The billionaire owner of Northumbrian Water is at the centre of a documentary being aired on North East screens on Monday (12 Jan) night.
The water company, owned by Hong Kong-based Li Ka-shing, one of the richest men in the world, has made more than £630m profit in the last two years, according to BBC investigations programme Inside Out.
But the firm pays on average less than 10% tax because of a legal tax loophole, the show will claim.
Northumbrian Water told the BBC that the company always acts transparently and within the letter and spirit of the law, adding that it is not in dispute with HM Revenue and Customs on its tax affairs.
But presenter Chris Jackson will tell viewers:
“Northumbrian Water sounds nice and local but when you pay the bill you may be surprised to learn the profits leach away to the other side of the world.”
Mr Li is the richest man in Asia, and 17th richest in the world, with an estimated wealth of £20bn.
He owns Superdrug and the Three mobile network, invests in Spotify and Facebook and has owned Northumbrian Water, which employs 1,600 staff, since 2011. He also runs a charitable foundation.
In terms of his North East assets he ranks alongside Mike Ashley and the Duke of Northumberland – except nobody here has ever heard of him, says Jackson who asks in the show:
“Of all the things he could have bought in the world, why did he buy a slice of the North East?”
Interviewee Professor David Hall of the University of Greenwich, will tell the documentary:
“The UK government provides a regulatory environment which most people think of as protecting the consumer, but its core objective is to ensure that the companies continue to make enough profits so that they want to carry on investing.”
In the last two years, Northumbrian Water has paid less than 10% tax on £630m profits, compared with the 20% standard corporation tax, because it has borrowed £1bn from Mr Li, Jackson will claim in the documentary.
The government has looked at closing the tax loophole – which is completely legal – but decided against it, prompting Labour MP John McDonnell to attack the situation in the House of Commons last year. He said:
“No wonder he’s the world’s ninth richest person. We’re making him the world’s ninth richest person. I think this is a scandal.”
> Earlier the article named him the 17th richest person. Perhaps he’s lost a bit since last year, poor dear. Down to his last few billion.
Mr McDonnell is calling for an independent public inquiry.
Nobody from the government would be interviewed for the programme, but a statement from the Treasury said recent analysis showed that changing the system used by Northumbrian Water would not save money and would undermine the competitiveness of the British economy.
Most utility companies in the UK now have owners dotted across the world, the programme will say.
> Well of course they are – subsequent governments – of all colours – since Thatcher have been obsessed with selling off the family silver to the highest bidder. A process that continues today with the NHS and DWP.
Barbara Leech, from the Consumer Council for Water which represents customers, will appear in the documentary describing how Northumbrian Water – which provides water supplies to the homes of 2.7m people in the North East – is top of the league in terms of satisfaction with services.
The full story can be seen on Inside Out (North East and Cumbria) on BBC1 at 7.30pm on Monday 12 Jan, in an episode which also features a Tyneside surgeon’s dream of building a hospital in India’s slums and a Teesside woman who helped shape modern Iraq. It will also be available on iplayer for 30 days.
Source – Newcastle Evening Chronicle, 12 Jan 2015
More than 250,000 workers in the UK are being cheated out of the legal national minimum wage by unscrupulous employers, a damning new report reveals.
A new report from the Trade Union Congress (TUC), National Minimum Wage – Keeping up the Pressure, reveals that while the majority of employers are ‘happy’ to pay up, others are finding new ways to escape paying the legal minimum wage.
The findings may prove to be deeply embarrassing for the Tory-led coalition government, who claim to be “making work pay” and on the side of “hardworking people”.
> I doubt they are capable of feeling embarrasment or shame…
The national minimum wage rate is currently set at £6.50 per hour for workers over the age of 21, falling to £5.13 for 18-20 year olds, £3.79 for under 18’s and £2.73 per hour for apprentices.
However, the TUC says a minority of employers are adopting a ‘wide range of scams’ to avoid paying up: including under-recording hours, bogus self-employment, misusing interns and volunteers, charging for uniforms, not paying for travel between work sites during the working day, clocking workers off when there are no customers in the store or cafe, and employers vanishing to avoid minimum wage fines only to reappear under another name.
