Ed Miliband has said he will demand that Bermuda and other UK tax havens be put on an international blacklist within six months of a Labour government taking office unless they end their system of secrecy and produce a public register of offshore company owners.
After a week in which he has been battered for an alleged anti-business agenda, the Labour leader insisted: “I am not going to back down.” He said: “The time has finally come to put an end to a society in which one group of people can play by different rules to the rest.”
In an interview with the Guardian, Miliband said he wanted to focus attention on the issue of tax. He said: “There is nothing pro-business about defending tax avoidance. Millions of British people and businesses pay their taxes and they are damaged by this behaviour.”
Miliband was speaking after he and his party came under sustained attack over its business policies, beginning on Sunday when the billionaire boss of Boots, Stefano Pessina, claimed that if Miliband and other Labour politicians acted in the way they spoke “it would be a catastrophe”. Other business leaders added to the criticism, including the former Labour donor Sir Charles Dunstone, who said he felt “frightened” by the idea of a Labour election victory in May.
The events of the week led Miliband to conclude that “the phoney war is over” – and showed that he clearly believed he had in fact identified a weak Conservative flank in its close links to a particular form of finance capital.
The Labour leader maintained that his economic policies had been developed in conjunction with leading business people and were not just about fairness, but creating high productivity.
He said: “For this to be portrayed as anti-business is ridiculous. What I am saying is what the archbishop of Canterbury has been saying, the International Monetary Fund has been saying, and the OECD has been saying – a more equal society is a more efficient society. I believe in wealth creation and company profits, and for the government to play its part, and we have been working closely with business to shape that agenda.”
Specifically, Miliband pointed out David Cameron, during his chairmanship of the G8 in 2013, had promised to make a crackdown on tax evasion one of his central goals. At that time he had demanded reforms from Jersey, Guernsey and other crown dependencies, including a commitment from each to make the true owners of companies located in their jurisdictions public.
Miliband said: “Cameron made this big promise 18 months ago that he was going to force UK tax havens in crown dependencies to open up and he has totally failed to meet that promise. We are sending a very clear message today.
“A Labour government is not going to have endless consultation and dithering. We are going to give six months to these tax havens to agree to publish a register of beneficial ownership, and if they do not act we will recommend to the OECD that they are put on a blacklist.”
Since Cameron’s announcement at the G8, the crown dependencies – largely led by the Cayman Islands and Bermuda – have defied the prime minister either by dragging their feet or saying that following internal consultations they will not make the change until there is international action.
A meeting between the government and the crown dependencies on 2 December in London ended in deadlock with talk of a further meeting before a meeting of the G20 finance ministers in Turkey next week. The additional meeting is not now going ahead, the Cayman Islands government has confirmed to the Guardian.
Miliband said it was necessary to introduce public share registers “so that the tax authorities in the UK can get at the people that are avoiding their taxes. If the Conservative party really want to have an argument about who is going to be serious about tax avoidance I welcome and relish that argument.
“The way we change the country and tax avoidance internationally is through the power of example. We are not going to hang back and wait for others to act. Unless we act everyone is going to say ‘after you’. That is why this has dragged on and on. It could be billions of pounds that we are missing.”
In 2013 Cameron said: “Beneficial ownership and public access to a central register is key to improving the transparency of company ownership and vital to meeting the urgent challenges of illicit finance and tax evasion.” The register would reveal the identity of anyone with an interest in more than 25% of a company’s shares or voting rights held in one of the offshore territories.
Miliband argued that dealing with tax avoidance would help support better public services. “This matters to everyone who relies on our schools, our hospitals, our roads and our railways. It is costing everyone who pays their fair share of taxes, including millions of British businesses,” he said.
The Labour leader said he was sending a letter to the crown dependencies putting them on notice about his intentions. Although the OECD blacklist has largely disappeared, Miliband seems determined to revive the concept. Being placed on any international blacklist is designed to cause reputational damage, as well as open the way for restrictions on banks. The French government has been operating its own blacklist and believes it has been effective in forcing tax havens to cooperate with its tax authorities.
After a week in which he has come under sustained criticism, Miliband denied that he was taking an anti-business stance. “The reason this argument matters is much wider than who is attacking me, but why they are,” he said.
“There are people who are going to say for the next 90 days that this country cannot change, and that this is as good as it gets. This week has just exemplified the fight we face so it is a battle between status quo and the change.
“The question we have been addressing this week is who is this country going to be run for. Is it going to be run for everyone under fair rules which apply to everybody, or is it going to be a case of one set of rules for one set of people and another set of rules for another?”
He insists that his equality agenda is not just about duty, fairness and morality, but also about “social efficiency”.
Miliband also called for discipline within the Labour party and said too many people were trying to call the election result just as the players are getting on the pitch.
Earlier this week, Lord Noon, a major Labour donor, said he was embarrassed by mistakes made by the party on the economy, including the leader’s failure to mention the deficit in his conference speech and Ed Balls’s inability to remember the name of any business supporters of the party in a Newsnight interview.
Miliband said wealth creation was necessary, and sought to paint the Conservatives as a party who were reliant on a narrowing economic framework.
“We need successful wealth-creating businesses making profits, but how can that happen? There is a Tory vision that comes from an increasingly anti-European party, with Britain outside its main export market, a few hedge funds doing well, tax avoidance given the green light.
“Or a Britain with people with proper skills, high productivity, a working infrastructure, competitive markets , a banking sector that serves business.
“Wealth creation and wealth distribution are not separate arguments. The Tories think productivity comes from the top and trickles down. I think productivity must come from every part of the working population. What we need and have failed to achieve for decades is a high productivity workforce.”
A Conservative party spokesman said: “People should judge Ed Miliband by his record, not his rhetoric. For 13 years – including when he was an adviser in the Treasury – Labour did absolutely nothing to tackle tax avoidance. This shows that Ed Miliband is simply too weak to deliver on what he promises.
“In contrast, we are tackling the problem head-on. David Cameron put tax dodging at the top of the global agenda at the UK’s G8 summit, securing major new international rules to ensure that companies pay what they owe.”
