Ken Livingstone tax avoidance: 'Red Ken caught red-handed,' says PM

Only one of these men has paid his full share of tax

The astonishing story of Ken’s tax affairs continues to build, with further revelations in today’s Standard. After I revealed, on Sunday, that this great critic of “rich bastard” tax avoiders had avoided at least £50,000 in tax by channelling his earnings through a personal company (paying 21% corporation tax rather than 40% income tax), Ken said he would shut the company down if he became mayor.

It now turns out, however, that for about six years of his previous mayoralty, Ken had a similar arrangement. As I described on Monday, he channelled most of his (very large) income before his election in 2000 through a personal tax-shelter company, Localaction. What the Standard today reveals is that he did not shut down Localaction, and continued to process his non-mayoral-salary income through it, until 2006.

Ken insisted today that he had simply been “too busy” to wind down Localaction and that all the non-salary income he earned after becoming mayor had been donated to an (unspecified) charity “for the education of children who had had their fathers killed in India.” I’ve just asked his spokesman what charity that is and will update you when he responds.

The Standard has done a lead editorial today saying Ken’s behaviour “sits uncomfortably with his jibes about ‘rich bastards’ avoiding tax… Mr Livingstone’s public image does not quite square with minimising tax obligations.”

Ken’s tax avoidance also came up at Prime Minister’s Questions today. Asked by a London Tory MP about the issue, David Cameron said: “Whether it is Barclays Bank or, frankly, Ken Livingstone, people should pay the full amount of tax.

“I hope HMRC will look carefully at all these sorts of cases. Frankly, Londoners, many of whom live in Labour-controlled areas with high Labour council taxes, will be pretty angry about what they have seen. They will probably conclude Red Ken has been caught red-handed.”



Boris Johnson: Cameron delivers a message

At the Spectator Parliamentarian of the Year Awards dinner last night, as the magazine’s blog reports, David Cameron said the following:

“I think the great thing about the Spectator is your extraordinary heritage, the remarkable figures who’ve sat in the editor’s chair.  I’m thinking of people like Iain Macleod, Nigel Lawson and obviously not forgetting my own particular favourite.  We went to the same school, the same university and of course I’ve got a soft spot for him.  A man of high intelligence and huge ambition.  An irresistible charmer with an enviable head of hair.  Always bursting with brilliant turns of phrase and bright ideas.  Yes, my kind of political maverick… Ian Gilmour.  I’m not quite sure what went wrong for Ian.  I suppose he rubbed the Prime Minister up the wrong way and never really recovered.  Shit happens.  Anyway, there’s always the chance of becoming our ambassador in Pristina I suppose.”

Crossrail: Dave looks Boris in the eye

Will a new government keep Crossrail, I asked Boris Johnson last week. “David Cameron looked me in the eye,” replied Boris, “and said ‘We’re going to do it.’”

Admittedly, that commitment was given at the Tory conference in October, before the new team had a chance to examine the (horrible) government ledgers. The fact that we still cannot be wholly certain about the £16 billion tunnel was shown by this week’s letter from business leaders, pleading with the government to make its future secure.

Something else Boris said to me suggests one possible route our new masters may take. “You cannot extend the [construction] timescale to save money,” he said. “It’s a false economy.”

He also interestingly refused to deny speculation that the project could be descoped, with the Abbey Wood branch lopped off. Is that really possible? It would mean that Crossrail would not serve Canary Wharf, surely a bit of a no-no. Canary Wharf is also where most work has been done so far, with construction of the new station under way.

Likelier, perhaps, is the trimming of costs. £16 billion is a gigantic amount to spend on a few miles of rail tunnel – not much less, in real terms, than the 26-mile Channel Tunnel cost. TfL is notorious for its profligacy. People at Canary Wharf, who are part-funding their station, and building the whole thing under a fixed-cost contact, tell me that they were able to make substantial savings on the budget  TfL proposed for it.

It is, of course, almost unknown for British transport projects to come in below budget. But if that can be achieved, Crossrail’s future would seem to be more secure.

The Tories should pray for a Lib-Lab coalition

A Lib-Lab coalition would be democratically preposterous, defying the laws of political gravity. But for that very reason it could, in the medium term, be the best possible outcome for the Tories.  It would be losers propping up losers. It would be hugely difficult to keep together, lacking a majority of its own and requiring life-support from various nationalist parties. It would be vulnerable to all sorts of unsavoury Celtic blackmail, enraging the already long-suffering English (whose own voting intentions were very clear.)

It would lead to a second unelected prime minister. It might well trigger serious trouble in the financial markets. It would have to make drastic cuts with no mandate whatever. Electoral reform (which I support) would be discredited, because it would be seen as a cynical gerrymander to keep losers in power. Labour would probably be unable to deliver it, even if they wanted to (and it’s far from certain that they do.)  

For all these reasons, a red-yellow alliance would be a political disaster for all those involved. When the inevitable collapse, and new election, came, probably within months, both Labour and the Lib Dems would be annihilated. 

The much more sensible thing for Labour to do would be to go into opposition, let the Tories and Lib Dems suffer the pain of having to make cuts, and hope to profit in a future election, which might also come rather more quickly than usual.

The next year or two would have been horrible enough for whoever was in charge, even if they’d had a clear majority. Without one, it will be simply a world of pain. I still think it’s hugely unlikely we’ll end up with red-yellow rule – I should imagine the current Lib/Lab negotiations are just Clegg’s way of getting more from the Tories. But if it does somehow happen, the Tories will have dodged a bullet – and been handed an Exocet for later on.

Will attack on Tory Right-wing horrors work any better today than it did in London two years ago?

After Boris Johnson was elected as Mayor of London, you may remember his opponents promising to use his rule as a foretaste of the Thatcherite horrors that awaited under a David Cameron government. Whatever happened to that, I wonder?

In this election, Boris’s mayoralty simply hasn’t turned into the great weapon that his opponents hoped. That, no doubt, is why they have barely mentioned it in the campaign. A cuttings search finds a few attacks on Boris’s cuts to police numbers in the Standard and the local London press, but that really is just about all. It must be tremendously disappointing for the likes of the Guardian’s Dave Hill, who has been diligently campaigning for his chosen party (though one of Boris’s staff once said to me that being on the receiving end of Dave’s attack journalism felt like being gently nibbled by a very small goldfish).

There were plenty of real charges to make against Boris – his previous lack of interest in London, his managerial inattention, his lack of any formed idea of what he wanted to do with the job. I think some of those still apply. But it lacked credibility for Labour to claim, as they did, that he was “Norman Tebbit in a clown’s uniform” or “George W Boris.” He palpably is not, and his record at City Hall shows it. Ken Livingstone gracefully conceded this, too, when we met on TV the other day.

We will know soon enough whether the very similar attack against Cameron now being mounted by Labour has any more traction with voters than when the line was tried against Boris.