Apprentices are particularly likely to be underpaid, with figures suggesting as many as 120,000 people on apprenticeships are paid less than the legal requirement.
TUC says enforcement of the national minimum wage needs to ‘continuously improved’ and stronger punishments for employers who flout the law need to introduced, such as increasing the maximum fine from £5,000 to £75,000.
The report also calls for the appointment of 100 more HM Revenue and Customs (HMRC) enforcement officers, the naming and shaming of employers who fail to pay at least the national minimum wage and better guidance for businesses.
The TUC has outlined a 10-point programme the next government should adopt to improve minimum wage enforcement:
- Restore the budget for raising awareness about the minimum wage to £1 million.
- Hire 100 more HM Revenue and Customs (HMRC) enforcement officers
- Better official guidance on the minimum wage so that employers know their responsibilities.
- Create legal gateways so that HMRC can share information about enforcement with local authorities and the transport regulatory authorities
- Name and shame all non-payers.
- Government to guarantee arrears if employer goes bankrupt or simply vanishes.
- Adopt a prosecution strategy targeted towards the worst offenders and increase maximum fine from £5,000 to £75,000.
- More targeted enforcement for high-risk sectors.
- Make government funding for training apprentices dependent on employers paying the minimum wage, and create a duty for training providers to check that the minimum wage is paid.
- Promote collective bargaining so that trade unions can deal with more minimum wage problems themselves.
TUC General Secretary Frances O’Grady said:
“Failing to pay the minimum wage is an antisocial act that squeezes those workers who have the least. There should be no hiding place for cheapskate bosses who try to cheat their workers out of the minimum wage.
“We must engage in a constant battle to ensure that every worker gets at least the minimum. It is clear that some employers are actively looking for new ways not to pay even the legal minimum.
“There should be a broad consensus between political parties, good employers and trade unions that the minimum wage must always be enforced effectively.
“We urge everyone to support the TUC’s plan for ensuring continuous improvement to the minimum wage system.”
Source – Welfare Weekly, 08 Jan 2015
This article was written by Daniel Boffey, for The Observer on Saturday 22nd November 2014 20.28 UTC
The coalition’s record on low pay has come under attack as new figures revealed that not a single company has been prosecuted in the past year for paying less than the national minimum wage. Despite ministers’ claims that the government is getting tough on under-payers, the last successful criminal prosecution was in February 2013.
That was one of only two prosecutions during the government’s entire term of office to date, according to figures given to parliament. The cases involved the imposition of fines to the value of £3,696 on an opticians in Manchester and £1,000 on a security company in London.
The Annual Survey of Hours and Earnings for the Office for National Statistics recently found that about 287,000 workers were paid at less than the minimum wage in 2012, although the TUC puts the figure closer to 350,000.
Chris Mould, chairman of the Trussell Trust, the charity that runs 400 emergency food banks, said that the increasing numbers of people attending its facilities was clear evidence that ministers needed to do more to protect people who were living “on the edge”.
The number of people helped by Trussell Trust food banks in the first half of the 2014-15 financial year is 38% higher than in the same period last year. The trust reported this weekend that 492,641 people were given three days’ food and support, including 176,565 children, between April and September. That compared with 355,982 during the same period in the previous year.
Problems with the social security system continued to be the biggest overall trigger for food bank use (45%), of which “benefit delays” accounted for 30% of referrals, and “benefit changes” 15%, according to the charity.
However, an emerging trend, according to the charity, is that 22% of those helped were referred because of “low income” compared with 16% of referrals in the same period last year – meaning 51,000 more people were referred to a food bank due to low income.
“It is up to the democratically elected parliament to make some decisions and one route is to make it less easy for people to be exploited at the bottom of the labour market. We see people forced to cycle in and out of poverty and they are so close to the edge that it is easy for them to slip under.”
HM Revenue and Customs (HMRC) said that it prosecutes the most serious breaches of the national minimum wage “and where there is clear evidence to do so”. A spokesman said the average cost of a successful prosecution was around £50,000 and that HMRC believed it was preferable to recoup wages for workers through civil penalty powers. In 2013-14, HMRC conducted 1,455 investigations and issued 652 financial penalties.
