Tories are party of hedge funds and tax avoiders, says Ed Miliband

Hedge Fund

Labour has pressed ahead with its assault on corporate tax avoidance, hinting for the first time that it believes Smythson, the luxury stationers for which Samantha Cameron acts as an adviser, moved its headquarters to Luxembourg to lessen its tax burden.

Ed Miliband made no reference to David Cameron’s wife or to the company during prime minister’s questions but instead linked the £47m donations to the Tory party from hedge funds and the introduction in 2013 of a stamp duty exemption on stock market transactions, which he said had lifted £147m worth of taxes from the hedge funds.

The Labour leader, under assault from Tory-inclined business leaders for his alleged anti-business rhetoric, said: “This is the difference: this is a PM who won’t tackle tax avoidance for the simple reason that too many of his friends would get caught in the net. They’re the party of Mayfair hedge funds and Monaco tax avoiders.”

In a speech on Wednesday evening the archbishop of Canterbury, Justin Welby, will call for companies to pay more tax in the country where they have generated their revenue. The CBI is pressing the government to water down plans for a diverted profits tax, a means of preventing companies shifting their profits to countries where corporation tax is lower.

The attack on Smythson was launched by the Labour MP Tom Blenkinsop, who asked of Cameron in the Commons: “Does he know of anyone who owns or works for a UK-registered company that uses a Luxembourg-based company in order to avoid paying their fair share of tax in the UK?” Cameron replied that he wanted to see more companies headquartered in the UK.

Miliband focused all his questions on the link between the tax breaks for hedge funds and the extent of the donations to the Conservative party by hedge fund managers. He said: “Everyone pays stamp duty on stock market transactions except hedge funds, who are allowed to avoid it, costing hundreds of millions of pounds. You have been funded to the tune of £47m by the hedge funds.”

Labour claims the hedge funds loophole has cost the country £100m a year over the past five years, and others have put the figure higher. Miliband asked “Everyone knows that’s why you are refusing to act but what is your explanation? Why are you refusing to act on this?”

Cameron repeatedly refused to bow to the Labour leader’s demand, saying after three questions on the issue: “If you have a good submission for the budget, talk to the chancellor about it.”

Cameron jeered Ed Balls, the shadow chancellor, for failing to remember on BBC Newsnight the name of the business backer with whom he had been dining. “The shadow chancellor was asked on the television could he think of one single business leader [who supports Labour]. And do you know what he said, Mr Speaker? He said: ‘Bill somebody.’ Mr Speaker, Bill Somebody’s not a person; bill somebody is Labour’s policy.”

Balls shouted back: “At least I didn’t leave my daughter in the pub!” – a reference to an incident more than a year ago.

Miliband said his party was “standing up for hard-working families and businesses while you are a friend of the tax avoiders”. He said he would keep asking the same question. “You are bankrolled by the hedge funds, you claim you want to act on tax avoidance, why won’t you act?” he asked.

He then named some of the Conservatives’ key donors, including Lord Laidlaw, a tax exile living in Monaco, who gave £7m, and Michael Hintze, whose company is based in Jersey, who gave £3m. He added that Michael Spencer, who gave £4m, was involved in the Libor scandal.

Cameron attacked the wider Labour platform. “Two former Labour health secretaries completely condemned your health policy,” he said. “All the leading university vice-chancellors condemned your university policy. You can’t find one single business leader to back your economic policy.”

Cameron joked: “It is any wonder the Chuckle Brothers have launched an official complaint and said they don’t want to be compared to the two clowns opposite?”

He said that when Labour had been in power, the rich paid lower tax rates than their cleaners. “We’ve acted. They didn’t,” he said.

Powered by article was written by Patrick Wintour, political editor, for The Guardian on Wednesday 4th February 2015 14.39 Europe/London © Guardian News and Media Limited 2010