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Sorry, Ken — own up or accept the consequences, says Mehdi Hasan

You can’t run against Boris as the banker-bashing candidate but avoid your own income tax.

What is it with politicians and their taxes? In January, the US presidential candidate Mitt Romney was forced to disclose that he had paid a de facto tax rate of just 15 per cent over the past few years – less than half the 35 per cent income tax prescribed for the highest earners. Then, in February, the Sunday Telegraph revealed that Labour's mayoral candidate, Ken Livingstone, had avoided at least £50,000 in tax by having himself paid for his various jobs through a personal company.

That Romney, a multimillionaire Republican and former private equity boss, would want to minimise his tax bill is to be expected. But Livingstone, champion of the poor and long-standing Labour Party advocate of equality and social justice? Et tu, Red Ken? Really?

Livingstone's supporters justify his use of a company on the grounds that he is a "brand" – he gives speeches, writes books, presents radio programmes – and that he has employed not only his wife, with whom he jointly owns the company, Silveta Ltd, but several other aides and researchers. It is possible that he paid the (then) top rate of 40 per cent on his company-derived income in 2009/2010. But this doesn't change the fact that the £320,000 in cash (as of June 2010) sitting in his company is subject to a much lower rate in corporation tax.

I like Livingstone. But to pretend this isn't tax avoidance is disingenuous. And his allies just don't get it. I spoke to friends and colleagues of Livingstone's who seem to be in total denial. "It's a completely logical way of arranging your tax affairs if you have multiple incomes and expenses," says a source close to the ex-mayor. I asked another ally how he could justify such tax-dodging behaviour. "Er . . . ah . . . um . . ." His voice trailed off. "It's, er, normal."

Not normal

It might be "logical", from a narrow, self-serving, money-grubbing perspective, but it is far from "normal". Not for the vast majority – the 99 per cent? – of taxpayers in this country, whether they are on PAYE, self-employed or sole traders. Normal people tend to pay income tax on their income, not corporation tax.

The big problem for Livingstone is that he has been a vocal supporter of UK Uncut, which campaigns against not just (illegal) tax evasion but also (legal) tax avoidance – by Vodafone, Topshop and other big companies. "These rich bastards just don't get it," Livingstone wrote in 2009. "No one should be allowed to vote in a British election, let alone sit in our parliament, unless they are paying their full share of tax." The former London mayor called for everyone to "pay tax at the same rate on their earnings and all other income".

The word "hypocrite" is being whispered – and not just by the usual suspects on the right. "I think it's bad for him," says a former adviser to Livingstone who worked with him at City Hall. "People expect more from Ken." If he was a Tory or, say, Tony Blair, this wouldn't matter – but it is an axiom as old as party politics that left-wing politicians are, rightly, held to higher standards. Principles matter.

And so, too, does perception. So what on earth was Team Ken thinking? Why did none of the former mayor's aides raise any objections to his legal yet dodgy tax arrangements? The simple truth is this: you cannot run as the populist, banker-bashing candidate, the one who backs higher taxes on "rich bastards", if you're quietly channelling hundreds of thousands of pounds of your own earnings into a company jointly owned with your wife. You just can't.

In his defence, Livingstone has pledged to be a "one-job", full-time, full-term mayor and has announced that he'll take a pay cut of at least 5 per cent, if re-elected to the £143,911-a-year post, to save taxpayers money. He would also slash the number of mayoral staff earning more than £100,000 to try to cut the gap between City Hall's top and bottom earners.

Nonetheless, if I were Livingstone, I'd write a cheque to Her Majesty's Revenue and Customs and deliver it to HMRC headquarters in person, with a camera crew in tow. Regardless of his allies' protestations, or his pledges on pay, he has to kill this tax story. And fast.

That this news has broken when Livingstone should be on the offensive against Mayor Boris Johnson and his top team – over their financial interests – is deeply frustrating. According to a recent investigation by the Sunday Times, Johnson and his principal advisers "are busy supplementing their pay with business interests ranging from a hedge fund to a supplier of dog blankets".

Chicken feed

There's Kit Malthouse, London's deputy mayor for policing, on £53,439, who has six outside directorships, including a job as finance director of a hedge fund called Alpha Strategic. Malthouse has admitted to having held four meetings concerning his outside interests in his taxpayer-funded offices. Do I hear the words "conflict of interest"?

