2. What estimate she has made of the loss of tax receipts to developing countries by the use of tax havens by multinational companies operating in those countries in the last three years. (906669)
Tax avoidance is a significant challenge for developing countries, which is why the UK has led international action at Lough Erne and, more recently, in the G20 to help tackle the problem through capacity-building projects and through the implementation of international initiatives.
As the hon. Lady will be aware, one of the key objectives of the G8 presidency, which we had last year, was about tax transparency. I am really proud that our Government have led the way in tackling issues such as base erosion and profit shifting. Rules that have been in place since the 1920s need to be updated for today’s modern corporate world. We are making big steps on that and big steps on transparency and beneficial ownership, and we will continue to play our role, leading the international effort to improve the rules so that we can get the tax due in the countries where the work has taken place.
The hon. Gentleman is talking about G20 progress that was instigated by this Government when we held the G8 presidency. I am tempted to make the point that the Labour Government had 13 years in which to take steps in this direction, and entirely failed to do so. We took some important steps during our G8 presidency, and, as he will know, that involved the overseas territories. We are not saying that we have gone all the way down the path, but we are starting to move down it for the first time, and I think that the hon. Gentleman should welcome that. I assure him that we will continue to work to ensure that we bring the rest of the international community with us.
According to analysis by the ONE campaign, $1 trillion is siphoned from developing countries each year as a result of corruption, money laundering and illicit financial flows. What analysis have the United Kingdom Government conducted of the role of UK companies in that activity?
As the hon. Gentleman will know, there are various estimates of how much this kind of activity costs developing countries, which is one of the reasons why we put it on our G8 agenda. I mentioned the work that is being done to reform international rules. My Department is also engaged in significant work to build capacity in developing countries, so that when the progress that we are starting to see becomes international, they will be in a position to take advantage of it. The HMRC capacity building unit, which I helped to set up along with colleagues in HMRC, will work directly with tax revenue authorities such as the one in Pakistan to help them to improve their tax collection. As for corruption, DFID will continue to increase its efforts, through the Met police unit that it funds, to ensure that we can take action if money laundering and the corrupt obtaining of assets are associated with United Kingdom institutions.
May I return the Secretary of State to the issue raised by the hon. Member for Blaenau Gwent (Nick Smith)? As she will know, the Government of the 14 overseas territories were in London last week, and published action plans last year. The British Virgin Islands and the Cayman Islands, for instance, have delayed any action in relation to their own action plans for more than 300 days. When will we see any implementation of the commitments that they have made?
As my hon. Friend has said, for the first time overseas territories have signed up to action plans, and the next step is to ensure that they implement them. In fact, a number of countries need to stand by the promises that they made and deliver on them. However, we are delivering on our own promises.
I am sorry, but the Secretary of State can do better than that. We know that tax revenues amounting to three times the entire global aid budget are lost to developing countries every year, and that nearly a third of the estimated $32 trillion of private financial wealth that is held in tax havens comes from those countries. A year ago, the Prime Minister said that there would be a public register of beneficial ownership. That must include the overseas territories and Crown dependencies. By dithering and delaying, whose interests is the Secretary of State protecting?
There was dither and delay for 13 years under the last Government. I do not think we need take any lectures from them, either on the closing of our domestic tax gap—which grew under Labour—or, indeed, on the closing of the international gap. The hon. Gentleman would do better to welcome all the work that this Government have instigated, not least the setting up of the HMRC unit which I mentioned, which is enabling our officials to give invaluable help and advice to tax institutions around the world.
Unfortunately, there is nothing to remember, because so little progress was made. We welcome questions from Labour Members, because they give us a chance to point out that we are not only increasing the amount of funding for developing countries, reaching the 0.7% target, but working with those countries to support their so-called domestic resource mobilisation. We will do more of that work over the coming months and years.