General Election 2015: Lord Blencathra makes gaffe over foreign tax loopholes

The former Tory home office minister said the PM's bid to increase tax transparency was an attempt to appease political anger at home

Lord Blencathra: 'There is no need to change something which works' (Rex Features)

David Cameron’s flagship initiative to force tax transparency on Britain’s overseas territories was a “purely political gesture” and should be ignored by the countries affected, a Conservative peer has controversially claimed.

Lord Blencathra, a former Tory home office minister who was ennobled by David Cameron in 2011, told the government of the Cayman Islands that the Prime Minister’s bid to increase tax transparency was an attempt to appease political anger at home. Lord Blencathra’s views, revealed in a previously unpublished submission to the Cayman Islands and written last year, will embarrass the Conservatives who have claimed in the election campaign that their stance on tax avoidance is evidence that they are cracking down on those who unfairly use loopholes to avoid paying their “fair share”.

But Lord Blencathra said that Mr Cameron’s announcement in 2013 that he would pressurise Britain’s overseas territories to be more transparent about the ultimate beneficiaries of companies set up in their territories was designed to off-set public anger about tax avoidance – and prevent the French from imposing an EU tax on financial transactions.

He claimed in his submission that the Cayman Islands should resist the pressure from Cameron to abide by his transparency initiative as they already had adequate mechanisms in place.

“I suggest that the current Cayman system works and there has not been one single bit of evidence to suggest that the system is failing in any way. There is therefore no need to change something which works,” he said.

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The Conservative party dismissed the memo. “The PM led the world by putting tax and transparency at the top of the global political agenda, and was widely hailed by independent experts and commentators for securing significant progress, after Labour failed to act during its time in office,” a spokesman said. “Our motivation was to secure a fairer deal for hard-working British families – and people around the world.”

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