Tuesday, 31 August 2010

The Heir to Blair Indeed!

One of the reasons that I voted Lib Dem was that there was a pledge that tax loopholes and tax avoidance would be clamped down on.  Quite how this pledge sits with the news that Phillip Green has been asked to advise the government on how to cut waste is anyone’s guess.  One can only wonder what the Lib Dem “backbenchers” make of it all.


To be fair, Green does pay UK tax on his salary from BHS/Arcadia.  The problem is that this is a company which is owned by Green’s wife, Christina Green, and her immediate family.  Chez Green is not based in the UK, therefore do not pay Income Tax to HMRC.  As a result the UK taxpayer is having to make up a shortfall of somewhere between £400-500 million, with the tax-take on dividends between 2002 and 2004 (when the company stopped paying dividends) and additional £120 million (estimate).


What these amounts to not take into account is the profits made from investments made into and from offshore companies.  According to the In The City column in Private Eye, the original takeover was executed through a Jersey based company called Taveta Investments (sole director, Mrs T Green).  Taveta now owned 92% of Arcadia, with HBOs owning the other 8 %.  In 2005 alone Arcadia paid out £1.3 billion in dividends to Taveta, with a tax liability calculated to be around £360 million.  The Eye reports that this dividend “was only possible because Taveta Investments increased it’s bank borrowings by £1.675 billion.  Most of this was courtesy of a £1 billion syndicated 7 and a half year loan…  just how much of the loan HBOS took is unclear, but it would have been a big slice.  Taveta still owes some £550 million of it back


The Green’s “earn” £20 million a year, none of which is taxable by HMRC.  As Green himself put’s it “We do pay all our taxes in Britain…  My wife is not a tax exile.  My family do not live in the UK.  It is somewhat different.”  In good times, this appointment would be dubious at best, but in times when a lot of hurt and a lot of pain is going to come the general public’s way, to appoint someone who has not been 100% committed to this country shows a distinct lack of judgement .  However this decision is not the only questionable appointment Cameron has made in his short premiership.


In June 2010, the government appointed John Browne as an efficiency Czar, tasked with identifying efficiency savings and ways to cut public spending.  Browne had been the Chef executive of BP until 2007. It is his cost-cutting programme at BP, which compromised health and safety regulations, which  should put a shiver up everyone’s back.  Those cuts arguably led to two major accidents at BP installations,  the Texas City refinery explosion in 2005 and more recently the Deepwater Horizon explosion, which caused friction between English Tories and American’s as the oil continued to seep into the Gulf of Mexico.  We can only hope that whatever cuts John Browne recommends, that he has learned his lessons from his tenor at BP.


What this does exemplify is that Cameron is developing the habit of not really thinking about his appointments and advisors.  This is a trait he shares with, of all people, Tony Blair (I’ve just noticed as well that Browne’s title is the rather Blairite “Efficiency Tzar”).  Remember the various people Blair would schmooze with?  We also remember the way Cameron touted himself as “the heir to Blair” in around 2006.  What is surprising is how quickly, and with so much gusto, Cameron has adopted some of the Blair hand book.

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