Ed Miliband claimed a partial victory in the battle over Britain’s wealthy tax avoiders after former Conservative party treasurer Lord Fink abandoned his threat to sue if Miliband repeated a claim that he avoided tax.
Lord Fink, who had demanded an apology on Wednesday when Miliband first made the allegation in the Commons, admitted yesterday he had been involved in “vanilla” tax avoidance measures including transferring shares he held into family trusts in Switzerland.
Fink added “everybody does tax avoidance”, telling the Evening Standard: “The expression tax avoidance is so wide that everyone does tax avoidance at some level. I didn’t object to his use of the word ‘tax avoidance’. Because you are right: tax avoidance, everyone does it.”
Fink added that he rejected expert advice that he could save a fortune in tax by adopting more “aggressive” measures. “What I did was at the vanilla, bland, end of the spectrum.”
He said he “used the opportunity … to set up some simple family trusts” while on a four-year posting to Switzerland and had transferred some shares to his children and his wife. “My family and I paid tax on all the dividends, both in Switzerland and the UK. They were done because my children were under 18 and I wanted them to have something to help them make their way in the wider world.”
Fink’s morning retreat allowed an emboldened Miliband, speaking about education at Haverstock School in north London on Thursday, to say: “Yesterday a Conservative donor challenged me to stand by what I said in the House of Commons. I do.”
Miliband said: “I think that this is a defining moment in David Cameron’s leadership of the Conservatives because it is now revealed that he appointed a treasurer for his party that boasts about engaging in tax avoidance and thinks it is something that everyone does.
“I don’t think that is the view of most people, and of the country. I think it does say something about the Conservative party so the question for today is does David Cameron agree with Lord Fink and does he sanction his attitude?”
After Miliband spoke, and in a sign that the Tories wanted to cool the controversy, Fink made no further threat to sue Miliband. Instead he said, in a statement released on his behalf by the Conservative party, that it had been the Labour leader who had backed down by denying he had ever intended to imply he was a dodgy donor, a phrase used by Miliband under privilege in the Commons.
In the statement, Fink said: “Yesterday I challenged Ed Miliband to repeat the accusations he made in the Commons that I used an HSBC bank account to avoid tax and that I was a ‘dodgy’ donor. He did not.
“This is a major climbdown by a man who is willing to smear without getting his facts straight.”
But in Fink’s original letter on Wednesday, in which he demanded an apology from Miliband, the peer made no objection to the phrase ‘dodgy donor’, providing some cover for claims made by Labour aides that he had not retreated.
Miliband said he had not been referring to Fink as a dodgy donor, adding: “The thing he, Fink, objected to – until his extraordinary U-turn 24 hours later – was me saying that he was engaged in tax-avoiding activities.”
He said that he had made “a general comment about dodgy donors in the Conservative party and I totally stand by that comment”.
The Labour leader was also forced to defend his own tax arrangements after it emerged he had used a deed of variation, a tax efficient arrangement that allowed him and his brother, David, to take a share of their family home in Primrose Hill, north London after his father’s death in 1994.
He said: “This is something my mother did 20 years ago – a decision she made. I paid tax as a result on that transaction and I have avoided no tax. No doubt the Conservative party wants to smear mud but frankly it is not going to work. The story has been written before and I paid tax on that money.”
On a day that probably went better for Miliband than had at first seemed likely, the Conservatives tried to hit back by claiming a Labour aide had likened the battle over HSBC to the “Milly Dowler moment,” a phrase first mentioned by BBC political editor Nick Robinson in a blog.
However, later Robinson said that had been his phrase, not that of a Labour aide. A Labour official said the aide had argued that phone hacking and the treatment of Milly Dowler had been a moment that had crystallised people’s attitude to some newspaper reporting, and the HSBC scandal was having the same effect on tax avoidance.
Evan Harris, associate editor of Hacked Off, said: “There is nothing to criticise about politicians, their aides or journalists comparing a scandal of endemic tax avoidance – that they and the country feel strongly about – with the historic break that all party leaders claimed to have made from inappropriate and corrupting relationships with powerful newspaper editors and owners after the Milly Dowler hacking came to light.”
Cameron’s hope that the wider HSBC scandal will dissipate were also dealt another blow when the Treasury select committee said they would be calling both HMRC and HSBC officials to give evidence.