We have an electoral system that encourages short-termist government; I suppose that is one of the penalties that goes along with the blessings of being a democracy. Having to submit to the whims of the voters every four or five years does, however, militate against long-term strategic thinking, so when a party leader exhibits some of the latter, it is sufficiently rare that one tends to sit up and take notice.

Denis Healey, ever one to turn a memorable phrase, threatened in the 1970s to “squeeze the rich until the pips squeak”. Fantastic old Labour rhetoric, matched by a 98% top rate of income tax. Nick Clegg is so much more polite about it; indeed he does a pretty good job of making the rich feel good about the prospect of paying more tax when he says:

“.. is there a time limited contribution you can ask in some way or another from people of considerable wealth so they feel they are making a contribution to the national effort?”

If you think that sounds faintly Churchillian, then how about:

“What we are embarked on is in some senses a longer economic war rather than a short economic battle”.

Mr Clegg is of course so right; the ills of the UK economy cannot be cured overnight; it will be the work of a generation. He expands on his theme as follows:

“If you are going to ask people for more sacrifices over a longer period of time, a longer period of belt tightening as a country, then we just have to make sure that people see it is being done as fairly and as progressively as possible. While I am proud of some of the things we have done as a government I actually think we need to really hard-wire fairness into what we do in the next phases of fiscal restraint. If we don’t do that I don’t think the process will be either socially or politically sustainable or acceptable.”

And that is the moral background against which aggressive and artificial tax avoidance has become unacceptable. There is a sense that we are all in this mess together, and that it will take all of our efforts to get out. It is no time for selfishness or for ignoring the public good; in that sense the wartime analogy is particularly apt. It is this aspect that the apologists for aggressive tax avoidance miss when they defend the right of the taxpayer to minimise his or her tax liability within the letter of the law; we simply can’t afford the luxury of allowing everyone to do that.

Often dismissed unfairly in the media as a political lightweight, Nick Clegg may in fact have taken the bravest and most difficult political decision of the century (and beyond) by putting his own and his party’s political future on the line in the interests of the country by entering into a coalition with fairly odd bedfellows, at a time when there was little political credit to be gained by being in government and an awful lot to lose. As I said at the time, the appropriate response to the election result and the economic crisis would have been a government of national unity, which would have spared Mr Clegg and his party the martyrdom which possibly awaits them at the next election. In my view the situation is desperate enough to call for this, but maybe the coalition was as close to that as we were realistically going to get. But how much better it would be to have Labour’s financial brains on the inside helping to find the long-term solution rather than sniping from the outside.

I see him alongside such politicians as William Hague and John Smith, who were in the wrong place at the wrong time for their own political ambitions, and had much more to offer than circumstances allowed them to. Any politician who takes a long-term strategic view on tax issues deserves an audience on novelty value alone, but Mr Clegg’s thoughts are much more valuable than that, as they help to clarify the critical nature of the next few years, and the importance of a collective approach to resolving the current economic crisis. Let us hope the British public is listening.


George Osborne was quick to warn of the risks of business fleeing the shores of the UK if Nick Clegg’s suggestion of a temporary additional tax on the rich came to pass. But what evidence or justification is there or such fears and concerns?

One of the great fallacies that underpins a great deal of right-wing fiscal thinking is that increasing taxation on the better off will drive them out of the UK and thus prove counter-productive in revenue raising terms. That this is a fallacy was amply demonstrated by the recent Skandia “Millionaire Monitor” survey, a fascinating, if at times profoundly depressing, insight into the minds and motivations of a sample of millionaires from the UK, Dubai, France, Hong Kong, Italy and Singapore. By far the most interesting question came under the heading of “High Net Worth Mobility” and asked “Please rank the following reasons why you would consider leaving this country”, giving a list of 10 reasons. I couldn’t believe the mind set that the results demonstrated, and neither will you:

Reason for leaving Percentage of millionaires placing reason for leaving first Ranking of reasons for leaving (1 to 10)
Other 2.2 10
Economic policies 3.9 9
Employment opportunities 6.6 8
Government policies 7.2 7
Society issues (crime, poverty etc.) 7.7 6
Friends and family overseas 8.8 5
High taxation 10.5 4
High / increasing cost of living 11.0 3
Better standard of living in chosen alternative country 20.4 2
Weather 21.5 1


This needs to be read in the context that 44% of the surveyed millionaires were not totally committed to living in the UK, so it is hardly an academic question for a good proportion of them. High taxation comes in fourth, just behind high or increased standard of living. Almost twice as many millionaires cite the similar reason of better standard of living in the chosen alternative country, but more than twice as many cite the main reason for considering leaving the UK.

So what is this problem that we must deal with at all costs to dissuade our footloose millionaires from fleeing these shores, never to return? What aspect of government policy needs to be tweaked to keep our rich friends content in their penthouses and country estates? The weather. Yes, those highly sophisticated captains of industry whom we must at all costs retain as UK residents are most significantly influenced in their lack of desire to stay in the UK by the good old British weather.