But the shadow business secretary, Chuka Umunna MP, said that the coalition was not taking the action needed to enforce the minimum wage. Failing to pay the minimum wage was made a criminal offence in 2007. Under Labour, seven organisations were prosecuted, including Torbay council.
“The national minimum wage is one of Labour’s proudest achievements in government and it has made a huge contribution to making work pay, boosting living standards and tackling in-work poverty.
“It is clear that the Tory-led government is not going to take the action needed to properly enforce the minimum wage – so that is why Labour is clear that we need to see higher penalties for rogue companies who don’t pay employees the minimum wage and far more effective enforcement, including by giving local authorities new powers.“
An HMRC spokesman said that the number of staff enforcing the minimum wage now stood at 194 – 40 more than in 2009-10. He said:
“Paying less than the minimum wage is illegal and, as HMRC’s record shows, if employers break the law they will face tough consequences. We conducted 1,455 investigations in 2013-14, securing over £4.6m in wage arrears for over 22,000 workers.
“The vast majority of national minimum wage cases are dealt with using civil penalty powers, as this route is usually the most appropriate, ensures workers receive the wages they’re due, and provides the most cost-effective resolution for taxpayers. However, in more severe cases, HMRC will take criminal action and seek a prosecution.”
Source – Welfare Weekly, 22 Nov 2014
A pledged crackdown on tax evaders who fail to pay tens of millions to the Treasury has been a failure, a North East Labour MP says.
Blyth Valley’s Ronnie Campbell’s comments come after tax expert Richard Murphy estimated around £80m was not paid to the Government last year.
The MP also called on the Conservatives to reverse job cuts at HM Revenue and Customs (HRMC) which he says have shrunken the workforce by 43% in just over a decade.
He said: “The current Tory-led coalition has promised a clamp-down, but have not acted on those empty promises.
“Think how many new hospitals, schools and care homes could have been built across the North East.
“It is a disgrace and the next Labour government will sort it out.”
The report, commissioned by the Public and Commercial Services union, revealed the overall amount of tax owed, evaded or avoided has barely reduced despite tough-talking pledges by the Government. It adds evasion could rise to £100bn by 2018-19.
The report focused on economic activities not recorded or declared so as to avoid government regulation or taxation; tax lost as a result of other criminal or fraudulent activity in the UK economy; capital gains tax and inheritance tax and offshore tax evasion; and tax evasion on investment and rental income.
The report recommends introducing a proper anti-avoidance rule into UK tax law; country-by-country reporting for multinational corporations; reform of small business taxation; and proper regulation of companies in the UK to ensure they file their accounts and tax returns and pay the taxes they owe.
Source – Newcastle Evening Chronicle, 30 Sept 2014
More than £4.6 million has been paid out to thousands of people working for less than the national minimum wage, including staff at a Premier League football club, figures have shown.
HM Revenue and Customs said it had held more than 1,400 investigations in the past year which led to arrears being paid to 22,000 workers.
Around 650 financial penalties were issued, worth £815,000, recovering an average of £205 per person.
Business minister Jenny Willott said: “Paying less than the minimum wage is illegal and, as HMRC’s record shows, if employers break the law they will face tough consequences.
“We want to issue a clear warning to employers who fail to pay the minimum wage – under the Government’s new rules you will be named and shamed and face a stiff financial penalty.”
The unnamed football club was ordered to pay arrears of more than £27,500 to 3,000 workers after it made deductions for uniforms and travelling time for staff working in hospitality.
Other cases included a social care provider found to have not paid its staff for travelling time and a recruitment agency ordered to pay more than £167,000 to workers, including some it had classified as unpaid interns.
Jennie Granger, director of enforcement and compliance at HMRC, said: “Paying the national minimum wage is not a choice – it’s the law. HMRC will continue to ensure that workers get at least the wage to which they are legally entitled.
“Where an employer ignores these rules, we will ensure that any arrears are paid out in full and the employer is fined. Rogue employers be warned – we will find you and you will pay.”
> So Workfare – working for benefits only – an amount below the national minimum wage ? Will the HMRC find Iain Duncan Smith and make him pay?
Source – Northern Echo, 05 June 2014