David Gauke: Sunak – the Anywhere Chancellor in a Somewhere Government

11 Apr

David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire at the 2019 general election.

Wednesday, 8 April 2015 was the day the Conservatives’ general election campaign could have gone horribly wrong.

Up until then, Labour had said very little on the subject of non-doms. The concept of non-doms – people who are resident in the UK but ultimately intend to return to their place of domicile and who could elect to pay UK income tax only on their income arising in the UK but not from elsewhere – was a well-established part of the tax system. Now Labour planned to abolish the status.

Their announcement had taken us by surprise. We could be painted as being on the side of the wealthy and although we could explain the reasons for the existence of non-dom status, during a General Election campaign it is generally the case that when you are explaining you are losing.

The Conservatives had a record for tightening the rules on non-doms. George Osborne announced in 2007 that a Conservative Government would introduce a fee for non-doms not paying tax on their worldwide income. The Labour Government unashamedly copied the idea and introduced such a fee. In the Autumn Statement of 2014, George Osborne had increased the fees.

I was the tax minister at the time and, rather than spend the tax campaigning in Watford, I was soon summoned into CCHQ. It was whilst travelling into London that – to our relief – a recording had emerged of someone pithily explaining three months earlier why it might be a bad idea to abolish non-dom status altogether. “If you abolish the whole status it will end up costing Britain money because some people will leave the country.” Thank goodness for Ed Balls, I thought to myself for the first time in my life.

Labour’s announcement caused us some difficulties but it did not result in the transformative moment that we feared. After returning to office, we further tightened the non-dom regime ensuring that those who have been resident here for 17 out of 19 years can no longer claim the status.

Almost exactly seven years after Labour’s announcement, non-doms returned to the front pages after it emerged that Rishi Sunak’s wife, Akshata Murty, was a non-dom.

It is a policy area about which I know a little so will set out a few thoughts. Before doing so, I should declare an interest. Since leaving politics, I have returned to my previous City law firm which has a strong private client practice. This has not changed my views on the appropriate policy towards non-doms but these things are, ahem, best declared.

On the substance of the policy, there are conflicting objectives. We should seek to raise revenue from the wealthiest in society and we should have a tax system that is seen as being fair. We also, in my view, want to offer a competitive tax environment to ensure that talent and capital comes to the UK, recognising that there are plenty of other options available. The uncertainty here is that no one can be completely sure what the behavioural response to changes in the tax regime will be.

Some non-doms contribute a lot of tax to the UK and if they decide to move elsewhere this may more than outweigh any additional revenue from taxing the worldwide income of those non-doms who stay. Back in January 2015, Ed Balls was raising a fair concern.

I would also add that the non-dom regime makes the UK an attractive location for many successful people in the financial services sector and has contributed to the City of London being the international success that it is. At a time when we are making life more difficult than we need to for the City because of Brexit, I would tread carefully here.

Broadly – subject to new evidence emerging – I think the reforms announced in 2015 mean we have the balance about right.

We should also acknowledge that the non-dom regime is a policy choice – one that successive governments have made. Making use of the regime does not automatically constitute “tax avoidance”, any more than investing in an ISA or a pension constitutes tax avoidance. To constitute tax avoidance, I would argue, involves acting in a way which is contrary to Parliament’s intentions.

I have never met Ms Murty but the current scrutiny of her financial affairs must be grim for someone who has not herself entered public life. On the evidence in the public domain, her behaviour does not appear to be contrary to Parliament’s intentions and, therefore, does not appear to constitute tax avoidance.

As for her husband, I do not know Rishi Sunak particularly well but he has always struck me as decent, intelligent, thoughtful and well-intentioned. I certainly do not always agree with him (my previous column here criticised his spring statement) but, were he to become Prime Minister, I would be more sympathetic to the Government than is currently the case. If, as has been suggested, he gives up politics, I think that would be a significant loss to the Government, the Conservative Party and British public life as a whole.

