A campaign has been launched to encourage more local authorities to take into account a company’s tax record when awarding contracts.

Christian Aid said councils should direct their combined multi-billion pound spend on goods and services at firms that ‘pay their fair share of tax’.

Its Sourced campaign will highlight the growing number of local authorities which are probing the tax arrangements of potential contractors.

Although current laws dictate that councils should ask suppliers whether they have been found guilty of tax evasion, it does not require them to dig deeper and ask questions around tax avoidance.

Oxford City Council voted in December to look into how it can investigate companies’ tax practices and similar arrangements have already been put in place in Northern Ireland by Belfast and Lisburn & Castlereagh councils.

Helen Collinson, senior public advocacy adviser at Christian Aid, said: ‘Christian Aid is pleased to see a growing number of UK councils demanding that companies seeking contracts must reveal whether they have been in trouble about tax, anywhere in the world. We hope to see many more do so in 2016.

‘That’s because companies’ tax decisions have a major impact on people’s lives, both in the UK and even more so in developing countries. When they use accounting tricks to pay less tax, there is less funding for public services at local and national level, including for schools and health services.’

Cllr Jean Fooks of Oxford City Council, who proposed the motion that was passed by the local authority, said: ‘At a time when councils are struggling with ever deeper cuts to our budgets, it makes sense that we use our spending power to favour companies that pay their taxes. After all, it is companies’ and individuals’ tax payments that ultimately fund council budgets. I hope that councils across the UK will agree.’