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The Tax Avoidance Row And Tory Donor Alienation

Last Updated: Friday, June 22nd, 2012

David Cameron is legendarily good with party donors.  He remembers the names of their spouses and children, asks after both, and listens at least as much as he speaks.

But I’m afraid that his good manners and natural courtesy may not be enough to keep them happy in the wake of the row over Jimmy Carr and tax avoidance.

It goes almost without saying that every Sunday newsdesk in the land – and investigative TV journalist worth his or her salt – is today frenziedly pursuing Tory donors’ tax affairs.

The announcement of the Leveson Enquiry was preceded by a great wash of horrible stories about media misconduct.  It’s reasonable now to expect a mini-wave of donor “revelations”.

If this was the only difficulty that the donors had to face, they might face it with a degree of stoicism.  But the Carr story, and the Gary Barlow one that followed, are part of a bigger pattern.

It is the familiar one of a loss of legitimacy with big political parties and formal politics among parties.  A presumption has grown that donors are sleazy until proved otherwise.

This doesn’t only affect the Conservatives.  Labour endured the “Cash for Peerages” investigation and the “Donorgate” rumpus.

But the Tories are peculiarly vulnerable because of their reliance on private funding.  Labour, after all, have the trade unions to fall back on.

And Conservatives donors have specific reasons to be unhappy – even if the Prime Minister’s intervention this week had never happened.

* “Cruddasgate”, the recent controversy over donations and access, resulted in the resignation of Peter Cruddas, the party Treasurer.  It was a vivid reminder to the donors of the risks of bad publicity that they take by giving.

* The donors are basically a pretty right-wing bunch – they’re Tories, after all.  And although they like some Government policies (such as the corporation tax and top income rate tax cuts), they dislike others: in particular, they were and are worried by Nick Clegg’s proposed “Tycoon Tax”, the original charity tax cap proposals, and the concentration on avoidance.  They will not like the current anti-business and anti-bonus mood and will disapprove of Downing Street playing along with it (as they see it) – for example, by moving to restrict Stephen Hester’s bonus and removing Fred Goodwin’s knighthood.

* In short, they give money so that a Conservative Government can look after the interest of business.  Not all will be convinced that the Coalition is fulfilling the same function.

Tory donations dipped from about £34 million in 2010 to £14 million last year.  To some degree this is to be expected, since gifts tend to rise as general elections approach.

But given the long and shorter term factors I’ve described the Conservatives can take nothing for granted.

They may even find themselves looking more sympathetically at a cap on donations if big money gradually stops coming in.

By Paul Goodman

  

HIGHLIGHTS FROM THE WEEK ON CONSERVATIVEHOME

Paul Goodman: Michael Gove’s O-level gambit is a sign of a deeper frustration. Where will it take him?
“The Education Secretary’s impatience is another sign of the deep seriousness of purpose that Tim Montgomerie applauds in today’s Mail.  I sat in on some of his education meetings at the end of the last Parliament as he prepared for government (their attention to detail was impressive) and felt that the vicissitudes of the expenses scandal had somehow hardened him: that it brought home to him that politics is uncertain, that life at its top is brief, and that he would have to act fast to bring about real change.  There was a reinforcement of the sense that he isn’t in the Commons just for the ride.” Read more: http://is.gd/6MWZHI

Elizabeth Truss MP: It’s time Britain got a “Maths shock” and recognised the subject’s impact on our future prosperity   “We need a “maths shock” to sort out the gaping gap at 16. The spur for this should be last year’s Vorderman report that recommended that maths should continue until 18 for all students. The Government has already dipped its toe in the water by requiring those failing to gain a grade C at GCSE to re-take. It should now go further and make maths a core part of the post-16 curriculum. This would follow leading countries. Hong Kong, one of the world’s top performers, recently made maths compulsory until the end of high school. In Germany maths is part of the Abitur, in France it’s compulsory for the majority of Baccalaureate streams and it forms a required element of the International Baccalaureate.” Read more: http://is.gd/Cnxj3F

Harry Phibbs interviews Eric Pickles   “While Pickles is a Cabinet Minister in a coalition government, he also remembers that he is a Conservative politician. He is an avid reader of this website, and asked to be interviewed as he values and is comfortable with the Conservative grassroots.

“As Ronald Reagan used to say: ‘Dance with the one who brung ya’,” he says. “The Party activists are vital. I remember that I wouldn’t be here without them. We have to stay connected with them. That’s why I do the rubber chicken circuit speaking at constituency events. In fact, generally the food isn’t rubbery at all.” Read more: http://is.gd/CPfiS6

Marina Yannakoudakis MEP: What price the pro-bailout victory in Greece?   “If Germany is to save Greece, the country will be required to relinquish more control over its economy than ever before. Greece and the Eurozone will face a stark choice between the single currency and a form of federalism which will see Brussels oversee not only government spending, but taxation, social policy and employment laws. I don’t believe that even the most Europhile nations are ready to surrender so much sovereignty. I work closely with Greek MEPs in the European Parliament, including those from New Democracy, and not once have I felt that any of them were ready to sign up for wholesale federalism.” Read more: http://is.gd/A65OMs

Tim Montgomerie: The Conservative Party must prepare for a comprehensive relaunch at the end of this parliament     A comprehensive review of the Tory message, manifesto and machine should be undertaken. The very process will reassure anxious Conservative voters, members and MPs that Cameron has a plan beyond the Coalition. It should keep the party together over what will be an anxious 18 or so month period of continuing Coalition compromises and increased tensions between the two parties. The process should begin now in order to convince the party that Cameron is serious about winning the next election and because the mountain we have to climb at the next election – adding 3% to 5% to our vote share – demands more than small and obvious steps. Read more: http://is.gd/bhpQtl

Nadine Dorries MP: Free speech on the internet cannot go unpoliced   “During the debate, I spoke about how I had folded at the point of making two prosecutions for online abuse against myself. One was with a man who wanted to see me locked in a burning car and watch my burning flesh melt from my bones and the other was a car bomb threat from a student at Oxford. I took the decision that I didn’t want to ruin two lives with a lifetime criminal record for their own moment of anonymous madness. That because I was in the public eye, it came with the turf. I have since realised that I took the wrong decision not to prosecute.” Read more: http://is.gd/yplZqS

Adam Bruce: Contrary to popular opinion, wind energy cuts electricity bills and boosts economic growth     “Wind energy lowers the price of electricity. Prof Harry Markowitz, the Nobel Prize winning Chicago school economist was one of the first to describe modern portfolio theory. The theory, simply put, states that to deliver the best possible return from an investment portfolio you need a mix of high and low risk assets. Apply Markowitz’s theory to electricity markets and you observe the same result – where an optimal mix of risky (gas and coal plant with all that price volatility) and non-risky (free fuel wind and solar plant) delivers the best possible risk adjusted return – which in this case is a lower electricity price than a comparable market with no wind or solar plant.” Read more: http://is.gd/CSBVsM

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