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Tony Blair warns Labour could be reduced to a protest party as cuts bite

Category : Business

Labour in danger of returning to dividing lines of 1980s, when it languished in opposition to Thatcher’s Tories, says former PM

Tony Blair has warned Labour that a fierce resistance to austerity and welfare cuts risks reducing it to a party of protest.

In an apparent dig at Ed Miliband, the former prime minister cautioned that the political centre ground in Britain had not shifted to the left as a result of the credit crunch.

He highlighted the danger of returning to the dividing lines of the 1980s, when Labour championed the “status quo” and languished in opposition to Margaret Thatcher’s Tories.

The intervention – Blair’s most significant on the domestic stage since leaving office nearly six years ago – came in an article for the New Statesman magazine.

He flatly rejected the argument that New Labour created the financial crisis, insisting the structural deficit had been below 1% in 2007-8. But however the crisis occurred, he said, “no one can get permission to govern unless they deal with its reality”.

“The paradox of the financial crisis is that, despite being widely held to have been caused by underregulated markets, it has not brought a decisive shift to the left,” he wrote. “But what might happen is that the left believes such a shift has occurred and behaves accordingly.

“The risk, which is highly visible here in Britain, is that the country returns to a familiar left-right battle. The familiarity is because such a contest dominated the 20th century. The risk is because in the 21st century such a contest debilitates rather than advances the nation. This is at present crystallising around debates over austerity, welfare, immigration and Europe.

“Suddenly, parts of the political landscape that had been cast in shadow for some years, at least under New Labour and the first years of coalition government, are illuminated in sharp relief. The Conservative party is back clothing itself in the mantle of fiscal responsibility, buttressed by moves against ‘benefit scroungers’, immigrants squeezing out British workers and – of course – Labour profligacy.

Blair said the Labour party was back as the party opposing Tory cuts and highlighting the “cruel consequences of the Conservative policies on welfare and representing the disadvantaged and vulnerable (the Lib Dems are in a bit of a fix, frankly)”.

He said the scenario was “less menacing than it seems” for the Tories. “They are now going to inspire loathing on the left. But they’re used to that,” he said. “They’re back on the old territory of harsh reality, tough decisions, piercing the supposed veil of idealistic fantasy that prevents the left from governing sensibly … For Labour, the opposite is true. This scenario is more menacing than it seems.

“The ease with which it can settle back into its old territory of defending the status quo, allying itself, even anchoring itself, to the interests that will passionately and often justly oppose what the government is doing, is so apparently rewarding, that the exercise of political will lies not in going there, but in resisting the temptation to go there.”

Blair insisted Labour’s “guiding principle” should be to seek answers, not become the “repository for people’s anger”. The party needed to be “dispassionate even when the issues arouse great passion” otherwise it would become a “simple fellow-traveller in sympathy” rather than a leader. “In these times, above all, people want leadership,” he added.

Blair said “the case for fundamental reform of the postwar state is clear”, and urged the Labour leadership to ask itself questions such as: “What is driving the rise in housing benefit spending, and if it is the absence of housing, how do we build more?” He also suggested there should be more focus on increasing the skills of unemployed people, setting the right balance between universal and means-tested help for pensioners, and use of DNA technology to tackle crime.

In a passage likely to be taken as implicit criticism of Miliband’s policy platform so far, Blair said the public wanted to “know where we’re coming from because that is a clue as to where we would go, if elected”.

Producing a “vision of the future” is “of the absolute essence”, Blair insisted. “The issue isn’t, and hasn’t been for at least 50 years, whether we believe in social justice,” he wrote. “The issue is how progressive politics fulfils that mission as times, conditions and objective realities change around us. Having such a modern vision elevates the debate. It helps avoid the danger of tactical victories that lead to strategic defeats.

“It means, for example, that we don’t tack right on immigration and Europe, and tack left on tax and spending. It keeps us out of our comfort zone but on a centre ground that is ultimately both more satisfying and more productive for party and country.”

The meat scandal shows all that is rotten about our free marketeers | Will Hutton

Category : Business

This is a crisis not only for environment secretary, Owen Paterson, but for the whole Conservative party

The collapse of a belief system paralyses and terrifies in equal measure. Certainties are exploded. A reliable compass for action suddenly becomes inoperable. Everything you once thought solid vaporises.

