David Taylor (North West Leicestershire, Labour)

It is a great pleasure to speak under your chairmanship, Mr. Hancock. I am grateful to Mr. Speaker for selecting this vital subject for debate in a long slot, especially as it precisely coincides with this year's Christian Aid week. I shall focus my opening remarks on the international development implications of tax avoidance and evasion and then highlight the impact on the UK Exchequer and our society of the corporate culture of tax avoidance that has taken root in this country.

As the Finance Minister of South Africa, Trevor Manuel, has said:

"the correct spelling of the word 'aid' is 'T-A-X'".

It should be a source of consensus, or a no-brainer as the tedious phrase goes, that tax is the most sustainable source of finance for development work in poor countries. It promotes accountability and allows Governments to generate revenue from their nations' economic activity to invest in their own infrastructure, health care and education. A broad tax base improves representation and accountability between states and citizens. It encourages good governance, as Governments who depend on their citizens for revenue are more likely to act in the interests of the people.

Because promoting economic development for all means greater revenues for the state, Governments have a vested interest in ensuring that economic growth is shared among the population. Progressive taxation also benefits the poor by redistributing wealth through society, and it can limit consumption that has harmful effects on society or the environment through the levying of heavier taxes on products and services. Angel Gurría, the head of that international free market acolyte the OECD, certainly believes that. He has observed that

"taxes provide the long term financial platform for sustainable development. Taxes are the lifeblood of state services."

It is estimated that between $500 billion and $800 billion of illicit capital flows from developing countries every year. Of that, $160 billion is lost through commercial tax evasion—or £20 million during this 90-minute debate. It is about twice the annual bill for global aid from rich countries to poor countries. It is also several times larger than the $40 billion to $60 billion that the World Bank estimates will be needed annually to meet the United Nations millennium development goals, which are intended to halve poverty by 2015. If that money—that avoided tax—were allocated according to present spending patterns in poor countries and with the same degree of effectiveness, the additional revenues could, among other things, save the lives of 1,000 children under the age of five every day.

There is much discussion about the role of tax havens in facilitating these capital transfers. It is recognised by, among others, the current Pope—he must be infallible—that offshore centres play a major role in the imbalances of development, causing a gigantic flight of capital that is the result of tax evasion. Christian Aid estimates that, between 2005 and 2007, £35 billion of illicit capital flowed from non-EU countries to the United Kingdom as a result of trade mispricing—a practice whereby multinational companies sell goods and services across borders at inflated or sometimes deflated prices to minimise their tax burden. Of that, £5 billion of illicit capital flowed into the UK from the world's 49 poorest countries. That is almost equivalent to the Department for International Development's entire programme budget for 2006-07.

The estimable researcher on these matters, Professor Prem Sikka, has pointed out that transfer pricing is used as a "key mechanism" for dodging tax by multinationals all over the world, yet its abuse is scarcely on the political agenda. These are not abstract figures. They represent essential services that the world's poorest people are being denied by merciless and venal exploitation, not just of individual states but through the lack of regulation applied to the global movement of capital.

Bob Spink (Castle Point, Independent)

The hon. Gentleman mentioned the plight of children between the ages of one and five. He will know that malaria particularly attacks those children, that it affects 40 per cent. of the people in the world and that it infects 500 million people each year. Can he estimate just how much good it would do for mankind if just 5 per cent. of the tax that is avoided were put towards malaria research?

David Taylor (North West Leicestershire, Labour)

The answer is in the hon. Gentleman's question. The figures that I have given show the scale of progress that could be made towards achieving the millennium development goals, and the point that he raises is very important. We are considering African countries. Zambia has some of the richest deposits of copper in the world, but it failed to benefit at all from the commodity boom between 2003 and 2008. Why? Because some multinational companies pursued aggressive tax avoidance strategies by pushing for special tax breaks and keeping mining contracts secret. In a country in which just 2 per cent. of people in rural areas have access to clean drinking water, there is an urgent need for more tax revenue. The concept of corporate social responsibility rings particularly hollow in the context of the fact that 98 per cent. of people in rural areas of Zambia do not have clean drinking water.

Andrew Stunell (Hazel Grove, Liberal Democrat)

Does the hon. Gentleman agree that Zambia has a problem not just from the direction that he mentions, but from the purchase of its sovereign debt at a discount by so-called vulture funds, which are also showing a complete lack of social and corporate responsibility?

David Taylor (North West Leicestershire, Labour)

I agree with that so strongly that I was on the other side of the River Thames with my hon. Friend Ms Keeble just 24 hours ago with a vulture on my arm to highlight the issue to which the hon. Gentleman refers.

The ability of sovereign Governments in both developed and developing countries to tax effectively is seriously undermined by international tax avoidance and evasion. Under-resourced tax authorities struggle to track the extent to which taxable income from multinationals is moved offshore. Few developing countries can navigate the complexities of multinationals' structures in order to determine tax liability, especially when their people are dying for want of clean drinking water, malaria treatments and sanitation services. Long-term policies in areas such as tax collection and enforcement cannot realistically be adequately supported in crisis and disaster-led circumstances.

This is clearly an issue of policy coherence. We cannot continue to spend billions of pounds of UK taxpayers' money only for it to come back to the western world, including to the UK, as illicit money. Trevor Manuel has also said:

"It is a contradiction to support increased development assistance, yet turn a blind eye to actions by multinationals and others that undermine the tax base of a developing country."

That is happening on a grand scale. Greater transparency is required globally to ensure that more of those resources stay in developing countries and are used for development. That can be achieved by implementing a new international accounting standard and addressing secrecy in tax havens and offshore financial centres.

David Drew (Stroud, Labour)

I thank my hon. Friend for taking up this issue again. One way in which it could be dealt with is through a Tobin tax. That is an idea whose time came five or so years ago, yet lamentably we have made no progress on it. Is there a reason why?

David Taylor (North West Leicestershire, Labour)

I genuinely do hope to come to that point at the end of my speech and I hope that my hon. Friend will be able to stay until then.

The problems of capital flight and the financial crisis show clearly that the complexity of global financial flows has grown far beyond the ability of Governments—any Government—to monitor and regulate them effectively. The fight against poverty demands an end to the secrecy surrounding tax payments made by multinationals to poor countries' Governments. The International Accounting Standards Board provides the framework for regulation in this area and should require multinationals to report the scale of their economic activity and the taxes paid in every single country in which they operate. That would enable sovereign Governments and civil society to ensure that multinationals paid the right amount of tax in the right place at the right time. Many investors are also keen to have that information, which allows a much closer understanding of the risk associated with investments. Such reform of global accounting practices would also promote the concept of ethical investment, which is regarded in many quarters as oxymoronic.

