HSBC leaks: 'Labour is in no position to point the finger on tax'

Their desperation to paint the Tories as the party of sleaze, the friend of big business, in the run-up to the general election, is painfully obvious

When I worked in the House of Commons as a reporter, I well remember one Labour star, someone who went on to become a senior member of the Blair government, telling me how he’d uncovered a “web of Tory corruption out of Hong Kong”. His claim was that the Conservatives were being funded by a Hong Kong tycoon, who, in return, was receiving the promise of favours from the party. When I looked into it, his evidence fell away completely. Yes, it was true; the Tories had received a declared donation from a company that had among its major shareholders a Hong Kong billionaire. It was also the case that this particular firm did a lot of work with the then Tory administration. 

But the Hong Kong businessman was not the majority investor; he did not even have a seat on the board. And the corporation was in the business of securing public sector contracts, regardless of the colour of the party in power.

The Labour politician’s naivety, coupled with his desire to put one over on the Tories, was shocking. Meanwhile, I remember thinking,  his own colleagues were busy securing cash from all manner of donors, some of them far dodgier than his supposed Godfather from Hong Kong.

We’re in a similar state now with the allegations of tax evasion, avoidance and HSBC. Labour’s desperation to paint the Tories as the party of sleaze, the friend of big business, in the run-up to the general election, is painfully obvious.

The trouble is, for every one of Labour’s charges there is a flipside. The Tories employed Stephen Green, the former chairman of HSBC, as a trade minister. Green, charges Labour, is supposed to know what the bank’s clients were up to.

Really? Since when must a bank be aware of its customers’ activities? Green worked for HSBC. The Labour government employed James Sassoon, vice-chairman investment banking at UBS Warburg. Indeed, he was Gordon Brown’s “ambassador for the City”. In 2008, Brown made him president of the Financial Action Task Force on Money Laundering. Was he quizzed about his former bank, in particular the Union Bank of Switzerland part, and all the things its clients may have got up to?

One figure that has cropped up in the HSBC furore is Sir Philip Green. Pictures have appeared showing the billionaire retailer with Bill Clinton and Green’s pal  Richard Caring. Apparently, Green’s wife, Tina, sheltered some of Caring’s assets, including shares in BHS, the store chain. Caring denies any of his assets were in accounts controlled by Tina.

Labour loves to get stuck in to Green, at one time an adviser to David Cameron. But which party knighted Green? Labour.

At the Public Accounts Committee, the chairman Margaret Hodge, lambasted Lin Homer, chief executive of HMRC, for bringing only one successful prosecution from the HSBC Swiss clients list. But when HMRC gained access to the HSBC files they put a team of 300 (300!) to work, trawling through the data.

They found that of the 3,600 UK clients of HSBC’s Swiss private banking arm, a straight two-thirds, or 2,400, could be ruled out because they enjoyed privileged “non-domicile” status in the UK, and  had paid all the tax – such as it  was – to HMRC.

Which party, when it was in power cranked up the number of non-doms? By now, you probably know the answer. Yes, it was Labour. During the Blair years, the total of non-doms more than doubled, from 67,600 to 137,000.

Of the 1,100 cases drawn from HSBC’s books where the authorities believed tax was owing, the majority settled by negotiation. The alternative would have been prosecution, which would have taken years and might well  have failed.

Faced with this choice, HMRC took a cost-effective, pragmatic approach. They know to the taxpayers’ cost just how expensive, and fruitless, criminal charges against wealthy people can be – witness the Harry Redknapp and Ken Dodd acquittals. Would Hodge prefer that the Revenue wasted millions pursuing such cases?

In 1994, Gordon Brown, then the shadow Chancellor, told the Labour party conference that those who avail themselves of tax loopholes were the “something for nothing elite” and the “undeserving rich”.

Once Labour was in charge, Brown pledged, it “would take action against the tax abuses and avoidance on the part of the few, which result in higher demands on the overwhelming majority”. Twenty-one years on, and what progress has been made? Virtually none. Somehow, I suspect, 21 years from now, the same simplistic attitudes will be to the fore, and we will still be arguing over party donors (only solution: introduce state funding of main parties), wealthy individuals and companies, and their tax affairs.

By the way, who was Brown’s researcher and speechwriter when he made that speech which came to nothing? Ed Miliband. Of course.

Twitter.com/@Chris_Blackhurst

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