Owen Paterson, secretary of state for the environment, food and rural affairs, is living through such a nightmare and is utterly lost. All his once confident beliefs are being shredded. As the horsemeat saga unfolds, it becomes more obvious by the day that those Thatcherite verities – that the market is unalloyed magic, that business must always be unshackled from “wealth-destroying” regulation, that the state must be shrunk, that the EU is a needless collectivist project from which Britain must urgently declare independence – are wrong.

Indeed, to save his career and his party’s sinking reputation, he has to reverse his position on every one. The only question is whether he is sufficiently adroit to make the change.

Paterson is one of the Tories who joyfully shared the scorched earth months of the summer of 2010 when war was declared on quangos and the bloated, as they saw it, “Brownian” state. The Food Standards Agency was a natural candidate for dismemberment. Of course an integrated agency inspecting, advising and enforcing food safety and hygiene should be broken up. As an effective regulator, it was disliked by “wealth-generating” supermarkets and food companies. Its 1,700 inspectors were agents of the state terrifying honest-to-God entrepreneurs with unannounced spot checks and enforced “gold-plated” food labelling. Regulation should be “light touch”.

No Tory would say that now, not even Paterson, one of the less sharp knives in the political drawer. He runs the ministry that took over the FSA’s inspecting function at the same time as it was reeling from massive budget cuts, which he also joyfully cheered on. He finds himself with no answer to the charge that his hollowed-out department, a gutted FSA with 800 fewer inspectors and eviscerated local government were and are incapable of ensuring public health.

Paterson, beneath the ideological bluster, is as innocent about business as Bambi. Even the most callow observer could predict that with the wholesale slaughter of horses across the continent as recession hit the racing industry – horsemeat production jumped by 52% in 2012 – some was bound to enter the pan-European network of abattoirs, just-in-time buying, industrial refrigeration units, food brokers and giant supermarkets that deliver British and European consumers their food.

Meanwhile, the budgets of some local government food sampling units have been slashed by 70%. A Tesco beef burger containing 29% horsemeat was an accident waiting to happen. Of course it was the Food Safety Authority of Ireland rather than the FSA that blew the whistle. Businesses owned by footloose “tourist” shareholders whose sole purpose is profit maximisation in transactional markets have an embedded propensity to degrade. Consumers and suppliers alike become no more than anonymised numbers to be exploited to hit the next quarter’s profit target.

The large supermarkets have said little or nothing, which Number 10 deplores. There is nothing they can say. They have lobbied for the world in which we now live. An alternative world – in which consumers were genuinely served and where it is understood that suppliers need adequate profit margins in the supermarkets’ interests as much as the suppliers’ own – has to be created by stakeholders, including by government. There is a codependency between state, society, business and business supply chains, anathema to Paterson with his undeviating obeisance to the virtues of a “private sector” free from such “burdens”.

What the Paterson worldview has never understood is that effective regulation is a source of competitive advantage. If Britain had a tough Food Standards Agency, it would become a gold standard for food quality, labelling and hygiene. British supermarkets and food companies could become known for their quality at home and abroad, rather as “over-regulated” German car companies are, rather than first suspects when something dodgy is going on. Capitalism does not organise itself to deliver best outcomes, whatever rightwing American thinktanks might claim. There has to be careful thought, law and regulation about the obligations that accompany incorporation and ownership, how supply chains are organised and how companies are managed and financed. Otherwise disaster awaits.

And there are other bitter implications for Paterson. Geography means that Britain is inevitably part of the European food supply chain. Our efforts at better regulation – and of catching wrongdoers – have to be matched by others for everyone’s sake, exactly what the EU was set up to do and is now doing. The hypocrisy of passionate Eurosceptic Owen Paterson flying to the Hague urgently to meet Europol, saying afterwards: “It’s increasingly clear the case reaches right across Europe. Europol is the right organisation to co-ordinate efforts to uncover all wrongdoing and bring criminals to justice” and urging all European governments to share information with it, should not be lost on anyone. Europol holds powers from which Eurosceptic Tories, led by Paterson, urgently want an opt-out, but not in the middle of a first-order food safety and hygiene crisis.