Christian Aid and others, including ActionAid, are calling for two key measures of global financial regulation: first, an international accounting standard on country-by-country reporting to provide investors, regulators and tax authorities with a powerful indicative tool to assess risks and highlight abuses; and, secondly, automatic tax information exchange between all jurisdictions, including tax havens, based on a global agreement, instead of a piecemeal approach involving bilateral treaties, which have been shown to have limited impact and tend to exclude developing countries.

The London summit not long ago—the G20 meeting—delivered significant progress towards financial transparency. Indeed, for the first time, the Prime Minister publicly acknowledged the link between tax evasion and development. Prior to the G20 meeting, he stated:

"we will also set down new measures to crack down on those tax havens that siphon money from developing countries, money that could otherwise be spent on bed nets, vaccinations, economic development and jobs."

However, the measures proposed by the G20 are agreements on sharing bilateral tax information between tax havens and wealthy countries that have the economic and political muscle to negotiate. They are rushed measures; they do not help the developing world and will hinder tax investigators in countries such as the United Kingdom.

Tax information exchange agreements—TIEAs—as proposed by the G20 and the OECD, are of limited value to developing countries. First, only the richest countries have the economic power to negotiate such agreements and gain speedy access to the necessary information. Using a bilateral model, if only UN member countries had fair access to tax information, each of the 192 countries would have to sign 192 information exchange agreements. I know, Mr. Hancock, that you are good at mental arithmetic: 192 squared would mean a total of 36,864 agreements globally. There are between 50 and 72 tax havens in the world, and more than 100 countries with which they could negotiate TIEAs, so that is potentially more than 7,200 bilateral agreements. However, by March 2009, only 49 TIEAs had been signed between OECD countries and secrecy jurisdictions, and only 18 have entered into force.

The second reason why TIEAs do not work is that poor countries do not have the power to offer strong sanctions on their own, and thus cannot access the information that they need through that channel. The proposed agreements enshrine "on request" information sharing. If a poor country wants information on a tax payment, it will need to provide significant evidence that criminal activity is occurring, but it simply will not have the resources to conduct such investigations.

Andrew Stunell (Hazel Grove, Liberal Democrat)

I entirely support what the hon. Gentleman says. Perhaps he will take into account the words of John Battle: Africa needs accountants. Many African Governments are not professionally equipped to deal with the kind of challenging financial regimes that confront them. This is a major problem. Even if the partners are willing participants, how will they evaluate the material that they receive and move on to enforcement?

David Taylor (North West Leicestershire, Labour)

I agree, and Zambia would be a great example. Soon after I qualified—it was quite a few years ago—I was on the point of moving to one of the towns in the copper belt in Zambia to work as an accountant, but it did not happen.

Evidence so far shows that TIEAs have produced only a trickle of information. For instance, the TIEA between the US and Jersey—two of the biggest players in the offshore system—was used only four times in 2008. States may also maintain or introduce other restrictions on the procedures for obtaining or supplying information. For example, some states consider that before any information is supplied, the person concerned must be notified of the request and given an opportunity to object. That, of course, gives tax evaders ample opportunity to cover their tracks, which highlights again the culture of secrecy and privilege that the activities of powerful multinationals are afforded by domestic and international authorities.

The Government must recognise that automatic tax information exchange between all jurisdictions, including tax havens, is the only system that can deliver rightful tax flows to poor countries. The Minister's response to that specific point would be immensely helpful and much appreciated.

Of course, some will argue for a bilateral agreement on tax information exchange. Indeed, the Government have argued against automatic TIEAs, saying that developing countries might not have the capacity to use the data that would be transferred and that the information transfer would thus be for nought. That argument is patently absurd and deeply patronising to developing countries. It suggests that they do not have, and could not quickly develop, the ability to deal with large quantities of data of the sort that automatic information exchange would generate. In fact, many developing countries already use international software and data sources to deal with vast quantities of data—most obviously, when one's passport is scanned at any customs point when entering an airport in almost any country at any income level.

At present, no one can tell what profits are made by companies operating in developing countries, or what taxes they have paid there, because companies are obliged to provide only a total profit figure for the whole world. That is an open invitation to avoid or evade tax liabilities—an invitation that most companies take, given the $160 billion figure for tax evasion and avoidance that I cited earlier. It is critical that the Government actively try to secure an international accounting standard on country-by-country reporting. That would provide investors, regulators and tax authorities with a powerful indicative tool to assess risks and highlight abuses.

An international accounting standard for all industries that would require companies operating internationally to disclose the profit that they make and the tax that they pay in each country in which they operate would equip developing countries with the information that they need to target corporate tax abuse. To secure an IAS on country-by-country reporting, the Government, acting in alliance with other leading economies, would need to ask the International Accounting Standards Board to create such a standard. It is important to note that the gang of four—the four big accountancy firms of Deloitte, Ernst and Young, PricewaterhouseCoopers and KPMG—are represented on the IASB, so they have a direct say in setting international accounting rules and standards. Interestingly, Christian Aid's proposals for the country-by-country reporting of corporate profits, which are supported by ActionAid, have been rejected by the big four, and no convincing argument has been posted to date to explain why, although we can draw our own conclusions.

The IASB is little more than a trade association for international accounting firms that is funded largely by the gang of four and other corporate entities. It might be time to relieve it of responsibility for setting international accounting standards. Perhaps that should be passed to a supranational body such as the UN so that appropriate mechanisms can be developed. I am not sure whether that idea was floated at the recent G20 summit—perhaps the Minister will tell us—but the current situation is untenable. It demonstrates, once again, that in spheres as important as global accounting, self-regulation does not work—it militates against the public interest and the public in the poorest countries. However, G20 Governments should commit themselves at least to approach the IASB in support of a country-by-country profit reporting system. I hope that we will receive an assurance that such an approach will be made today.

If implemented, the measures would have the potential to deliver a sum that would have a big impact towards eliminating poverty on a scale never seen before and achieving and embedding the millennium development goals. The Minister, who is a highly regarded, efficient and conscientious member of the Administration, might be able to elaborate on the UK's interpretation of the G20 agreements on the regulation of capital flows to tax havens, and the way in which the impact on developing countries can be reduced.

On 12 May 1789, William Wilberforce made his first major speech in the House of Commons on the abolition of slavery. He argued that slavery was morally reprehensible and a matter of natural justice. Tax evasion on the present massive scale has been described as the most harmful economic condition since slavery, as it contributes to the desperate global poverty endured by millions every day. The financial crisis has presented us with an opportunity to reform the economic system and to address global injustices, which are hugely damaging to the world's poorest people. Left untouched, the current system will for ever cast doubt on the legitimacy of profits derived from corporate activity in poor countries.

