To use current political jargon, tax is the latest issue to be “weaponised” by the political parties, as the leak of a large tranche of secret HSBC bank accounts in Switzerland put tax avoidance and evasion at the heart of the political and media agenda.
This should come as no surprise. Tax avoidance has been a prominent issue throughout this Parliament. It is a topic that resonates both in Westminster and on doorsteps across the country, especially in a period of continuing austerity. It strikes at the heart of both fairness and trustworthiness.
The HSBC revelations created a particularly appealing narrative, both for the media and politicians. Any story that combines Government Ministers, Swiss bank accounts and party donors was always going to be irresistible for the blogosphere. For politicians, this presented a perfect chance to engage in point scoring and to broadcast tough language on cracking down on tax avoidance.
Unsurprisingly, Labour have taken full advantage of the public outrage. This affair provides them with a welcome new front on which to attack David Cameron and the Conservatives. There are several reasons why this issue works so well for them
Firstly, a key part of Labour’s General Election narrative rests on the idea that the Conservatives only represent and care about the rich, whereas Labour will stand up for ordinary voters and businesses.
Ever since George Osborne’s decision to cut the 50p top rate of tax in 2012, Labour have hammered home the message that the Tories only care about protecting their rich donors and friends in the City. This is a message which they believe gets through to voters and acts to differentiate the two parties.
The presence of several prominent Conservative donors in the HSBC files has given Labour the perfect opportunity to reinforce these messages and argue that the Conservatives don’t want to take effective action against tax avoidance because they want to protect their rich friends. The row between Ed Miliband and the Conservative Treasurer Lord Fink over tax avoidance played perfectly into that narrative.
Secondly, since his election as Leader Ed Miliband has consistently emphasised his mission to fix broken markets and create a fairer society in the UK. Taxation is an important part of this agenda and Labour have taken pains to stress that they would go much further than the current government in tackling tax avoidance and evasion.
This has been an important issue for the Conservatives as well, and they have been quick to point out their reforms in this area, from the introduction of the General Anti-Avoidance Rule (GAAR) to David Cameron’s work on transparency at the G20 level. But prominent examples of tax evasion such as the HSBC files undermine this message and add credence to Labour claims that the Conservatives are not taking a tough enough stance.
Thirdly, one of the Conservative party’s main advantages over Labour has been the fact that David Cameron polls much more strongly on economic competence than Ed Miliband does. In a tight General Election, the appeal of the party leaders could prove to be decisive. Labour are aware of this and are taking every possible opportunity to try and close that gap.
The HSBC files allow them to do this through focusing on the role of Lord Green, the former Conservative minister, and his activity before his ministerial appointment. Labour MPs have already raised questions over Lord Green’s appointment and how effectively he was vetted. They have also begun to draw parallels with the appointment of Andy Coulson to try and build a narrative around David Cameron’s poor judgement and willingness to ignore the wrongdoing of his friends.
But Labour may not emerge from this debate completely unscathed. The Conservatives have been quick to point out that this activity all took place under a Labour administration, in which Ed Balls was a key Treasury adviser. Also, while Ed Miliband has made some eye-catching pledges around cracking down on avoidance, there was more media interest at the weekend in the presence of a prominent Labour donor in the HSBC files. This allows the Conservatives to talk about Labour hypocrisy and makes it harder for Miliband to paint this as purely a Conservative issue. There is a danger for Labour that voters will now simply see this as another case of all politicians being too close to business and dodgy donors.
With fresh details still emerging, and prominent Select Committees indicating they will be investigating HSBC, there are no signs of the interest in this issue going away. The challenge for both the Conservatives and Labour will be to convince the electorate that they are the ones who will ensure this type of activity is stamped out.
Image source: TaxRebate.org.uk