That everything Paterson believes in is so wrong is not just a crisis for him – it is a crisis for his party and for Britain’s centre-right media whose prejudices makes thinking straight in the Tory party impossible. A great country cannot be governed by politicians whose instincts and policies are at such odds with reality, so betraying the people, economy and society they govern. The horsemeat crisis is not confined to our food chain. It reveals the existential crisis in contemporary Conservatism. British democracy needs a functioning, fit for purpose party of the centre-right.

Instead, it has Owen Paterson and today’s Tories.

A tip for Labour about planning for power. Listen to the Tories | Andrew Rawnsley

Category : Business

Senior Conservatives are already rehearsing the election lines they will use against Eds Miliband and Balls

A senior coalition figure puts it with stark profanity: “If the economy comes right, Labour is fucked. If it doesn’t come right, we’re fucked.” I wouldn’t frame it quite like that myself. It is too determinist to think that elections turn solely on whether the growth figure is positive or negative. Governing parties in Britain have won in the shadow of recessions and they have lost when presiding over expansion. But the basic point is surely right: the economy will be far and away the single most important issue when the country next makes a choice of governors. More specifically, many voters will be hugely influenced by whether their household disposable incomes are rising or falling.

Hence the rather desperate alacrity with which the prime minister and chancellor hailed the latest figures that suggested that the economy grew by 1% in the most recent quarter. Hence the welcome through gritted teeth that this news received from the Eds Balls and Miliband.

Both sides have to be very careful about how they address a country feeling the pain of prolonged austerity. Labour ought to be wary of exposing itself to the Tory charge that it is talking down recovery or secretly hoping for continued misery. The coalition, frantic for something to boost morale after a terrible few months, has to guard against the impulse to greet any modest movement in a positive direction as a glorious new dawn, a temptation to which David Cameron is prone to succumb.

In his early months as prime minister, back in October 2010, he seized on one quarter’s growth figures to brag that Britain was “out of the danger zone” and firmly set on the road to recovery. Within months, the economy was shrinking again. Once burnt, the prime minister is not twice shy. Naughtily pre-empting the official publication of the latest figures, he cockily told the Commons that the good news would keep coming, a rather reckless hostage to future fortune when there are considerable internal and external risks that Britain could slide into negative territory for a third time, a triple-dipper.

When trying to establish where the parties really stand with the public, the headline polling numbers are often not as informative as how voters answer the question: “Who do you most trust with the economy?” On the crucial issue of perceived economic competence, it is pretty much neck and neck between Labour and the Tories. There’s an encouraging way of looking at this from a Labour point of view. The two Eds have closed what used to be a yawning deficit on this question. Two and a half years since Labour was ejected from office, having presided over the worst financial crisis since the 1930s, the party has clawed its way back to rough parity with the Conservatives on economic competence. But there is also a way of looking at this which makes Labour frontbenchers nervous.

George Osborne has failed in the most important objective that he set himself. The central pillar of his original strategy – closing the budget deficit in a parliament – has no prospect of being achieved by the time of the next election. The original target date has already been put back by two years. Taxes have been hiked, spending squeezed and living standards crunched. Yet the governing party is still even-stevens with the opposition on economic competence and roughly 10 points behind in the headline poll numbers at midterm. Many governments have come back from much worse. Ken Clarke likes to remind younger Tory colleagues that he sat in Margaret Thatcher’s government when Conservative support fell to 18% and they went on to win the 1983 election by a landslide.

I don’t encounter many Tories who think that is likely to happen. But I do meet quite a lot of Conservatives who believe that, if growth can be sustained and the government manages to look competent for a change, Labour’s poll lead is very vulnerable. Senior figures in the Labour party think their Tory counterparts may be right and that current ratings are far more a reflection of the government’s failings than of a settled desire in the country to put Labour back into power.

There is a scenario that haunts some Labour frontbenchers. They sustain a poll lead all the way up to the threshold of the next election, only to lose it in the end because they had not dealt with the doubts about Labour nagging away at the electorate. The Conservatives are already practising their election themes. Boris Johnson played it for a laugh at the Tory conference in Birmingham, but it was a joke with deadly serious purpose, when he called David Cameron “a broom”, George Osborne “the dustpan” and compared other senior ministers to household implements “clearing up the mess left by the Labour government”.