I do not have time to deal with the role of the Commonwealth Development Corporation, which was rebranded as the CDC on privatisation. Why do we allow the corporate culture of "greed is good" to spread into international development policy to such an extent? The Minister will not have time to answer all my questions, but the Government must answer them at some stage, and be forced to do so if necessary.

Finally I turn to the impact of tax avoidance in the United Kingdom, which is another area in which reform is overdue. We need to combat the advances made under such a highly dubious corporate culture. It is a tale of merciless profiteering that again features the infamous gang of four. Government borrowing is about to double, but we should not expect private householders alone to bear the brunt of the problems caused by the failure of regulators and the City.

I strongly support and applaud President Obama's action to close tax loopholes, including offshore tax havens, that are exploited by US companies, which we read about in the press a day or two ago. The new Administration in Washington estimates that US companies paid an effective tax rate of 2.3 per cent. on the $700 billion that they earned in foreign profits in 2004, so action is long overdue. I hope that there is more to come. I urge the Government to display similar principles and conviction in dismantling the tax avoidance industry in the UK.

As we know from a series of excellent articles by the tax gap team of The Guardian—I referred to it in an early-day motion at the time—the tax avoidance industry and its clients will go to exceedingly convoluted lengths to avoid their full liability. The evidence of Barclays bank's commitment to stretching Denis Healey's famous prison cell wall that exists between tax avoidance and evasion is not only astonishing, but significant for gaining an understanding of the relative ease with which existing tax laws may be manipulated.

There is a compelling argument that complex tax avoidance strategies were a major factor in the collapse of our over-leveraged and indebted financial system. However, the bottom line is that HMRC annually loses a minimum of £25 billion in tax revenue as a result of the tax avoidance activities of the wealthiest individuals and 700 largest businesses. This places an unfair and intolerable burden on working families, small businesses and pensioners at the best of times, but during a recession, when general taxation is expected to increase to meet the Government's higher borrowing, that potentially toxic load that could fuel serious civil unrest.

As an accountant myself, I have been studying the special purpose vehicles and other formulae used to channel funds offshore to avoid tax liabilities. We all need to be aware of the damage that such complex instruments wreak on the public purse. We do not let scientists develop chemicals that have a destructive environmental impact, so we should never exempt accountants from the social consequences of their actions, no matter how lucrative their proposals might be in the short term.

The Public and Commercial Services Union's tax justice campaign, which builds on the work of its members and that of the Tax Justice Network, focuses on the loss of local tax offices and the consequent problems for HMRC when tackling tax avoidance. Given the Chancellor's Budget announcement just two weeks ago of more resources for HMRC to devote to closing tax loopholes and tackling tax avoidance, it is vital that the programme of so-called efficiency measures does not include the continued closure of local tax offices, as that is akin to tying one hand behind HMRC's back as it tries to deal with the serried ranks of accountants employed by private sector firms to avoid tax.

David Drew (Stroud, Labour)

I concur totally with my hon. Friend and pay due tribute to the work of Richard Murphy of the Tax Justice Network. Does my hon. Friend agree that one of the good things that the Government did—this has been heavily criticised since—was to shut down advanced corporation tax? Quite simply, that was a major loophole for larger companies and a scam that could be used to hide many things relating to pension arrangements—not least early retirement problems—and company pension holidays. Is it not about time that the truth came out about advanced corporation tax? There are too many fables about what it was really about.

David Taylor (North West Leicestershire, Labour)

The criticism of that measure in the 1997 Budget is often misplaced. It has been developed and promoted by Opposition parties and demonstrates quite vividly their financial illiteracy—that is a great pity! I have always believed that although there is a register for tax avoidance schemes, the enforcement of the registration is pathetic. Some organisations fail to register with tax avoidance schemes and accept the relatively small fine incurred as an operational cost. Why do we let people get away with that?

Finally, we need to look beyond limited measures, such as a Tobin tax, on regulating the global flow of capital, and to set independently and enforce international accounting standards and equitable tax information sharing agreements—KPMG is particularly bad in that respect. Accountancy might be boring—that dreadful suggestion was made in the "Monty Python" series years ago—and taxation might be seen as a black art, but the devil is in the fiscal detail. We politicians must make a stand against endemic greed and corruption before it infects the values of fairness and equality that bind humanity.

Several hon. Members:

rose—

Mike Hancock (Portsmouth South, Liberal Democrat)

Order. A number of colleagues want to contribute to the debate. I intend to start the winding-up speeches at 3.30 pm. If people are generous to, and tolerant of, each other, everyone will get a chance to speak.

Tony Baldry (Banbury, Conservative)

There is a danger that we might be conflating two separate issues. In a communiqué put out immediately after the G20 summit, our Chancellor noted that leaders had agreed to

"take action to protect the world's financial system and our public finances by cracking down on tax havens".

His statement made no mention of the need to take action to protect developing countries. Almost all the references in the Library paper prepared for today's debate relate to tax avoidance schemes in developed countries depriving the Exchequers of developed countries of funds. The first paragraph of the first article in the pack reads:

"UBS yesterday defended itself against attempts by the US Internal Revenue Service to extract names of thousands of American customers holding offshore accounts, telling a federal court that matters should be resolved via talks between Bern and Washington. The beleaguered Swiss bank was responding to a legal challenge by the IRS to reveal the names of up to 52,000 accounts as part of the US administration's efforts to combat tax evasion."

There is not a scintilla of a quarrel—I suspect—between hon. Members about it being right for mature democracies, or indeed all countries, to bear down on tax evasion. However, in none of the briefings that I have been sent have I seen evidence supporting the suggestion that developing countries are losing huge amounts of revenue each year through commercial tax evasion. Not a single article in the Library pack gives any statistics or evidence in support of that suggestion. I am not saying that it is incorrect, but I am bemused. If we are not careful, this will become an article of faith, and the danger of such articles of faith is that they can be used as alibis in other ways.

In other words, developed countries can say to developing countries, "Well, you would be in a much better position, and you would not need so much development assistance, if you had in place a better tax system, and if you were properly taxing companies doing business in your jurisdiction." As times start to get hard, the risk is that countries that signed up to the millennium development goals and increased development funding will seek to find such excuses. If it is to be asserted that developing countries lose large amounts of money through commercial tax evasion, it needs to be much more evidence-based. We then also need to consider how we can strengthen developing countries' tax systems and administrations through increased targeted aid.

I find something else bemusing about this debate: I cannot recall having seen, in any of DFID's country plans—I stand to be corrected—a reference to enhancing the efficiency of Exchequers and Treasuries in those countries. Much work is being done on good governance, on bearing down on corruption, and on improving the judicial system, courts and general machinery of governance, but very little, as of yet, is being done on improving and strengthening developing countries' tax systems and administrations.

