The Paradise Papers have shown that the elites aren’t contributing their fair share to society by avoiding taxation through different (legal and illegal) mechanisms. The Paradise Papers are the latest in a long series of cases exposing the tax avoidance of the super-rich in our societies, that have been discovered recently. Why is it then, that the UK government has failed once again to tackle this important problem, whilst cuts and austerity hit harder the most vulnerable in our societies?
In the last election, Lord Ashcroft, who has the dubious honour of being one of the protagonists of the Paradise Papers in the UK, donated half a million pounds to the Conservative party. In fact, in the 2017 General Election, the Conservatives were the main beneficiary of the deep pockets of donors, receiving just under £11 million in donations over £7,500 from private individuals or companies. That compares with £4.5 million for Labour, and just £860,000 for the Liberal Democrats. That’s a huge 66% of reportable donations that have gone to the Conservatives.
Money flows through our politics, influencing the process from start to finish: from decisions about what is going to be prioritised or excluded from manifestos, through to who gets the ear of a minister at fundraising dinners - money speaks volumes, and literally buys those who can afford it a seat at the table.
Ashcroft has been very aware of this fact and has used his money to buy power and influence over UK politics - in his own words, he has donated “some £8 million into the party”. Since his donations started in 1980, he has encouraged policies that favoured his business interests such as the privatisation of the cleaning services in NHS hospitals and state-schools. His donations also propelled him to be the Deputy Chairman and treasurer of the Conservative Party, and ultimately granted him a peerage for life. His peerage was conceded under the promise that he would pay all his taxes in the UK, and cease to use his ‘non-dom’ status. Now we know that even though he took on his life peerage with the explicit promise of renouncing his non-dom status he never paid his fair share in the UK.
The financial relationship between Lord Ashcroft and the Conservatives didn’t stop until Cameron refused to give him a ministerial position. However, as soon as Theresa May got into power the relationship began again. Through a £50,000 donation he was able to get into the Conservatives’ "Leaders Group", that grants influence by getting invited to dinners with the current PM and other senior figures from the Conservative Party.
A decade of tax-avoidance scandals haven’t pushed the government to tackle this problem - and not as a result of lack of ideas. For example, under the Conservative-led coalition with the Lib Dems Vince Cable proposed a register of beneficial ownership. This would have shed some light onto who owns British companies by extending the register to British Overseas Territories in order to clamp down tax havens. However, Cameron failed to follow through. Tax avoidance has cost the economy an estimated £300bn pounds - a huge amount of money that could be used to fund the NHS, schools, or helping to solve the housing crisis. However, the political impetus to make changes seems to be lacking and questions must be asked as to whether this is because these changes are not in the interests of powerful donors.
Lord Ashcroft was able to use part of his wealth - boosted by tax avoidance - to influence in UK politics at a level that not many can even dream of. Having the conservative party in his pocket for many years, is it a surprise that the government fails again to tackle tax avoidance or is it rather a result of it?
We may never be able to answer that question, but something is clear: we need to unlock democracy from the hands of rich-tax-avoidant-donors. You can help to do so becoming a member or by signing up to our mailing list.