So, in summary, I think it is sensible that we have a non-dom regime; using it does not automatically constitute tax avoidance and it is not clear that it does here; I like Rishi Sunak and feel sympathy for his wife.

Given that Ms Murty has announced that she will now pay UK tax on her worldwide income, does this mean that Sunak’s problems are behind him? I am afraid the answer is no.

In addition to the broad question about the Chancellor’s political judgement, I think the Sunaks face three specific problems.

First, in order to be domiciled in India, Ms Murty must have the intention of returning there. This means that either the Sunaks are going to be resident in two different countries or Sunak – after holding high office in the UK – plans to emigrate. The former is unconventional and the latter raises the question of how committed Sunak is to the UK.

Second, Ms Murty has told us she will remain a non-dom. This means that inheritance tax will not be charged on the whole of her estate as the law currently stands. Again, I do not think this is tax avoidance. When we reformed non-dom status in 2015, we were conscious that imposing inheritance tax on the entirety of a non-dom’s estate (including on assets that had nothing to do with the UK) would have a significant behavioural impact resulting in many non-doms ceasing to be resident here. But this particular policy issue will now become contentious (Labour will see to that).

One would hope and expect that the point at which the taxation of Ms Murty’s estate becomes a real time issue is many years hence (at least a dozen Chancellors are likely to have the chance to change the law in the interim) but Sunak will be under immediate pressure to close a so-called “loophole”.

Third, many of the arguments in favour of him and the non-dom regime – we should be an open economy attracting wealthy people here, we want the City to thrive, this is all part of the “global race” – sound rather unfashionable in the country as a whole and the Conservative Party in particular. To use David Goodhart’s distinction, the country can be divided into the “somewheres” – those rooted in a particular place – and the “anywheres” – those who have “portable” identities. As the last week has revealed, Sunak is the “anywhere” Chancellor in a Government appealing to “somewheres”.

It is an uncomfortable position.

Charlotte Gill’s Podcast Review 8) Matt Chorley with Andrew Gimson, Nick Robinson with Ed Balls

5 Jan

Every fortnight, ConservativeHome will compile a handful of podcast recommendations – content that has been published in the weeks preceding – for its readers. Although these will mainly focus on podcasts for conservative listeners, we will try to include other options – should they be particularly interesting. Sometimes this feature will contain other types of media.

Title: Red Box Politics Podcast
Host: Matt Chorley
Episode: Gimson’s PMs: Thatcher to Johnson

Duration: 1 hour, 1 minute
Published: December 12
Link: Here

What’s it about?

In this fun exchange with Matt Chorley, Andrew Gimson, Contributing Editor to ConservativeHome, author and historian, takes Matt Chorley on a passage through time of Britain’s Prime Ministers, starting with Margaret Thatcher and ending with Boris Johnson. The episode, recorded towards the end of last year, marks 300 years since Britain got its first Prime Minister, in the shape of Robert Walpole, in 1721. It’s packed with insights, as well as comparisons between leaders; find out who Gimson thinks Johnson most closely resembles towards the end.

Some teaser quotes:
  • “Blair knew how to talk to everyone, from a duchess to a cleaning lady. He could adopt the right tone and he had a genius, I’m afraid, for annoying his own party and thereby convincing Middle England that he must be a sound-enough chap and he was really a bit of a Tory.”
  • On Gordon Brown: “Who knows, perhaps he would have been a very great Prime Minister if he’d come in ’97, but he’d waited for 10 years, pretending to be satisfied with the job of Chancellor of the Exchequer”.
  • On David Cameron: “He was a very Anglican figure in some ways; he very much believed in good behaviour and compromise, but – as far as doctrine was concerned – he was fairly flexible about that.”
Verdict:

Very informative, and the hour goes by fast.

Title: Political Thinking with Nick Robinson
Host: Nick Robinson
Episode: The Ed Balls Christmas Special One

Duration: 37 minutes
Published: December 27
Link: Here

What’s it about?