So George, you would be better off by a factor of 2 employing planes and chemicals to bombard the rain clouds off the south west coast to make it rain out at sea and improve the UK climate than you would worrying about whether to cut or increase taxes on the better off. Clearly imputing any degree of greater sophistication to our resident millionaires that that of the general population is utterly futile; they are just as shallow as the rest of us. So much for Bernard Jenkin’s comment “If the politics of envy made a country rich, we would be a very rich country.” I don’t envy them Bernard, I feel sorry for them. If the weather is their biggest worry, they clearly haven’t got enough going on in their sad little lives.

Two parting thoughts. The serious one? When will right wing politician stop peddling this rubbish about tweaks to the tax system having a devastating effect on our quota of resident millionaires? And (I hope) the humorous one? Perhaps the Tory politicians who are urging David Cameron to allow the building of a third runway at Heathrow are playing the long game, on the basis that global warming would improve the UK climate and thus attract more millionaires to come or to stay here? I know they always said when there was a Tory leadership election that they were “the most sophisticated electorate in the world” (also perhaps the most big-headed?), but boy that is sophisticated fiscal planning. Shame about the future of the planet though …………..


I blogged a little while ago about the International Development Committee recommending that the UK concentrate more efforts on helping developing countries to administer their tax systems more effectively. However, the less well-publicised aspect of the IDC’s comments related to the impact of UK anti-avoidance legislation on the tax systems of developing countries.

The IDC focused in this respect on the revised Controlled Foreign Company (CFC) rules. Designed to discourage UK-owned corporations from using tax havens to shelter profits, the revised version restricts its scope to companies operating in the UK. The charity Action Aid has suggested that, by encouraging those operating in developing countries to use tax havens, this legislation could cost developing countries up to £4 billion in tax revenues. The IDC has urged HMRC to produce its own figures in this respect, on the basis that such a result would undermine the UK government’s attempts to make developing countries less dependent on aid.

Back In 2011, when cynicism and negativity about the Olympics was rife, the Simpson family took a decision to apply for a large number of tickets for a wide variety of events. This was based on a hugely successful and enjoyable Commonwealth Games in Manchester in 2002, and on the fact that it would be a once-in-a-lifetime experience, certainly for us. Indeed, as I said to the children:

“If the Olympics takes as long to come back as it has since last time, you will both be in your 70s by the time it returns.”

So my stepfather and I between us applied for 27 events and got tickets for 10, which we supplemented to 13 with later purchases; we also attended two free events. My son was terrified about transport and crowds, but in the event absolutely loved the experience, as we all did. So here are my top 10 thoughts about the 2012 Olympics:

  1. 1.       Complaints about ‘hogging’ tickets

I saw complaints from people (once the Olympics was clearly a success) about people ‘hogging’ tickets; well that would be us, then. Some thoughts on this:

  1. We were prepared to put our money where our mouth was and buy tickets when many were prophesying doom and gloom.
  2. Many of our tickets were for low profile events – we saw only 5 medal events (paid for) and 2 free.
  3. We may have obtained some advantage in applying for low profile events because many of these were ‘kids pay their age’ events.
  4. Lots of people seem to have applied solely for high profile events and then sulked when they didn’t get them. We would have loved to get cycling, tennis, diving, equestrian and gymnastics tickets, but we didn’t throw our toys out of the pram when  we didn’t get them – we were happy to get what we did.


  1. 2.       Crowds

 One of my son’s big fears, and there were a lot of people, but there was a lot of space for them too, particularly in the Olympic Park. We never felt crushed or in any danger, and everyone was so happy and friendly it was a pleasure to spend time with them.

  1. 3.       Children

I think the greatest thing of all about the Olympics was the number of children who were at the events, of all ages, enjoying what I am sure will be an experience that stays with them for the rest of their lives. And the crowd behaviour was so good that parents like us were delighted with the example set of sportsmanship, consideration for others and sheer enthusiasm.

  1. 4.       Transport and travel cards

My son’s other big fear was also misplaced, as the transport system was amazingly good. We probably took a wise decision to base ourselves in Greenwich, as this meant that Stratford was easily accessible, with direct DLR trains every 10 minutes. ExCel was also accessible by DLR, whilst we could easily catch a bus that got us into central London in 45 minutes for more outlying venues. We only used the tube twice and the Thames Clippers once, and the Javelin train from St Pancras to Stratford was wonderful. There were few crowded trains etc and everything ran like clockwork.

The innovation of giving ticket holders free travel cards for days when they were going to the Games was a huge success, meaning that ticket collection and checking at venue stations could be dispensed with.

  1. 5.       Volunteers and security staff

What hasn’t already been said? They all looked like they were enjoying themselves, they were friendly and helpful, the security checks were superbly efficient and they set the tone for a happy and friendly games by their demeanour. Thank you.

  1. 6.       Free events

If you were miffed at missing out on tickets, there were plenty of events you could go to see for free. We saw the women’s triathlon cycling go past us 14 times on Constitution Hill and the women’s marathon go past us 6 times on the Embankment, on the front row each time. The crowds at both events were, I thought, extraordinary, until I saw on the big screen at Eton Dorney the crowds for the men’s triathlon, which were simply unbelievable.

