UK Politics

Boris Johnson enters Boots v Labour tax row

Boris Johnson Image copyright PA
Image caption Mr Johnson said the Boots boss was defending the interests of shareholders

Boris Johnson has weighed into the row about the amount of tax paid by Boots and its chief executive in the UK.

The mayor of London said it was "disappointing" Stefano Pessina did not pay tax in Britain and that the retailer had moved its headquarters to Switzerland for tax purposes.

Ed Miliband has attacked Mr Pessina as a "tax exile" after he warned a Labour government would be a "catastrophe".

Boots said its total tax bill in 2013-14 was about £550m.

Labour has suggested there is an "unholy alliance" between some business people and the Conservative Party to resist change in the run-up to May's election and has vowed to take on "powerful forces" over the amount of tax paid by multinationals, as well as on wider issues of taxation and regulation.

Mr Pessina, who took over the retailer when it merged with Alliance Unichem in 2007, has suggested Labour policies in such areas would be "unhelpful for the country".


Image copyright PA
Image caption Mr Miliband has urged more responsibility from "people at the top"

Analysis by 5 live chief political correspondent John Pienaar

It is hard to imagine Gordon Brown, and still harder Tony Blair, picking a fight with business leaders like the chief executive of Boots.

But Ed Miliband is less keen to claim British business as a prized convert to the Labour cause; much keener to gain credit - and votes - for taking on powerful interests.

Read John's full article


This prompted an angry response from the Labour leader, who said a "tax exile in Monaco" should not "lecture" people on how to vote in May's election and Mr Pessina "ought to pay his taxes" in the UK.

Mr Johnson told LBC Radio that Mr Pessina was "perfectly entitled" to express his view on the business landscape in the UK and it was "refreshing" that businessmen did not feel cowed from speaking up so close to an election.

Mr Johnson, who is hoping to return to Parliament as a Conservative MP in May, said it was "absolutely true" that Labour had "no interest" in wealth creation.

Image copyright AP
Image caption Boots' parent firm recently merged with the US business Walgreens

But he said that it was "slightly disappointing" that Boots had moved its headquarters from Nottingham to Switzerland in 2008, a move experts have said is saving the firm millions of pounds every year.

"He is doing his best by the lights of his shareholders and the interests of the company," Mr Johnson said.

"These guys, I'm afraid, have a fiduciary duty to their shareholders to minimise their obligations. In business terms, it's what you have to do.

"I have to say I find it a little bit disappointing that he doesn't cough up for Britain ... I think it is a good thing if companies that earn great sums in Britain should pay their taxes in Britain."

'Business backbone'

Responding to Mr Johnson's comments, Labour challenged David Cameron and George Osborne to "join the criticism of tax avoidance by the Boots chief".

Mr Cameron told BBC Radio London he could "very much agree" with Mr Johnson.

"I'm very clear that I want every company to be headquartered in Britain and I want everybody working in those companies to live in Britain," he said.

"The good news is lots of companies are choosing to headquarter in Britain and we will go on encouraging them to do so, and so I can very much agree with what Boris has said."

Speaking on BBC Newsnight, Simon Woodroffe, who founded the Yo! Sushi restaurant chain, said the Labour Party's approach to business "scares" him.

Mr Woodroffe appeared in a 2004 Labour party political broadcast but has since donated to Conservative MP Oliver Letwin.

He said: "What I worry about with Ed Miliband is that he is appealing to the popular by saying 'look at these fat cats'.

"What I want our leader to say is 'we want enormous profits, and yes we are going to share them out later, but first of all we've got to make it'."

Speaking on the same programme, shadow chancellor Ed Balls dismissed Mr Pessina's criticism of his party.

He said some business leaders supported the Conservatives, some backed Labour, and "most business people are in the centre ground".

Mr Balls referred to Mr Pessina's decision to move to Monaco but said "of course business leaders should have a view".

Lord Rose, who headed M&S for a decade and is now a Conservative peer in the House of Lords, defended Mr Pessina's right to intervene in a political debate.

Image caption Stuart Rose said business was the "backbone" of the economy

"As a man responsible for 70,000 workers - that's 70,000 livelihoods supporting 70,000 families - Mr Pessina was perfectly entitled to speak out," he told the Daily Mail.

"What happens in Westminster has a direct impact on his employees and his customers."

He added: "In a healthy, thriving democracy, people must be free to speak out without fear or favour," he added.

"This is the real face of British business. They aren't the enemy. They are the backbone of our economy - and they deserve the support and respect of our politicians."

Sir Ian Cheshire, the former boss of B&Q, said politicians should refrain from "unattractive" personal attacks even if they disagreed with others' point of view.

"He has the complete right to have his say, as have other people," he told the Daily Telegraph. "Even if you disagree with him, I don't think it is necessary to have personal attacks on Stefano in this way - particularly for a guy who has really ploughed a lot of money into the UK and is doing now to make Boots a world force."

Sir Ian, who stepped down as head of Kingfisher last year, was recently named as the government's top non-executive director, advising departments across a range of issues.

'Stung'

Conservative backbencher John Redwood suggested the row risked damaging Boots' reputation as well as Labour's and business leaders needed to think carefully before wading into political controversies in the name of their companies.

"By all means let's hear from Mr Pessina as an individual with his anti-Labour views, but let's hear less from Boots," he wrote on his blog.

"Labour now sees it as an opportunity to put the boot into Boots, as they are stung by the criticism. Neither Labour nor Boots will gain from these rows."

Alliance Boots, which merged with US firm Walgreens last year, said it paid £90m alone in UK corporation tax in 2013-14, an 40% increase on the year before.

"Overall, the total amount of tax paid in the UK, including business rates, national insurance and corporation tax, was around £550m in 2013/14," it said.

During that period, the firm made a £830m profit on sales of £6.3bn.

In a statement, it added: "Over the last eight years, and under Mr Pessina's leadership, Alliance Boots contributed over £1.2bn to its pension funds, benefitting many of the 70,000 people it continues to employ in the UK, and invested a similar amount in transforming Boots stores across the UK."

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