Tax returns in Glasgow, 2009. Photo: Jeff J Mitchell/Getty Images
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Leader: The stench of corruption at HSBC is a reminder tax havens must be closed

Now we've caught wind of the money hidden in Swiss accounts, it's time to turn to other veiled tax affairs.

The tax scandal uncovered at HSBC is one that even the most imaginative conspiracy theorist would struggle to concoct. The Swiss arm of Europe’s largest bank is accused of having colluded with wealthy clients for years to allow them to shield undeclared accounts from their domestic authorities. Detailed information was passed to HMRC in 2010; 1,100 British citizens are thought to have been involved.

Five years later, just one prosecution has resulted. Contrast that with the 1,046,398 sanctions, or financial penalties, imposed on Jobseeker’s Allowance claimants in 2013, or the nearly 200,000 prosecutions of people who failed to buy a television licence. As the tax campaigner Richard Murphy put it: “To the wealthiest criminals and their assistants within the financial system go the rewards and the plaudits. To everyone else goes intimidation and persecution.”

Far from being called to account, Stephen Green, who served as chief executive and then chair of HSBC from 2006 to 2010, was ennobled by David Cameron and appointed as a trade minister in January 2011. He held the position until December 2013. An ordained priest and the author of Serving God? Serving Mammon?, Mr Green is now advising the Church of England on “talent management”.

Both the government and Mr Green must explain how all of the above occurred. But, like many of those on the HSBC list, their response has been one of evasion. “As a matter of principle, I will not comment on the business of HSBC, past or present,” the latter said. This stance is at odds with what he advocated in his book. “For companies, where does this responsibility begin?” he wrote. “With their boards, of course. There is no other task they have which is more important. It is their job ... to promote and nurture a culture of ethical and purposeful business throughout the organisation.” If the HSBC head did know about his bank’s behaviour, he was guilty of collusion. If he didn’t know, he was guilty of incompetence.

Ministers must explain why Mr Green was invited to join their ranks. That he may have been “an excellent trade minister”, as Mr Cameron put it, is irrelevant. The question, as in the case of his former director of communications Andy Coulson, is whether the Prime Minister was “wilfully blind” when he appointed Mr Green.

The laxity of HMRC’s approach to prosecutions suggests a refusal to reckon with the scale of the scandal. Margaret Hodge, the Labour chair of the Commons public accounts committee, observed: “If this had been benefits scroungers, they would have been queuing around the courtrooms.”

Unlike in the US, France, Belgium, Spain and Argentina, where legal proceedings have been launched against HSBC, no action has been taken against the bank by the UK. HMRC asserts: “In most cases, disclosure and civil fines are the most appropriate and effective intervention.” Yet to date just £135m has been recovered, less than France, though British citizens hold twice as much money. When governments fail to pursue those who evade tax, they squander their legitimacy with the great majority who pay it. As long as the penalties for this crime remain negligible, the incentives for others to behave in this way will endure. The feeling will grow, too, that the system is rigged against the honest citizen.

Ed Miliband, to his credit, understands this. Two days before the HSBC exposé, he announced that he had written to the offshore financial centres linked to Britain as Crown dependencies or overseas territories to say that under a Labour government they would have six months to open their books or be placed on a blacklist. The angry responses emanating from Bermuda, Jersey and elsewhere were as predictable as those of the business leaders who have recently warned of doom should Labour win power. They were equally wrong-headed. Tax havens denying that their affairs remain “shrouded in darkness”, as Mr Miliband described it, makes little sense when they still have no publicly accessible registers of beneficial ownership – documents that show who owns an offshore company.

As a result, HMRC cannot check if a UK resident has set up a company in these havens, let alone whether money is being diverted there. Such secrecy encourages tax avoidance and evasion and costs the Treasury billions of pounds in lost revenue. It needs to change – and soon.

 

This article first appeared in the 13 February 2015 issue of the New Statesman, Assad vs Isis

Photo: Getty Images/AFP
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Is Yvette Cooper surging?

The bookmakers and Westminster are in a flurry. Is Yvette Cooper going to win after all? I'm not convinced. 

Is Yvette Cooper surging? The bookmakers have cut her odds, making her the second favourite after Jeremy Corbyn, and Westminster – and Labour more generally – is abuzz with chatter that it will be her, not Corbyn, who becomes leader on September 12. Are they right? A couple of thoughts:

I wouldn’t trust the bookmakers’ odds as far as I could throw them

When Jeremy Corbyn first entered the race his odds were at 100 to 1. When he secured the endorsement of Unite, Britain’s trade union, his odds were tied with Liz Kendall, who nobody – not even her closest allies – now believes will win the Labour leadership. When I first tipped the Islington North MP for the top job, his odds were still at 3 to 1.