As I said, I am slightly concerned that we are conflating two issues. If we are not careful, we will create an article of faith that says that huge amounts of revenue in developing countries are going missing, and we will give an alibi to developed countries to say, "If only developing countries sorted out their tax system better, they would not be in so much difficulty."

David Drew (Stroud, Labour)

As the hon. Gentleman knows, my knowledge of the Sudan is better than that of any other African country. When the government of southern Sudan were setting up their administration, the British Government paid for a number of people—admittedly from the private sector—to go in to help them set up their tax system. Without such a system, southern Sudan had no mechanism to raise revenue. The hon. Gentleman was right to draw attention to the matter but, to be fair, the British Government have a history of trying to help.

Tony Baldry (Banbury, Conservative)

As yet, there is no de jure state of southern Sudan. The government in Rumbek are pretty sui generis. We will have to see whether they hold a referendum and decide to go for a de jure state. I am not saying that the British Government have never given funding to help Exchequers, but having read through a large number of plans for developing countries, I cannot recall seeing that they have.

The difficulty with such debates is that we approach them thinking about the developed north and the developing south. We need to think about a system that will be effective for Chinese companies operating anywhere, be it in the Sudan or in Kazakhstan. If we are to have a system that is globally transparent—this is not just about UK banks and companies or US companies—it must apply to companies throughout the world, or it simply will not stick.

Vincent Cable (Twickenham, Liberal Democrat)

Is the hon. Gentleman aware that he is suggesting that there is a lack of evidence on the subject of revenue loss from tax avoidance in developing countries? Is he aware of the Christian Aid report on death and taxes that seems, on first sight, to be a very serious piece of econometric work? It suggests that somewhere between 10 and 15 per cent. of the revenue of developing countries, and medium and low-income countries, has been lost as a result of systematic manipulation of prices and, therefore, the revenue deriving from them?

Tony Baldry (Banbury, Conservative)

If policies are to be taken forward, they must be based on evidence. I am slightly concerned that in the four years that I served on the Select Committee on International Development, very little work was done on that issue. It may well be that Christian Aid is one of the first organisations to have done some work. There is a danger that we create an impression that developing countries would have access to more money than they do currently if only they started taxing more efficiently and more effectively. Ironically, when one visits pretty much any country in Africa, the major concern relates to jobs. Most countries are worried about jobs and employment. Interestingly, most developing countries will offer substantial "tax holidays" to new inward investors. That is true of almost any capital city in Africa. Many developing countries in Africa have free ports and other such mechanisms to encourage investors and job creators to invest in those countries because their primary concern is job creation.

Andrew Stunell (Hazel Grove, Liberal Democrat)

The hon. Gentleman seems to be developing an argument that poorer countries are giving such incentives of their free will to provide the right business environment to create jobs. Surely the reality is that the multinationals go on a reverse Dutch bidding war to see which country will give them the biggest discounts. One only has to look at copper pricing in Zambia to see how damaging it is to the income stream of poorer countries. Surely the balance of trade in that negotiation is very much with the larger multinational corporations and not with the developing countries' Governments.

Tony Baldry (Banbury, Conservative)

There is a slightly 1960s feel about how we describe the multinationals. If the hon. Gentleman goes to Khartoum, Freetown or Dar es-Salaam, he will find that the major new investors seeking the best fiscal arrangements are Chinese or Russian. Most African countries will seek to attract those companies—whether they be from China or elsewhere—by giving fiscal incentives.

My next point relates to tax havens, but I will try to be brief because I am conscious that others wish to speak. If the UK Government believe that something is wrong with tax havens, they are probably in the best position to sort it out because a large number of them are UK overseas territories. In part, UK overseas territories, such as the Turks and Caicos, the Cayman Islands and Bermuda were encouraged by successive UK Governments to go into banking and financial services as a means of becoming self sufficient. That also applies to the British Virgin Islands and, to a lesser extent, Anguilla, Montserrat and Gibraltar. I have never been entirely clear as to the constitutional status of Guernsey, Jersey and the Isle of Man. None the less, if it is being said that there is something wrong with tax havens, it is within the gift of the UK Government to take action. After all, they managed the constitutions of all of those overseas territories.

The Government have decided to return the Turks and Caicos to direct administration under the governor, but that is because of allegations of corruption and nothing to do with it being a tax haven. I am slightly surprised that the Chancellor has proclaimed at the G20 and elsewhere that they will take action on tax avoidance and evasion because many of the tax havens are under UK jurisdiction. Therefore, if action needs to be taken against tax havens, it is within the gift of the UK Government. However, if we are going to take action, it should be based on evidence. We should not put developing countries in a position in which they are being accused of being the authors of their own misfortune. There is a danger of giving an alibi to developed countries to cut back on their assistance to developing countries on the grounds that if only developing countries took the necessary action to increase their own tax yields, they would be in a far better position. If we say that the amount of taxation in developing countries is roughly one and a half times the amount of annual global aid from rich countries to poor, we will see where that argument goes when the developed world is under pressure.

Nia Griffith (Llanelli, Labour)

I very much welcome the attention that the G20 is giving tax havens and tax avoidance, which is long overdue. No one can pretend that ruling out the immoral and devious practices that companies use to avoid playing fair and to wriggle out of paying their dues—in short, to cheat—will be easy. Those involved defraud the exchequers of the world of billions of pounds, and we all pay for that because we are defrauded as consumers and taxpayers. When we as consumers buy something from a company, we expect a certain amount to go towards legitimate taxation, not towards lining the pockets of millionaires. Similarly, we as taxpayers will pay more or enjoy fewer services if others do not pay their dues.

The Government are a big consumer, and procurement can be a powerful tool. My hon. Friend the Minister will be aware that I introduced a ten-minute Bill—the Public Contracts (UK Tax Requirements) Bill—last year. Its purpose was to place certain requirements relating to the payment of UK tax on companies bidding for public contracts, to prohibit the transfer of such contracts overseas and to require such companies to provide certain information about tax payments. My hon. Friend Mr. Mitchell introduced an early-day motion in a similar vein.

The problem is that some companies that have won Government contracts, including private finance initiative contracts, can transfer ownership of the company to a tax haven. In that way, they can avoid paying UK tax on their income and profits. I find it particularly outrageous—and so, I think, do the electorate—that those untaxed profits come from the public purse and from taxpayers' hard-earned money.

The real difficulty is that there is a lack of transparency and that those who award public-private partnerships or PFI contracts are not required to request sufficient explanation and detail about the tax arrangements of the companies that bid for them. We all understand that large companies have projects and businesses in many different countries, but the British public want to be sure that the money that they pay in taxes does not go into schemes that pay companies that do not pay their full UK tax dues.