Recorded before Christmas, in this interview Nick Robinson sits down with Ed Balls, former Secretary of State for Children, Schools and Families, to discuss a huge amount, from his life outside of politics, from his love of cooking, to teaching at King’s College London, to the 10 years he has spent learning the piano. Perhaps the most interesting part of the discussion is when Balls discusses his interest in understanding people with whom he disagrees; it makes a nice change from some of the name-calling that Conservatives and/ or Brexiteers have got used to, from the Opposition benches, in recent years.

Some teaser quotes:
  • On a career in politics – “It’s not a conventional career, where you can rise up and you can see your future stretching before you… In politics, it’s totally not predictable, and there’s so much luck, whether you happen to be in the right place and the moment opens up, but when you get the opportunity, it’s brilliant, hard, such a responsibility, such an honour.”
  • “Genuinely, I thought I’m in danger of having a midlife crisis – so therefore I should plan it.”
  • “One of the key things you have to do in politics is you have to be reaching out to people who need to be persuaded. And if you’re going to take the current situation, there are people who voted Conservative in 2019, who voted Labour in 2015 or 2010… Labour’s not going to win unless it persuades those people to come back. And if it sometimes sounds as if Labour is saying ‘you voted for the evil guys’… I mean, how bad, how reprehensible.”
Verdict:

An interesting exchange – indicating a man who has yet to tire of the limelight.

Title: The Brendan O’Neill Show
Host: Brendan O’Neill
Episode: David Starkey: Lockdown is the revenge of the elites

Duration: 58:29 minutes
Published: December 24

What’s it about?

In this jam-packed episode, David Starkey leaves you under no illusions around what he thinks of Boris Johnson – clue: it ain’t pretty – his government and lockdowns. What’s especially interesting, is that, despite vehemently opposing the Government’s pandemic measures, Starkey has a fairly no-nonsense approach to the vaccine hesitant – taking listeners through the reasons why he thinks libertarian arguments have failed here.

Some teaser quotes:
  • On Boris Johnson: “He doesn’t seem really to believe in anything very much… he lurches from one position to another; and…, as very often happens to people in power who don’t have strong views, he has been captured.”
  • “We’ve got a government that thinks it knows better than those who elected it, because it’s powered by a civil service, it’s powered by a judiciary, it’s powered by… various kinds of medical elites”.
  • “All the time we hear ‘the science says’. Science doesn’t say; science isn’t a device for manipulating popular opinion; science is speculative; science is hesitant; science debates. Instead it’s being turned into a weapon of propaganda and manipulation, and above all a gigantic alibi for incompetence.”
Verdict:

As with Gimson’s interview, you get your money’s worth – in terms of a large amount of insight packed into one episode. Starkey challenges stereotypical notions of what a conservative should support in terms of Covid measures.

Labour voters make Kim Leadbeater, sister of Jo Cox, early favourite in the Batley and Spen by-election

20 May

Kim Leadbeater, sister of the murdered MP Jo Cox, will win the Batley and Spen by-election for Labour. That at least is the firm belief of a number of drinkers in The Union Rooms pub in Hick Lane, Batley.

For ConHome this was an unexpected message. We approached Batley by train from Leeds. The station before is Outwood, in the constituency of Outwood and Morley, where during the 2015 general election campaign we detected “a change in the political weather” in favour of the Conservatives, and Ed Balls, the Labour incumbent, was duly defeated by Andrea Jenkyns, by the slender margin of 422 votes. She now has a majority of 11,267.

The station after Batley is Dewsbury, a marginal seat captured for the Conservatives in 2019 by Mark Eastwood.

So there ought to be good chances of a Conservative victory in Batley and Spen, held for Labour in 2019 by Tracy Brabin by 3,525 votes. Only a fortnight ago, in the Hartlepool by-election, a Labour majority of 3,595 was demolished, and became a Conservative majority of 6,940.

