Ed Miliband makes accusation after PM refuses four times to say whether he discussed tax avoidance at HSBC with Stephen Green

David Cameron stood accused by Ed Miliband of acting as a “dodgy prime minister” after he repeatedly failed in the House of Commons to say whether he had discussed tax avoidance at HSBC with Stephen Green before appointing him as trade minister in 2011.

On a day when the Conservative party’s attitude to tax avoidance and Whitehall’s failure to probe HSBC’s complicity in tax avoidance moved to the heart of the pre-election battle, Cameron refused to tell MPs four times if he ever discussed with the former HSBC chairman the evidence of tax evasion and avoidance at the bank’s Swiss subsidiary.

In some of the most brutal and personal exchanges of this parliament, Miliband seized on reports published by the Guardian an hour before prime minister’s questions showing seven Tory donors had bank accounts in HSBC’s Swiss subsidiary.

In the Commons, the Labour leader said: “It was in the public domain in September 2010 that HSBC was enabling tax avoidance on an industrial scale. Are we seriously expected to believe that when he made Stephen Green a minister four months later he had no idea about these allegations?”

Ed Miliband accuses David Cameron in the House of Commons on Wednesday, 11 February.

Pointing at the prime minister, Miliband added: “There’s something rotten at the heart of the Conservative party – and it’s him.”

In his most complete answer to the question of what he had discussed with Lord Green, Cameron told MPs that “every proper process” was followed when the banker was appointed.

“I consulted the cabinet secretary, I consulted the [Cabinet Office] director for propriety and ethics, and, of course, the House of Lords appointments commission now looks at someone’s individual tax affairs before giving them a peerage,” he said.

Hours after the Commons exchanges, it emerged that ministers had been alerted to evidence of potentially wide-scale tax evasion at HSBC’s Swiss subsidiary as early as 2010 by HMRC, before Green was appointed to office.

Appearing before the public accounts committee, Lin Homer, chief executive of HMRC, said she believed officials would have told government ministers within months of receiving the data in April 2010. “We are confident we will have told ministers that we were about to receive a big tranche of operation information,” she told MPs.

During the hearing, it emerged that neither HMRC, the Treasury or the UK bank regulators appear to have questioned why HSBC’s Swiss subsidiary had become a magnet for thousands of rich people across Europe and whether there was any systemic problem in the bank’s governance.



Homer said: “I would just ask you to understand that we are only in a very limited way regulators of the bank in relation to their tax activity ... I am not the regulator of the banks.

“I think we were speedy and on the case and we acted with real effectiveness to use the data that was made available to us and got the money in the bank for the British taxpayer.”

Margaret Hodge, who chairs the committee, said it appeared that activities related to the Geneva branch of HSBC’s Swiss subsidiary were “pretty outrageous” and told Homer that tax investigators should have spoken to whistleblower Hervé Falciani, who obtained the list while employed as an IT worker in 2007.

Homer insisted staff in her department had been diligent in their approach to the files and said their record of securing one conviction and £135m in unpaid tax, fines and interest compared well with other countries.

Hodge responded by saying that the French and Spanish tax authorities had recouped more from fewer individuals.

“It’s the first time in many of these leaks that there are really strong allegations not of egregious tax avoidance but of tax evasion, and that is incredibly serious,” said Hodge.

“For you to sit there and say, as you are doing, that ‘We couldn’t get the money in in the same way as the French and Spanish did’ and ‘We didn’t litigate because we wanted to get the money in’ and yet you did worse on the money – it leaves me believing that you are not serving the British taxpayer.”

She added the message sent out by the HMRC was: “It’s a risk worth taking – the worst that can happen to you if HMRC can be bothered to catch up with you is that you may have to pay, you won’t have a prosecution, you won’t have any shame, you won’t be an example to anybody else, you’ll get away with it.”

“That’s a terrible message to get out to British taxpayers, it’s a really rotten message,” she added.

HMRC said it was widening its investigation and revealed that 130 of the 1,000 HSBC account holders in Switzerland had yet to be investigated.

But No 10 aides said ministers including Cameron only knew individuals were being challenged about tax evasion at the bank, but were not aware of the bank’s complicity in wrongdoing when reports emerged at the weekend.

How David Cameron ducked questions about former HSBC boss at PMQs Read more

Miliband has clearly made the political judgement that mounting popular anger over individual and corporate tax avoidance is so intense that he can credibly present Labour as the crusader against the immorality of some of the super-rich.

In the Commons, the Labour leader also challenged Cameron’s judgement, accusing him of turning him a blind eye to Green’s record just as he had when he failed to look into the background of the former News of the World editor Andy Coulson before appointing him Conservative communications director in 2007.

Cameron dismissed his accusation as “desperate”, saying Labour had made enemies of business, Scotland and women in the past week.

Miliband highlighted the list of political donors who were named in the HSBC files, including the former treasurer of the Tory party Lord Fink, who has donated £3m to the party.

Miliband referred to Fink’s tax avoidance activities, adding that Cameron was bang to rights and up to his neck, overseeing a revolving door between HSBC and the Conservative party headquarters.

A furious Fink insisted his account at the bank was entirely innocent and opened purely because he was working in Switzerland. The UK tax authorities knew of the account and did not disapprove, he said in a statement.

He wrote to Miliband demanding that he apologise – or repeat his claims outside parliament where his remarks would not carry parliamentary privilege and could theoretically open the Labour leader to a libel action. Fink said Miliband had been caught playing the man and not the ball.

Miliband’s office insisted he would not back down and said it was for Fink to prove his complex tax arrangements were in order and then for the public to come to a judgement.