  1. 7.       Hockey

I thought hockey at the Commonwealth Games was rather like watching paint dry, but at the Olympics it was brilliant. Maybe women’s hockey is better than men’s?

  1. 8.       Athletics

Hearing my daughter cheering on Mo Farah in the 5,000m heats was a highlight, but so was the whole morning. Apparently London was unusual among Olympic cities in selling out morning athletics, but I can’t understand why – always something going on and often 2 or 3 things at the same time.

  1. 9.       Handball

The great thing about the Olympics is discovering new sports. “You must go and see handball” said so many people that we did, and it was fabulous – fast, rough, close, spectacular – my son’s highlight of the entire Games.

  1. 10.   Swimming / Michael Phelps

Our one ‘high profile’ event was the last night of the swimming. 2 world records (2 more than I had ever seen before) and the last gold medal and special FINA presentation to Michael Phelps, who I suspect will remain the greatest gatherer of Olympic medals and gold medals for some time to come. Unforgettable! And as we came out the noise from the Olympic Stadium was incredible; spine-tingling in its intensity and getting louder as we got further away. That was Mo Farah winning the 10,000m, Great Britain’s third athletics gold medal in 45 minutes. Wow!

So my children, at least one of whom was dreading the Olympics so much, ended up collecting Wenlocks and Mandevilles and asking “can we go to Rio in 2016?” Wouldn’t be much of a once in a lifetime experience then would it? Anyway, they seemed happy with the counter-offer of Glasgow 2014 – much more exotic than Rio – after all, can you get a pint of heavy and a deep-fried Mars bar in Rio? Precisely.


Every year, in  August, I take a quick diversion from the world of tax to review the productions in the 24:7 Theatre Festival. This year my review is somewhat delayed by the fact that the Olympics followed closely upon the Festival (see following blog post) for which I apologise, but stretching the ageing memory bank more than usual I reckon I can still do a reasonable job. By the way, for anyone expecting absolute objectivity, I have an interest to declare as a trustee of the charity that runs the Festival, although as befits an accountant I am very wisely let nowhere near the creative process!

2012’s incarnation was the ninth annual Festival, and I have to say that the overall standard of productions just keeps getting better and better. For non-Festival goers, work must be previously unperformed, not more than an hour in length and capable of being performed in non-orthodox theatre spaces (this year two venues in New Century House and the Three Minute Theatre in Affleck’s Arcade). The quality was in my view greatly helped by the decision a few years ago to cut down the programme from 17 to 21 productions to 10, which means that plays have to reach a very high standard to get into the Festival. And boy did that show this year!

The Olympics dictated that I had to get my festival going in early this year, so on opening night I eventually found the Three Minute Theatre after an entertaining tour of Affleck’s Palace to see two productions:

  1. 1.       Firestarter

Apparently based on true events in Hull a few decades ago, this was the story of a teenage arsonist. The first half of the play featured the young man explaining how a troubled childhood led him into fire-raising, with a particularly chilling yet totally convincing description of the sensations that starting fires engendered in him. The second half found him having chosen the wrong house at the wrong time for his activities, as he had fallen foul of a man just released from prison, played as an all-too-convincing psychopath by Festival veteran Richard Vergette. Despite the best efforts of his plainly terrified girlfriend, Vergette’s character eventually inflicts sickening violence on the young arsonist.

Very powerful and convincing writing and performances, and an accurate introduction to a Festival that was to be long on gritty reality and relatively short of outright humour, although plenty of the ‘black’ variety was on display in other productions.

  1. 2.       My Arms

Second on the bill on Friday night was the compelling two-hander “My Arms”. This told the tale of an act of drunken driving and its far-reaching consequences for families of perpetrator and victim, in ingenious fashion from back-to-front. If this sounds like a recipe for confusion it wasn’t, due to an intelligent script and sympathetic performances. I felt that, having previously condemned drunk-drivers out of hand, the play gave an understanding of how easily the offence can be committed, and how it can then haunt the lives of all concerned. Powerful yet under-stated, in a festival that sometimes shouted to get your attention, this kept it with a subtle whisper.

  1. 3.       Loaded

I had not previously sampled the Festival during the day at a weekend, but this year needs must, so     to more familiar territory in New Century House (Pioneer Stage) for Loaded. The play centred on Chantelle, an oddly endearing if foul-mouthed teenager, sent as a last educational chance to see a Geordie social worker, who manages to work out what makes Chantelle  tick and make some progress with her. Meanwhile Chantelle has met an apprentice gangster who becomes her boyfriend, although the bigger threat to her well-being initially seems to come from her abusive stepfather, who rapes Chantelle, resulting in her becoming pregnant (Republican politicians please note).

The plot thickens as Chantelle catches her boyfriend with a gun, which she appropriates. All comes to a head when boyfriend discovers what stepfather has done, leading to an explosive and unpredictable climax from which some characters emerge more fortunately than others. I found I really engaged with and cared about the characters in this play, which was a tribute to some fine writing and acting.

