Tony Blair's tiny tax bill and the foul stench of fat-cat greed



Laughing: Tony Blair's companies turned over £12m but he only paid £315k in tax

David Cameron’s Government plans a ‘crackdown’ on senior executive pay. Ministers recognise the strength of public rage not only towards bankers’ stratospheric rewards, but also towards those of company managers.

Since the millennium, bosses’ pay has risen ten times as fast as that of employees. The average remuneration package of a FTSE chief executive is now £3.8 million.

In an era when average pay increases for workers have been running at 4.7 per cent — though many people’s wages have been all but frozen for the past two years — directors’ earnings have quadrupled.

What is more, these are scarcely prizes for success: during the same period most companies’ share prices have stagnated, while those of banks have crashed.

The message, in the eyes of many people including ministers, City demonstrators and millions of middle-earners, is that capitalism is not working.

Few of us resent high earnings for entrepreneurs who create jobs, and boardroom winners who make wealth trickle down.

But when we see unbridled greed grip the entire corporate culture; and when the men in suits seem happy to keep driving their yachts full speed through seas bobbing with the human and financial wreckage of the European economic crisis, something must give.

The respected Financial Times columnist Gillian Tett wrote a year or two back that it was deplorable that no banker was sent to prison following the 2008 big bust. Today, bonuses may have fallen a tad, but failure is still being handsomely rewarded.

Beyond pay, many of Britain’s biggest earners are expert tax avoiders. Most of the people who pay the 50 per cent top rate introduced by the last Labour government are not fat cats but middle-rankers. The seriously rich regard tax as something only silly folk get stung for.

For instance, one private company with a sole owner declared an income last year of £12 million, but paid just £315,000 in corporation tax, after writing off ‘administrative expenses’ of nearly £11 million. Shocking, is it not? The owner, a Mr Blair, apparently conducts his business operations across several continents through a network of companies, most of which escape having to publish accounts.

Dark clouds: Mounting public anger at fat-cat greed in the City of London, pictured, is pushing the Government to introduce punishments

Their activities are perfectly legal. But they create a stench in the nostrils to compete with any banker’s body odour.

This Mr Blair could not, surely, be any relation of the Tony Blair who said in a 1994 speech when campaigning to become Opposition leader: ‘We must tackle abuse of the tax system. For those who can employ the right accountants, [it] is a haven of scams, City deals and profits.

‘We should not make our tax rules a playground for revenue avoiders and tax abusers who pay little or nothing, while others pay more than their share’.

But, of course, this is indeed the very same People’s Tony, in his new guise as a jet-setting multi-millionaire.

His company Windrush Ventures is a pace-setter for those who earn vast rewards while contributing an astonishingly small proportion to the Britain he once governed.

Blair’s ascent to riches suggests that the Titanic’s captain, had he survived the sinking, might have enjoyed a lucrative second career advising on maritime safety.

Mrs Thatcher never liked the City with its smooth-tongued Old Etonians

It is an amazing irony that it was Blair who presided over the era when fat-cat greed ran amok. Margaret Thatcher is sometimes described — particularly by the Left — as the great evangelist for market freedom, capitalism red in tooth and claw.

In truth, however, she never liked the City, nor the smooth-tongued confidence men in Old Etonian ties who dominated its activities.

On her watch, the City was dramatically liberalised, but insider traders were prosecuted with a vigour never seen before and not much since.

Thatcher’s heart lay with small businesses. When her government reduced the top rate of tax from over 80 per cent first to 60 per cent, then to 40 per cent, she cared nothing for enriching the occupants of gilded boardrooms, but everything for easing the burden of the state on those struggling to make capitalism work at the coalface, in provincial towns and on god-forsaken industrial estates.

It was Blair, Mandelson and their comrades, with their infatuation with wealth — remember Mandelson’s assertion that he was ‘intensely relaxed’ about people getting filthy rich under New Labour — who fired the starting gun for the City goldrush, and are today collecting vast pay-offs from the cronies they first embraced in government. It is an extraordinarily ugly business.

David Cameron is right to show he is trying to stem the excesses of corporate bosses and bankers, who have shown themselves without shame or conscience and have seriously diminished the moral legitimacy of capitalism.

Only this week, a Wall Street commentator accused the big investment banks of operating a cartel in setting their extravagant charges for share offerings, debt underwriting and suchlike.

No wonder the bankers are howling about the suggested EU transaction tax — they already sting their customers for every service they provide.

For the Prime Minister, there is just one problem: it is highly doubtful that his Government can find a formula that will effectively curb bosses’ and bankers’ excesses.

David Cameron is right to show he is trying to stem the excesses of corporate bosses and bankers

You may notice that at the start of this article I dressed the word crackdown in quotation marks. I did so because it is usually fraudulent. Politicians deploy it to signal an ineffectual attempt to curb an identified abuse, whether by dangerous dogs, drug-taking schoolchildren or greedy bosses.

The main sanction proposed on executive pay is to make remuneration deals subject to shareholder approval.

Yet there is no evidence that shareholders — which chiefly means investment fund managers who themselves earn seven-figure rewards — care sixpence about executive pay, which is unimportant to those speculating in multi-billion- pound companies. A classic example was Marc Bolland, hired from Morrisons to run M&S with a £2.6 million signing-on package. When M&S’s outgoing chairman Stuart Rose was asked why Bolland agreed to move, he said laconically that it was because Morrisons ‘didn’t pay him enough’.

News of the switch caused shares in Morrisons to fall, while those of M&S rose. Marks’ shareholders, if invited to approve Bolland’s deal, would happily have agreed to double it.



'Insult is added to injury by seeing Tony Blair’s snout buried in the trough of bank consultancy fees, jetting around the world pocketing millions'

Yet few pundits would today suggest that the new man has earned his money: Morrisons shares are up by around 15 per cent, while those of M&S have fallen by almost a quarter.

By the same token, big bankers who whine that they could not keep talent unless they paid outrageous bonuses might ask themselves the definition of ‘talent’, when they have ruined their shareholders and daily stuff their customers.

Meanwhile, Luxembourg’s Svenska Handelsbank, which as a matter of policy pays no bonuses, is prospering mightily and has just increased its dividend.

Company bosses and bankers are alike responsible for a confidence trick, gouging their companies for monstrously disproportionate rewards.

Few of us begrudge people like the inventor Sir James Dyson — who has created a splendid business from scratch — a penny of their fortunes.

Revulsion is prompted by the spectacle of employees — men and women who have created nothing and merely gamble with their companies’ money — creaming off huge sums.

Insult is added to injury by seeing Tony Blair’s snout buried in the trough of bank consultancy fees, jetting around the world pocketing millions while the British people whom New Labour steered over a financial cliff struggle to regain solvency.

As for his City fat-cat friends, even those of us who ardently support capitalism applaud the efforts of David Cameron to cap its excesses. I only wish I could believe that the bankers and FTSE chief executives will end up a penny poorer in consequence.