The HSBC story is one that a few years ago almost no one could have imagined. A major bank is alleged to have assisted fraud. The UK is supplied with evidence in more than 7,000 cases. Our tax authority is so slow to respond that some two years later, only one in six of those named have even been contacted. In the meantime it signs a deal with Switzerland in which it is said that the public interest is not served by prosecuting anyone involved. To date, no one has been prosecuted for specific issues relating to the disclosure. And HSBC’s former chair, who was also the chair of the HSBC Swiss private bank that is alleged to have arranged the fraud, was ennobled by the Conservative party, become a minister of the state and now advises the archbishop of Canterbury. Alan Ayckbourn could not have created such a plot. But it happened.

So what might explain this fiasco, and what might we do to address the issues it gives rise to?

The explanation is easy to offer: this is all about the power of the City of London. HSBC is a bank with a wavering affiliation to the UK that has often declared its willingness to depart for Hong Kong. There are few obvious reasons for it to do so, yet the threat of one of the world’s leading banks leaving London has no doubt helped to win favours. The HMRC’s extraordinary statement in 2012, that the public interest would not be served by prosecuting anyone involved in this matter, may for one be explained by the desire to keep HSBC in Britain. The City wanted to keep one of its own, and the government did what was needed to ensure that the Square Mile got its way.

What can be done to tackle this is more difficult to answer – not for lack of suggestions, but because of the lack of hope that there will be sufficient political will to adopt them. But let me try anyway.

First, we must have a banking regulator with bite. When the Financial Conduct Authority is chaired by a former senior partner at KPMG, the same firm that audited HSBC from 1991 to 2013 and which itself was at the heart of a tax scandal in 2005, there seems little chance of that.



Second, we need a tax authority with bite. When HMRC is chaired by a former senior partner at KPMG there seems, again, little chance of that.

And we need people who might hold these authorities to account. That is not just in parliament, where Margaret Hodge is notable precisely because she does what so few have dared do by asking the type of question that should be commonplace. It’s also in places like the National Audit Office. But when that is led by a former PWC partner that seems, again, unlikely. They are now auditors to HSBC.

And then we need to provide these authorities with the resources they need. HMRC has lost 40% of its staff over the last decade, with more still more to go. You cannot chase tax cases without the right people to do it.

But recruiting more tax collectors alone wouldn’t address the problem. We also need to ensure that they have the right data to work on. When limited liability companies are readily available around the world at almost no cost, with little way of proving whether their declarations on their ownership are correct or not, then Ed Miliband was right to demand that the UK’s tax havens get their act together on this issue. It was just a shame that the UK’s new law on that issue is so toothless that any tax cheat could walk round it without any fear at all of that fact being discovered.

So, the problems in Switzerland and the City are real. But the problems that we have to address here in the UK as a result of our failing regulatory institutions may be even more acute.

In that case, if we want to solve the problem of HSBC, we have to start at home. The City has to be brought to account. Its influence on public administration has to be reduced, or even eliminated. The revolving doors that saw the HMRC director who negotiated the Swiss tax deal then leave to go to HSBC have to be shut. And we must invest in law enforcement in terms of political support, sufficient people, enough cash and a willingness to create and enforce laws that will work.

The UK can apparently afford to prosecute 200,000 people a year for TV licence offences. It did not think it appropriate to tackle tax cheats. That simple fact suggests why HSBC happened. It was because the City and political establishment was willing to turn a blind eye to it as a matter of choice. It’s that blind eye that needs to be opened now, and sharply focused on eliminating the cancer of the self-interest of wealth in our society and its regulatory authorities. The question is, who is willing to do that?