RESIDENCE: AVAILABLE ACCOMMODATION (Hansard, 13 July 1993)

§ Mr. Nicholas Brown
I beg to move amendment No. 28, in page 160, line 24, leave out from beginning to end of line 4 on page 161.
A Budget that raises taxes, extends value added tax to domestic fuel, readjusts advance corporation tax in such a way as to impose a substantial burden on charities and pension funds, places a 1 per cent. increase on employees' national insurance contributions, refrains from indexing allowances and, in particular, restricts mortgage tax relief and married couple's allowance to the new 20 per cent. tax band, especially when combined with significant increases in excise duties—most noticeably, duties on petrol and cigarettes—is a tax-raising Budget.
The House now has a rare opportunity to discuss a tax concession. Admittedly, it is one that will cost only some £10 million in 1994–95. Nevertheless, it is a reduction in the tax burden. Over and over again, the Chief Secretary has spoken about the need for deficit reduction, tax increases and public expenditure cuts. Admittedly, he says less about why we are in this position, and he did not make these points so forcefully before the last general election, but he makes them emphatically now.
Let us take the Chief Secretary at his word. Let us also take at his word the hon. Member for Southend, East (Sir T. Taylor), who said yesterday: If one's country is bust".—[Official Report, 12 July 1993; Vol. 228, c. 757.] We were also told by the hon. Member for Corby (Mr. Powell) that the Budget contains serious errors of judgment. If we are indeed in such difficult circumstances, as even Conservative Members seem to allege that we are, it must be extraordinarily difficult—1 think that we understand the difficulty—for the Government to give a tax break to anyone. However, after careful consideration, the Conservative Government have found a group of people who, even in these difficult times, require a tax concession.
Who are these people? I know that the most compassionate of my hon. Friends, amazed at the 865 discovery of a group of disadvantaged citizens so deserving of relief that even this Government have noticed their plight, will be wondering if enough is being done for those people. Suggestions of food parcels, perhaps, could well emanate from my hon. Friends.
These people are not the poorest, most downtrodden in our society. This relief that the parliamentary Labour party is seeking to withdraw is to go to people who have substantial means, who are rich—people to whom the right hon. Member for Kingston upon Thames (Mr. Lamont), the former Chancellor, used to refer as the internationally mobile. This concession to them is being made at a time when the rest of the people of this country are being urged to tighten their belts.
The clause weakens the available accommodation test for residency. It is a relief that, were he to return to this country—if only to ask for his money back from the Conservative party—would be available to Mr. Asil Nadir. There are those who think that the Conservative party has already done enough to help Mr. Nadir, but that is clearly not the view of Treasury Ministers. Indeed, his plight—not his flight—and that of those like him was given extra special consideration by the Financial Secretary before the clause was inserted in the Bill.
In Committee, I was able to make reference to the script for a first-rate Granada Television "World in Action" programme that dealt with tax avoidance and evasion. There was a scene in it—to which I did not refer in Committee but which, I am sure, will inform the debate on the Floor of the House—that included a very familiar landmark, and the commentator said that this was another of Asil Nadir's tax havens. You will be astonished to hear, Mr. Deputy Speaker, that this was a shot of the fountain in Trafalgar square. The commentary went on as follows: WORLD IN ACTION has discovered that UK tax rules allowed Nadir a privileged status known as non domicile. So although he was one of the richest men living in Britain he paid comparatively little tax here. But our tax laws allowed Nadir to acquire several homes in Britain. Through an offshore trust he owned a country mansion, Baggrave Hall in Leicestershire. The commentator went on to quote a tax partner from Moores Rowland, a Mr. Eastaway, who said: To have a non UK domicile is one of the great secrets of turning the United Kingdom into a tax haven. 5.45 pm
I am not sure that the House wants to turn the United Kingdom into a tax haven. I am certainly not sure that, in this time of stringency, when substantial imposts are necessary for all our other fellow citizens, we should be making an albeit relatively modest relaxation in the rules to give money to people who already seem to have rather large sums of money available to them. I do not understand why we should do that, especially in the present economic climate.
The Financial Secretary, in fairness to him, tried to explain it in Committee. As an explanation of why the clause was in the Bill, he said: It was represented to me, very persuasively, that"— the clause— has dissuaded business men—and, indeed, tourists, though my principal concern is business men—from including this country in the range of options that they consider when making business decisions."—[Official Report, Standing Committee A, 24 June 1993; c. 592.] The words that stick in my mind from that speech are "very persuasively". I am not certain what the Financial Secretary meant by those words, but "Business Age" 866 magazine draws our attention to some £71 million worth of unexplained money in the Conservative party's accounts. "Business Age" has provided a helpful guide to the big donors and their possible motivation, on the assumption that that motivation extends beyond disinterested public spirit.
The reason most frequently cited for giving these large donations to the Conservative party is that it is in recognition and support of the Government's retention of favourable tax breaks for United Kingdom overseas subjects. Those donors are just the sort of people who could benefit from the changes that we are now discussing.
What sort of an argument is £71 million? To borrow an expression from the Financial Secretary, it is a very persuasive argument. It is my contention that if, in difficult times, it is necessary to increase the tax burden on our fellow citizens, any concession has to be very carefully considered. This is a concession to very rich people who do not, in any event, pay their fair share of tax in this country. We make this concession at a time when we are being asked, in the same Finance Bill, to make the most regressive changes to the value added tax regime that it would be possible to devise.
Let me make it clear that I would not give these tax-dodging scoundrels the benefit of this clause in any event. It is a handout from the public purse that cannot be justified. In the present circumstances, it is positively grotesque.