Then there's Christine Chau, who earns between £102,558 and £111,044 as the mayor's "assistant director for London engagement" (what is that, by the way?) and is the founder and main shareholder of Charley Chau, "supplier of beautiful bedding for dogs". Its website lists her as one of the contacts for the business.

Let's not forget Johnson, with his £250,000 "chicken-feed" salary from the Telegraph, for whom he writes a weekly column.

Put in perspective, the Livingstone tax row is a huge distraction. It should annoy and upset progressive voters – but it doesn't give Johnson his Get Out of Jail Free card. The mayor, as even a Downing Street official recently conceded to the Times, lacks a simple "retail offer" for voters; his plans for a second term, the official said, are "underwhelming".

Under Johnson, train fares have risen and police numbers have fallen. Unemployment in the capital is now higher than the national average (10 per cent, against 8.4 per cent) and it is expected to rise further as the Conservative-led coalition's spending cuts bite.

Do Londoners want a mayor who will stand up to austerity and who wants to restore the Education Maintenance Allowance and reduce fares, or a mayor who will defend the coalition's regressive fiscal policies? Do they want a mayor who is willing, belatedly, to hold the bankers to account, or a mayor who wants to scrap the tax on their bonuses and abolish the 50p tax rate? Do they want a full-time mayor who's paid less, or a part-time mayor who's paid more? From where I'm sitting, the choice on 3 May remains clear.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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What's to be done about racial inequality?

David Cameron's words on equal opportunities are to be welcomed - now for some action, says Sunder Katwala.

David Cameron made the strongest, clearest and most high profile statement about ethnic inequalities and the need to tackle discrimination ever yet offered by a British Prime Minister in his leader’s speech to the Conservative Party conference in Manchester.
“Picture this. You’ve graduated with a good degree. You send out your CV far and wide. But you get rejection after rejection. What’s wrong? It’s not the qualifications or the previous experience. It’s just two words at the top: first name, surname. Do you know that in our country today: even if they have exactly the same qualifications, people with white-sounding names are nearly twice as likely to get call backs for jobs than people with ethnic-sounding names? … That, in 21st century Britain, is disgraceful. We can talk all we want about opportunity, but it’s meaningless unless people are really judged equally”, said Cameron.
While the proof of the pudding will be in the eating, this was a powerfully argued Prime Ministerial intervention – and a particularly well-timed one, for three reasons.

Firstly, the Prime Minister was able to root his case in an all-but-universally accepted appeal for equal opportunities. It will always prove more difficult in practice to put political energy and resources behind efforts to remedy discrimination against a minority of the population unless a convincing fairness case is made that values cherished across our whole society are at stake. Cameron’s argument, that any party which tells itself that it is the party of the ‘fair chance’ and ‘the equal shot’ must have a response when there is such clear evidence of discrimination, should prove persuasive to a Conservative Party that has not seen race inequalities as its natural territory. Cameron argued that the same principles should animate responses to discrimination when it comes to race, gender and social class. Put like that, wanting job interviews to be fair – by eradicating conscious and unconscious patterns of bias wherever possible – would strike most Britons as offering as clear a case of the values of fair play as wanting the best baker to win the Great British Bake-Off on television.
Secondly, Cameron’s intervention comes at a potential "tipping point" moment for fair opportunities across ethnic groups. Traditionally, ethnic discrimination has been discussed primarily through the lens of its impact on the most marginalised. Certainly, persistent gaps in the criminal justice system, mental health provision and unemployment rates remain stark for some minority groups. What has been less noticed is the emergence of a much more complex pattern of opportunity and disadvantage – not least as a consequence of significant ethnic minority progress.

Most strikingly of all, in educational outcomes, historic attainment gaps between ethnic minorities and their white British peers have disappeared over the last decade. In the aggregate, ethnic minorities get better GCSE results on average. Ethnic minority Britons are more likely, not less likely, to be university graduates than their fellow citizens. 