At the top of Hick Lane, the visitor to Batley finds a tremendous stone Wesleyan Chapel, now used by Europabeds, whose slogan is “Sleep in Style, Wake in Comfort”.

On the opposite side of the road stands another splendid building, the words “West Riding Union Bank Limited 1877” carved in stone over the gothic porch, now in use as a Wetherspoon pub.

“I vote Labour,” said Mick Carter, a retired painter and decorator, who was having a drink in the garden at the back. “I can’t vote Conservative. They tell too many lies.

“I think they should do a comedy act, those two. Pinocchio and Coco the Clown. I wonder why they won’t answer a straight question.”

He meant Boris Johnson and Matt Hancock.

Carter was pleased recently to have received a letter, posted in Wakefield, from Sir Keir Starmer: “They must know I’m a Labour supporter.

“The only reason I was going to go off Labour was when Corbyn was in. I couldn’t stand that Corbyn. But when Starmer came in, he could stand up to Boris, couldn’t he.

“Boris could run rings round Corbyn. But Starmer, he can actually keep on top of him.

“Really by rights what he [Johnson] should have done is have a lockdown much earlier, I’d say February instead of March.

“Now he’s making more mistakes. He should have kept the border shut, it’s too late now, if this variant [from India] is out, it’s his fault.

“Before he came to Batley [the Prime Minister visited a vaccination centre there on 1st February] he says we can’t go anywhere. But he comes 400 miles with his entourage to Batley.

“But the day before he said you’ve got to stay at home. But they never tell lies. Bloody hell.

“And I’ll tell you another thing I couldn’t stand about the Conservatives. You know they’re that bad, they didn’t even treat the cancer patients.

“They treated them like garbage. ‘We’re too busy,’ they said.

“I’ll tell you someone who doesn’t like that Boris, he doesn’t even treat them right, the Scottish people.

“You know what he is. He’s a dictator. You do as I say. I’m in charge of the country. That’s what he tells them in Scotland. You know why? She’s a woman.

“Him in Manchester sticks up to him. And he’s Labour. You know that Andy Burnham, I think he’ll take over from Starmer. He seems OK that Burnham. He seems to know what he’s talking about.”

Does Carter expect Labour to hold Batley and Spen?

“I think they will. I think, is it Kim, she’ll take over. I think she will. I hope so.

They murdered that other woman, that Jo, in Birstall. You can’t do stuff like that.”

Carter is 63, and works part-time as a gardener, having been forced to give up painting and decorating after falling down a flight of stairs.

“Do you know what he [Johnson] offered the NHS? One per cent.”

A second man: “It’s an insult.”

Carter: “Then he redecorates his flat. How much does it cost? £500,000. She wants gold doorknobs. That’s what it says in the paper the other day.

“I would have done the job for about four grand.”

The second man said: “It used to be a good place, Batley. Everything’s gone now. It used to be buzzing. We’ve had them all here, the top stars, at Batley Variety Club. Shirley Bassey, the Drifters, Tom Jones.

“They couldn’t get Elvis. They offered him £50,000 a night. Louis Armstrong, Neil Sedaka, Showaddywaddy, Gene Pitney.”

At a second table, a woman aged 25, who works as a retail assistant and was drinking a Sex on the Beach cocktail (vodka, peach schnapps, cranberry juice, orange juice), wanted to talk about Tracy Brabin, who has just stood down as MP for Batley and Spen after being elected Mayor of West Yorkshire:

“I can’t stand her. She cares more about how she looks than actually dealing with the issues we’ve got in the community.

“I do normally vote for Labour but since Tracy Brabin took over I haven’t bothered to vote any more.”

Would she vote for Kim Leadbeater?

“Most likely yeah. If she’s got the same views as her sister. She [Jo Cox] actually took an active role within her community.”

What does she think of Boris Johnson?

“He’s a buffoon. I can’t stand him. His priorities have been elsewhere. He cares more about how he looks [laughter].

