Tuesday, 11 December 2012

One privatisation that is unlikely to happen

There has been an agenda since the early 80s to privatise things – first it was industrial groups and public utilities, then the railways, PFI and outsourcing, and now it has moved on to public sector service delivery in for instance the NHS, prisons, police and schools. Driving privatisation has been the belief that almost anything can be undertaken more efficiently by the private sector rather than the public sector. There isn’t space here to discuss what efficiency actually means (lower service quality, strict adherence to service level agreements, public sector risk, private sector profits and so forth to name just a few) but one thing that doesn’t seem to have occurred to anyone to privatise is the collection of uncollected HMRC tax revenue. Particularly for corporation tax, but also for the highest earners.   

Now this is strange given that, tens of billions of pounds are going left uncollected by HMRC. So why hasn’t it ever occurred to the Tories to privatise elements of revenue collection. Well possibly, because the thought of Serco, or Goldman Sachs, or vulture funds taking Microsoft, Amazon, Starbucks, or themselves to court is more than George Osborne could stomach – employing large organisations to protect public sector revenue. After all, privatisation is meant to be a means to provide commercial opportunities to the private sector – not to allow the private sector to find ways to regulate the profits of other private sector organisations.

HMRC privatisation would work something like this: private sector organisations that could prove they had the necessary expertise, ability and compliance procedures in place (to adhere to the necessary confidentiality and data protection procedures) could be licensed by HMRC to investigate corporate tax avoidance. They could then purchase or be given a caseload, and any potential tax raised by their investigations would be shared between them and HMRC. They would receive a proportion of the tax raised – UK taxpayers’ money – but the flipside is that at the moment, this tax is likely to go uncollected. Additionally, it would disincentivise tax avoidance, and therefore increase the overall level of corporation tax raised.

I assume it’s unlikely to ever emerge from a right wing think-tank as a policy proposal, much less be proposed by a coalition minister. And of course, you might say that it would be better to resource HMRC with tax collectors and tax experts. And also, if the money genuinely is tax avoidance rather than tax evasion, then it will be unable to be collected. Still, it’s my ‘desert island’ privatisation. It might actually lead to a few test cases, seeing as HMRC always inevitably agree to settle rather than take the cases to court and stand up to large organisations. Maybe Deloitte or Accenture might be willing to use some of their own wealth if they thought the potential rewards exceeded the risk. And what’s more, unlike PFI, and many other privatisations, it genuinely would be private sector risk, and public sector gain. 

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