Financial Crime: Legislation

Lord Dykes Excerpts

Thursday 17th March 2011 Lords Chamber

[Lord Dykes]

My Lords, I very much agree with the words of the noble Lord, Lord Parekh, particularly his regret and sadness that people are greedy and avoid paying taxes when they can easily afford them. I, too, take pleasure in thanking my noble friend Lady Williams for launching this debate, as others have done. These matters are being raised at a very important time in this Session of Parliament. I shall declare two separate interests, if I may: as being a retired member of the Stock Exchange, after many years, and that I live in France because I particularly wanted to pick up on a reference made earlier.

It happened a short while ago that one of our senior ministerial friends in the coalition Government—for obvious reasons, I will not say who—took one of my colleagues aside to say: “You don’t have to worry, you know. You talk about all this trouble with bribery, corruption and tax avoidance in Britain but look at the situation in France”. Because I live in France, I happen to have had the opportunity on quite a few occasions of having close contacts with the political, official and parliamentary classes of people in France and that is not true at all. France has increased enormously the regulations and legislation governing bribery, corruption and tax avoidance and evasion, tightening them to such an extent that people there now live in fear of being apprehended. That is not the situation in the United Kingdom where there is enormous complacency about this subject.

My noble friend Lord Sassoon is famous, quite rightly, for taking conscientious notes about the contributions made in these debates. Various excellent speeches have been made today, marred only slightly, if I may say so, by the hesitations of our three or four Tory colleagues saying that it was perhaps not such a terrible subject after all. However, I appreciate their request for absolute clarity and transparency on the regulations governing their tax and payment duties, overseas and in Britain. Now is the opportunity for my noble friend Lord Sassoon not just to answer politely and routinely on this occasion, but to reassure us fundamentally about some of these matters.

The amount of tax avoidance in this country is colossal. There is a very cosy, conspiratorial attitude in the City of London. I know it well; I am there frequently and have many friends in the City. For obvious reasons, I will not mention some names today but that attitude is quite wrong too. I am glad that my noble friend Lady Williams mentioned the Multinational Chairman’s Group, which probably sidles into the back entrance of No. 10, as Rupert Murdoch apparently does, to discuss these matters in order to mitigate the obligations that other people quite naturally accept. What is the sin in people having to pay proper taxes, be they in corporate, commercial or ordinary human activity of all sorts, when other people do it routinely?

Does nobody here feel so sad personally for Sir Philip Green, with his self-created personal dividend coming out of his brilliant reorganisation of British Home Stores? That was because of his talents as a retailer, which I pay tribute to; and that BHS reorganisation was funded, I think, not just from his own resources but by private equity borrowings, as they usually are. A billion pounds of profit was, quite rightly, taken out as a dividend. However, instead of taking just that self-created dividend he absolutely insisted that, as his wife was a recipient of that dividend, he would not pay the £200 million extra of tax or whatever it was. Is that really not a very sad reflection on the greed in our modern society, which is a disgrace for businesspeople and for others? No wonder Labour Peers here such as the noble Lord, Lord McFall, reflect on the unfairness in our society created by that.

Although this is by definition probably a fairly unlimited figure I estimate, for example, as my City friends do, that over £150 billion of tax evasion occurs because of all the tax havens that the British Empire and others have created. It is also because of the authorities in London not tightening up, given all the agencies which they have at their disposal and the improvement in the SFO to which my noble friend referred. Yet that figure is almost the size of the deficit. Then there is the £15 billion of corporate taxes that are not paid properly by companies that simply disappear along with their directors. Those amounts of money are a reflection on the unfairness of society.

The newspapers, however—most of them, incidentally, apart from the FT, the Guardian and one or two others, owned by tycoons who live in tax havens abroad and do not pay UK direct taxes, while paying low corporation tax because of their international structures—give us long, learned, pompous leaders again and again about the disgrace of people defrauding their social security. They are right—that is a terrible thing to do—particularly the example yesterday of the Afghan family who are now about to be sentenced for claiming a huge amount of money. But that amount in total is probably £20 billion, maybe £25 billion—a tiny figure given the thousands of people involved—in comparison with the small number of elite members of our business society in Britain and abroad, a reflection of the British Empire, who abuse their position.

I conclude with a quote on Rupert Murdoch. We are all thinking about the forthcoming deal. I have even been told by someone, although I do not know whether it is true, that Jeremy Hunt was actually at the Christmas supper attended by the Prime Minister and Rebekah Brooks. A newspaper said, at the end of September last year:

“From Thatcher through Blair to Cameron, our democratically elected leaders have tugged their forelocks to an unelected foreign tax exile in gibbering fear of losing his papers’ support, allowing Murdoch to regard a change of government as the mere shuffling of junior personnel”.

