The cautionary tale of the 79-year-old tax dodger

How much of George Osborne's pledge to cut tax evasion is chest-thumping?

UK chancellor George Osborne has unveiled a budget full of detail on government plans to crack down on tax evasion. The UK government has been banging its drum for some time on the topic, but now it’s released some firm detail on what it intends to do, and in particular its offshore strategy. The question is how much of this is chest-thumping and what will it actually mean?

Here, like in many other areas, it’s useful to see what the US is doing and it’s clear that the UK has taken its lead from across the Pond. The US has had significant success putting the fear into US citizens with assets abroad. The US Internal Revenue Service has netted more than $5bn in back taxes, interest and penalties since 2009. This included the conviction of a 79-year-old former offshore account holder, Mary Estelle Curran, who was fined $21m having failed to report tax of $667,716 on her undeclared offshore accounts (although the accounts did hold $41m so she wasn’t left destitute by the fine!). The HMRC has outlined plans to use similar name and shame tactics to get the desired result.

The message the government and HMRC are trying to send is clear: the government is doing its worst to be a big bad monster and force tax-dodgers to quake in their boots and fess up. The government says it will ‘name and shame’ not only avoiders, but those who help them all – or as David Cameron referred to them in Davos earlier this year: “the travelling caravan of lawyers, accountants and financial gurus”. The aim is to bring in an extra £4.6bn in taxes over the next five years and the tax exchange agreements recently agreed with Jersey, Guernsey and the Isle of Man are expected to bring in more than £1bn of that over the same period.

This seems like a modest amount, and it would be entirely realistic to see this figure edge higher. According to global wealth consultancy WealthInsight the amount of offshore funds held in the UK and Channel Islands by local clients’ stands at about £515bn. Osborne’s figure of £1bn is, therefore, a tiny drop in this ocean of offshore money.

However it’s important to remember that this kind of rhetoric about tax dodgers is not new. Governments have been talking about it for the past seven years, although it’s only now that the regulatory machinery has caught up. There’s little doubt the smart money has already moved to become transparent – those caught in the coming years are likely to be those without Cameron’s ‘caravan’ of sophisticated advisers.

Still it’s important not to underestimate to what lengths the tax authorities will go to claw back revenue. Since 2010 the HMRC has spent £1bn on tax gathering including employing an extra 2,500 staff by 2014-15. And the HMRC is not just targeting high flyers; it recently released a list of evaders who had avoided £25,000 or more. The writing is on the wall. The government coffers need any penny they can scrape together and the HMRC is set to go to what may seem like extreme lengths to claw back all it can get from its taxpayers, at home and abroad.

George Osborne. Photograph: Getty Images
Photo: Getty
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Slowly but surely, the patriotism question is making its way into Labour

John Denham observes a strange but happy outbreak at Labour party conference.

It’s a measure of Labour’s distress that it managed to settle the leadership while resolving so few of the challenges it faces. Over the past two years, the party’s electoral base has been torn apart by identity politics. Huge numbers of Scottish Labour voters abandoned party loyalty to vote for separation and then to dump the party itself. In England, voters feared SNP support for a minority Labour government; many others turned to Ukip. In the final blow, millions of former Labour voters, particularly those who felt mostly sharply English, backed Brexit. Many of the party’s MPs wonder how many will ever be coming back.

Faced with this tsunami of political rejection, the issue was simply airbrushed out of the leadership campaigns. Over four months neither Jeremy Corbyn nor Owen Smith even acknowledged, let alone addressed, the potent power of identity. Both cleaved to the belief that the complex weave of hope, fear, powerlessness, aspiration, community and security that are bound up in our sense of ‘who we are’ could all be stilled by the promise of ‘anti-austerity’.

One of the left’s less appealing habits is believing that it understands what voters really want better than voters do themselves. (You tell me you are worried about how quickly migration is changing your community, I tell you’re really worried about spending cuts).  Jeremy Corbyn’s statement that “we are not concerned about numbers” is probably enough to lose Labour the 2020 election on its own. No comprise here with voters on the issue that has dominated public concern for 15 years. To be fair, Owen Smith never offered a radically different perspective. It was never part of the debate.

Yet reality has a fortunate habit of intruding into the debate. In early, sometimes stumbling ways, identity politics is beginning to concern people right across the party. At Liverpool, most of the think-tanks held meetings addressing national identity in England, Scotland and the Union. Most attracted healthy audiences who, by and large, did not think identity was the property of the far right. (Declaration of interest: I was a speaker at some of these). Policy Network, IPPR, LabourList and the Fabians were amongst those taking the debate forward. Much of the New Statesman’s “New Times” edition is preoccupied with the same issues. Newer organisations from different parts of the party are engaging. The Red Shift group of Liam Byrne, Shabana Mahmood and Nic Dakin called for an explicitly English Socialism. Veteran Brexiteer John Mills, is supporting a new Labour Future organisation. Both are exploring how radical national policy and national identity fit together.

More surprising was the overt insertion of patriotic themes into the speeches of Corbyn’s front bench and the leadership itself. Military service sits as easily with the socialism of Clive Lewis as it does with Dan Jarvis. Rebecca Long-Bailey told the conference  Patriotism is not just about waving a flag during the World Cup. It is a real, life-long commitment to the people around you….When you pay your taxes, you are investing in the British people..This commitment to British people should be woven into every aspect of the British economy,

This is a potentially powerful and unifying theme for Labour. National identity and patriotism may still be a minority interest, yet it attracts people from all the party’s wings.  Tristram Hunt, Lisa Nandy, Owen Jones and some of Corbyn’s key supporters are all engaged.

These are early days. National identity was hardly the dominant issue of the conference, let alone Momentum’s parallel event. Too often the tone is narrow and defensive, as though people on the left don’t have identities but we need to understand those who do. There’s a temptation to believe that Labour simply needs some St George flags to unveil on council estates and put away elsewhere. At its best, progressive patriotism can uniting disparate interests and communities. It opens up conversations with people who would reject a political label. It can be a foundation for holding the powerful to account.

In his speech, John McDonnell praised Christians on the Left for promoting the hashtag “patriots pay their taxes”; a message that was reinforced in Corbyn’s own speech: “there is nothing more unpatriotic than not paying your taxes”.  As Hillary Clinton exposed this week, patriotism can separate those who accept their obligations to a wider society, and those who think it is clever to avoid them. In English radical history, the notion of the common weal held that the measure of the powerful was how well they looked after the commons. It has a powerful resonance today and Labour needs to mine it more.

John Denham was a Labour MP from 1992 to 2015, and a Secretary of State 2007 to 2010. He is Director of the Centre for English Identity and Politics at Winchester University