their rhetoric on tackling enablers … is clearly not being followed through with action.”
Before 2014, HMRC struggled to crack down on offshore tax dodging due to limited data on accounts overseas. But that year saw the approval by tax authorities around the world of the Common Reporting Standard, a measure that made financial institutions share information across borders. That allowed HMRC and other tax authorities unprecedented oversight of where taxpayers had stashed money overseas.
HMRC also began cooperating with other major tax authorities through the J5, a coalition of tax authorities founded to tackle tax evasion and money laundering.
Meanwhile, the revelations in the Panama Papers in 2016 marked a turning point in HMRC’s pursuit of the middlemen who helped to hide money from tax authorities. The offshore enabler penalty was introduced in 2017, alongside a raft of new powers to make it easier to punish perpetrators.
The penalty could include a £3,000 fine or 100% of the amount of tax that was dodged, whichever was larger.
See original article for embedded graphic. Embedded graphic has the title ‘
Offshore riches
Money held by UK taxpayers in foreign accounts outstrips a year’s worth of all tax owed in the country’
But the new figures show compliance enforcement is “not what you’d be expecting, based on their focus on enablers and all the sources of information that they have available to them”, said Sloane. “It’s an area I expect the next government will wish to concentrate on.”
Stephen Daly, a tax academic at King’s College London, called the lack of any offshore enablers penalties “bizarre”. “Why would the government want to introduce such a power only to leave it sitting idly by?”
The findings compound pressure on HMRC after revelations that the authority does not know how much is lost to offshore tax dodging each year.
HMRC estimates that it collects 95% of all the tax owed in the UK, but the remaining 5% accounted for about £36bn in lost revenue in 2021-22.
And figures HMRC disclosed to Tax Policy Associates in 2021 revealed that UK taxpayers held £850bn in foreign accounts in 2019, of which £570bn was in tax havens.
However, HMRC said in a freedom of information response to the thinktank that it had not “produced or received any estimates” on how much is being lost to unlawful offshore schemes.
In June 2022, Lucy Frazer, then financial secretary to the Treasury, said HMRC would produce data on the “offshore tax gap” in 2023. But still no data has been published.
Whoever wins the election, some experts say they will need to make substantial investments in HMRC’s investigative teams if they want to raise funds for the public purse by closing the tax gap.
Commenting on the scale of revenue lost offshore, Dan Neidle said, “On the evasion side, we don’t really know, because we’ve got no data – [while] on the avoidance schemes offshore, HMRC seem ineffective at stopping the promoters.
“If it’s as much as single-figure billions, that’s a good result. But it’s going to take criminal sanctions on promoters to stop this.”
An HMRC spokesperson said: “We have a strong track record in tackling offshore non-compliance. Since the launch of our No Safe Havens strategy in 2019, we have secured almost £700m from offshore initiatives.”
Original article by Ed Siddons republished from TBIJ under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
Original article by Ed Siddons republished from TBIJ under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
The number of civil tax avoidance leads looked into by HMRC’s Fraud Investigation Service has fallen by almost half in five years, while the number of civil cases it has formally opened has decreased by more than a quarter.
These figures, obtained by the Bureau of Investigative Journalism (TBIJ) under Freedom of Information laws, raise questions about the tax authority’s performance since the start of the pandemic.
The findings follow revelations by TBIJ and the Observer in September that prosecutions following HMRC investigations plummeted by two thirds in five years. TBIJ then revealed in January that HMRC has not charged a single company under a landmark 2017 law to clamp down on corporate tax evasion.
The new figures suggest that the tax authority’s civil enforcement has also declined alongside its use of criminal powers.
Margaret Hodge MP called on HMRC to “finally crack down on egregious tax avoidance and collect the revenues we desperately need”.
In the tax year of 2018/19, HMRC’s Fraud Investigation Service opened 37,273 “risks”, a term used to describe a preliminary inquiry into suspected error or false declaration. In 2022/23, that figure fell to just 21,338 – a 43% decline in five years.
The number of civil cases that were formally opened fell by 28% in the same period, from 17,424 to 12,585.
“The new revelations that HMRC is failing to make up for [declining numbers of criminal prosecutions] by undertaking more civil investigations is just disgraceful,” said Hodge. “These consecutive failures mean tax dodgers and their enablers can continue getting away scot-free.”
Stephen Daly, senior lecturer in corporate law at King’s College London, said: “[The number of] investigations has fallen off a cliff, and that can’t be good … If you don’t enforce the rules, then you create a culture in which people don’t have to worry about their tax returns later being checked.”
Civil inquiries and investigations declined sharply in 2020, when the Covid-19 pandemic interrupted HMRC’s enforcement activity. But despite a significant rise last year, the number of cases remains well below pre-pandemic levels. “If, in fact, this isn’t explained by Covid, then it’s unacceptable,” said Daly.
A HMRC spokesperson told TBIJ that figures relating to its Fraud Investigation Service “do not take account of our overall compliance activity”, including 300,000 interventions opened in 2022/23. They said the authority has recouped £136bn from compliance interventions since 2018/19.
Easy targets?
As well as the general decline in civil cases opened by HMRC’s fraud unit, the number opened by its team for investigating offshore, corporate and wealthy taxpayers has fallen especially steeply, by 56% in five years.
“Even when [HMRC is] opening civil cases, they appear to be going after the easier, lower value targets,” said Fiona Fernie, a partner at tax advisory firm Blick Rothenberg.
