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9 November 2017

The Paradise Papers raise the question: do you know where your pension is invested?

The mores of international capitalism have wormed their way into all our lives. 

By Peter Wilby

The Daily Telegraph has scarcely bothered to report the Paradise Papers revelations of how the Queen, Bono and other prominent folk have money salted away in tax havens – or “tax neutral” locations, as defenders prefer to call them. Instead, it accuses Labour leaders, who point out that the lost tax could finance schools, hospitals and police, of hypocrisy.

The Labour Party rents its London offices from a property fund run by Schroders and based in Jersey. John McDonnell, the shadow chancellor, gets £14,421 annually from the pension fund of his former employers, Westminster City Council. Part of the fund is invested with Longview, a global equity manager based in Guernsey.

The charge of hypocrisy is obviously preposterous. Nobody can be held responsible for the financial affairs of their landlord. McDonnell has no influence over the investment decisions of Westminster councillors, two-thirds of whom are Tories. Yet there is a important point here. If you have a private pension fund, do you know how it is invested? If you own an Apple computer, do you benefit from the company’s newly revealed subsidiaries in Jersey?

The truth is that, if the pension investments were fully taxed and Apple stayed out of tax havens, you would probably receive less from your pension and pay more for your computer.

The mores of international capitalism have wormed their way into all our lives. That was exactly what Margaret Thatcher intended.

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Where the streets have no taxes

None of that lets Bono off the hook. The Paradise Papers reveal that the U2 lead singer is director of a firm called Nude Estates, based in Malta, where company profits are taxed at 5 per cent. It bought a shopping centre in Lithuania. Ownership was later transferred to Guernsey, where profits tax is zero. If Bono is as concerned about deprived countries as his campaigns try to persuade us to believe, shouldn’t he press his fellow directors to base Nude Estates in, say, Tanzania where he could cheerfully pay its corporate income tax of 30 per cent?

Cross-party sleaze

It used to be said that the Tories’ Achilles heel was sex while Labour’s was money because the Tories stood for traditional morality and Labour railed against greed and materialism. But neither the 2009 parliamentary expenses scandal nor the current sexual harassment scandal are specific to either party. They simply add to the public perception that MPs of all parties, far from dedicating themselves to public service, line their pockets, binge on cheap food and booze, and plan sexual conquests.

The reputation of parliament, in its present form, seems beyond rescue. The need to vacate the Palace of Westminster for urgent repairs presents an opportunity to rethink its functions and practices. Royal commissions are out of fashion. None has been set up this century and only three in the past 40 years, against more than five a year in the Victorian era. They are regarded as too unwieldy and long-winded for our fast-paced times. Yet with their quasi-judicial powers – and the convenient fiction that they have the sovereign’s personal imprimatur – they have a certain status. If one were set up on parliament, with non-parliamentarians in a majority, no government could ignore its proposals without losing the few shreds of esteem that politicians still enjoy.

Damn Yankees

We Brits have a habit of allowing our self-esteem to be determined by what Americans say about us. Dean Acheson, a former US secretary of state who had left office a decade earlier, said in 1962 that we had “lost an empire but not yet found a role”. We still quote him more than half a century later. When a Time magazine cover story celebrated “swinging London” in 1966, the national mood was so uplifted that it carried our footballers to their solitary World Cup triumph. When Vanity Fair discovered “cool Britannia” in 1997, the nation celebrated again.

Now a report from the outgoing London bureau chief for the New York Times, Steven Erlanger, concludes that Britain has “suffered a sudden nervous breakdown” and is committing “a controlled suicide”. “Should be compulsory reading”, tweets the BBC’s Jeremy Bowen. “Sometimes it takes an outsider to tell it like it is,” tweets Tim Bale, a University of London politics professor. In my view, it is a mediocre piece, written by a journalist who seems to talk only to people in metropolitan think tanks. Britain’s problems – mainly to do with the alienation of its indigenous working-class – are common to those of the US and other European countries, but at least our extreme right isn’t in the legislature or anywhere near Downing Street.

But why care what a New York Times hack says? We should stop this reflex cringe towards the opinions of our former colony.

Play it straight

Much as I enjoyed James Graham’s latest play, Labour of Love, I came away from London’s Noël Coward Theatre with one question nagging at me. The story, about a Labour MP and his female constituency agent, begins with the 2017 general election and then goes back, in stages, to a by-election in 1990 when the MP first won his seat. After the interval, it moves forward until we are again in 2017.

This is less confusing than many modern dramas which jump back and forth unpredictably. But does mucking about with chronology add to the audience’s pleasure and understanding? Or is it just a fashion that allows playwrights to show cutting-edge skills? To me, Graham’s play would have worked as well if it had started in 1990 and gone steadily forward, and perhaps better in that the reverse narrative of the first half made it hard to engage with the characters. All Shakespeare’s plays follow a straightforward chronology. And he’s been quite successful, hasn’t he?

This article appears in the 08 Nov 2017 issue of the New Statesman, The Tory sinking ship