In recent days, the prime minister and chancellor have been rehearsing other lines. It has been tough going, the Tories will say, and a bigger task than we expected because the inheritance from Labour was even worse than we imagined. But we are getting it done; re-elect us to finish the job. That will be a core Tory message. They might campaign on the slogan: “Britain’s On The Right Track. Don’t Turn Back.” They already own the copyright on that one having used it successfully against Labour in the past. One shadow minister suggests the Tories might also steal a soundbite from American politics: “Why hand the keys back to the guys who drove the car into the ditch?” Like cheap music, cheap slogans can be potent. In the words of one Labour frontbencher, the Tories could have the makings of “quite a compelling story”.

To counter it effectively, Labour will need a better story of its own, especially if growth is looking solid by the time of the next election. One line Labour is currently pushing hard is that the Tories have already done lasting, irrecoverable damage to the economy, which has disadvantaged Britain against major international competitors.

Ed Balls will pursue this theme with all the aggression for which he is famed, but the shadow chancellor also knows that it is very difficult to prove a counterfactual, a what might have been. Arguments about the past will probably matter less to voters at the next election than which of the parties seems to offer the best plan for the future. Labour will need a compelling case that it is better able to deliver jobs, rising incomes and enduring prosperity. There are unresolved tensions within the Labour high command about how to go about this. There is no open dissent from Ed Balls towards Ed Miliband’s speeches about reforming capitalism, but colleagues don’t come away from talking to the shadow chancellor with the impression that he burns with unbounded enthusiasm for this as a way of winning the confidence of voters. In the view of quite a lot of Labour MPs, ruminating about responsible capitalism is all very well, but also a bit too highfalutin. “What people will want to know at the next election is how we are going to make them better off,” says one member of the shadow cabinet.

Another, equally stiff challenge for Labour is to answer the anxieties about its trustworthiness when it comes to the nation’s finances. The Tories will ceaselessly repeat variations of David Cameron’s conference line: “Labour: the party of one notion – more borrowing.” The sort of questions in voters’ minds are well put by one senior Labour figure: “Will they always go for the short-term fix? Will they just throw money at problems and give in to vested interests?”

The two Eds have one main answer to this at the moment. That is to get themselves booed by trade union audiences at every opportunity by telling them that they won’t be able to reverse everything done by the coalition and warning that a Labour government will also have to inflict cuts.

That’s probably quite useful in improving their fiscal credentials with sceptical voters, but far from sufficient really to establish trust in Labour. There is a range of options on fiscal discipline. At the most astringent end of the spectrum, Labour could commit itself to introducing an American-style law setting a debt ceiling. This would oblige the government to ask for Parliament’s permission every time it wants to raise borrowing. I’m not persuaded they will go that far, but they will certainly need something very firm and convincing to win this part of the argument with their opponents.

Another crucial task for Labour is to impress the public that it would spend wisely and well. This demands some hard, imaginative and brave thinking about ways to sustain public services on reduced budgets. Labour’s team could also be doing a lot more to try to convince the public that they are resolved to extract the maximum return from every pound of taxpayers’ money. The party’s frontbenchers would be smart to seize every opportunity they get to talk about how they would reduce waste and eliminate inefficiencies.

The two Eds can be forgiven for not knowing what the economy will look like in 2015. No one does. But there is no excuse for not preparing for how the Tories will fight the election. Because they keep telling us.

Clarke has tax pledge ‘doubts’

Category : Business

The government may not implement a change in the tax status of married couples promised by the Tories, Cabinet minister Ken Clarke says.

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Battle over third runway at Heathrow as government prepares U-turn

Category : Business

Osborne and Johnson at odds as government prepares to reverse opposition to expansion at London airport

George Osborne and Boris Johnson, the two frontrunners to succeed David Cameron, intensified their battle on Wednesday as the government prepared the way for a U-turn over a third runway at Heathrow.

Sir Howard Davies, the former director general of the CBI, has been appointed by the government to chair a commission that will allow the Tories to ditch their opposition to a third runway if it rules in favour of expansion at Heathrow.

