Cash in hand row: David Gauke's priorities under fire

Jul 24, 2012

Gauke might be right that paying cash to builders is 'morally wrong', but Bob Diamond did more harm than Bob the Builder

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EXCHEQUER secretary David Gauke came under fire today after claiming that people who pay tradesmen in cash for a discount are "morally wrong".

Gauke accused homeowners of helping workers avoid tax by paying them in cash, claiming that undeclared payments cost the government £2bn a year in VAT and income tax.

"Getting a discount with your plumber by paying cash in hand is something that is a big cost to the Revenue and means others have to pay more in tax," he said. "I think it is morally wrong. It is illegal for the plumber, but it is pretty implicit in those circumstances that there is a reason why there is a discount for cash."

The Treasury issued a hasty statement to the effect that Gauke was answering a specific question rather than proposing a policy change – but commentators have nonetheless reacted angrily to his words.

"What planet is this government on?" asks Melissa Kite in the Daily Mail. "Specifically, in which galactic space federation was David Gauke resident before Scotty beamed him down to make absurd pronouncements on the British economy?"

If Gauke has his way, calling the odd-job man to fix a bit of peeling paint would mean adding "miles and miles of paperwork, acres of banking red tape, and oodles of extra HMRC form-filling to your already soul-crushing routine", says Kite. "For heaven's sake, Scotty, beam this one back up."

"What's immoral about paying cash?" questions Cristina Odone in The Daily Telegraph, who claims "Bob Diamond has done a lot more harm than Bob the Builder".

We have seen bankers manipulate the system to tunes of billions yet the "twerps at the Treasury worry about me paying my plumber £80 in cash to fix a leak", says Odone. "Talk about the wrong priorities."

Today's Telegraph leader makes a similar point: "Instead of pronouncing such sententious moral judgments, perhaps the minister should ponder why people are so keen on paying the plumber or the builder in cash. Could it have anything to do with the fact that they are fed up with the way the Exchequer digs ever deeper into their pockets while simultaneously wasting much of the proceeds through ill-targeted and unnecessary public spending?

"Householders should be free to pay for services rendered as they see fit. Spending cash is not yet a criminal offence and Mr Gauke has no right to suggest it is in any way improper or wrong."

Tariq Dag Khan, from the tradesmen recommendation website Rated People, told The Independent that Gauke's comments  do little to help tradesmen who are struggling in a difficult economic climate", adding: "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."
Melanie McDonagh in the London Evening Standard joins in the confessional chorus: "I always pay my cleaner in cash, who doesn't?" she proclaims. "The reason why his remarks have struck such a nerve is that he has identified a practice that is so widespread, it's rather bad taste to allude to it."

But McDonagh adds that none of this goes to show that Gauke is actually wrong. "It's self-evidently the case that paying builders in cash is 'facilitating the hidden economy and that's as big a loss to the Exchequer as tax avoidance'."

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