Senior political figures fall foul of Treasury minister David Gauke’s view that it is ‘morally wrong’ to pay tradesman cash
David Cameron, Boris Johnson and Nick Clegg all admitted that they have made cash-in-hand payments to tradesmen as Downing Street struggled to control a debate on the morality of tax.
The government’s most senior members – plus the London mayor – all acknowledged that they may have fallen foul of a Treasury minister who said it was “morally wrong” to pay plumbers in cash.
But other ministers took a different view. Eric Pickles, the communities secretary, denied that he ever made a payment in cash. Asked whether he had ever done so, Pickles told the BBC: “Certainly not.”
Westminster descended into virtual parody of the television satire The Thick of It after the Treasury minister David Gauke said on Monday it was “morally wrong” to pay plumbers cash in hand because it denied the revenue vital funds. Ministers issued different responses, indicating a lack of central co-ordination.
A No 10 source said that Cameron is likely to have made payments in cash but he had never done so to secure a discount. The source said: “The prime minister has never paid anyone in cash to get a discount. He may have paid cash but he has never done this to help anyone evade their share of tax.”
Johnson said: “I’ve certainly paid a lot of cash in hand,” he said.
Clegg told Channel 4 News: “I can’t remember off the top of my head. I am sure I have paid someone cash, but I certainly have never paid anyone cash in hand knowing that is done in order to avoid tax. That would be entirely wrong.”
Vince Cable, the business secretary, said “of course” he had made payments in cash. Asked by ITV News whether he had ever paid anyone cash in hand, Cable said: “Of course, it’s perfectly legal and perfectly moral, providing you’re not doing it with the objective of avoiding tax and I certainly wouldn’t do that.
“There’s nothing wrong with paying people cash. Absolutely nothing wrong at all. What is wrong is if people do it knowing that this is a way to avoid tax and where there is an understanding that somehow the differences will be split. That is wrong. Everyone should be honest and everyone should be ensuring that tax is properly paid.”
Cable used the debate to highlight the government’s campaign to crack down on millionaire tax avoiders. “The real abuse takes place in the multi-million, multi-billion tax dodges and that is where the government is now starting to crack down hard, identifying individuals in big tax avoidance scheme, introducing a general anti-avoidance rule that will stop a lot of these schemes getting through in the first place.”
Jeremy Hunt, the Olympics minister, was asked at a London 2012 security briefing whether he could say “hand on heart” that he had never made any cash in hand payments. Hunt said that he had never dodged tax as he dodged the question.
“Let me start by saying David Gauke was saying that tax dodging is wrong and I personally haven’t dodged tax. But I am here to talk about the Olympics so I think it is very important that we focus on that topic, if I may.”
James Brokenshire, the home office security minister who was sitting next to Hunt at the briefing, was more forthcoming. “Would I have made cash payments to avoid VAT? No, I certainly would not.”
Treasury sources moved to play down the significance of Gauke’s remarks. They said that he had only described cash-in-hand payments as morally wrong if they were designed to secure a discount from a tradesman avoiding tax.
In his remarks on Monday Gauke said the revenue was losing £5bn a year in tax avoidance. HMRC has raised more than £500m in the past year after launching campaigns focusing on particular areas such as plumbers and electricians.
Tariq Dag Khan, of the tradesman website Rated People, said: “David Gauke’s comments that it is morally wrong to pay tradesmen in cash do little to help tradesmen who are struggling in a difficult economic climate. For the reality is that there is little or no alternative to cash payments for many tradesmen, and criticising the whole industry belies a misunderstanding of the situation many customers and tradesmen are in.
“There is a great deal of trust involved when hiring a tradesman for both the tradesman and the customer and therefore cheque payments do not provide a viable alternative especially when, if the cheque bounces, the tradesmen could be dangerously out of pocket and in some circumstances forced out of business as a result.”