  1. 4.       Goldfish

Next up on the Elphick Stage at New Century House was Goldfish. This was less immediately accessible than some of the other work on offer, but nonetheless rewarded the effort of keeping track of what was afoot. The play centres on two teenage girls from troubled families, who frequent a day centre on their estate run by a social worker who, whilst devoted to the children in her care, is concerned that this results in her neglecting her own child.

The male characters are a teenage boy, new to the estate, his family having moved down in the world, who befriends the two girls but is ineligible to attend the day centre with them, apparently on the basis that he and his family do not have any major issues, and a policeman new to the estate, whose enthusiasm for his role leads him into a potentially career and liberty-threatening situation with one of the girls. As his life implodes, the teenage boy sets fire to the day centre, having concluded that bad behaviour is the only way to get noticed

A moral story for our day dealing with the paving of the road to hell, the slightly unorthodox presentation of this piece did not detract from its power or its message.

  1. 5.       The Cell   

Sunday lunchtime and a final trip to Three Minute Theatre for a fast-moving piece centring on an unusual hostage situation in a prison, as a prison officer takes a wise-cracking Scouser hostage (not a situation that appears to unduly worry the prisoner), having assaulted a prisoner he believes to have been responsible for the suicide of a young sex offender. Revelations come thick and fast, including the fact that the Scouse prisoner has an impressive network of contacts and illegal hardware (“who do you think I am, 118?”) asks the prisoner in the next cell at one point, and rather darker revelations about the prison and the officer, including the fact that his son is accused of an under-age sex offence, and the officer has been ‘hung out to dry’ by his senior officer. Eventually the officer cracks, finally shattering the cool of the prisoner as he takes desperate action.

This was a real highlight, black humour contrasting with a tragic story line to make an absorbing play that flew past, usually a sign of high quality in my experience.

  1. 6.       The Interpreter, Home

Monday night and the Manchester Business Breakfast Club 24:7 trip, with record numbers of attendees for three productions, the first of which was an understated and compelling drama about the mystery of a silent Kurdish psychiatric patient and the student engaged to interpret for her. Of particular merit were the greys in which the characters were painted, particularly the keen young psychiatrist, anxious to help her patient in any way she can but concerned about hospital procedures, and the nurse, highly efficient but perhaps lacking in certain of the human qualities normally associated with her role.

The young interpreter goes way beyond her brief to seek to help the patient, eventually tracking down her long-lost son, who reluctantly re-enters his mother’s life at the denouement. The play particularly appealed as a triumph of unorthodox methods over the tried and trusted, and of persistence in doing  what you know is right when everyone around you is telling you it is wrong, and benefitted from wonderful performances, particularly from interpreter and patient.

  1. 7.       The Transit of Venus

Next up was one of my personal highlights of the festival, so good that I created another first and took my 11-year old son to see it subsequently (he greatly enjoyed it too).

The reason for taking my son is that the play centres on astronomy, as two Lancastrian amateur astronomers plot and witness the UK’s first passing of Venus between Earth and Sun, against the backdrop of impending Civil War, which has dark consequences for one of the astronomers.

Again this was wonderfully understated, with a touching depiction of the burgeoning of shy young love between the daughter of one of the astronomers and the other. The play also carried a strong moral message about the difficulty of steering a middle course when all around are extremists, and about the importance of sticking to your principles at the hour of crisis. A work for all concerned to be proud of.

  1. 8.       The Legend of the Ghost Shark

A rare comedy next, and a manic one at that. A writer moonlights from his day job as a food critic to take a commission from a shaman to write a legend that threatens to have dire consequences for the world. Also featuring a narrator conjured from the writer’s subconscious, an angry boss from his food magazine, a somewhat bewildered wife and two eccentric policemen, this was a chaotic hit and miss production that divided opinion among those I spoke to down the middle. Certainly it had the potential to bewilder if you did not throw yourself whole-heartedly into the writer’s bizarre world, but there was much to reward those who contrived to do so in the performances and (from time to time) the script. Ten out of ten for effort for all concerned, even if the execution marks were somewhat lower.

  1. 9.       Stars Are Fire

Tuesday night and another under-stated treat, a play about a widowed father returning to his native Northumberland, much against the will of his teenage daughter. She befriends her cousin ( a touching and rather innocent relationship), and as a result father and daughter come to a better understanding of each other. Apart from a large number of distracting scene changes, which might usefully have been cut down, this was a subtle piece of work dissecting what makes families tick, and a very rewarding watch.

  1. 10.   All The Bens

Another highlight to finish with. Ben wants to start a relationship with Al, but Al is not really interested. Ben’s autistic cousin Henry hits it off with Al, who finds himself drawn into friendship with Henry, but not keen on continuing to see Ben. Al’s somewhat bizarre behaviour finally causes his girlfriend to drop him, allowing him to come to terms with himself, and the fact that he is really called Ben.