It would be nice to think that we will see the end of tax havens and that we will no longer need a Bill such as mine, but there is still a long way to go and much international negotiation to do. I therefore ask my hon. Friend the Minister to do everything possible to demand much greater transparency from companies that bid for public contracts. In that way, we can ensure that we do not aid and abet some of the practices we have heard about today and that British taxpayers do not pay companies that use tax havens to avoid paying their dues.

Austin Mitchell (Great Grimsby, Labour)

I congratulate my hon. Friend David Taylor on raising this important subject. He, I and others have been lobbying Ministers and HMRC to do something about it for several years, and we have always received an interested hearing along the lines of "Gosh, we didn't know that!" but no action has resulted. Now that we are in a recession or near-depression, and the manipulations, greed and derelictions of the financial sector have produced their own nemesis, something will clearly be done. When the Minister speaks, and when Ministers do act, however, I hope that they will not just fob us off with the idea that everything is very difficult and that we can act only through international agreement. As my hon. Friend said, there are actions that this country can take at a national level.

One of the basic problems that we face is the avoidance of taxation through the formation of holding companies, which can be found around the world. Thirty per cent. of Barclays subsidiaries are in tax havens, Lloyds has 80 holding companies in Jersey and BP has 3,000 holding companies. Such companies are used to manipulate profits. News Corporation is very adept at that. It makes huge profits from The Sun and now from Sky television, which do not pay tax on their earnings in this country as they should, because those earnings are manipulated through holding companies.

Google is a classic instance. It must generate between £1 billion and £2 billion of its £7.5 billion worldwide profits in this country. It is headquartered in Ireland, and the money is filtered out through Ireland. It does not pay any tax in Ireland, so the Irish get no benefit from providing the European headquarters—ultimately, the headquarters are in Bermuda. Google has more advertising revenue than ITV, which produces programmes in this country, but it does not pay tax on that revenue and is making no contribution to production in this country.

Last year, in an interesting pamphlet entitled "The Missing Billions", the TUC estimated—its estimates are very moderate—that such practices cost the British taxpayer £25 billion in lost revenue. That will become increasingly important, because we need the revenue to repay the debts that we are accumulating as a result of trying to expand the economy at a time of deflation. Individuals are failing to pay £13 billion in tax in this country, while companies are failing to pay £12 billion.

As my hon. Friend said, we can deal with the problem through action in this country. We need not to tax companies registered as subsidiaries, but to view corporations and multinationals as a whole. We need a unitary tax system with formulaic apportionment. Where is the revenue generated? As my hon. Friend said, we need national accounts of what is generated where so that we can tax in this country the revenues accruing from profits, plants and workers in this country. Such a system of unitary tax with formulaic apportionment operates between states in the United States and it could well operate here. Why do we not introduce it? That would put an end to the loss of tax capacity and tax revenue in this country.

Vincent Cable (Twickenham, Liberal Democrat)

Will the hon. Gentleman give way?

Austin Mitchell (Great Grimsby, Labour)

I would rather get through my speech, because the hon. Gentleman will have some interesting opinions to give us.

The system that I have set out should be the basis for our tax system given that we need the revenue in the current crisis.

A second general principle that this country could and should adopt is anti-avoidance. Why not? It works well in Australia. Under legislation from 1903, Australia does not look at what the law actually says about what is due—lawyers will quibble about that for ages, and corporations have huge staffs of well-paid lawyers. Instead, it looks at the intention of the legislation. As a result, any structures that are designed to avoid taxation, rather than to improve a company's competitiveness and strength, are struck down. Why do we not have that principle in this country to avoid the manipulations that are going on?

The third thing that we can do unilaterally is deal with the tax havens, although Tony Baldry indicated some reluctance to do that. As he said, there are two categories of tax haven. The British overseas territories—particularly the West Indies—are mainly of concern to America because of tax avoidance in the United States. The hon. Gentleman was correct to say that we encouraged those territories to develop financial and banking centres as an alternative to paying them aid. We said, "We won't give those West Indian chappies aid. We'll let them develop banks such as we have"—the same successful banks that have brought this country to its knees. We used that as a substitute for paying them aid because it was cheaper—that is what it was all about. However, the countries involved are British overseas territories and they can be dealt with as such.

The consequence of such development is the corruption that we see in the Turks and Caicos Islands, with its corrupt regimes and inefficiency. It failed to develop the economy's industrial and agricultural potential because it concentrated on financial services, which are skimming off the cream.

The second category of overseas territory, as the hon. Gentleman intimated, is the Crown dependencies—the Channel Islands and the Isle of Man. Those are of more interest because they are escape hatches—subsidiaries—which allow finance in the City of London to manipulate its money. We can deal with such dependencies quite effectively. The only inhibition is the constitutional one, which Governments make much of, although they do not hesitate to cross that line on moral issues, equality issues or rights.

The Channel Islands are a British concern, and there is not as much of an issue about American companies as there is in the West Indies, so we can deal with the problem by insisting on the principle of absolute openness. All ownership of companies should be on the public record. All the name plates that flourish in Jersey and Guernsey make a fascinating tour; people could think they were touring a mighty industrial empire as they went around looking at those name plates gleaming on the doors of companies there—but there is nothing behind them. They are just name plates. There should be openness about ownership in the public record; all accounts should be on the public record, so that we would know who was passing the money through, and could deal with that; and there should be full compliance with the European savings tax directive. In other words just paying withholding tax and keeping the accounts secret should not be allowed; full compliance with the directive should be insisted on. That transparency would produce radical change and a substantial reduction in the kind of financial sector that is found in the Channel Islands. It might drive them back to their old basics of tomatoes and tourism, and they might need financial help with that, but we cannot avoid the principle.

There is a need to build such measures. We can do it on a national basis without waiting for international agreement, and we should. There is a need to act quickly rather than wait for international agreements, because we are now in a situation of some desperation. We need the companies in question, which do not pay their tax dues or their social rent to this country, to pay.

I conclude with an important point, which my hon. Friend did not deal with. We are now concerned about the environment and global warming, and it must clearly be dealt with on an international scale. Global warming and the development, control and management of industries cannot be dealt with unless the financial side of the question, and the management and control of the tax capability of the relevant companies, is dealt with. It must be done, and soon.

David Taylor (North West Leicestershire, Labour)

My hon. Friend says that no one has been prepared to stand up. An organisation is nominally charged with that responsibility: the International Accounting Standards Board, which is, as I said, predominantly funded by the gang of four large accountancy bodies. He who pays the piper calls the tune, and you do not bite the hand that feeds you. There are all sorts of sayings that come to mind to explain why the IASB has been so torpid in tackling the problems.

