Murdoch's tax: Labour has, er, nothing to say

Why has the Opposition come over all coy? asks Nick Cohen
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The Independent Online
THERE comes a point in every aspiring monopolist's career when his business reaches a critical mass and he becomes so powerful that no politician dare take him on.

Rupert Murdoch, owner of the Sun, the Times, the News of the World and the Sunday Times, the publishers HarperCollins and a large chunk of BSkyB television, arrived at this comfortable state last week.

The Independent demonstrated on Monday how Mr Murdoch's News International had paid virtually no tax for 10 years. The Labour Party, which has been labelled "loony" by Mr Murdoch's papers for years, and threatened to place restrictions on the growth of his business in the Eighties, reacted by saying ... nothing.

The accounts of News International's subsidiaries showed how money from Britain had moved to tax havens in the Cayman Islands and Netherlands Antilles. Quite legally, Mr Murdoch's empire had claimed "group tax relief" by offsetting profits made in one part against losses made in another.

The result is that News International has accumulated pounds 979.4m of net profit since 1986 and paid just pounds 11.74m of net tax (1.2 per cent of the take).

Gordon Brown, the Shadow Chancellor, daily denounces business "fat cats". At the Labour conference this year he promised that the party would produce an "irreversible shift in wealth and power away from privilege and excess to the real wealth-creators - those who work and study hard, who pay their fair share of taxes."

Surely he would tear into a tycoon who, if he had paid taxes at 25 per cent on his profits last year, would have given the Treasury pounds 200m - enough for about 50,000 hip-replacement operations? "No," explained one of Mr Brown's aides. "We tend not to make specific criticisms of specific companies."

But what about the privatised water company bosses? You are pretty specific about them. "Ah. Yeah. They're different, they're privatised. If you want a comment on Murdoch, try Nigel Griffiths." Mr Griffiths is Labour's consumer- affairs spokesman. All that he had to say was: "It's nothing to do with me. Try the Treasury people [who work for Gordon Brown]." Well, we had. So we turned to Margaret Beckett, described by the Sun last month as a politician "as left as they come". Would she condemn Mr Murdoch? The omens seemed good. Mrs Beckett,Labour's Trade and Industry spokeswoman, would assume final responsibility for the Monopolies and Mergers Commission if Labour won power.

The allegation against the commission from Mr Murdoch's competitors, including the owners of this paper, is that it allowed him to threaten his rivals' future by "dumping" the Times on the quality-newspaper market at 20p. The huge losses the Times sustained - estimated at pounds 40m a year - were then passed around his group.

The commission did not blink an eyelid. This was not a surprise: it hardly ever intervenes. After a year in which it allowed the City to make pounds 500m from fees for giving advice on takeovers, cynics suggest it would have approved Hitler's invasion of Poland as a legitimate expression of the free market in military force.

But Mrs Beckett's office gave no hint that a reformed MMC would trouble Mr Murdoch. "I'm not being evasive, but newspapers are the responsibility of Jack Cunningham at National Heritage," said a spokesman for her office. "Obviously we've got an interest, but we've really got nothing to say."

Neither had Mr Cunningham. "We're waiting to see what the Government does in its Broadcasting Bill," explained a researcher. "Jack hasn't really formulated his ideas yet. I'll get him to give you a call." Mr Cunningham did not call.

The only Labour frontbencher prepared to take a firm line was Tom Pendry, the shadow Sports Minister. He had "a number of reservations" about the way that BSkyB was buying up the great national sporting events and forcing viewers to pay for the privilege of watching them. He promised that a Labour government would set up a task force to investigate the problem.

Mr Pendry should be careful. Earlier this month, Richard Caborn, Labour's spokesman on competitiveness, called on the Government to investigate the "serious threat to the development of the UK broadcast industry" posed by Mr Murdoch's pay-TV monopoly. He was instantly slapped down by John Prescott, Labour's deputy leader, who said Mr Caborn was not reflecting party policy.

As we were passed from office to office, one name kept coming up. Speak to Alistair Darling, said the aides to Mr Brown, Mr Cunningham and Mrs Beckett. He is the party's authoritative voice on Mr Murdoch and tax.

We finally tracked the well-regarded spokesman on City affairs to his Edinburgh office. Was he prepared to say if a Labour government would force Mr Murdoch to pay more tax?

"Up to a point,'' came the shy reply. "You see, we haven't seen Murdoch's accounts. We don't have anything to go on. In a global economy, all companies can secure tax advantages by moving funds around."

Sceptics suggest that Labour's coyness is motivated by a desire not to offend the world's most powerful media magnate. They cite as evidence Tony Blair's visit to Australia to address News International executives and the party's refusal to condemn Mr Murdoch's closure of the Labour- supporting Today newspaper, even though there was a willing buyer.

But Mr Darling said that the party was concerned with loftier ideals. "You can't be subjective. You must never design a tax system to get at one person. It is a matter of fundamental principle."

Murdoch's power, page 21