Clegg under fire over tax avoidance vow
Financial Times (London, England) - Thursday, August 19, 2010
Author: Barker, Alex ; Pickard, Jim
Abstract: Lib Dem MPs have 'concerns' on Green
Nick Clegg was attacked by his own MPs yesterday after he pledged to crack down on tax avoidance - just days after hiring Sir Philip Green as an efficiency adviser.
Speaking at an event on inequality, the Liberal Democrat leader and deputy premier said: "We are looking at the case for an anti-avoidance rule to ensure that wealthy individuals pay their fair share of tax."
The rhetoric puzzled some of Mr Clegg 's own backbenchers who pointed out that Sir Philip has lived in Monaco, a tax haven, since 1998. In 2005 his company paid a £1.2bn dividend to its direct owner, his wife Tina, who was able to receive it tax-free because she was a Monaco resident.
Tax avoidance is legal. Sir Philip also says he has paid up to £400m of tax on profits in the past five years. But some coalition MPs believe the retail tycoon's flamboyant lifestyle of yachts and extravagant parties makes him an unlikely figure to be involved in austere government cuts.
Andrew George, Lib Dem MP for St Ives, said Sir Philip was talented and experienced, "but I would have thought more useful in terms of advising on tax avoidance rather than deciding on the future job prospects of, particularly, the poorest-paid public servants". Mr George added: "He could be of more use advising the Treasury on how to maximise their revenue."
Mike Hancock, Lib Dem MP for Portsmouth South, said he had "great concerns" about Sir Philip's appointment. "I'm all in favour of anyone who avoids tax to be tackled firmly and I'm surprised that Clegg would want to appoint someone like that to advise him."
Vince Cable, the business secretary, has refused to comment on the appointment of Sir Philip. In opposition Mr Cable said it was "totally unacceptable" that Alex Salmond, Scotland's first minister, had employed Jim McColl, a Monaco-based engineering tycoon, as an adviser.
The role of Sir Philip, whose Arcadia business includes Bhs, Topshop and Dorothy Perkins, is to scrutinise Whitehall spending to find savings before the October 20 spending review.
Mr Clegg 's comments prompted speculation yesterday of a split between the Conservatives and Lib Dems: "The two parties are miles apart on fair taxation," said Alastair Campbell, the former Downing Street spin-doctor.
A spokesman for Mr Clegg declined to comment further last night. The deputy prime minister cited a rise in capital gains tax and the planned assault on tax avoidance as evidence the Lib Dems were pursuing a fairness agenda. He vowed, in his speech, to break Britain's entrenched class structures and "improve people's lives" without resorting to the state handouts preferred by Labour.
In an argument stressing the range of factors holding back children from underprivileged backgrounds, Mr Clegg cited evidence suggesting that engagement of parents was four times more important than socioeconomic background.