Vincent Cable (Twickenham, Liberal Democrat)

I congratulate David Taylor on securing the debate. This is a very topical issue and he presented the case extremely well. Rightly, the focus has been on tax havens—the common theme is secrecy—which my colleague, the noble Lord Oakeshott, called

"sunny places for shady people."—[Hansard, House of Lords, 26 March 2009; Vol. 709, c. 772.]

People go to the British Virgin Islands or the Caymans not because they want financial expertise but because they have got something to hide, even if there are other reasons why people want secrecy.

The debate is on the revenue side. Tony Baldry rightly asked for an evidence base. There is fragmentary evidence. Her Majesty's Revenue and Customs estimated three years ago that the British Exchequer was losing something in the order of £10 billion to £40 billion a year—a wide range—to tax avoidance and evasion activities of various kinds. Richard Murphy, who has rightly been praised for his practical work on the matter, has estimated that HMRC is losing something in the order of £18 billion specifically through tax havens. High net worth individuals account for about half of that through legal avoidance; £3 billion is lost through corporates; and the rest is lost to illegal evasion. A lot of evidence has come through in the past few years, for which The Guardian has rightly been praised, on corporate tax avoidance, as distinct from evasion.

In 2005-06, a third of British companies in the FTSE 100 paid no tax at all on their profits—none whatever—and a third paid very little. We have an extraordinary state of affairs. The average corporate tax rate for small companies in Britain is 21 per cent., which is supposed to be concessional, but the average tax paid by big companies is 20 per cent., because the latter have access to the lawyers and accountants that the former do not. That is utterly perverse.

Before I go any further, we need to clarify the language. We all use the words "avoidance" and "evasion", but there is clearly a continuum—it is not one or the other. On the one hand, there is outright criminal activity, and on the other the form of tax avoidance that all taxpayers engage in when the Government, sometimes rather foolishly, openly give a differential that invites people to take advantage. We had a good example in the Budget: we now have a 50 per cent. top rate tax on earnings, but only an 18 per cent. rate on capital gains tax, which is an open invitation to perfectly law-abiding individuals to turn their income into stocks so that they can pay tax at a much lower rate. We cannot blame people for that. The measure could have been simple incompetence, but it could also have been deliberate.

Somewhere between avoidance and evasion is a very grey area, on which the debate has centred. Mr. Mitchell and Mr. Mudie helpfully described the complex structured arrangements in which organisations such as Barclays engage. I believe that Barclays has 110 specialists working on the absolute edge of the margin between evasion and avoidance, so that they stay on just the right side of the criminal law. They nevertheless have the very clear intention of avoiding paying UK taxes, which is our main concern.

The big question that the hon. Member for North-West Leicestershire asked was, what do we do about it? It is partly about taking international action and partly about domestic policy. Internationally, the fundamental issue raised by the G20 was transparency, and he raised two of the three key issues, the first of which is the automatic exchange of information. The current OECD white list is very good at creating transparency, but it leaves substantial hurdles when it comes to getting information from tax havens. Information exchange has to be made automatic to be effective. As he mentioned, the Government are resisting such a measure. There are good reasons for resisting automatic exchange in some cases—one would not want automatic exchange of information with, say, Mugabe's Zimbabwe, for human rights reasons—but, as a general principle, between countries that have satisfactory human rights, automatic exchange of information should be the norm.

The second transparency issue that the hon. Gentleman raised was country-by-country accounting. As several hon. Members mentioned, it is an issue for the IASB. There is a lot of foot-dragging, and political leadership is needed, but that is the way to stop the systematic abuse through transfer pricing, the manipulation of profits and the minimisation of corporate tax payment.

The hon. Gentleman did not mention the third transparency issue, namely the identification of the beneficial owners of trusts and companies. A lot of tax avoidance through tax havens takes place by hiding the names of the ultimate owners. The EU savings directive precludes that, but it is not being enforced. One difficulty that the UK has in being righteous about the matter is that our trust system is incredibly opaque. Many trusts are never registered and other countries might reasonably ask, "Why are the British getting heavy-handed about this when their own system of tax law in relation to trusts is so opaque?" Until we deal with that problem, it will be impossible to crack down effectively on the tax haven system.

On the specifics, the Prime Minister has now taken the initiative of writing to all our Crown dependencies and overseas territories and challenging them to come up with standards of behaviour that meet the requirements of the G20 and OECD systems. That is a step forward. One could legitimately ask why he did not take that step 12 years ago, but he has done it now. I guess that he did not introduce the measure earlier partly to protect the City, which has sustained many such relationships, and partly because DFID encouraged many of the territories to get into tax haven activities supposedly as a way of making their economies sustainable. That was foolish, as the hon. Member for Banbury pointed out, but we are stuck with it.

What action is going to be taken to follow up that initiative? I have two specific questions for the Minister. First, what sanctions are going to be taken against the seven British territories that are on the OECD grey list which do not even comply with the OECD's fairly modest demands? What powers do we have in respect of those territories to which the Prime Minister has written? I suppose that we cannot be too draconian. Fifty or so years ago, when General de Gaulle was annoyed by the tax avoidance activities of Monaco, he cut the water supply off; by the following day, Monaco complied. We are not in a position to do that, but I assume that sanctions against British territories are available. If so, what are they?

Secondly, the three United Kingdom Crown dependencies—Jersey, Guernsey and the Isle of Man—comply to pretty high standards under the OECD rules, but they do not automatically exchange information. What steps are being taken to make them comply with that higher requirement which, I think we have agreed in the debate, is necessary to make the crackdown on tax havens effective?

That deals with the international dimension, and I wish to pose a series of questions to the Minister on domestic policy in my remaining three minutes. First, what resources are the Government putting into HMRC to crack down on avoidance activities such as the complex structured arrangements in the banks that have been described? My understanding is that the budget for the relevant department within HMRC was cut by 5 per cent. for the current financial year. Is that true? What is being done to ensure that HMRC is properly resourced to pursue its activities? Is it true, as I have been told, that HMRC is not yet even so much as investigating the information that came to light as a result of the German crackdown on Liechtenstein? That brought to light a lot of British names. As far as I know, they are not being investigated. Is that true? What will be done following the Government's promise to name and shame companies and individuals who are engaged in systematic tax avoidance? What form will that action take and when will it start?

Secondly, as the hon. Member for Leeds, East said, we cannot be in a position in which the Government are guaranteeing banks and simultaneously allowing them to participate in tax avoidance activity. There is a lot of ambiguity about that. It is clear that the Government intended that the beneficiaries of the asset protection scheme comply with British tax rules, but in subsequent statements, including to me, the Chancellor has said that it is a separate issue. How separate an issue is it?

