Farage admits offshore tax fund was a mistake: "I'm not rich enough"

A bad day for UKIP as Farage's tax avoidance is exposed and the party loses its deposit in the Aberdeen Donside by-election.

Has Nigel Farage's seemingly inexorable rise finally come to an end? It feels that way this morning. The UKIP leader is on the defensive after the Daily Mirror revealed that he opened an offshore trust fund on the Isle of Man "for inheritance purposes", while in last night's Scottish by-election in Aberdeen Donside his party finished a disappointing fifth and lost its deposit after winning only 4.8 per cent of the vote. 

Farage wisely responded to the tax story by immediately admitting that it was "a mistake", although his declaration that he's "not rich enough to need one" is unlikely elicit much sympathy from voters. He said: "My financial advisers recommended I did it, to have a trust really for inheritance purposes and I took the advice and I set it up.

"It was a mistake. I was a completely unsuitable person for it. I am not blaming them, it was my fault.

"It's a vehicle that you chuck things in through your life that you don't need and you build up a trust fund for your children or grandchildren.

"It was called an educational trust and could have been used for grandchildren's schools fees, things like that.

"It was a mistake for three reasons. Firstly, I’m not rich enough to need one and I am never going to be.

"Secondly, frankly, the world has changed. Things that we thought were absolutely fair practice 10 years, 20 years ago, 30 years ago aren’t any more.

"Thirdly, it was a mistake because it cost me money. I sent a cheque off to set it up."

The story is all the more damaging for Farage because he also stands accused of hypocrisy. In a speech last month in the European Parliament, he told MEPs that they had a "common enemy – rich people, successful companies evading tax". Farage, of course, is guilty of legal tax avoidance, not illegal tax evasion, but it's the shared motive that counts. 

As for the by-election, while UKIP's share of 4.8 per cent might be considered impressive given that it had no previous presence in the seat, its prediction that it would keep its deposit (by polling at least 5 per cent) means it must be regarded as a failure. Lord Monckton, the party's Scottish leader, declared before the result: "We have made a breakthrough. It's clear now we'll keep our deposit".

Alex Salmond (interviewed in this week's NS) said: "They have never saved a single deposit in Scotland, which once again demonstrates a clear divergence between Scottish and Westminster politics."

Here's the result in full

  • Mark McDonald (SNP): 9,814 - 42% (-13.4%)
  • Willie Young (Labour): 7,789 - 33.3% (+5.5%)
  • Christine Jardine (Lib Dem)1,940 - 8.3% (+2.3%)
  • Ross Thomson (Conservative): 1,791 - 7.7% (-0.4%)
  • Otto Inglis (UKIP): 1,128 - 4.8% (+4.8)
  • Rhonda Reekie (Scottish Greens): 410 - 1.8% (+1.8%)
  • Dave MacDonald (Scottish National Front): 249 - 1.1% (+0.3%)
  • Tom Morrow (Scottish Christian Party "Proclaiming Christ's Lordship"): 222 - 0.9% (+0.9%)
  • James Trolland (Scottish Democratic Alliance): 35 - 0.1% (+0.1%)

Update: Labour has just issued its response to the tax story. John Spellar MP said: "I know Nigel Farage wants to appeal to disaffected Tories, but copying some of the Tories' biggest donors by using offshore trusts to avoid tax is taking things too far. It's typical of UKIP - they talk about how much they love this country, but they don't even bank here – it’s just hypocritical."

UKIP leader Nigel Farage addresses the media in London on May 3, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Who will win in Stoke-on-Trent?

Labour are the favourites, but they could fall victim to a shock in the Midlands constituency.  

The resignation of Tristram Hunt as MP for Stoke-on-Central has triggered a by-election in the safe Labour seat of Stoke on Trent Central. That had Westminster speculating about the possibility of a victory for Ukip, which only intensified once Paul Nuttall, the party’s leader, was installed as the candidate.

If Nuttall’s message that the Labour Party has lost touch with its small-town and post-industrial heartlands is going to pay dividends at the ballot box, there can hardly be a better set of circumstances than this: the sitting MP has quit to take up a well-paid job in London, and although  the overwhelming majority of Labour MPs voted to block Brexit, the well-advertised divisions in that party over the vote should help Ukip.

But Labour started with a solid lead – it is always more useful to talk about percentages, not raw vote totals – of 16 points in 2015, with the two parties of the right effectively tied in second and third place. Just 33 votes separated Ukip in second from the third-placed Conservatives.

There was a possible – but narrow – path to victory for Ukip that involved swallowing up the Conservative vote, while Labour shed votes in three directions: to the Liberal Democrats, to Ukip, and to abstention.

But as I wrote at the start of the contest, Ukip were, in my view, overwritten in their chances of winning the seat. We talk a lot about Labour’s problem appealing to “aspirational” voters in Westminster, but less covered, and equally important, is Ukip’s aspiration problem.

For some people, a vote for Ukip is effectively a declaration that you live in a dump. You can have an interesting debate about whether it was particularly sympathetic of Ken Clarke to brand that party’s voters as “elderly male people who have had disappointing lives”, but that view is not just confined to pro-European Conservatives. A great number of people, in Stoke and elsewhere, who are sympathetic to Ukip’s positions on immigration, international development and the European Union also think that voting Ukip is for losers.

That always made making inroads into the Conservative vote harder than it looks. At the risk of looking very, very foolish in six days time, I found it difficult to imagine why Tory voters in Hanley would take the risk of voting Ukip. As I wrote when Nuttall announced his candidacy, the Conservatives were, in my view, a bigger threat to Labour than Ukip.

Under Theresa May, almost every move the party has made has been designed around making inroads into the Ukip vote and that part of the Labour vote that is sympathetic to Ukip. If the polls are to be believed, she’s succeeding nationally, though even on current polling, the Conservatives wouldn’t have enough to take Stoke on Trent Central.

Now Theresa May has made a visit to the constituency. Well, seeing as the government has a comfortable majority in the House of Commons, it’s not as if the Prime Minister needs to find time to visit the seat, particularly when there is another, easier battle down the road in the shape of the West Midlands mayoral election.

But one thing is certain: the Conservatives wouldn’t be sending May down if they thought that they were going to do worse than they did in 2015.

Parties can be wrong of course. The Conservatives knew that they had found a vulnerable spot in the last election as far as a Labour deal with the SNP was concerned. They thought that vulnerable spot was worth 15 to 20 seats. They gained 27 from the Liberal Democrats and a further eight from Labour.  Labour knew they would underperform public expectations and thought they’d end up with around 260 to 280 seats. They ended up with 232.

Nevertheless, Theresa May wouldn’t be coming down to Stoke if CCHQ thought that four days later, her party was going to finish fourth. And if the Conservatives don’t collapse, anyone betting on Ukip is liable to lose their shirt. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.