HC Deb 11 June 1973 vol 857 cc984-7
20. Mr. William Hamilton

asked the Secretary of State for Trade and Industry how many directors of British companies are resident in the Cayman Islands.

Sir G. Howe

The answer is not obtainable except at undue expense.

Mr. Hamilton

Is the Minister aware that it is not so important for a person to reside in the Cayman Islands as to have part of his salary channelled there? Can he give the House any information about that form of tax evasion? In particular, will he say how many of the Lonrho directors, including Sir Basil Smallpeice, have part of their directors' fees channelled into an account in the Cayman Islands? Will that activity be covered by the inquiry into the Lonrho affair, and will the figures obtained be published so that the country may be aware of these almost criminal activities at a time when the Government are asking the ordinary worker to restrain his wage demands in the national interest?

Sir G. Howe

The hon. Gentleman makes several imputations. As he knows, the affairs of the Lonrho Company are to be investigated, and the investigators will have power to investigate the affairs of the subsidiaries as well as of the main company. The hon. Gentleman will also know that the tax affairs of individuals cannot be discussed on the Floor of the House. He will remember that my right hon. Friend the Chancellor of the Exchequer told the House that the Inland Revenue is making and will make full investigation into the tax position of any taxpayer. In the course of doing so it looks at the use or abuse of any devices. My right hon. Friend has also told the House that he is considering what further action is necessary on that front.

Sir G. Nabarro

Will my right hon. and learned Friend bear in mind that the scandalous state of affairs which existed in the Lonrho Company could readily be avoided in the future by the House passing legislation to require a residential qualification before any part of a company director's salary or emoluments could be paid in the Cayman Islands or in any other tax haven, and that that is the proper recourse which I hope he will apply in any amending company legislation?

Sir G. Howe

I take note of what my hon. Friend says. The impact of taxation and the way in which it should be assessed and collected are more matters for my right hon. Friend the Chancellor of the Exchequer than for me. He has said that he is considering whether further action is necessary on this or associated matters. I will certainly bear in mind what my hon. Friend says in the context of our consideration of company legislation.

Mr. Pavitt

Has the right hon. and learned Gentleman seen the statistics which suggest that there are more bank accounts in the Cayman Islands than there are blades of grass? Will he make a wider investigation, not just into the single affair before him but into the whole question of what is happening in the banking industry in the Cayman Islands?

Sir G. Howe

I am not able to speak for the blades of grass in the Cayman Islands but I assure the hon. Gentleman that my right hon. Friend the Chancellor of the Exchequer has in mind any tax implications that may arise from matters of this kind.

Mr. Benn

Will the Minister say whether the Lonrho revelations came as a surprise to the Government? If they did not come as a surprise to the Government, why did the Government accept for so long the unacceptable face of capitalism revealed by the Lonrho affair?

Sir G. Howe

The right hon. Gentleman when he was in office seemed to have found no difficulty in accepting a whole range of unacceptable faces of various kinds. In fact the present Government are concerned to establish the proposition that the democratic capitalist form of society is that which is most likely to ensure the continued prosperity of the people of this country. It is because we are concerned to ensure that form of society rather than to cast it into some neo-Socialist or neo-Communist society of the kind favoured by the right hon. Gentleman that we are alert to ensure that the capitalist system is working fairly and effectively. That is our prime concern because it is on that system that the prosperity of the country depends.

Mr. Bernn

rose——

Mr. Speaker

Order. Questions to the Attorney-General.