On the legislative provisions—several hon. Members referred to this—there has been a general expression of belief that we need to move to general anti-avoidance rule processes. What is the Government's time schedule for that, and do they have any specific provisions to introduce a purposive rule in order to ensure that the courts, when dealing with marginal cases, are clearly directed to ensure that companies and individuals seeking to avoid paying taxes are prosecuted?

The hon. Member for Great Grimsby correctly described how companies establish subsidiaries for the purpose of avoiding tax. My understanding is that such subsidiaries are required to be disclosed under the Companies Act 2006, but evidence unearthed by newspapers investigating the issue suggests that they are not being registered. They are not compliant with the law. Are the Government investigating the matter? Is action being taken against companies that do not comply with those legal processes?

Thank you for your indulgence, Mr. Hancock. I think that we all recognise that raising revenue is now a critical task, given the serious problems with the public finances. We should start by cracking down on the people who do not pay the taxes that they should pay.

David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)

It is a pleasure to serve under your chairmanship for the second time today, Mr. Hancock. I congratulate David Taylor on securing this debate. It is, as others have said, timely and topical, indeed fashionable, although to be fair to the hon. Gentleman, I do not think that anyone would describe him as a slavish follower of fashion, intellectual or otherwise. None the less, it is helpful for us to debate the issue. I know that he has pursued it for some time.

There is a clear consensus that secrecy within the financial services sector and various tax jurisdictions is creating great problems. The public mood has shifted, partly because at a time when most people's tax burden is increasing, it is essentially unfair that a wealthy minority can avoid their tax obligations. Also, as Mr. Mudie pointed out, the Government are desperately searching for revenue, we are borrowing a huge amount and debt is increasing.

I share the focus of the comments made by the hon. Member for North-West Leicestershire and Christian Aid in its campaign. Secrecy is key. We must find practical ways to improve the exchange of information. In the Crown dependencies and overseas territories, the picture is not all bad. Progress has clearly been made in our offshore financial centres, according to the interim Foot report commissioned by the Prime Minister, on a test of compliance with the Basel Committee on Banking Supervision, the International Organization of Securities Commissions, the International Association of Insurance Supervisors and the anti-money laundering standards published by the Financial Action Task Force. The International Monetary Fund assesses those financial centres as broadly comparable to other jurisdictions and, in some cases, better. It is also worth noting that the G20 assessment for the Crown dependencies suggested that they are substantially implementing the international standards for exchange of information. The overseas territories are committed to doing so, but they have not substantially implemented them yet.

We must not be complacent, of course, and there is clearly a great deal of progress to be made, but as Dr. Cable rightly pointed out, terminology is important. What do we mean by a tax haven? I would argue that a tax haven is not simply a jurisdiction with low tax rates. That is a sovereign right. The Republic of Ireland, for instance, was sometimes accused of being a tax haven for having a corporation tax rate of 12.5 per cent. I think that the focus should be secrecy.

Another point of terminology that the hon. Gentleman rightly raised is that there is a spectrum that runs from tax evasion, which is clearly illegal and unacceptable and must be addressed, through tax avoidance to tax planning. I quote:

"It's perfectly legitimate for people to tax plan. They are only obliged to render unto Caesar what is due to Caesar."

That comment was made by the Chancellor of the Exchequer to the Treasury Committee in his evidence; I suspect that the hon. Member for Leeds, East will recall it.

We must be careful about what we are addressing. There is a danger of confusion in some of the criticisms made about the level of tax avoidance. A number of hon. Members have mentioned the Trades Union Congress report that refers to a tax gap. The work was undertaken by Mr. Richard Murphy, who identifies a £25 billion tax gap caused by tax avoidance. Essentially, he looked at headline tax rates and then at the total tax rate, measured the gap and said that it was caused by tax avoidance, but that fails to take into account that we as a Parliament deliberately introduced measures that mean that entities, individuals and companies are not necessarily paying the headline rate.

It appears that half of the £25 billion gap is due to a combination of independent taxation in the UK between spouses and civil partners and the fact that companies can defer taxation through capital allowances. Bill Dodwell of Deloitte put it well when he said:

"The TUC's report doesn't inform the tax avoidance debate: it seems to be challenging policy choices (independent taxation; the taxation of the self-employed; capital allowance rates) by labelling them as tax avoidance."

We must be careful not to devalue the terminology. There is such a thing as tax avoidance, which should be addressed, but let us not become confused.

Christian Aid has led the argument on the international development element of the issue. I know that it is in frequent communication and contact with my hon. Friend Mr. Mitchell, our spokesman on international development. Christian Aid makes the point made by the hon. Member for North-West Leicestershire: it is better that countries should be self-sufficient and rely on their own tax revenue rather than aid. That is an interesting point for the Minister to answer. How much are the Government doing to assist in that?

On a note of caution, my party and I believe that globalisation has many positive effects and that it is good for countries to trade with each other and for multinationals to be active in developing countries. As my hon. Friend Tony Baldry pointed out, multinationals go to developing countries and create jobs, which benefits those countries. One reason why they may do so is the lower tax burden. It might be a combination of accident and design—my hon. Friend referred to tax holidays, for example— but if the lower tax burden is no longer available, it is legitimate to question whether multinationals would invest in the same way and create the same number of jobs.

To what extent do the numbers in the Christian Aid report incorporate a dynamic model? If not for what it describes as the tax leakage from developing countries to developed countries, would there be as much economic activity? I question whether that is the case.

Nia Griffith (Llanelli, Labour)

Will the hon. Gentleman give way?

David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)

I have only one minute, so I apologise to the hon. Lady for not giving way.

To conclude, in order to allow the Minister his full time, there should be more transparency and greater exchange of information, and it is right that we should debate the practical ways of developing them, but I have two questions about the UK and anti-avoidance. To follow the comments made by the hon. Member for Twickenham, how much is HMRC investing in enforcement and tackling tax avoidance? There were reports that the amount being spent on those matters increased to £1 billion, although we do not have comparable figures for previous years. Will the Minister put that £1 billion figure into context?

Secondly, avoidance activity is likely to increase when tax rates increase. A new 50p income tax rate has just been announced. It was reported that Treasury modelling said that 69 per cent. of those affected by the 50p rate will avoid or evade paying at least some of the tax. Will the Minister confirm whether those reports are accurate?

In conclusion, it is right that we tackle this issue in a practical way. We must address secrecy so that those who have to pay a fair amount pay it.