Osborne, who has been the driving force behind the Tories’ change of heart on airport expansion, has advocated the commission as a way of building a cross-party consensus on airport expansion. Most Tories believe the commission is designed to give the Tories cover for abandoning one of their most high-profile pledges at the last election.

The chancellor showed his determination to keep his options open when he played a leading role in forcing the removal as transport secretary of Justine Greening in this week’s reshuffle.

Greening, MP for Putney – which lies under the Heathrow flight path – is a fierce opponent of a third runway. She has been replaced by Patrick McLoughlin, a Derbyshire MP, who would have no difficulty in supporting a third runway.

Boris Johnson, who rallied to the defence of Greening on Wednesday, described the commission as a “fudgearama”. The London mayor told Radio 4′s The World at One: “It’s just a fudge, it’s just a fudgearama and it’s just an excuse for a delay – there’s almost three years to run until 2015. If such a commission were not to report until after the next election we’d have lost a huge amount of time. I don’t think British business would be remotely satisfied with that answer.

“Noise pollution around Heathrow already affects about 750,000 people. Almost a third of the noise pollution in the whole of Europe from aircraft is felt around Heathrow airport. It is just madness to continue to expand [Heathrow] in West London.

“There are very very good solutions. What I worry about is that we are now seeing a stealthy U-turn carried out which I don’t think is in the interests of London or indeed of the country as a whole. In the end you can expand Heathrow, you can put in another runway – actually it will be a short runway – but you have to come back in 10 years’ time and do another. In the end Heathrow can’t satisfy the country’s needs as the principal hub airport.”

The Davies commission is not expected to produce its final report until after the next general election in 2015. This will allow the government to uphold the coalition agreement which ruled out airport expansion in this parliament.

But Osborne confirmed at the weekend that he now favours an extra airport in the south of England to ensure that Britain can maintain its hub status and improve links to regional cities in emerging markets such as China. The chancellor officially has an open mind on where to build the extra runway. But it is an open secret that he believes Heathrow is the only realistic venue because it is Britain’s only world hub airport.

A delay in making a decision is also designed to avoid a parliamentary byelection in the marginal seat of Richmond Park. Zac Goldsmith, the environmentalist who was elected to the seat in 2010, confirmed that he would trigger a byelection if the Tories embark on a U-turn.

Goldsmith told the Today programme: “We haven’t just lost Justine Greening from this department, we have also seen Theresa Villiers moved out, both of whom were absolutely rock solid on this issue in terms of defending what is still the government’s line officially. I think their movement out of the Department of Transport shows the government is at least trying to open the door to the possibility of a third runway.”

The Tory leadership is keen to avoid a byelection in such a swing seat in London where the party must perform better at the next election if Cameron is to secure an overall parliamentary majority. But the leadership is braced for a battle with Goldsmith at the next general election if the party embarks on a U-turn in its manifesto.

The leadership may also have a battle with Greening, who said before her demotion to the post of international development secretary that she would find it difficult to remain in the cabinet if the party changed its position on Heathrow. Amid fears that Greening could cause trouble in future the leadership started undermining her on Wednesday.

One No 10 source told the Spectator: “She’ll have plenty of time to think about runways as her flight to the next developing country circles the airport yet again.”

Boris Johnson’s support for Greening and his repeated attacks on Downing Street shows that the London mayor has decided to make Heathrow one of his main dividing lines with Osborne. The London mayor favours a new airport on what is being dubbed “Boris Island” in the Thames Estuary.

Johnson told the BBC: “Downing Street is very cross. I am not criticising David who I like and admire hugely. A lot of people think there is going to be a U-turn and that they are gearing up to ditch the commitment against the third runway.”

Nick Clegg challenges David Cameron over EU treaty talks

Category : Business

Lib Dem leader argues that it is not in Britain’s best interests to exploit the eurozone crisis to win back powers from Brussels

Nick Clegg is mounting a direct challenge to David Cameron by ruling out any moves to repatriate powers to Britain from the EU while eurozone leaders are struggling to save the single currency. As William Hague outlined plans for a fundamental review of Britain’s relations with the EU, Clegg made clear that Britain should not attempt to exploit forthcoming EU negotiations.

“The idea that at the time when there is a crisis in the eurozone that you go to Brussels and demand a sackload of powers and bring them back on the Eurostar is for the birds,” one Liberal Democrat source said.