Three excellent performances, particularly from the actor playing Henry, who brilliantly portrays Henry’s somewhat unusual take on the world. All in all a pithy comment on the mess we can make of our relationships and the unlikely friendships that can spring up out of nowhere.

So overall another excellent Festival, indeed I would go so far as to say the best yet. On an individual basis nothing to quite displace Concrete Ribbons as best ever play, but collectively an excellent programme. Surely 24:7 can’t improve upon that again next year, can it?…………..

Human ingenuity is a pretty impressive quality. Block the obvious route to getting somewhere, and pretty soon someone will have come up with a cunning plan to get there some other way. Turning for a second to the usual subject matter of this blog, in many ways the history of tax avoidance schemes is the tale of human ingenuity; as one route to tax saving is blocked, someone will open up another. It is only the depth of the current financial crisis that has both moved the ‘moral goalposts’ sufficiently to make it broadly acceptable, and made the requirement for tax revenue sufficiently desperate to make it absolutely necessary, to seek to block that ingenuity once and for all by introducing a General Anti-Abuse Rule.

So when the banks responded to being baled out by the UK government by taking their lending ball home (bank lending to businesses has been shrinking since the end of 2008), people were bound to come up with alternative sources of finance. The government’s response to its inability to persuade the banks to loosen their purse strings (as I said at the time, the baled-out banks should have been nationalised) was to bring forth the Seed Enterprise Investment Scheme, which offers an unprecedented 50% tax relief plus capital gains tax exemption for equity investment in small trading companies in 2012-13. Meanwhile, others have been pursuing even more innovative solutions.

I have blogged previously about the St John’s Sunshine project in Old Trafford, which is a fine example of an innovative approach to funding a project. St John the Evangelist parish church installed solar panels, funded by a mixture of investment and donations from parishioners, other members of the local community and general well-wishers. Structured as a co-operative, St John’s Sunshine Limited will use revenue from solar power generation (to provide power for St John’s Church Hall) and export of surplus power to the National Grid to fund projects for the benefit of the local community, as well as paying a modest income to those investors who wish to receive it.

But there are also other funding models which might at first sight appear unlikely, but can in fact prove successful. Such a model has been used to fund the Bicycle Academy, a provider of budget bicycle construction courses based in Frome, Somerset. Andrew Denham, the founder, had no access to funding for premises or equipment, and in the current banking climate, little prospect of obtaining bank funding. So he opted for the radical alternative of ‘crowdfunding’.

In concept this is simple; Mr Denham put his business proposal on a website and asked the general public for money. The cynics among us might have put his chances of success pretty low, but we would have been wrong; he raised the £40,000 he needed within 6 days of the 6 week target he had set himself.

Donations at particular levels qualified donors for a variety of benefits. Donors of £20 received a T-shirt, while somewhat more substantial donors qualified for bags or model bikes. £300 donors received a place on a 1-day bike building workshop, and £500+ donors were able to reserve the first places on the commercial 4-day course run by the Academy.

One of the major donors says he had the money available, wanted to see it happen, and thus was keen to put money in and encourage others to do so. One factor in this may have been the social enterprise element of the Academy (in my experience, increasingly a factor in businesses set up by younger entrepreneurs), whereby the first frame made by each student is donated to a charity in Africa.

The background of crowdfunding is in the US, where it has been used on a regular basis to finance band tours, album recordings and films, but in the UK it is now expanding beyond the arts into the business sector. Oliver Morgan of Universal Fuels sold a 24% share in his fuel oil delivery business for £150,000 using crowdfunding website Crowdcube (the majority to one single investor), which he compares favourably to the stakes that were demanded by venture capitalists for similar investments.

Crowdcube allows a minimum investment of just £10, and also allows start-up companies to sell shares through the site; there are also other UK sites such as start-up site Seedrs which are contributing to the UK leading the world in this area, with US attempts to allow sale of shares through crowdfunding websites mired in predictable American legal difficulties.

And therein, trans-Atlantic jibes apart, lies one of the difficulties of crowdfunding as an avenue for attracting equity investment as opposed to donations. Taking subscriptions for shares is actually a highly regulated activity (understandably, given that investors are entrusting their money to total strangers), but even putting aside the risk of fraud, equity investment in micro businesses is a high risk activity, with a very high failure rate, so as ever the watchword is ‘caveat emptor’ when looking at crowdfunding investment opportunities.

Having said that, the availability of 50% SEIS tax relief, or even 78% for those with capital gains to re-invest, has definitely highlighted the potential of crowdfunding as a source of finance for the micro business, and also arguably decreased the true risk inherent in such investments. And the final word In praise of crowdfunding comes from Andrew Denham of the Bicycle Academy, who describes his donors as “183 evangelists of the Bicycle Academy – they help support us, they help promote us, and that’s invaluable”. So don’t discount crowdfunding, whether you are a micro business owner with more ideas than cash, or a potential investor looking for the right opportunity.


Last week featured an excellent article in Taxation magazine. I don’t agree with it, but it was nonetheless though-provoking, and deserves a reasoned reply. So here goes.

