Fair Tax councils: Putting pledges in action

With their iconic Oxford Street shopping district blighted by ‘dodgy’ American-style candy stores that had evaded around £9mn of local business rate taxes, in 2022 Westminster City Council launched a ground-breaking anti-dirty money and fair tax charter.

Almost two years on, the authority’s efforts are beginning to turn the tide and see legitimate business come to the fore: candy stores numbers are down from 30 to 21, and ‘fair tax’ features in the council’s latest Responsible Procurement and Commissioning Strategy.

Speaking at a recent webinar, the leader of Westminster Council, Cllr Adam Hug, senior council officers, and Fair Tax Mark accredited supplier businesses Mace and Marshalls, shared their approach and demonstrated how cross-sector collaboration can drive better practice.

Here are four learning points for how local areas can champion responsible tax conduct.

1. Set a strategic approach

Westminster Council are one of more than 60 local authorities across the UK signed up to the Councils for Fair Tax Declaration, pledging to lead by example on their own tax conduct and encouraging good tax conduct among suppliers.

Commenting at the webinar, Cllr Hug said: “Westminster Council plans to have a strong voice on this issue both whether it’s on candy stores, whether it’s on issues around who owns our properties…but also taking a lead on how we can use our supply chain to improve social value and deliver tax justice throughout our economy.”

Westminster have tailored their approach and responded to the local impact of economic crime. Ezra Wallace, Director of Policy, said of the council’s pledge: “What the [Westminster Against Dirty Money] Charter does is, for the first time, put in place a really clear framework to facilitate the steps available locally to tackle illicit finance.”

2. Work in partnership with business and government agencies

Wallace added: “We’ve got a really important leadership and convening role to bring partners together to stand for good tax conduct… businesses want to see this happen across the city and really welcome the Council playing a convening role.”

Westminster have worked constructively with local landowners, sharing information and collaborating to recover lost business rates. With opaque ownership structures making it hard, if not impossible, to trace the true owners of trading outlets like candy stores, Wallace outlined the council’s innovative partnership approach: “First we developed a list of properties where the beneficial owner is unclear or seems to be inconsistent. We map these with relevant law enforcement agencies, including National Crime Agency and HMRC, to take coordinated action, and that’s been a really effective tool, working with responsible landowners as well to close and discourage bad tax conduct.”

Westminster have sought to engage positively with supplier businesses around fair tax too. Speaking at the webinar, Alex Rigby, Senior Procurement Officer at Westminster Council shared how the council embedded this in the recent Responsible Procurement and Commissioning Strategy: “We have a Fair Council pillar, which is where our commitments to fair tax fit in… We are currently having strategic responsible procurement discussions with our top 80 suppliers. These discussions will focus on several different aspects of the strategy, including tax.”

This approach has resonated well with suppliers Mace and Marshalls. For Miranda Chamberlain, Group Head of Tax at Mace, aligning on fair tax makes good business sense: “Mace, as a construction company, we do a huge amount of work with government. We’re building hospitals, we’re building rail and road. We pay our taxes, as we should in every country. It funds governments to help invest in their infrastructure…so it’s really important and it just makes good business sense at the end of the day.”

Jo Holmes, Head of ESG Reporting at Marshalls, backed this up: “We also very much believe that we are part of the infrastructure… Back in 2014, we became a Living Wage employer and then we joined the Fair Tax Mark…it was an evolution of the things that we were doing to showcase our credentials and the way that we see how businesses should behave.”

3. Have a ‘can-do’ approach to local fair tax action

Westminster may be an extreme example of how economic crime blights local places, but it is by no means the exception. The UK government estimates local government lose around £250mn each year from business rates tax avoidance. And with the UK also losing around £12.5bn each year when multinational businesses shift profits to low-tax jurisdictions, it’s no wonder local authorities increasingly want to buy goods and services from companies that pay tax responsibly.

There are undoubtedly limits to what councils can and should do to tackle bad tax conduct. But Westminster are keen to inspire others to take a ‘can-do’ approach to local action.

“People are right to point out that in many ways, our levers are limited, but that doesn’t mean that we shouldn’t do anything,” said Wallace. Councils can maximise some powerful levers from procurement through to trading standards and business rates, as well as their advocacy and influencing role.

4. When you hit a wall, be vocal and call for national policy change

Councils signed up to the Councils for Fair Tax Declaration are calling for reform of the UK’s procurement rules so they can better address bad tax conduct and reward good tax conduct when buying goods and services. Current regulations significantly restrict what councils can do and prevent authorities from awarding points to businesses that demonstrate a robust commitment to responsible tax conduct.

Westminster’s approach has been to do what they can to raise awareness among suppliers, such as promoting the Fair Tax Mark at events, and surveying major suppliers on their approach to tax, in anticipation of legislative change.  

Cllr Hug added: “There’s an ongoing discussion at local, regional and national level about how we can better deliver social value.”

Earlier this year we covered Westminster’s calls for new regulations to close loopholes in economic crime legislation and help clean up the high street. With financial and ownership transparency being essential components of our Fair Tax Mark accreditation standards, we’ve long been behind reforms that would help drive out economic crime and boost fair tax.