Corruption is not just tax avoidance and bribery; it is that kind of behaviour as well.

Currency Markets

Lord Dykes Excerpts

Wednesday 2nd February 2011 Lords Chamber

Asked By

[Lord Dykes]

To ask Her Majesty’s Government when they will next hold talks with eurozone representatives to discuss the present state of currency markets.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, Ministers regularly meet their opposite numbers from other member states to discuss pertinent economic and financial issues, including currency issues, at ECOFIN. The next council meeting is currently scheduled for 15 February.

[Lord Dykes]

I thank the Minister for that Answer and for the fact that, on at least four or five recent occasions, HMG have said with great emphasis that the United Kingdom benefits directly from a strong, stable and secure eurozone. Does he feel that if the City, which is probably the largest euro-trading market in the world now, is undermined by greedy gamblers still spreading false stories about the strength of the euro, that would be a tragedy for the City of London?

Deficit Reduction

Lord Dykes Excerpts

Tuesday 18th January 2011 Lords Chamber

[Lord Sassoon]

My Lords, as and when there are proceeds they will be fully accounted for. That is the position.

[Lord Dykes]

My Lords, will the Minister agree that if the Government take more energetic action to deal with the tax dodgers, of which there are many—probably amounting to over £100 billion a year—there will then be less need to sell state assets?

[Lord Sassoon]

My Lords, we want to see that the taxpayers of this country pay what they properly should pay. Indeed, we are investing an extra £900 million over the spending review period to ensure that HMRC is able to generate many billions of pounds in additional tax revenue each year. That is quite independent of the need to look properly and hard at Government-owned assets—companies and otherwise—to see what revenue can properly be derived from those assets.

EU: Budgets

Lord Dykes Excerpts

Thursday 2nd December 2010 Lords Chamber

[Lord Sassoon]

My Lords, I am happy to confirm that the consolidated statement that the UK and a handful of other member states are producing is the most useful practical way of demonstrating that the EU funds that the UK administers are well under control. There is little reference in the auditors’ reports to any matters in the UK. Leading by example is the way we should do it.

[Lord Dykes]

My Lords—

[Lord Pearson of Rannoch]

My Lords—

[Lord Dykes]

My Lords, can the Minister confirm again that these are overwhelmingly technical, clerical, administrative and operational mistakes, and not to do with fraud, which accounts for a tiny amount; and that fraud has also occurred regularly in the United Kingdom?

[Lord Sassoon]

I do not want to go over old ground; I have talked about the fraud issue, which we should not get out of perspective. We nevertheless should not be complacent about any of this. There has to be a formal vote each year to discharge the Commission in respect of the audit qualifications. The previous Government never used their vote in this respect when the annual discharge was voted on. As my honourable friend the Economic Secretary has said, the Government plan to be ready to use our vote if the accounts fail to meet the standards that we think they should. We have to strike a balance here and be seen to take tough action if that is appropriate.

EU: Membership

Lord Dykes Excerpts

Monday 8th November 2010 Lords Chamber

[Lord Sassoon]

My Lords, in answer to the first part of the noble Lord’s question, 40 per cent of the UK’s trade goes to Europe, so it is a critical trading partner. On the potential increase of our budget contribution for next year, I should say that it was only thanks to the work of my right honourable friend the Prime Minister that the budget was put on to the agenda of the Council of Ministers and, thanks to the work he did with a number of other member states, the ridiculous proposal of a 6 per cent increase has been thrown out of court. The Council instead discussed the 2.9 per cent increase which we believed to be the absolute upper limit of what should be acceptable for next year.

[Lord Dykes]

My Lords, further to the Minister’s answer when he was referring to the enormous benefits in all sectors, would he agree that even the City earnings from being the largest euro currency trading centre in the whole world are enormous in comparison with the budget contribution we have to make? There are many other examples.

In view of the low quality of the characteristic questions of the noble Lord, Lord Pearson, should he not return to being leader of UKIP, the only party in Britain that wants us to leave, after 37 years of membership of the EU? If he were right, Richard Branson and many other businessmen would be wrong.

[Lord Sassoon]

My Lords, I suppose there was a question in there for me somewhere. I certainly agree with my noble friend that the City of London over a number of decades has indeed become the principal financial centre for the European Union. It is important that business across the European Union understands what benefit it gets out of the financing that goes through the City of London.