Iain Macleod of EDF Tax Limited contributed an article in defence of the broad sweep of UK tax planning, and challenged the notion that morality should play a part in determining whether tax planning is appropriate. In particular he suggested that “all who criticise the morality of others’ behaviour should at least make clear their presuppositions – ‘where they are coming from’”, and that they should “justify their own underlying moral position”. He is of course correct to say this, so, taking a deep breath, I will try to do precisely that.

There is, as Mr Macleod rightly says, a long history of tax avoidance activity in the UK, harking back to window tax and bricked up windows. We also suffer with a tax system that has ‘grown like Topsy’, not informed by any set of underlying principles, and subject to the influence of the latest government’s world view or pet love or hate of the moment. Like the classic story of the man trying to give complicate directions; “I wouldn’t start from here”.

Mr Macleod quotes Lord Tomlin’s classic words about the rights of taxpayers to order their affairs to reduce tax liabilities as well as Lord Rowlatt’s comment, to use the vernacular, that ‘tax is what it says on the tin’. However, he also rightly acknowledges the modern trend toward purposive interpretation of tax legislation.

I am a member of the Chartered Institute of Taxation, and twice a year I act as a group leader for a discussion group at the CIOT’s residential conference, at which topical tax issues are debated. It will surprise no-one to discover that tax avoidance has been a hot topic over the past few years, and as a result I think I have got a reasonable feel for what taxation practitioners are thinking about the issue. We have also recently seen strong comments from the chief executive of the Institute of Chartered Accountants in England and Wales on the subject of aggressive tax avoidance schemes. So there is a clear shift of professional opinion here, and it is worth considering why.

The long list of tax avoidance cases stretching back to Ramsay in the 1970s demonstrates that artificial tax avoidance schemes have been with us for a long time, and that HMRC has been attacking them in the courts and blocking them with legislation for about as long. Indeed, my sole personal experience with implementation of artificial tax avoidance schemes was with the various national insurance planning schemes of the 1980s.

At the time I do not recall taxation practitioners in general taking any sort of moral view on what was taking place; it was part of the ‘game’ of reducing clients’ tax liabilities. No-one seemed to stop and think about the impact on government finances, possibly because government finances were not at that point such a major issue. We still had plentiful supplies of North Sea Oil and a functioning banking system; we had the occasional recession, notably in the late 80s / early 90s, but no-one muttered darkly about the ‘tax gap’ or used emotive phrases such as ‘abusive’ about tax avoidance activity. And by and large, to borrow a paragraph heading from Mr Macleod’s article: “It was ever thus”.

So something changed, or more accurately a lot of things changed. So what were they, and why did they justify a moral stance being taken against certain kinds of tax avoidance?

In the 1980s, Margaret Thatcher could say “there is no such thing as society” without everyone laughing at her. It was a time when ‘every man for himself’ was an acceptable watchword, when great public monopolies were sold  to the population at large and council housing was offered on generous purchase terms to its tenants. It was a time when a Thatcherite view of the world had acquired sufficient appeal that it enabled the Conservative party to comfortably win four elections in a row, and it was entirely consistent with that view to argue that every individual had a right to do whatever he or she legally could to reduce tax liabilities. That was the moral view that prevailed in the 1980s, and indeed for much of the 1990s also. Indeed it prevailed without people necessarily being conscious that it did so.

Things started to change, albeit very slowly, with the landslide election of the Labour government in 1997. Although much Conservative policy and world view had been commandeered by Tony Blair for his own purposes, Gordon Brown’s effective monopoly on domestic policy meant that the concept of society began to return. Notions of collective rather than individual responsibility came gradually back into fashion, although this was definitely a process of evolution rather than revolution.

These years were also the years of plenty; Gordon Brown could claim, with great irony in retrospect, to have ‘brought an end to the years of Tory boom and bust’. So if particular companies and individuals still sought to engage in aggressive tax planning, the impact on government finances was still not perceived to be significant; it still wasn’t a big deal. Certainly government anti-avoidance activity was ramped up, with the advent of the DOTAS regime and the introduction of pre-owned assets tax, but it still did not feel like an issue that affected all of us intimately. For most tax practitioners, let alone members of the general public, aggressive tax avoidance was something that other people did, and it did not impinge on our everyday professional lives.

My recollection is that the first breach in this position was a dawning realisation among tax professionals that, in view of increasing litigation accusing our fellow practitioners of negligence, we needed to be aware of what planning was out there so that we could inform our clients, to be see to give them a full picture of the available options. As Mr Macleod puts it “there is the view that clients should be aware of all the options available”, although I would suggest it was not so much a view as a self-defence mechanism for many tax practitioners.

Of course being required to familiarise ourselves with what to most had been an alien area of tax planning meant that we had to form a view on particular schemes and providers, and offer our clients advice when they inevitably asked “what do you think?” It is here that I start to diverge from Mr Macleod’s point of view. The motives he attributes to those who object to aggressive tax avoidance schemes are numerous, and include:

Exposure of the inadequacies of statute to the detriment of Parliament

Moral issues relating to doubts as to whether particular arrangements deliver the advertised benefits

Undermining of our status as trusted professionals by those who devise and market such planning

Resentment at not sharing in the fees from such advice

Loss of clients to’purveyors of aggressive tax avoidance schemes’.

