Protests shift their focus to tax avoidance

High-street shops run by Top Shop and Vodafone were bracing themselves on Saturday for a fresh wave of protests, as campaigners against tax avoidance tap into a fast-growing vein of anti-corporate sentiment.

UK Uncut, a decentralised protest group, is targeting Vodafone’s stores and shops that form part of Sir Philip Green’s Arcadia fashion empire, including Top Shop. Protests are planned in 50 towns and cities.

The emergence of tax avoidance as a protest issue is causing concern to business leaders. Richard Lambert, director-general of the CBI employers’ group, said: “It’s worrying to the extent it gives an impression that business is not paying taxes in the way it should. It gives a misleading impression of the role of business in society.”

One of the most striking aspects of the controversy had been the ease with which a group of people had coalesced on a narrow set of issues. The sudden escalation of the issue was an “interesting and significant” example of the power of social media, he said.

Anthony Fitzsimmons, chairman of Reputability, a consultancy, said that Facebook and Twitter had transformed protest movements by allowing them to be orchestrated with remarkably little effort and negligible infrastructure. “Only a few decades ago, individuals couldn’t easily coalesce to challenge large organisations. Protest needed organisations and leadership. Now it is incredibly easy to propagate ideas.”

Tax avoidance had become a significant reputational issue for companies dealing primarily with consumers but interest in the topic should not be exaggerated, he said. The number of people – about 9,500 – who “liked” the UK Uncut Facebook page was dwarfed by the number – more than 800,000 – who backed the Boycott BP Facebook page.

Vodafone and Top Shop have both had to close stores because of UK Uncut’s protests but the closures have lasted no more than a few hours. Vodafone says the UK Uncut protests have had a “minimal” impact on trading. But it is also concerned about the impact on its reputation and on staff morale.

Some of the windows at Top Shop’s Oxford Circus store were smashed on December 9, when students protested at government plans to raise tuition fees.

Chris Tobin, a spokesman, said there had been “moments of connection” between UK Uncut and students demonstrating over tuition fees, but his group’s actions had not involved damaging property.

The Metropolitan police declined to comment on UK Uncut but said it always had appropriate plans in place to deal with protests it knew about.

Mr Tobin said UK Uncut’s objective, through its protests, was to persuade the government to take a more aggressive stance on tax avoidance. If ministers took a tougher stance, the public spending cuts could be reduced, he argued.

UK Uncut cites a TUC estimate that UK tax avoidance costs £25bn a year. By contrast, official statistics published by Revenue & Customs estimate that avoidance costs about £7.4bn a year, of which £2.9bn is due to avoidance by big companies.

The CBI’s Mr Lambert does not believe the protests will have a direct impact on investment decisions by multinationals. But he is anxious that the government does not take sweeping action against avoidance.

A proposal to examine a “general anti-avoidance rule” last week received a hostile response from the CBI, which said it would “introduce a very unwelcome element of uncertainty into the tax system”.

Businesses paid “substantial” amounts of tax. They should respond robustly to charges that they were failing to pay their fair share, he said. “It is important that people understand that the recovery from the recession and the creation of jobs is going to be heavily dependent on business investment.”

PUB MEETING INSPIRED CAMPAIGN

The idea for UK Uncut’s campaign emerged when a group of friends – including students, a trainee teacher and a nurse – met in a pub in Angel, north London, to discuss an article in Private Eye in September, write Andrew Parker and Vanessa Houlder. The allegation that Vodafone had avoided paying £6bn in tax through a dispute settlement with Revenue & Customs prompted them to hold a demonstration outside one of Vodafone’s three Oxford Street stores in London on October 27, which resulted in its temporary closure. UK Uncut decided to use Twitter, the microblogging website, to publicise its campaign. By Saturday, October 30, the group had succeeded in holding demonstrations outside 25 Vodafone stores in 15 towns and cities, according to Chris Tobin, a spokesman. About 12 Vodafone stores were shut down. UK Uncut then targeted Top Shop on December 4 after receiving e-mails and tweets from people complaining about Sir Philip Green’s tax arrangements. The focus on Sir Philip’s Arcadia fashion empire arose because his family was able to take a £1.2bn tax-free dividend from the Arcadia group in 2005, as the company is owned by his wife, Lady Tina, who is a resident in Monaco rather than the UK. Arcadia declined to comment on Sir Philip’s tax arrangements. Vodafone said reports suggesting it had an outstanding tax bill of £6bn were “incorrect”. “Vodafone takes corporate responsibility very seriously and meets its tax obligations in the UK and all of the other countries in which the company operates,” it added. UK Uncut’s future plans are vague but some activists are considering broadening their campaign to include accountancy firms and banks, according to James Kelly, a spokesman. However, there is a widespread preference for maintaining a narrow focus. “There is a feeling that the message may be lessened if we go after 15 or 20 companies.” Whatever the targets, Mr Kelly said the protests were likely to escalate ahead of next April’s cuts. “People will be back on the streets in the new year.”