There’s no prize in Sorrell’s race to the bottom

Alex Hern explains why Sir Martin Sorrell's feint over corporation tax is empty: he has no jobs to offer us, and wouldn't pay any tax even if he did move back.


Sir Martin Sorrell has been sabre-rattling again today on the front page of the City AM newspaper, claiming that the pro-business measures in the chancellor’s draft finance bill don’t go far enough for him to ‘move’ his company ‘back’ to London.

City AM dutifully reported:

Sir Martin says further progress is needed.

“We’re still studying the document,” he said. “It does not go as far as we thought it might… It’s very much in the right direction but not quite far enough in our case. We’re assessing what more needs to be done and the Treasury is being very responsive.”

They add:

Chancellor George Osborne has staked a large part of his business-friendly credentials on Sir Martin’s signal that his marketing firm WPP will come home in light of reforms to UK taxes on profits made abroad.

But as we reported back in March, any ‘movement’ of his company may be in the most technical sense possible:

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.

Not only is the movement unlikely to transfer any jobs, it’s not going to create new ones either:

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.”

Still, at least if they move their paper-HQ back to London we’ll get more tax revenue, right? Maybe not. Tax avoidance has been elevated to an art in the company, who have in the past used extremely intricate methods to get out of paying their share, and Sorrell’s offered no reason to think that this might change if he moved back.

So the chancellor, having given a handout to corporations while enacting the harshest austerity measures on normal people in a generation, is now being held to ransom for more money by a company which is offering neither employment nor tax revenue to the UK.

The chancellor is yet again being drawn in to a race to the bottom, but this time there’s not even a prize for getting there.

See also:

Cameron continues Gideon’s race to the bottomAlex Hern, October 26th 2011

The Sun “tax avoiding” front page you won’t have seen this morningShamik Das, October 26th 2011

Corporation tax – devolution too far?Ed Jacobs, August 24th 2011

Corp Tax cut cheerleaders WPP move headlines, not jobs to UKDaniel Elton, March 27th 2011

Small companies pay most corporation tax as Britain fuels new race to the bottomWill Straw, March 2nd 2011

Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.