The warning was reinforced in stronger language by Charles Kennedy, who responded to Hague’s statement by hitting out at Tories who are bent on “holding the EU to ransom”.

The split over the EU came amid continuing coalition tensions over reform of the House of Lords. The Lib Dems expressed irritation after a senior cabinet minister told Tory MPs that the junior coalition partners should settle for the removal of the 92 hereditary peers and elections to replace them in 2015.

“We are not going to give a running commentary on the many Tory ideas we will be hearing over the summer,” one Lib Dem source said. Clegg has agreed with Cameron that the government should make one last push on on the issue in the autumn.

But they disagree on how the bill should be amended. The Lib Dems are becoming less hostile to the idea of a referendum to win over the Labour party and a sizeable proportion of the 91 Tory MPs who rebelled against the bill on Tuesday.

Clegg believes the rebellion shows that many Tory MPs are unlikely ever to be reconciled to the coalition. “There are many Tories who cannot stand the coalition and cannot come to terms with the fact they lost the election,” one senior party figure said. “That is a problem for David that he has to deal with.”

An emboldened Clegg is flexing his muscles by letting Cameron know that Britain will not serve its interests by trying to exploit EU treaty negotiations for its own ends. This indicates that the prime minister will struggle to deliver a recent commitment to place British demands on the table if a fresh round of EU treaty negotiations are held to agree new governance arrangements for the eurozone.

Britain is not a member of the 17-strong single currency but it will have a veto in any EU-wide treaty negotiations.

The foreign secretary started to prepare the ground for a possible renegotiation of Britain’s relationship with the EU when he outlined a review of how the “balances of EU competences” affect Britain. In a statement to MPs, Hague said: “The review will be an audit of what the EU does and how it affects us in the United Kingdom. It will look at where competence lies, how the EU’s competences, whether exclusive, shared or supporting, are used and what that means for our national interest.”

Clegg has been heavily involved in drawing up the the terms of the review of the EU treaty which was part of a compromise agreement between the Tories and Lib Dems in the coalition agreement. But the parties have different aims for the review: the Lib Dems hope it will encourage reforms by the EU as a whole; the Tories hope it will help form the basis for Britain’s negotiating position if Cameron seeks the repatriation of powers to Britain as the price for signing an EU-wide treaty on eurozone reforms.

Charles Kennedy, the former Lib Dem leader, delivered the party’s formal response. In a statement, he said: “As the foreign secretary said, our EU membership is firmly in the national interest. This review will help inform people about our positive agenda for Europe by providing a constructive and serious British-led contribution to the wider European debate about how to modernise, reform and improve the EU.

“We are already delivering major positive EU-wide reforms such as devolving powers over fisheries policy, dramatically lifting the burden of regulation on small businesses and strengthening MPs’ involvement in EU affairs at home. There is much more we want to deliver.

“But holding the EU to ransom as some want to do simply does not work. We will be left without a UK seat at the table, unable to stand up for the UK’s interests when neighbouring countries make separate agreements on growth and financial services, and powerless over serious cross-border issues like pollution, climate change or organised crime. That is not standing up for Britain.”

Steve Bell on the banking blame game – cartoon

Category : Business

The Tories have suggested that members of Brown’s Labour government were complicit in the manipulation of Libor rates

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How advisers to stars lobbied MPs to make it a human right to avoid tax

Category : Business

Comedian Jimmy Carr was one of over 500 directors of tax shelter firm whose founders tried to prevent parliament closing loopholes

Poor Jimmy Carr. If the comedian who likes to joke that he is “literally the biggest face in television” had not been so famous he would not be making headlines for all the wrong reasons.

And if a promoter of K2, one of the tax avoidance schemes Carr had signed up to, had not boasted about the comic’s involvement to undercover reporters, his financial affairs, and those of many others, would have remained secret.

So, too, would the strange story of how a consultancy that devised another of Carr’s tax shelters sought Tory support for a campaign that tried to turn tax avoidance into a human rights issue.

Records at Companies House show Carr was once one of 518 directors of Romangate, a company set up in 2009 to facilitate what at the time was believed to be a legitimate tax avoidance scheme.

