Tax havens and the super-rich: why the government has one eye closed

London, tax haven capital.

New research from the Tax Justice Network – an organisation devoted to making the rich pony up their due - says that a minimum of $21trn is held offshore. This stash should worry us all.

This is not just because it is money which could generate $190bn in taxes to be spent by governments on, say, paying down debt, building schools or hiring nurses. What is as important is the effect this hidden money has on social inequality.

Alongside the report with the $21trn figure (which may in fact be $32trn, or somewhere in between, or indeed less), the TJN published "Inequality: You don't know the half of it", which hews to the argument of The Spirit Level and similar texts, that inequality increases social problems, and shows how it is now a much greater problem in the light of its new research:

"Power follows money, and extreme concentrations of wealth at the top of the income scale lead inevitably to disproportionate power and influence for the wealthiest members of society, so some of the most malign political effects of inequality stem from changes as the very top of the income and wealth distribution."

The British government is certainly making some efforts to tackle tax avoidance - all those Carr-ish schemes are being stopped - but it's with one eye closed. As Nicholas Shaxson pointed out in his book Treasure Islands: Tax havens and the men who stole the world, the fons et origo of tax havens is… London. With New York, "the jurisdictions act as capitals of secret empires, exploiting their hand-in-glove relationships with former colonies to tap funds that would otherwise be deemed too dirty to handle."

If the government can't make the connection between the money that flows into the City from tax havens and the riots on London's streets, it should perhaps pay attention to the Tax Justice Network, crusaders even without capes.

Josh Spero is the editor of Spear's.

London. Photograph, Getty Images

Josh Spero is the editor of Spear's magazine.

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Heathrow decision: 6 things we learnt about the third runway plans

Affected homeowners will get 25 per cent extra for their homes. 

After years of ferocious campaigning by both Heathrow and Gatwick to be the site of a new airport runway, Heathrow has triumphed. The government has accepted the recommendations of the Airports Commission and backed a third runway at Heathrow.

Confirming the decision, the Transport secretary Chris Grayling said: “The decisions taken earlier today are long overdue but will serve this country for generations to come."

So what happens now? Here is what we learnt:

1. It’ll be a while

Grayling said the draft policy statement will be published early in 2017. There will then be a full public consultation, before MPs get a chance to debate the details and vote on the proposals.

Only after that, will Heathrow be allowed to submit a planning application for the third runway.

2. Affected homeowners get a bung

Building a third runway will require the destruction of local homes, and Grayling said these homeowners can expect to be paid 25 per cent above the market rate. All associated costs, like stamp duty and legal fees, will be covered. 

3. So will the local communities

The government is promising £700m for insulating homes against noise, and it is floating the idea of a Community Compensation Fund that would make a further £750m available to local communities, although the details will be confirmed through the planning process. 

4. No flying at night

The government is demanding that flights are banned for six and a half hours a night to give locals some peace. Heathrow will also be expected to continue to give local residents a timetable of aircraft noise.

5. Air quality matters

Heathrow’s successful proposal included an ultra-low emissions zone for all airport vehicles by 2025. The airport can only get planning approval if it can meet air quality legal requirements. 

6. There will be a by-election

Zac Goldsmith, the MP for Richmond Park, is to resign in protest at the decision, and is expected to run again as an independent candidate. Speaking in the Commons, he warned that the decision to choose Heathrow was full of legal complexity and "will be a millstone around the government's neck". 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.