Corp Tax cut cheerleaders WPP move headlines, not jobs to UK

It turns out that there's less than meets the eye - for jobs and tax take - to WPP's much trumpeted possible move to the UK following the annouced corp tax cut.

It is a mainstay of right-wing politicians that all humans act rationally all the time and that this is defined as wanting lower taxes more than anything else.

So there was much to warm the cockles of their hearts when WPP, Sir Martin Sorrell’s multi-billion pound communications giant, announced on Thursday that it was likely to move its “tax headquarters” from Ireland to the UK in the wake of Chancellor Osborne’s corporation tax cut the day before. My, how the market works like clockwork!

Except, what the ‘move’ is, and how many jobs it will create seems to be harder to fathom on closer inspection. For a start, WPP already has operations in both the UK and Ireland. In fact it has 210 offices in the UK compared to only 22 in the Ireland. In addition, how much is based at the Ireland headquarters is debatable. The press office isn’t, for example. In fact, according to some reports, there may be as few as eight employees at the Dublin HQ.

Furthermore, given that several of the brand names represented in WPP’s Ireland offices are also represented in the UK, such as Kantar Retail, MediaCom and TNS, it can only be presumed that these are based in Ireland to serve that market, and not for any particular tax purposes, and so are unlikely to be moved to the UK. If the UK and Irish markets could be served from the same office, presumably WPP would have consolidated them already.

In fact, a WPP spokesman told Left Foot Forward: “we would not expect a material increase in numbers employed in London as a result of any possible move back to a UK tax domicile.”

It took more than 24 hours and an entire news cycle for WPP to get back to Left Foot Forward on the matter. You may think this odd, from an organisation specifically set up for media communication, whose  likelihood of considering a move back to the UK under tax arrangements was announced back in April 2010, and has been specificaly courted by the Chancellor.

There is another benefit which would seem to be accrued by WPP moving its headquarters to the UK: increased tax revenue to the UK Treasury. However, WPP has used extremely intricate ways to avoid tax in the past, and there is no reason to say they won’t even if they are headquartered in the UK.

Indeed, given the ‘race to the bottom’ that European countries are pursuing, each cutting corporation tax in turn in the hope of luring the continent’s WPPs, it appears that any benefit to the Treasury – even if it could outweigh lost revenues elsewhere – will be short-lived. Ireland and Iceland tried this game before and we know how that ended.

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