Other directors included Coronation Street star William Roache, footballer Chris Sutton and Coleen Nolan, until recently a presenter on ITV’s Loose Women. Stephen Lambert, the television producer behind hits such as Secret Millionaire, was also a director.

The majority of Romangate’s directors, all of whom have now resigned, were contract workers and foreign nationals. A vast number were doctors, dentists, bankers, accountants, engineers and oil traders. One listed his profession as a watchmaker while another said he was a butcher. The aristocracy was represented by the socialite Lady Rona Delves Broughton and Lady Caroline Harrowby, an interior designer.

Romangate was part of a tax avoidance strategy called Rushmore that was closed down in 2009 without any financial benefit to its members amid claims in parliament that it could end up depriving the Exchequer of £200m. Introducing legislation to close the scheme down, the Labour Treasury secretary, Stephen Timms, explained: “We are preventing exploitation of the tax system by the schemes of a small number of wealthy people. Honest taxpayers rightly expect the government to identify such schemes quickly and block them effectively.”

The diverse backgrounds of those who sought to benefit from the strategy suggests tax avoidance trusts are not simply vehicles for the super-rich. Romangate, which is owned by a Jersey trust called Plectron, is just one of a range of companies founded by financial consultants Matthew Jenner and Anthony Mehigan to help a multitude of clients avoid tax.

The two men, who declined to return calls from the Observer, run a tax consultancy called NT Advisors that lists an office in London’s West End. The consultancy was behind a major lobbying campaign to wreck aspects of the previous government’s 2008 Finance Act, which closed a number of tax loopholes.

NT Advisors hired a lobbying firm, the Whitehouse Consultancy, and briefed officials and politicians to press for parts of the bill to be dropped, arguing it would unfairly affect 600 individuals who benefited from legitimate tax avoidance schemes. “The introduction by stealth of retrospective legislation is an affront to the democratic process and seriously undermines the reputation of the UK as a good place to do business,” Mehigan declared at the time.

NT Advisors wrote to politicians threatening to seek a judicial review of the act which they claimed breached Article 1 of the European Convention on Human Rights, the right to peaceful enjoyment of possessions.

In June 2009, the Tories tabled an amendment to prevent a retrospective clause of the act being extended. David Gauke, the Treasury minister, declared “the risks of retrospective legislation are very considerable” because “it damages stability and certainty in the UK tax system”. The Tories’ opposition delighted NT Advisors .

Gauke confirmed to the Observer: “We tabled an amendment on the retrospective element of this clause which closed down an avoidance scheme” but he stressed it was simply a parliamentary manoeuvre to gain clarification. He said the Tories had “enthusiastically supported” the Labour government’s efforts to close tax avoidance schemes and the amendment was never pushed to a vote.

A campaign to overturn the retrospective elements of the act continues with some of the affected claiming financial hardship as a result of its introduction. But their cause will not have been helped by the revelation that among their ranks were a multi-millionaire comic, TV stars, City traders and super wealthy financiers.

Financial expert Richard Murphy said Carr’s travails had catapulted the issue of tax avoidance to the top of the political agenda. “The public mood is moving against tax avoidance,” Murphy said. “People really do want every one to be in this together.”

Top Tory donor linked to Jimmy Carr tax scheme

Category : Business

Romangate tax shelter, part of Rushmore scheme, had both George Robinson and Jimmy Carr as directors

One of the Tories’ biggest donors was signed up to a tax avoidance scheme that also included comedian Jimmy Carr, the Observer has established.

The revelation is intensely embarrassing for David Cameron, who attacked the comic’s use of such schemes as “morally wrong”.

Records at Companies House reveal that George Robinson, a hedge fund manager who has given the Tories more than £250,000, was – in the 12

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Top Tory donor linked to Jimmy Carr tax scheme

Category : Business

Romangate tax shelter, part of Rushmore scheme, had both George Robinson and Jimmy Carr as directors

One of the Tories’ biggest donors was signed up to a tax avoidance scheme that also included comedian Jimmy Carr, the Observer has established.

The revelation is intensely embarrassing for David Cameron, who attacked the comic’s use of such schemes as “morally wrong”.

Records at Companies House reveal that George Robinson, a hedge fund manager who has given the Tories more than £250,000, was – in the 12

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