David Cameron is likely to remain as Prime Minister, in the short-term at least. However he is engulfed in controversy over his father’s tax avoidance past and his own unwillingness to explain his own role in the business. The company set up Ian Cameron, is named Blairmore Holdings – slightly amusing given that David Cameron once described himself as ‘the heir to Blair’.
Most people will agree, as a moral principle, that a child shouldn’t be held responsible for the sins of their parents. It’s just about the one decent argument that has been brought up in David Cameron’s defence during the Panama tax dodging scandal. We try to be reasonable people and, as much as we don’t like David Cameron, there is an argument there. Partially.
To start with, it’s likely that when Ian Cameron made the decision to move from working as a stockbroker in 1982, the 16-year-old David had no chance to prevent it.
We would have liked to think that, as he grew older and became interested in politics and came to understand the way that tax avoidance deprives the state of resources, David would confront his father over the issue. (As a teenager David Cameron worked as a researcher for the MP Tim Rathbone; seemed to have played no part in university politics; then went from university straight to working in the Conservative Research Department.) However, it’s understandable that risking a family rift may have been something that young David Cameron was unwilling to do.
Rathbone is David Cameron’s godfather, so it may well be that his early jobs in politics were chosen simply as a means of paying the rent, rather than a deeply held desire to change the world. But when a person decides to run for political office, it’s a basic moral principle to make the voters aware of any potential conflicts of interest. There are various codes for different offices, but they share the same understanding – that the voters have the right to look at the ways in which a person may be tempted to misuse power before entrusting them with that power.
There’s room to argue how much power a backbench opposition MP really holds, but the date when David Cameron decided to run for leader of the Tory Party and Leader of the Opposition (29th September 2005) was the latest reasonable point for an honourable politician to make the public aware of his background.
It would have been embarrassing, but could have been sold as a positive – David Cameron will have a detailed technical knowledge of how tax havens work far beyond most of us, and he has at various times positioned himself as being against the principle of tax avoidance. He criticised a tax avoidance scheme used by the comedian Jimmy Carr as “not morally acceptable”, and four years ago he promised to publish his own tax returns, as part of criticism of Labour’s London-mayoral candidate Ken Livingstone, which he didn’t get around to actually doing.
But of course, David Cameron chose not to let the British public make the judgement for themselves.
We are all, whether we want to be or not, shaped by our childhood experiences. It’s likely that, in some way, Ian Cameron’s background helped form an association in David’s mind between tax avoidance and a wasteful state.
You may be aware that Cameron demanded the Tory leader of his local council make “back-office savings” in 2015, rather than cut services.
You may also be aware that David Cameron’s aunt and mother have both signed petitions against cuts in services made in response to Cameron’s national budget cuts.
It appears that, while the council leader understands the numbers, and his family members have seen the impact of his policies, Cameron believed, on apparently purely ideological grounds, that there would be more waste to cut. There just had to be!
Where did this fact-resistant ideology come from?
Maybe on some level David Cameron believes his father was doing the British taxpayer a good deed, by forcing the British government to be more creative to cope with the money Blairmore Holdings was denying it.
Worse still, it’s emerged in the past few days that in 2013 Cameron intervened to water down proposed EU rules on tackling tax evasion. The Financial Times reports that Cameron personally wrote to the President of the European Council. He argued that trusts used for inheritance planning should be given a special status compared to other companies, and as a result created a loophole.
It may well be that Cameron is right in claiming that companies and trusts should be treated differently.
But his family members have benefited and continue to benefit from loopholes in an overly complex tax system. Did Cameron intervene because of his deeper technical knowledge of the tax system, or to aid his own family’s investments? This is precisely the reason why MPs are expected to disclose their investments – so investigative journalists and the general public can look into any potential conflict of interest. (As Channel 4 News were doing before the Panama Papers story broke.)
As is often the case, the picture gets worse when you begin to think about George Osborne.
You may have seen a video, which has gone semi-viral from time to time, which shows a younger George Osborne offering tax avoidance advice via “pretty clever financial products” on national television in 2003.
You may also be aware that, as reported by Private Eye, between 2008 and 2015 his family’s business paid no corporation tax in the UK, despite having a 2015 turnover of £34 million and paying one of its directors £684,000.
George Osborne didn’t have total control of the company, but is beneficiary of a trust that owns 15% of the company. His father of one of the co-founders, and is related by marriage to the other – so presumably holds some kind of influence (whether formal or informal) on the way it was ran, and as a result holds partial responsibility for his family company avoiding its part of the social contract, (presumably achieved via some ‘pretty clever financial products’).
HMRC, overseeing all of the UK’s tax collections, is generally not micro-managed by the Chancellor of the Exchequer. But it does fall ultimately under the power structure of both the Chancellor and Prime Minister.
The overall staffing levels fell from 96,000 in 2005 to 60,000 in 2015 (Cameron and Osborne came to power halfway through that decade). This cutting in staff levels has a practical effect on the work HMRC can do – the Association of Revenue and Customs union claims that investing £300m in HMRC staff would allow them to collect an extra £8 billion of tax.
The best possible interpretation of this situation is that the people in the chain of command that begins with Cameron and Osborne are financially inept, and don’t understand the very basic concept of investment. But another interpretation is that HMRC has been deliberately underfunded, to allow tax avoiders like Blairmore Holdings and Osborne and Little to get away with withholding their taxes from the British state.
Unlike with the Cameron family, there is no paper trail that details how the Osborne family avoided paying their socially agreed share of tax, and there may be an innocent explanation for why Osborne and Little arranged their financial affairs in such a way. But given Osborne’s smirk at the idea of playing the system and the way HMRC has been underfunded, it seems unlikely.
Bear in mind that the Panama Papers leaks only reveal details of one tax avoidance law firm – Mossack Fonseca – and that they are only the world’s fourth biggest firm in their field. So there’s a very decent chance that the only reason Osborne isn’t as deeply mired in this scandal as Cameron is because his family decided to go upmarket.
As a practical statement, the environment and moral principles that a child is raised with will affect them across their lives. In a democracy, the people who a politician serves have the right to know the key factors in forming a politician’s ideology before they are elected into power. And yet Cameron withheld this information from the public – we can only assume deliberately.
It’s a little ambiguous whether to define this as corruption given that technically no laws have been broken. But there is overwhelming evidence that the two most powerful people in British government have been deliberately underfunding the state, and doing so in order to allow super-rich families like their own to keep money that they should be paying towards the upkeep of Britain’s roads, hospitals and schools.
In terms of practical outcomes, the scandal of the Cameron family (and probably Osborne family) tax avoidance is a scandal which dwarves Watergate.