An issue of trust

Spectator, The, Dec 6, 1997 by Redwood, John

John Redwood, who has just won an award for his questions about Lord Simon's finances, now turns to Geoffrey Robinson's

THE LABOUR manifesto already seems a period piece, a work of faction that summarises the mood of a time past. In it they promised a `new trust' with the British people on taxation. They understood that the Conservative tax increases which had followed our less than glorious period in the Exchange Rate Mechanism had damaged Tory credibility. They chose the phrase of trusting them on tax to offer a contrast.

Now, seven months on, the word 'trust' has an entirely different meaning. We have Lord Simon's blind trust for his shareholdings, which had such prolonged and painful birth pangs. We have Margaret Beckett's blind trust as a conduit for donations to her office. This is a relic of easier opposition times. Her other Cabinet colleagues have all wisely wound their blind trusts up. Now, most spectacular of all, we have the Orion Trust for the Paymaster General. Labour has gone to town to establish new trusts for ministers rather than for the British people.

It is some protection to a Minister of State that his shareholding would be managed by an independent trust, and that he should have no knowledge of what is bought and what is sold. It is even better protection if the minister simply sells his shares and puts the money on deposit. It is less protection for the President of the Board of Trade to seek donations to her office through a blind arrangement. Mr Drucker, a recent Labour party fund-raiser, has asked the embarrassing question why anyone should give to a blind trust rather than to the party. He does not think such trusts can remain blind to the recipient and is suspicious of the motives behind the manoevre.

The exciting thing about the Orion Trust is its location in Guernsey. In opposition, Labour front-benchers fumed about the injustices of Channel Island trusts. They condemned them roundly. They regarded them as undesirable ways for the rich and powerful to shelter assets from full United Kingdom taxes. The then shadow Chancellor, now in the job he shadowed, told us that a Labour government would close the loopholes. The faces of the poor in Britain would no longer be ground by a government missing out on much-needed revenue from the well-heeled, protected by their Channel Island trusts.

In government, things have proved to be a little different. The reinterpretation began when I revealed that BP held shares for its senior executives through a Jersey trust. I explained that we Conservatives saw nothing wrong with this, but wondered how it squared with New Labour's puritan distaste for careful tax planning. Margaret Beckett told me that no tax was lost through this arrangement. She tried to conjure up the idea that companies like BP kept their shares in Jersey for the sake of the sea air. Only after persistent questioning did she accept that Jersey enabled them to benefit from what she called 'a longstanding extra-statutory concession published by the Inland Revenue'.

Now we see something similar with Geoffrey Robinson's Orion Trust. Again, Conservatives are not jealous that Madame Bourgeois gave him so much money. They obviously had a close business relationship. Nor would we criticise if anyone other than a senior Labour figure chose to keep this money in Guernsey, or benefited from a trust set up there by others.

Geoffrey Robinson tells us that he has done nothing wrong. He tells us that he has paid all his legal dues. The charge he should answer is one of humbug. How can he work for Gordon Brown, who has denounced the Channel Islands and all their financial works in such stark terms? How can he be responsible for tax policy and closing loopholes when he is such a substantial potential beneficiary of a Guernsey trust? Why did he sell shares in his company through another company into this trust? Does he not see that these complicated arrangements, established no doubt by good tax and trust lawyers, are difficult for Labour to explain to its traditional supporters, brought up on a doctrine that such arrangements are unfair to the working man?

New Labour, new trust. Some trust, when we see the magnitude of Labour's tax demands on businesses in this country. We estimate that so far Labour has demanded an additional 25,000 million in tax from British business over the lifetime of this Parliament. They are taking away the tax breaks now enjoyed by smaller savers with Tessas and PEPs, to replace them with something meaner. They are taxing everything from mobile phones to renewable energy. But now we want to know whether they plan to tax the offshore pools of capital held for the ultimate benefit of British ministers.

Their strategy has been to keep such taxing questions off the agenda. Lord Simon did not declare his shares in BP in the Lords register. He did not have to under the rules. Geoffrey Robinson did not declare his shares in the Orion Trust in the Commons register. He says he did not have to. As part of their promise of a new trust with the British people, Labour promised more openness in government. They have proved as open as a locked safe when it comes to finding out what interests ministers enjoy and how they have handled them to avoid conflicts.