Speaking following UK Foreign Minister, Jack Straw's suggestion at the weekend that the outsourcing of call centre and other back office functions to countries such as India could benefit the UK economy, Shadow Chancellor, Oliver Letwin has condemned the "crackpot" VAT rules which mean that the government is "effectively providing a subsidy of 17.5% to people who want to go offshore".
On Monday, Mr Letwin suggested that: "The current VAT system provides a massive financial incentive to banks, insurance companies and other financial institutions if they outsource certain functions to countries such as India rather than the UK."
He added:
"The problem is becoming ever more acute as competition from low-wage countries increases."
Meanwhile, a number of the UK's largest unions have announced that they will be taking part in an independent public investigation into the recent outsourcing trend.
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