“This whole pandemic, he could have done more, sooner, like New Zealand.

“My father passed away last year when it peaked, in April. My Dad, he barely went out. He went out to the hospital, we thought he had cancer, unfortunately he contracted coronavirus.

“He did have additional health problems. If only he [Johnson] had done it sooner like New Zealand. He’s a joke, he’s an embarrassment.

“This new type of the virus in India, why didn’t they close the borders?

“My Dad were only 60 when he passed away. Not being able to see him, to be around him, we didn’t even see him in the chapel of rest, apparently his body was contaminated, he was put in a plastic bag, which we didn’t need to know.

“It happened on day eight of the hospital admission. He left behind three children, five grandchildren, his wife.”

She reverted to Johnson: “In five to ten years we’ll be a military-led country. He’s a dictator. He is literally a clone of Donald Trump. He and Donald Trump are the same person.”

A man sitting next to her, pouring himself drinks from a jug of Godfather (whiskey, amaretto, Pepsi), said: “Everyone thinks that.”

The woman did a rather good imitation of Johnson: “I, I, I, I, I’ll be going down to get a drink myself.”

She went on: “I don’t like him but he makes me laugh.”

There was much laughter during these conversations. Nobody seemed to mind an ignorant southerner coming into a pub in West Yorkshire and asking people about their politics. A sort of friendly defiance of the Prime Minister prevailed.

At a third table, a man said: “Well I certainly wouldn’t vote Labour. I don’t think that Labour’s doing a good job.

“I used to vote Labour. I vote Conservative now, and I always will do now, I think. I think Boris has done a marvellous job, the way he’s handled the pandemic, the furlough.

“I work at Tesco. We’ve been very busy at Tesco. Never stopped.”

Another man, a retired dryliner and decorator aged 60, said of politicians generally: “They’re all the same. I’ve never voted in my life. I never will.”

But he said of Johnson: “I think he’s all right. I like him actually. His charisma, his hair style. For crying out loud, put some hair lacquer on.

“I have actually voted once, and that was Conservative, about 30 years ago. I did actually vote for Thatcher a few times.

“I know Thatcher caused a lot of shite, but she argued, ‘You get stuck into your work and that’s what you get paid for.’

“The unions were all going on strike for no toilet paper [a dispute at a local firm at the time].”

A third man: “Margaret Thatcher was bang on.”

The retired dryliner: “You worked for your money.”

The third man: “At the last election I voted for Paul Halloran. He’s helped a lot of people in the community, has Paul. There was a woman in a wheelchair, he helped her get access to her house, the council said it couldn’t be done.”

At the 2019 general election, Halloran stood for the Heavy Woollen District Independents, a local successor to UKIP, and as Paul Goodman last week noted on ConHome, came a strong third, with 6,432 votes.

Phil Taylor, 69, who did “lots of jobs mainly in the building trade”, said at once, when asked for his view: “Oh I’m going to vote for Jo Cox’s sister. Kim is it?

“I’ve seen her many times on telly. I think she’ll stand up for the area. Once she starts she’ll never shut up. She’s the fastest talker. She never comes up for air.

“If she’s got summat to get a point over she won’t half drill it home.

“Jo Cox came in here once, she were having her breakfast, she were a nice lass.

“It were the first time I seen her. She was sat in that room, having her breakfast. Tragic what happened to her. Coming up to her anniversary next month, 16th of June I think it were. Terrible.”

He is correct about the date.

“Mrs Peacock, she were the last Conservative, I remember her. I thought she was all right, to be honest. She spoke good. Elizabeth Peacock [who in 1983 won a narrow victory in the newly created seat of Batley and Spen, holding it by slender majorities until 1997] – they showed her on telly the other night.”