Actually, in my experience from ‘the other side of the fence’ as it were, Mr Macleod is wrong. We could have made a fortune by strongly advising clients to undertake aggressive tax avoidance activity; the commissions paid by those who market these expensive schemes are very generous. But we owe a duty of care to our clients, and in particular we have a duty to know our clients, and their attitude to risk.

I have never had a client, of a number who I have introduced to what Mr Macleod describes as ‘purveyors of certain arrangements’, who has actually taken up one of those arrangements. And that is because the vast majority of those clients are ‘risk averse’. Not risk averse in a general business sense, because by definition if they are potential users of an aggressive avoidance scheme they are highly successful business people, which does not often go along with being risk averse, but risk averse in the sense that, as David Gauke put it the other day; “if an avoidance scheme promises results that seem too good to be true, they probably are”.

Doubts about the effectiveness of the schemes were one big factor in client aversion to schemes, another was cost (we are talking eye-watering expense in terms of fees) and the third was concern that HMRC would be all over the client’s tax affairs like a rash for a significant period. To be fair, I would only refer clients to a scheme provider which I considered to be honest about all of the implications of taking up one of their schemes, and their commendable honesty was probably the main reason why clients always ended up saying “no thank you.”

I am not suggesting that the clients’ response to schemes was moral aversion; I do not believe that to be the case at all. I am simply saying that the vast majority, even of highly successful business clients, could find ample reason not to undertake aggressive avoidance schemes.

So that was where we stood in 2007, when the world changed (I suspect even Mr Macleod would not seek to argue that there was not a seismic shift in views of all manner of matters economic and fiscal as a result of the banking crisis). And the world changed, very much for the worse, for two main reasons (at least in terms of public perception), greed and banks, the former often being exhibited very clearly in the behaviour of the latter.

Now if asked to name the major market for large scale aggressive tax avoidance schemes, I for one would name banks. So here were organisations that on the one hand were undertaking elaborate tax planning exercises to deprive governments of tax revenue, and on the other hand were expecting those same governments to dip their hands into their pockets to an utterly unprecedented extent to bale them out of the consequences of their own greed. Do you see now, Mr Macleod, where the seeds of public and professional antipathy toward aggressive tax avoidance were sown?

The results of government decisions to bale out the banks were stark in the extreme; we had basically been obliged to mortgage our own and our children‘s future in order to prop up these essential but undeserving organisations. We were all innocent victims of a monumental series of errors of judgement, and were going to remain victims for the foreseeable future.

So not only had we said goodbye to the economic prosperity of the previous 10 to 12 years, but there was little enough prospect of it returning any time remotely soon. We were all going to be paying for the banking crisis for a very long time to come through increased taxes and through economic slowdown. I will repeat that with emphasis for Mr Macleod’s benefit; “we were ALL going to be paying for the banking crisis”.

No longer was the public in general or the tax profession in particular going to maintain its moral neutrality on the subject of aggressive tax avoidance – “nothing to do with us, mate”. In times of crisis, we all have to stick together: “united we stand, divided we fall” anyone? And anyone who thought that they were morally justified in opting out of that situation by adopting a clever tax avoidance scheme was always likely in that context to be in for a nasty shock, and so it has proved.

The media in this country is very far from perfect, and thus the debate on tax avoidance has thus been conducted through a haze of misunderstanding, misplaced indignation and plain ignorance. Nonetheless, the British public has got the general idea that shirking one’s tax responsibilities, particularly on the grand scale implied by the use of an aggressive tax avoidance scheme, is not an acceptable course of action in our current dire economic straits.

Thus, Mr Macleod, whilst your reading of tax history is entirely reasonable, you have not factored in the events of the past 5 years or the seismic changes in economic, financial, moral and philosophical circumstances that they have wrought. With the impending advent of a General Anti-Avoidance Rule, of which I note Mr Macleod says not a word, his entire argument collapses; then we will have legislation that outlaws the type of avoidance schemes which he defends so impressively.

And those firms who market such schemes will presumably become the latest victims of the financial crisis, their products and services rendered obsolete every bit as much as those of Kodak were by the advent of the digital camera. And on the basis that they produce nothing of any value for society as a whole, I fear that few will mourn their passing.

So that is where I am coming from, Mr Macleod. The moral climate of the 21st century is very different from that of the 20th, and for very good reasons. On a personal level I feel extremely sorry for you, but the legislative clock is ticking and your business model is about to become untenable. In the 19th century we sent children up chimneys and down mines, and now we don’t. The moral climate changes, sometimes very dramatically, and there are victims as well as beneficiaries. Aggressive tax avoidance schemes are now beyond the pale, and the sooner we all get used to that idea, the better.

