THE BLOG

A Distant and Distracted Cameron Cannot Tackle Tax Avoidance

21/05/2013 15:38 BST | Updated 21/07/2013 10:12 BST

Tomorrow I will be speaking at the Google Big Tent.

It is an opportunity to talk about the way digital is changing the global economy, changing Britain and changing the way we prepare for the next Labour government.

Thousands of new enterprises are starting up, the dream of owning your own business is coming into every home as the internet opens up the economy for millions. But countries and people can be left behind. At the same time as the internet breaks down old hierarchies, it can also create new vested interests. And, even as the internet connects people across the world, footloose companies can use the global market to avoid facing up to their responsibilities.

The rules that we set, the behaviour we reward, and the cultures we encourage can either help bring about a better future made by the many or ensure power and wealth is still concentrated in the hands of a few. In short, the choices we make will begin to determine whether we have a responsible capitalism or an irresponsible one.

The events of the past three weeks have only served to underline how distant and distracted David Cameron, not to mention his divided party, has become from addressing these issues.

Last week we watched his government being pushed around by Conservative backbenchers so that on the crucial issue of Europe policy now appears driven by the short term political interests of internal party management rather than the long term interests of British businesses and British workers.

This week we have watched the Prime Minister looking desperately over his shoulder at the MPs behind him over the issue of same-sex marriage.

Being backward-looking and inward-looking will not work if we are to succeed as a country and meet the new challenges presented by the digital age.

Tomorrow I will have more to say about the forward-looking, outward-looking agenda One Nation Labour is developing on issues ranging from access to public data for small firms, what is taught in schools, rewards for innovation and limiting anti-competitive practices.

It must also include the rules around the tax paid by the big global corporations which have been created in this digital age.

Google is said to have paid only £10million in corporation tax in the UK between 2006 and 2011, despite revenues of £11.9billion.

I was surprised the Prime Minister failed to raise this when Eric Schmidt attended the Business Advisory Council's meeting in Downing Street this week - because the subject under discussion was the Government's declared intent to tackle corporate tax avoidance.

It was even something that Mr Schmidt raised himself over the weekend when he and I both called for international tax reform.

I want to ensure transparency, proper rules on transfer pricing and a crackdown on tax havens. I don't believe this distracted and divided Government is doing enough on this issue ahead of the G8 summit. And, if we cannot get international agreement, we have been clear that we should be acting here at home.

But big choices are not confined to government. Corporations like Google must decide what kind of future they want to help create.

So the right laws must also be accompanied by the responsibility of firms - and this always goes beyond simply obeying the letter of the law.

Think about someone on benefits, who could work, but isn't doing so.

If they were meeting their requirements to report to the job centre, but were only making the barest effort to look for work, we would condemn their behaviour.

Well, similarly, companies have obligations that go beyond the law.

In Google's 2004 IPO prospectus, it said: "Don't be evil. We will be stronger in the long term, we will be better served - as shareholders and in all other ways - by a company that does good things for the world, even if we forego some short-term gains. This is an important aspect of our culture and is broadly shared in the company."

I take two things from this.

First, that Google wanted to do the right thing because that's its culture. And, second, because it will be better for Google: "We will be better served."

Its employees want a culture where they feel they are doing the right thing and your customers want it too.

Think about the wider society on which Google and all other companies depend: a health service and an education system training our young people to be the creative individuals we all want them to be.

Again, it is not just the right thing to do, it is essential for a prosperous country.

Google shouldn't be going to extraordinary lengths to avoid paying its taxes. It has an obligation to do more than simply comply with the letter of the law.

Google has done much to open up markets and opportunities for entrepreneurs. It has done some great things for the world.

But it also has an obligation to wider society and to live up to its own founding principles.