Last year, HMRC reached one of its highest ever tax settlements when former F1 mogul Bernie Ecclestone paid £650m after pleading guilty to tax fraud – but that success was “the exception, not the rule”, said Fernie.
Part of the problem is that the UK has an increasingly complex tax code, which makes enforcement action difficult, she said. “The staff are under considerable pressure, we get an increasingly complicated system every year, [and] it’s very difficult to get anybody to keep up with it.”
Robert Palmer, executive director of Tax Justice UK, said another issue was lack of resources. “We know HMRC is underfunded and resources have been diverted for work on Covid and Brexit,” he said.
HMRC estimates that it collects 95% of all the tax owed in the UK, a proportion it says has remained stable in recent years. However, it estimates that the remaining 5% still accounts for about £36bn.
“Parliamentary research shows that when the government invests in HMRC, the return on investment is significant. Until the department is properly funded, vast sums of money owed, often by the richest people and companies, will go unrecovered,” said Palmer.
The Public Accounts Committee last year found that for every £1 spent on compliance, HMRC recovers £18 in additional tax revenue. “The government is missing the opportunity to recover billions in lost revenue by not resourcing compliance,” it said.
Original article by Ed Siddons republished from TBIJ under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
Lead image: Her Majesty’s Revenue and Customs building, London. Credit: Ian Bottle/Alamy Stock Photo
Original article by Ed Siddons republished from TBIJ under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
HMRC has not charged a single company under landmark legislation passed six years ago to crack down on corporate tax evasion.
Critics say the data, released after Freedom of Information requests by the Bureau of Investigative Journalism and TaxWatch, suggests that HMRC is undermining its own deterrents against corporate tax evasion by failing to use its criminal enforcement powers.
Margaret Hodge MP called the findings appalling and said the lack of enforcement had rendered the law “a paper tiger.”
The Criminal Finances Act 2017 introduced new powers to charge companies and partnerships operating in the UK that failed to stop their employees or associates from facilitating tax evasion, regardless of where in the world the tax was evaded.
One part of the new law, known as the Corporate Criminal Offences clause, drastically lowered the bar for prosecuting businesses that enabled tax evasion. It introduced “strict liability”, meaning that a company cannot plead ignorance of the wrongdoing to evade a criminal charge, and prosecutors do not have to prove intent in order to secure a conviction.
It also threatened unlimited fines in the case of established wrongdoing. Companies can avoid punishment if they have reasonable procedures in place to prevent the facilitation of tax evasion.
The law both made criminal prosecutions easier to pursue and strengthened the penalties. But critics say the refusal to charge a single company has cast serious doubts on the landmark legislation.
TBIJ, TaxWatch and The Observer previously revealed that the number of concluded prosecutions after HMRC investigations had fallen by more than two-thirds in five years, with only 11 wealthy taxpayers prosecuted in 2022.‘A deterrent that you never use is no deterrent’
“The lack of any Corporate Criminal Offence prosecutions is, I think, quite serious,” said Dan Neidle, founder of Tax Policy Associates and formerly head of tax at Clifford Chance. “A deterrent that you never use is no deterrent.”
Criminal penalties were the only reliable way to change behaviour, while the overreliance on civil penalties and fines often failed to curb serious wrongdoing, Neidle said. “If you disarm yourself and don’t use the criminal tools that you have available, then you are missing the trick.”
A spokesperson for HMRC said: “Corporate criminal offences were introduced to encourage organisations to put preventative measures in place to stop tax evasion. Our efforts have helped drive a corporate culture shift towards anti-tax evasion awareness, which has led to new procedures across business sectors.”
HMRC told TBIJ it has 11 live investigations and is looking into a further 24 possible cases. It has also reviewed and rejected an additional 94.
Hodge said: “We are in the midst of a cost-of-living crisis, and tax evasion is costing our economy billions each year. So it is appalling that HMRC has failed to prosecute a single enabler of tax evasion.
“We know that there continues to be a whole industry that supports those who don’t want to pay their fair share of tax. We cannot drive cultural change in that industry if its members are under the impression that this offence is just a paper tiger.”
HMRC prioritises the recouping of money lost to tax avoidance and evasion through civil settlements rather than prosecutions, according to Robert Palmer, the director of Tax Justice UK. He cited the risk and cost of prosecuting powerful opponents with deep pockets.
“HMRC is routinely outgunned by the private sector,” he said. “It’s a real problem, because the minute you go against someone who’s rich, they can lawyer up and drag things out. HMRC are outmatched … particularly when it comes to the professional enablers and facilitators.”
Other legislation with similar “failure to prevent” clauses has resulted in charges and convictions. The UK Bribery Act 2010 made it a crime to fail to prevent bribery and has led to high-profile prosecutions, including the oil and gas company Petrofac in 2021.
The realistic threat of criminal prosecutions means “the Bribery Act continues to be taken very, very seriously,” said Neidle, “whereas the Criminal Finances Act is dropping off the radar.”
Susan Hawley, director of Spotlight on Corruption, said: “Legislation only has a deterrent effect for so long without any meaningful enforcement.
“The government urgently needs to get to the bottom of whether this lack of prosecutions is related to failures of political will or resourcing issues at HMRC, or deeper problems with the wording of the offence.”
Original article by Ed Siddons republished from TBIJ under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