Ian Pearson (Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)

It is a pleasure to serve under your chairmanship this afternoon, Mr. Hancock. The debate has been excellent with well-informed and interesting contributions from Tony Baldry and my hon. Friends the Members for Llanelli (Nia Griffith), for Great Grimsby (Mr. Mitchell) and for Leeds, East (Mr. Mudie), as well as from the Opposition spokesmen, the hon. Members for Twickenham (Dr. Cable) and for South-West Hertfordshire (Mr. Gauke). In particular, I congratulate my hon. Friend David Taylor on securing this timely debate on tax avoidance and evasion.

The Government believe that for any tax system to be effective, everyone must pay their fair share. Tax evasion and avoidance damage the ability of the tax system to deliver its objective of paying for services that we all use and need. It is important to say that the vast majority of people in Britain pay the right amount of tax. It is unsurprising that those who pay are angered by reports of the small minority of people and companies who seek deliberately to evade or avoid paying their fair share. The Government have been consistent in challenging avoidance and evasion through legislation and litigation, and by working closely with other countries, which is increasingly important in the global economy.

It is said that businesses that operate internationally can most readily reduce the amount of tax they pay and that globalisation opens opportunities to avoid tax. From the UK point of view, we must keep our rules under review and work with international partners to support our competitive position and protect our tax base. We must also ensure that our partners' systems are not open to abuse. I will shortly say more about the important international agenda that we are pursuing in response to the points made by my hon. Friend the Member for North-West Leicestershire.

The Government are also taking strong domestic action to counter tax evasion and avoidance. The Budget set out a further package of measures to tackle tax evasion and avoidance. In addition to closing down a number of abusive and artificial tax avoidance schemes, we announced measures to tackle cross-border tax evasion, including an opportunity for holders of offshore bank accounts to come forward and pay what they owe. The Chancellor announced steps to ensure that large taxpayers take responsibility and accountability for paying tax, including a duty on the senior accounting officers of the largest companies to sign off on tax returns. As hon. Members noted, we are also introducing legislation that will allow HMRC to publish the names of serious tax defaulters. That package of measures will raise more than £1 billion in the next three years and, by 2010, will protect a further £3 billion of tax receipts from evasion and avoidance each year.

I mentioned that this problem is international. We are not the only country acting domestically to tackle tax evasion. Earlier this week the US Government released proposals to tackle the problem, which we will watch with interest. The need for international collaboration on taxation has never been clearer. The global financial downturn and the shocks that precipitated it highlight the extent to which our economies are intimately interconnected. The ability of large firms to move large flows of money around the world with ease provides greater opportunity for tax arbitrage through structures designed to minimise tax, as we have heard from hon. Members. As well as leading to a loss of tax revenues at home and in the developing world, such structures add capacity to the financial system and increase uncertainty about the location of risk and value.

The Government have long been committed to supporting developing economies. As well as providing aid to the poorest developing countries, we have been clear about the role that tax can play in the development process. I assure my hon. Friend the Member for Leeds, East that that is not a new conversion—it has been a consistent policy over many years. In effect, we have led G20 discussions on taking action in this area. It was among the key issues discussed in London, where a great deal of progress was made. The G20 leaders agreed to take action against tax havens and noted the published OECD list of jurisdictions that do not meet international standards for exchanging tax information. They are ready to deploy sanctions, if necessary, and I will say more about that in a moment.

Tax information exchange agreements play a key role in combating evasion and avoidance by enabling tax authorities to obtain information on the foreign income and assets of their taxpayers for tax assessment and compliance purposes. That makes it more difficult for people to hide income in foreign accounts and to avoid paying tax to their own authorities. Perhaps more so than developed countries, developing countries suffer from flows of capital to tax havens. Tax information exchange agreements provide greater transparency and make it possible to ensure that tax is paid where it is due, meaning that illicit flows of ill-gotten gains are more easily discovered. Transparency has been a key theme of our debate.

The Government's priority is to ensure that momentum in this area does not falter and that our G20 commitments are delivered. We are looking to countries that do not meet international standards on exchanging tax information to make swift progress. As the hon. Member for Twickenham mentioned, the Prime Minister has written to all our overseas territories to remind them of their commitments. The hon. Gentleman also asked about G20 sanctions. The G20 is certainly prepared to take counter-measures, and I refer him to the communication annexe of the G20 report, which outlines them.

We are talking to countries such as Switzerland and Lichtenstein, which were mentioned, about the implementation of their commitments to exchange tax information with the UK through bilateral treaties. Those steps will not only bring benefits for tax collection in the UK, but help developing nations to improve their tax systems. Rising revenues and sustainable economic growth are important for the strategies of developing countries to move out of aid dependency. With that in mind, we were able to secure the support of our G20 colleagues on ensuring that developing countries benefit from new measures to enhance co-operation on tax. The Prime Minister has written to the OECD to ask it to look at ways to enable developing countries to participate in and benefit from the exchange of tax information. He wrote specifically about extending global forum membership to developing countries. We will continue to explore mechanisms to support developing countries.

Transparency is the key to tackling tax evasion. Tax authorities need the capacity to collect the taxes that are due, but they also need to be able to assess the full extent of tax liabilities. The hon. Member for Banbury commented on the measures that we have taken in Sudan. In addition to those, we are exploring the OECD's model multilateral tax information exchange agreement—perhaps that addresses the 192 squared point that my hon. Friend the Member for North-West Leicestershire made about bilateral agreements. That agreement could be a significant step towards allowing developing countries access to relevant tax information without requiring time-consuming and resource-intensive bilateral negotiations.

David Taylor (North West Leicestershire, Labour)

rose—

Ian Pearson (Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)

If my hon. Friend will forgive me, I will not give way because I have precisely two minutes in which to address the other points that he made.

HMRC will continue to work closely with other jurisdictions through the Joint International Tax Shelter Information Centre and other international groups to combat avoidance and global tax risks. HMRC deals with all information that is received on a resource-to-risk basis. I cannot comment on individual cases, but it is important to understand the operating efficiencies that have been made by HMRC in recent years. We are also building a better evidence base to underpin our work.

The Secretary of State for International Development has commissioned detailed research on the impact of tax evasion on developing countries and the interim review is expected imminently. Between 2001 and 2006, the Department for International Development undertook 101 tax-related projects to support developing countries in improving their tax systems. We are doing a lot with developing countries, not just Sudan, and I could give many further examples of the action we are taking. We are working through the African tax administration forum to share experiences on policy and process.

Mike Hancock (Portsmouth South, Liberal Democrat)

Order. I am afraid that I will have to interrupt you, Mr. Pearson. I thank all Members who have taken part for the courtesy that they have shown to the Chair and to each other, and I ask them to leave the Chamber quietly as we progress on to the next debate.