§ Mr. Beith
I share the view of the hon. Member for Newcastle upon Tyne, East (Mr. Brown) that this is a worrying aspect of the Finance Bill. Like him, I studied the "Business Age" list of a series of donors to the Conservative party and was very struck by the way in which the motives were listed. There appeared again and again the motive of supporting the maintenance of tax breaks for United Kingdom subjects overseas. There were one or two large donors whose motives were described as completely unexplained. But there was a very large group—it includes people who, I believe, would say this quite clearly, and probably publicly, if asked—who were grateful to the present Government of the United Kingdom for maintaining a situation in which they felt that they were relatively favourably treated under United Kingdom tax laws. The sort of concession which is at the heart of that is the ability to take advantage of the residence rules.
It is difficult for Ministers to detach themselves from these issues when explaining them to the House. It is particularly difficult for the Paymaster General. When he was the Conservative party's vice-chairman and working at Conservative central office, I think that all these things must have passed him by. I cannot imagine that he was involved with any of the mysterious, undisclosed accounts that were published by river companies. I think that they just stuck him behind a desk, that it all passed him by and that it was handled by other people. I suspect that a lot of that goes on in Conservative central office.
What is becoming increasingly clear, however, is that a large number of people overseas are now prepared to put very substantial sums of money in the way of the Conservative party, if it is considered appropriate to do so, by way of accounts held overseas whose purposes are unidentified. Some people and some groups are prepared 867 to do that because they like the tax treatment that is afforded to United Kingdom subjects who are resident abroad.
There are other motives. There are those who want a favourable regulatory regime for their companies. Others are concerned about foreign policy issues. The single largest group, however, appears to be those who find this kind of tax treatment advantageous to them. When the Minister seeks to explain this, he will be judged not simply by his explanation but against the background of the substantial donations that have been made to his party by people who like this sort of thing.

§ Mr. Dorrell
The hon. Member for Newcastle upon Tyne, East (Mr. Brown) and the right hon. Member for Berwick-upon-Tweed (Mr. Beith) sounded more than mildly implausible when whipping themselves into a synthetic fury over this question. If it were true that the Government were interested in finding ways of safeguarding nefarious activities of the kind about which they are both concerned, it is profoundly improbable that it would have been this Government who tabled a proposal in 1988 to revise precisely the rules that apply now to the taxation of United Kingdom residents who are not domiciled in this country.
The issues that the hon. Gentleman and the right hon. Gentleman have hinted at are on the table and in the public domain at least in part because the Government published a consultative document in 1988 that launched public discussion of exactly the issues that they raised. Neither of them, however, chose to tell the House about the results of that consultation. Virtually with one voice, the representations to the Government on that subject, from those of all political persuasions, were that it would be damaging to Britain's interests to go down the route that had been suggested in the consultative document, a document tabled on the authority of Ministers of this Government in 1988.

§ Mr. Nicholas Brown
Most of the representations—not all of them, I accept—were from people who would be disadvantaged if the changes were made.

§ Mr. Dorrell
That hardly distinguishes this representation from any other representations in which the Government are engaged. My point is that the overwhelming majority of the representations were hostile to the ideas that Ministers of this Government had tabled.
Arguments were advanced in principle against the proposals. The arguments that were advanced—by, I stress, people of all political points of view—were precisely from the perspective of the disadvantaged citizen, the perspective that was espoused so eloquently by the hon. Member for Newcastle upon Tyne, East. The argument was—I find it persuasive—that to go down the route envisaged in the 1988 consultative document would make this country a less attractive place in which internationally mobile business men, whom the hon. Gentleman correctly identified as a legitimate target for consideration, could do business.
It was for that reason that the proposals in the consultative document were dropped. The announcement was made in 1989. As far as I know, there was no great 868 outcry from either the Labour party or the Liberal Democrats when the decision was announced, because it was recognised to be in response to public concern.
The clause is motivated by precisely the same perspective and the same thought processes as those that led to the dropping of the 1988 proposal—that when considering who should pay tax in this country, the Government ought to pay regard to the proper priorities if we are to attract internationally mobile business activity to the United Kingdom. It was for that reason that we dropped the 1988 proposal. We did so in response to public consultation. Precisely the same reasons led us to table the clause; therefore, I oppose amendment No. 28.
I want tax to be raised fairly from people who are resident in this country. I also want there to be a tax system that is friendly to internationally mobile businesses. The hon. Member for Newcastle upon Tyne, East made it clear that he regards that as a secondary objective. I regard it as a primary objective.