In the EU Referendum, Batley and Spen voted 60 per cent Leave. Taylor was one of those Leavers, and said Batley had deteriorated after Britain joined the Common Market:

“It used to be a lovely town this, at one time. Like everywhere in the country, shops and that started closing down. Batley had a massive Conservative Club, it were being demolished, they’re turning it all into flats.

“But I think it’s starting to pick up now. There’s more properties opening when you walk up town. There’s mainly Asian places and eatery places – Turkish and Indian and Chinese.”

At the centre of Batley, just along Commercial Street from the pub, lies the Market Place, which contains a number of handsome stone buildings, including the Zion Chapel of 1869, still in use as Batley Central Methodist Church; the Town Hall, formerly the Mechanics’ Institute and currently in use as a vaccination centre; the Carnegie Library, which opened in 1907; and the Police Station, which to the anger and regret of local residents closed in 2018.

We took a late lunch at SIBU, an Asian Soul Food restaurant which has just opened at the Market Place end of Commercial Street, almost next to Jo Cox House, a charitable venture set up in her memory.

Ismail Achhala, 21, who is studying International Relations at the University of Leeds, with other members of his family set up the restaurant.

He lives in Dewsbury, is a member of Dewsbury Conservative Association, has campaigned there for Mark Eastwood, and has “converted” his younger sister, who is studying dentistry, to the Conservative cause.

He explained that he had joined the party because of David Cameron: “Just the character he had, the policies.

“I could see a Prime Minister and I was proud of him. All I could see with the Labour Party was infighting.”

Achhala’s grandfather came to West Yorkshire from Gujarat in 1967, worked most of his life in a factory, and after ten years could afford to bring his grandmother over.

She is still alive, aged 94, and has 40 grandchildren, of whom the oldest is 43 and the youngest two. At elections she always tells her family to support Labour: “Vote the red box.”

“Thatcher was a villain in her eye,” Achhala said.

What did he think of Thatcher?

“She was much needed,” he replied.

He added that while Tony Blair was in power, there had been a “drainage of services” from the local area:

“Nobody wanted to come and live in Batley. Now there’s high demand. It’s very recent.”

But there is a crime problem: “It doesn’t feel as safe as it used to. They’ve put all the police in one place in Dewsbury – I don’t think that it’s a good idea.

“At night you’ve had stones thrown at the windows. Why should we have to put the shutters up? It spoils the look of the place.

“Before you’d see police patrols at night. Now you feel there’s no support.”

He mentioned the row at Batley Grammar School, where there were demonstrations after the showing of a cartoon of the Prophet Mohammed in a lesson. A teacher has been suspended and gone into hiding pending the outcome of an inquiry.

This bitter clash between free speech and respect for religious belief has had extensive coverage in the national press, but no one in the pub mentioned it.

“I don’t approve of threats of violence,” Akhhala said. “It’s a very tiny traditional community in Batley. You report it to the authorities and you leave it to them.

“I think that working with faith leaders there is a way of sorting these things out.”

It occurred to me that while in Batley, I had met a number of people from Labour backgrounds who now support the Conservatives, but no one who has made the opposite journey. Achhala remarked:

“The direction Boris is taking the party in is very different – he’s opening it up to more voters – the working class who are trusting in him.”

So does he think the Conservatives will win the by-election?

“It’s too tight,” he replied. “I think Labour have got the edge. We need someone to work for the party in Batley. You don’t feel like there’s anything going on.

“There’s a huge Asian working-class community in Batley. There’s also a massive middle-class Asian community that have moved up, but even they’re still Labour.”

With great pride, and infectious optimism, Akhhala showed ConHome the kitchen at SIBU, which has chefs from the Philippines, Malaysia, Nepal, India and Britain. This is globalisation the Batley way.

The Yorkshire Post reports  that Labour will choose its candidate for Batley and Spen on Sunday. Councillor Ryan Stephenson, who represents Harewood ward in Leeds, was yesterday evening selected as the Conservative candidate.

Both parties have enough potential supporters to win this seat, if only they can persuade their people to turn out.