Speculation that 1% levy on turnover of top 100 firms could be introduced
Lord Chancellor Gove’s growing reputation as a left-leaning reformer could be cemented by a new tax that he is apparently planning to hit top City law firms with.
Uneasy with the much maligned court charge brought in by his hated predecessor Chris Grayling — which is basically a way of getting more money from poor people — but also under pressure to balance the Ministry of Justice’s books, Gove has had a bright idea.
According to a report in this morning’s The Times (£), the government is considering scrapping Grayling’s scheme to extract money from guilty defendants in favour of a 1% levy on the turnover of the top 100 corporate law firms.
The article is light on detail, but given that the Lord Chancellor used to work as a journalist at The Times before going into politics, it may be worth taking seriously.
Perhaps most importantly, the report recalls comments made by Gove in June when he noted that “justice is not just a marketplace — it is a community” and urged big-earning corporate lawyers to “look into their consciences” and do more pro bono work. If this didn’t happen, Gove added that legislation was “always open to us”, with proposals for a “lawyers’ levy” apparently already drafted.
The court charge — which is already proving difficult to enforce given how broke many convicted criminals are — is expected to pull in between £65 million and £90 million annually, while the mooted City lawyer tax would boost the Treasury’s coffers by a much larger £190 million. So there is method in Gove’s liberal madness.
Nevertheless, any bid by the government to hit corporate law firms in the pocket is likely to provoke serious opposition. After all, the likes of Clifford Chance have on-site swimming pools (pictured below) to maintain.
In fairness to the City firms, despite their occasional extravagances, they are huge business success stories that in 2013 were collectively responsible for generating an impressive £22.6bn — equating to a not insignificant 1.6% of total UK GDP.
And the government has been among the first to boast about this, celebrating the nation’s corporate legal profession at events like the Global Legal Summit. So City lawyers will have a fair bit of leverage in their negotiations with Gove if he does try to introduce his “lawyer’s levy”.
Quick off the mark, City of London Law Society chief Alasdair Douglas, who is the former senior partner of Travers Smith, came out against the plan this morning, commenting:
Suggestions of a special tax on only one section of the community to pay for a public service seems intellectually unsustainable.
Gove has won widespread praise in the left-leaning media of late for his rehabilitation-focused prison reform plans and more constructive engagement with lawyers over the legal aid cuts.