Rank Hypocrisy
Dan Hodges writing in The Telegraph takes the Labour leader, Ed Miliband, to task over his rank hypocrisy on task avoidance by using a device known as a 'deed of variation' which was once described by Gordon Brown as a form of 'tax abuse'.
Now in those days Gordon Brown was known as the Iron Chancellor and one of his advisers in the Treasury was none other than Ed Miliband.
So I think you can safely say that this deed of variation business has put Labour and Ed Miliband in a very tight spot and for that reason I expect to hear a lot less about tax avoidance in the run-up to the general election.
Of all the political sins, hypocrisy is worst – especially for Labour
Ed Miliband’s blunder over tax avoidance has shattered his aspiration to moral superiority
Photo: Dave Thompson/PA
By Dan Hodges - The Telegraph
In politics there are a multitude of forgivable sins. Cheat on your wife. Lie about your record. Stab your colleague in the back. Lie with your colleague’s back-stabbing wife.
The voters will tut, shake their heads, and move on. But there is one offence for which there is no pardon. Never, ever, under any circumstances, get caught preaching one thing at the public while practising another. Incompetence, duplicity, arrogance – each one hurts. Hypocrisy kills.
On Friday a perception was building in Westminster that we had witnessed a breakthrough week for Labour. Or rather, a breakdown week for the Conservatives. The HSBC scandal had, we were told, merged in the public consciousness with the Black and White Ball, the annual Conservative fundraiser that sees Tory ministers literally auctioning one another off to the highest bidder. We then had Ed Miliband’s confrontation with Lord Fink, who threatened to sue the Labour leader after he implied – under parliamentary privilege – that Fink’s tax affairs were “dodgy”.
Having challenged Miliband to repeat the charges outside the House of Commons, Fink hurriedly unchallenged him, happily admitting he practised “vanilla” tax avoidance, and claiming “everyone does tax avoidance”. And at that point I, like most other people, thought Ed Miliband had indeed carried the day. He had effectively smeared his opponent by linking some low-level tax avoidance to a row over tax evasion. But the smear had worked.
And then back came Mr Miliband. To be fair, his opportunities for hubris have been few and far between over the past four years. So it may have been excitement at the prospect of a rare victory won, or it may have just been a sense of relief that he wasn’t going to be spending the first couple of weeks of what he hopes will be his new premiership in the dock of the Old Bailey defending himself against defamation charges. But whatever it was, he proceeded to provide the most staggeringly hypocritical, stupid, short-sighted, self-destructive hostage to fortune since John Major stood up and proudly announced he was taking Britain “back to basics”.
With steel in his voice, Ed Miliband said: “I just want to make this point about Lord Fink. This is a very important moment. Lord Fink yesterday was threatening to sue me because I’d said he was engaging in tax avoidance… I think this is a defining moment in David Cameron’s leadership of the Conservative Party. Because it is now revealed he appointed a treasurer who says everyone engages in tax avoidance… I don’t think that’s the view of the country. I think that says something about the Conservative Party.”
Maybe. But it also says a fair bit about Ed Miliband. Because one of those tax avoiders Lord Fink was referring to – and Ed Miliband was attacking – is Ed Miliband.
In 1994, Ed Miliband benefited from a posthumous re-drafting of his late father’s will that allowed him to inherit 20 per cent of his father’s property, thereby reducing his own personal tax liability. The device used was a “deed of variation”, and according to HMRC enables the beneficiary to “reduce the amount of Inheritance or Capital Gains Tax payable”.
Back in 1993 it took the Tories weeks to appreciate the implications of John Major’s self-immolating words, and try to neutralise them. To Labour’s credit, it has taken a considerably shorter amount of time for the Labour spin machine to mobilise in an attempt to save their leader from himself.
The first line of defence has been that Miliband has paid all the tax owed on his inheritance of his late father’s house. Which is true. But the primary benefit of the deed of variation in this case was that it reduced Miliband’s liability in the event of the death of his mother, who retained a 60 per cent share of the house, and still resided in it. Happily, Mrs Miliband is still alive today. But Ed Miliband still benefited financially. He was aware he would be inheriting a share of a valuable property with a reduced tax liability, and was able to plan his financial affairs accordingly.
The second line of defence has formed around the claim that a deed of variation isn’t actually a tax avoidance device at all. Which is odd, given that Gordon Brown once described deeds of variation specifically as a form of “tax abuse”. That’s the same Gordon Brown Ed Miliband used to work for as a senior Treasury adviser.
The final redoubt has been built upon the assertion that Miliband has not technically engaged in tax avoidance because the deed of variation was drawn up by his mother, not him. It was the main line used by the Labour leader himself at his speech last week. Setting aside the eagerness of his party to throw Mrs Miliband under this particular bus, it’s a line that again doesn’t hold. The whole point about her son’s tax avoidance argument is that this is not a technical issue, but a moral one. Miliband was a beneficiary of tax avoidance. Therefore, by his own definition, he is a tax avoider.
Over the weekend – with all the unpredictably of leaves drifting to the ground in autumn – Labour’s “back to basics tax” crusade blew up in the party’s face. A host of Labour donors have already been exposed for using a range of tax dodges that read like out-takes from The Wolf of Wall Street. Over the coming weeks every Labour shadow cabinet member, MP and peer will see their own tax affairs come under forensic scrutiny. Not all will withstand it.
To what end? Labour insiders felt the HSBC tax evasion scandal was providing them with sufficient ammunition as it was. “Where’s George Osborne been? It’s not like him to vanish like this,” said one, with the knowing air of a budding Dr Watson.
Labour has also had enough warnings from history – contemporary as well as distant. This parliament has to an extent been defined by hypocrisy charges levelled by MPs at their political opponents. The spectacle of the Liberal Democrats castigating their coalition partners while simultaneously propping up their agenda is the primary reason for their poll implosion. Similarly, the greatest single blunder the Tories have made in government has been their decision to cut the top rate of tax at precisely the moment they were lecturing the nation on the need for collective sacrifice. Only now are they regaining the ground they lost.
Fortunately for David Cameron, Ed Miliband looks set to do all he can to help him make up the rest. Hypocrisy is toxic. But if anything it is even more toxic for Labour than the Tories.
That is because moral superiority is basically all Labour have left now. Ed Miliband’s party long ago gave up trying to convince the country Labour could govern more efficiently or prudently than the Conservatives. Their entire offer is now based upon convincing people they can do so more ethically.
Which was always going to be a tough ask. The voters are currently minded to declare a plague on the house of every politician. But if we get many more examples of Labour’s tax avoidance, it will become impossible. Because hypocrisy is the original political sin.