As a result of that progress, Cameron’s intervention comes at a moment of significant potential – but significant risk too. Britain’s ethnic minorities are the youngest and fastest-growing sections of British society. If that educational progress translates into economic success, it will make a significant contribution to the "Great British Take-Off" that the Prime Minister envisions. But if that does not happen, with educational convergence combined with current ‘ethnic penalties’ in employment and income persisting, then that potential could well curdle into frustration that the British promise of equal opportunities is not being kept.  Cameron also mirrored his own language in committing himself to both a ‘fight against extremism’ and a ‘fight against discrimination’: while those are distinct challenges and causes, actively pursuing both tracks simultaneously has the potential, at least, depolarise some debates about responses to extremism  - and so to help deepen the broad social coalitions we need for a more cohesive society too.

Thirdly, Cameron’s challenge could mark an important deepening in the political competition between the major parties on race issues. Many have been struck by the increase in political attention on the centre-right to race issues over the last five to ten years. The focus has been on the politics of representation. By increasing the number of non-white Conservative MPs from two to seventeen since 2005, Cameron has sent a powerful signal that Labour’s traditional claim to be ‘the party of ethnic minorities’ would now be contested. Cameron was again able to celebrate in Manchester several ways in which his Cabinet and Parliamentary benches demonstrate many successful journeys of migrant and minority integration in British society. That might perhaps help to ease the fears, about integration being impossible in an era of higher immigration, which the Home Secretary had articulated the previous day.

So symbolism can matter. But facial diversity is not enough. The politics of ethnic minority opportunity needs to be about more than visits to gurdwaras, diversity nights at the party conference fringes and unveiling statues of Mahatma Gandhi in Parliament Square. Jeremy Corbyn’s first speech as Labour leader did include one brief celebratory reference to Britain’s ethnic diversity – “as I travelled the country during the leadership campaign it was wonderful to see the diversity of all the people in our country” – and to Labour bringing in more black, Asian and ethnic minority members - but it did not include any substantial content on discrimination. Tim Farron acknowledged during his leadership campaign that the Liberal Democrats have struggled to get to the starting-line on race and diversity at all. The opposition parties too will no doubt now be challenged to match not just the Prime Minister’s rhetorical commitment to challenging inequalities but also to propose how it could be done in practice.

Non-white Britons expect substance, not just symbolism from all of the parties on race inequalites.  Survation’s large survey of ethnic minority voters for British Future showed the Conservatives winning more ethnic minority support than ever before – but just 29 per cent of non-white respondents were confident that the Conservatives are committed to treating people of every ethnic background equally, while 54 per cent said this of Labour. Respondents were twice as likely to say that the Conservatives needto do more to reach out – and the Prime Minister would seem to be committed to showing that he has got that message.  Moreover, there is evidence that ethnic inclusion could be important in broadening a party’s appeal to other younger, urban and more liberal white voters too – which is why it made sense for this issue to form part of a broader attempt by David Cameron to colonise the broad centre of British politics in his Manchester speech.

But the case for caution is that there has been limited policy attention to ethnic inequalities under the last two governments. Restaurateur Iqbal Wahhab decided to give up his role chairing an ethnic minority taskforce for successive governments, unconvinced there was a political commitment to do much more than convene a talking shop. Lib Dem equalities minister Lynne Featherstone did push the CV discrimination issue – but many Conservatives were sceptical. Cameron’s new commitment may face similar challenges from those whose instinct is to worry that more attention to discrimination or bias in the jobs market will mean more red tape for business.

Labour had a separate race inequalities manifesto in 2015, outside of its main election manifesto, while the Conservative manifesto did not contain significant commitments to racial inequality. The mid-campaign launch in Croydon of a series of race equality pledges showed an increasing awareness of the growing importance of ethnic minority votes - though the fact that they all involved aiming for increases of 20 per cent by 2020 gave them a slightly back-of-the-envelope feel. 

Prime Ministerial commitments have an important agenda-setting function. A generation ago the Stephen Lawrence case opened the eyes of middle England to racist violence and police failures, particularly through the Daily Mail’s persistent challenging of those injustices. A Conservative Prime Minister’s words could similarly make a big difference in the mainstreaming of the issue of inequalities of opportunity. What action should follow words? Between now and next year’s party conference season, that must will now be the test for this Conservative government – and for their political opponents too. 

Sunder Katwala is director of British Future and former general secretary of the Fabian Society.