Labour MPs break ranks on Murdoch

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Westminster Correspondent

Labour MPs have broken ranks with the party hierarchy by coming out to condemn the Byzantine tax avoidance arrangements of Rupert Murdoch's News International.

When the Independent revealed last week that over the last decade News International made nearly pounds 1bn in profits but paid just pounds 11.74m in tax, Labour said nothing. The party that is usually quick to condemn City "fat cats" and corporate excess maintained a stony silence.

Even the fact that News International, which owns the Sun and Times newspapers, paid no tax on profits of pounds 779m in its last financial year, was not enough to stir Labour. Alistair Darling, the party's City spokesman, brushed aside the party's apparent lack of interest, explaining that "you must never design a tax system to get at one person. It is a matter of fundamental principle".

Cynics pointed to the growing rapprochement between Mr Murdoch and a Labour leadership anxious to ensure that the media baron's titles do not exhibit the same hostility in the general election as they did in 1992. The Sun has always boasted that it was the paper "wot won it" for the Tories.

The two sides' courtship has seen Mr Blair speak at an internal conference for senior executives of Mr Murdoch's empire in Australia, where the Labour leader was roundly praised by his host. When News International's Today newspaper closed, Mr Blair penned an article exhorting its readers to switch to its Sun stablemate.

However, following fresh disclosures in the Independent that deals in three of News International's obscure "finance" companies had produced profits of pounds 340m in the year to June 1994 but attracted no tax, some Labour MPs have read enough.

A Commons early-day motion tabled by Harry Cohen, MP for Leyton, and supported by nine of his colleagues, registers "dismay" at only pounds 11.74m going to the Inland Revenue in the last 10 years, and "notes that this represents a rate of 1.2 per cent, when corporation tax is set at 33 per cent ... and most companies, including News International's competitors, pay over 20 per cent."

The motion says: "This House ... considers that News International have abused tax avoidance arrangements by amongst other complex transactions using letter-box companies in off-shore tax havens, and calls upon the Chancellor and the courts to close these loopholes."

Its signatories are predominantly, but by no means all, from the left- wing Campaign Group of MPs. They include Tony Banks, Jeremy Corbyn, Ken Livingstone, Eddie Loyden and Dennis Skinner. However, they are joined by non-Campaign members Maria Fyfe, Gerry Steinberg and Mike Hall. Mr Hall sits on the influential Public Accounts Committee.