Banking confidentiality is still important

Austria shows the way.

In a world where financial privacy is becoming increasingly difficult to obtain, it’s heartening to hear that Austria is toughing it out alone and refusing to relinquish its constitutionally protected banking confidentiality.

It is now the only EU country to take this stance, after Luxembourg, another historic centre of financial discretion, this week agreed to disclose its foreign residents’ financial details with the governments in their home countries. HNWs who originally chose Luxembourg for its banking confidentiality must be encouraged to hear that, at least for the time being, there is one other European country that does not seem intent on blabbing about its citizens’ private matters in the interests of fighting tax evasion.

When European finance ministers meet this weekend in Dublin, Maria Fekter, Austria’s finance minister, will make the important point that fighting tax evasion is not mutually incompatible with preserving financial confidentiality. She has said today that Austria will "stick to bank secrecy", at the same time as doing everything it can to prevent tax evaders and money launders storing their money there. How long Austria can hold out, however, is uncertain, as she will no doubt come under heavy fire from her European counterparts.

As I wrote last week when the Guardian unveiled its investigation into offshore banking on the British Virgin Islands, not everyone who chooses to place their money in a jurisdiction other than that in which they live or do business is involved in nefarious goings-on. Clients have a right to expect privacy in their financial matters when they are doing nothing wrong.

But this distinction — between criminality and legitimate, private, offshore banking — is increasingly being blurred by the media and governments. Austria’s commitment to retaining banking confidentiality proves its commitment to the latter, rather than constituting an invitation to those who have something to hide.

This piece first appeared in Spear's magazine

City of London. Photograph: Getty Images

Mark Nayler is a senior researcher at Spear's magazine.

Photo: Getty
Show Hide image

PMQs review: Jeremy Corbyn prompts Tory outrage as he blames Grenfell Tower fire on austerity

To Conservative cries of "shame on you!", the Labour leader warned that "we all pay a price in public safety" for spending cuts.

A fortnight after the Grenfell Tower fire erupted, the tragedy continues to cast a shadow over British politics. Rather than probing Theresa May on the DUP deal, Jeremy Corbyn asked a series of forensic questions on the incident, in which at least 79 people are confirmed to have died.

In the first PMQs of the new parliament, May revealed that the number of buildings that had failed fire safety tests had risen to 120 (a 100 per cent failure rate) and that the cladding used on Grenfell Tower was "non-compliant" with building regulations (Corbyn had asked whether it was "legal").

After several factual questions, the Labour leader rose to his political argument. To cries of "shame on you!" from Tory MPs, he warned that local authority cuts of 40 per cent meant "we all pay a price in public safety". Corbyn added: “What the tragedy of Grenfell Tower has exposed is the disastrous effects of austerity. The disregard for working-class communities, the terrible consequences of deregulation and cutting corners." Corbyn noted that 11,000 firefighters had been cut and that the public sector pay cap (which Labour has tabled a Queen's Speech amendment against) was hindering recruitment. "This disaster must be a wake-up call," he concluded.

But May, who fared better than many expected, had a ready retort. "The cladding of tower blocks did not start under this government, it did not start under the previous coalition governments, the cladding of tower blocks began under the Blair government," she said. “In 2005 it was a Labour government that introduced the regulatory reform fire safety order which changed the requirements to inspect a building on fire safety from the local fire authority to a 'responsible person'." In this regard, however, Corbyn's lack of frontbench experience is a virtue – no action by the last Labour government can be pinned on him. 

Whether or not the Conservatives accept the link between Grenfell and austerity, their reluctance to defend continued cuts shows an awareness of how politically vulnerable they have become (No10 has announced that the public sector pay cap is under review).

Though Tory MP Philip Davies accused May of having an "aversion" to policies "that might be popular with the public" (he demanded the abolition of the 0.7 per cent foreign aid target), there was little dissent from the backbenches – reflecting the new consensus that the Prime Minister is safe (in the absence of an attractive alternative).

And May, whose jokes sometimes fall painfully flat, was able to accuse Corbyn of saying "one thing to the many and another thing to the few" in reference to his alleged Trident comments to Glastonbury festival founder Michael Eavis. But the Labour leader, no longer looking fearfully over his shoulder, displayed his increased authority today. Though the Conservatives may jeer him, the lingering fear in Tory minds is that they and the country are on divergent paths. 

George Eaton is political editor of the New Statesman.

0800 7318496