Remember bookmakers aren’t trying to predict the future, they’re trying to turn a profit. (As are experienced betters – when Cooper’s odds were long, it was good sense to chuck some money on there, just to secure a win-win scenario. I wouldn’t be surprised if Burnham’s odds improve a bit as some people hedge for a surprise win for the shadow health secretary, too.)

I still don’t think that there is a plausible path to victory for Yvette Cooper

There is a lively debate playing out – much of it in on The Staggers – about which one of Cooper or Burnham is best-placed to stop Corbyn. Team Cooper say that their data shows that their candidate is the one to stop Corbyn. Team Burnham, unsurprisingly, say the reverse. But Team Kendall, the mayoral campaigns, and the Corbyn team also believe that it is Burnham, not Cooper, who can stop Corbyn.

They think that the shadow health secretary is a “bad bank”: full of second preferences for Corbyn. One senior Blairite, who loathes Burnham with a passion, told me that “only Andy can stop Corbyn, it’s as simple as that”.

I haven’t seen a complete breakdown of every CLP nomination – but I have seen around 40, and they support that argument. Luke Akehurst, a cheerleader for Cooper, published figures that support the “bad bank” theory as well.   Both YouGov polls show a larger pool of Corbyn second preferences among Burnham’s votes than Cooper’s.

But it doesn’t matter, because Andy Burnham can’t make the final round anyway

The “bad bank” row, while souring relations between Burnhamettes and Cooperinos even further, is interesting but academic.  Either Jeremy Corbyn will win outright or he will face Cooper in the final round. If Liz Kendall is eliminated, her second preferences will go to Cooper by an overwhelming margin.

Yes, large numbers of Kendall-supporting MPs are throwing their weight behind Burnham. But Kendall’s supporters are overwhelmingly giving their second preferences to Cooper regardless. My estimate, from both looking at CLP nominations and speaking to party members, is that around 80 to 90 per cent of Kendall’s second preferences will go to Cooper. Burnham’s gaffes – his “when it’s time” remark about Labour having a woman leader, that he appears to have a clapometer instead of a moral compass – have discredited him in him the eyes of many. While Burnham has shrunk, Cooper has grown. And for others, who can’t distinguish between Burnham and Cooper, they’d prefer to have “a crap woman rather than another crap man” in the words of one.

This holds even for Kendall backers who believe that Burnham is a bad bank. A repeated refrain from her supporters is that they simply couldn’t bring themselves to give Burnham their 2nd preference over Cooper. One senior insider, who has been telling his friends that they have to opt for Burnham over Cooper, told me that “faced with my own paper, I can’t vote for that man”.

Interventions from past leaders fall on deaf ears

A lot has happened to change the Labour party in recent years, but one often neglected aspect is this: the Labour right has lost two elections on the bounce. Yes, Ed Miliband may have rejected most of New Labour’s legacy and approach, but he was still a protégé of Gordon Brown and included figures like Rachel Reeves, Ed Balls and Jim Murphy in his shadow cabinet.  Yvette Cooper and Andy Burnham were senior figures during both defeats. And the same MPs who are now warning that Corbyn will doom the Labour Party to defeat were, just months ago, saying that Miliband was destined for Downing Street and only five years ago were saying that Gordon Brown was going to stay there.

Labour members don’t trust the press

A sizeable number of Labour party activists believe that the media is against them and will always have it in for them. They are not listening to articles about Jeremy Corbyn’s past associations or reading analyses of why Labour lost. Those big, gamechanging moments in the last month? Didn’t change anything.

100,000 people didn’t join the Labour party on deadline day to vote against Jeremy Corbyn

On the last day of registration, so many people tried to register to vote in the Labour leadership election that they broke the website. They weren’t doing so on the off-chance that the day after, Yvette Cooper would deliver the speech of her life. Yes, some of those sign-ups were duplicates, and 3,000 of them have been “purged”.  That still leaves an overwhelmingly large number of sign-ups who are going to go for Corbyn.

It doesn’t look as if anyone is turning off Corbyn

Yes, Sky News’ self-selecting poll is not representative of anything other than enthusiasm. But, equally, if Yvette Cooper is really going to beat Jeremy Corbyn, surely, surely, she wouldn’t be in third place behind Liz Kendall according to Sky’s post-debate poll. Surely she wouldn’t have been the winner according to just 6.1 per cent of viewers against Corbyn’s 80.7 per cent. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.