Comment: Gauke has opened up the wrong can of worms

By Terry Murden
Published on 25/07/2012 00:00

Woe betide any coalition MP who is found to be paying his or her cleaner, odd-job man or nanny in the folded stuff. They will be watched like hawks after Exchequer Secretary David Gauke said those who pay any worker in cash and helped them avoid tax were “morally wrong”.

Did he really say that? Maybe he should re-read his notes and think again. There can’t be many householders who have not offered to pay someone in cash, usually to get a discount, or maybe because the worker – such as a babysitter – doesn’t have a bank account.

What will be next on the list of immoral practices? Negotiating an agreed price? Handing your kids a fiver to go to the shops?

This nonsense from the minister is wrapped up in the government’s bungled attempts at tackling tax avoidance, but Gauke got himself tied up in knots by suggesting that a pensioner handing cash to a handyman to trim his roses is also encouraging him to fiddle his tax return.

Aside from the sillier aspects of this row, there are some serious issues here. The government is justified in trying to clean up the black market, estimated to be worth £160 billion a year, but in the process it has effectively criminalised millions of innocent transactions.

Paying in cash is not illegal, nor is it illegal for a worker to ask to be paid in cash. But the law states that there should be an invoice if it is not to be regarded as defrauding the taxman and if the government goes the distance with this, it could have implications for everyone right down to the humble car boot seller.

It’s no surprise that tradesmen’s organisations are furious and have demanded the government take a look at the real culprit – the rates of tax – if it wants to reduce avoidance. VAT at 20 per cent is a particular target, adding £600 to a £3,000 bill and tempting work-starved tradesmen to find ways of doing work more cheaply. There is plenty of evidence that says lower rates of tax yield a higher tax take.

The Gauke row may also pump up pressure for more formal licensing of tradesmen, as happens in some overseas countries. Where it has been applied in Britain it has proved beneficial for the most part.

Winning and losing is all part of the game

The Olympic jamboree is getting into full swing, but thousands of small businesses feel they’ve been let down after being promised a share of the spoils from this once-in-a-lifetime opportunity. The London Organising Committee of the Olympic and Paralympic Games (LOCOG) is applying a strict set of rules over who benefits commercially and who, in the opinion of Oddbins boss Ayo Akintola are “reduced to the status of beggars”.

Akintola is offering a discount 
to anyone arriving at one of his 35 wine merchants with a list of non-accredited products. That means they will need the full list of his own prescribed goods, including a British Gas bill and an RBS Mastercard, in order to qualify for cheap wine.

But this is barely a gesture of defiance let alone a proper campaign of action. His window displays will conform to the LOCOG rules and no-one will stop him selling discounted wine to somebody wearing a pair of Nike shoes just because the company is not an Olympic sponsor.

As a gimmick, it might just bring a few opportunists through the doors and, in fairness, the wider point he’s trying to make is that many firms are missing out on a potential uplift in trade.

But it is not unusual for sponsors and organisers of events to strictly control what might be termed 
counter-promotions by companies trying to gain advantage without paying for the privilege. LOCOG’s rules may be draconian, but – as in sport – there are winners and losers.

China has its eyes on Scotland’s oil

China has grabbed a slice of the North Sea oil sector in a clear sign of intent. The West has plentiful supplies of oil and gas but is short of money; China needs to import energy and has the cash to pay for it.

This week’s double acquisitions of Canadian firm Nexen and a half-stake in the UK assets of Talisman Energy suddenly make China a big player in the North Sea. Now, who said it was Scotland’s oil?