It occurred to me in the wake of my recent post about politicians holding down other jobs whilst acting as MPs that my views might be held to be inconsistent with my oft-expressed contempt for professional politicians, so I thought I had better clarify why in my view there is no inconsistency.

I think it is extremely useful that MPs have significant experience of life outside the political bubble before they enter Parliament. It seems clear from the frankly bizarre tax legislation that frequently emerges from Whitehall that both MPs and senior civil servants have only a passing acquaintance with the real financial and economic world that faces those of us who run small businesses, and that intellectual niceties appear to count for more in drafting legislation than a practical, common sense approach.

Also, the world of politics strikes me as a frankly very odd place indeed. The modern 24-hour news media and consequent endless demand for a story has led to a regrettable tendency for governments always to want to do something, or more accurately to be seen to be doing something. Indeed, quite often it appears that they are happier to be seen to do anything, however irrelevant or counter-productive, than nothing. If the country is crying out for anything at the moment it is crying out for some stability, to be allowed to get on with the difficult process of emerging from our double-dip recession without being faced with constant changes to legislation and bureaucracy.

In my own field of taxation we are currently ‘enjoying’ the early stages of what threatens to be a disastrous transition from tax credits and various other benefits to Universal Credit, under a system that appears to have been designed by someone intent on creating the maximum inconvenience for small businesses. Recently in Taxation, respected national insurance expert David Heaton issued heartfelt one word plea to government: “Stop!” Stop the endless legislation, regulation, tinkering, political posturing and sound bites, and just do what is necessary to get the country onto, and keep it on, an even keel.

The big problem with people who have been inured too long in the political bubble is that they think that what they do is vitally important, and that they can successfully micro manage the economy and all other aspects of life in the UK. They are ‘busy fools’, who would be much better advised taking a step back and applying a gentle and occasional hand to the tiller rather than the constant heavy hand of regulation and  interference.

By and large I think people who have experienced the other end of this process, perhaps in another context what David Lloyd George memorably referred to as “the wrong end of a municipal drainpipe”, have a better understanding of how counter-productive and frankly annoying it is to be on the end of ‘big government’. Also, I think it is easier for the electorate to relate to the achievements of Parliamentary candidates outside politics than inside, and thus easier for them to elect the appropriate person to represent their interests.

If someone has, for example, run a successful business, held down a responsible job, brought up a family in difficult circumstances or faithfully cared for a sick relative over a significant period, it is much easier for a voter to relate to what that means than to relate to the life experience of someone who has been a political researcher, political agent or private secretary to a senior politician. Certainly I would always be inclined to vote for a candidate, of whatever party, who I felt had significant credible experience of real life in this country.

However, having considerable experience of the rich tapestry of life before becoming an MP is very different to continuing to do so after becoming an MP. If MPs believe that their role is so important (and they do) then it must be a role to which they are prepared to devote the whole of their working lives, without distractions. No-one is forcing them to be MPs, and if they want to do it badly enough then they will make the necessary sacrifice in terms of business, job etc.

And of course, if we are attracting the right quality of person to be MPs, they will be of sufficient calibre to find their way successfully back into ‘ordinary’ life again when and if their constituents grow tired of them. And if someone who aspires to be MP does not have the self-confidence to believe in their ability to achieve this, then I will save them the trouble by not voting for them.

It inevitably goes along with this that we should pay our MPs properly, which we do not do at present. And if we did that, we might even solve the recurring issues of MPs expenses, as well as attracting a higher calibre of candidate to Parliamentary elections. I mistrust people who regard politics as a career, not least because when they lose their seats they are likely to be fish out of water in the real world. So give me candidates who have proved themselves outside the Westminster bubble, and I believe they will give us better government than we enjoy at pres

“If it isn’t broken, don’t fix it” is a rule of thumb that I have always tried to apply. My wife would tell you that this is because I am so impractical that there would be no chance of me fixing it whether it was broken or not, and might go on to quote her father’s excellent advice in his speech at our wedding:

“If at first you don’t succeed, do it the way she told you to”. Whilst I cannot vouch for the factual accuracy of Rex’s speech (at one point he described his wife Barbara as “The Marchioness of Budleigh Salterton”, a title which I cannot trace in Debrett’s Peerage) I can vouch for the sound common sense behind this suggestion.

Some things in government are clearly broken (the Child Support Agency springs irresistibly to mind) and some are clearly not (HMRC’s research and development unit in Manchester for one). On some the jury is out, and I would have included tax credits in that category. The system we have become used to is complex, and does not deal well with levels of income that vary from year to year; it also suffers from the classic government failing of giving with one hand and taking away with the other (see the child benefit tax charge). But after a number of years it is a sort of workable system, and people have pretty much got used to it. And one of the really good things about it is that HMRC administers it, so they have ready access to the necessary income details to check claims.

Now if modern governments have one besetting sin, for which I blame 24 hour rolling news channels, it is a constant need to be seen to be doing something. The other sin which goes along with this is a constant need to be saying something, which leads directly to comments like David Gauke’s about people paying tradesmen in cash. In government, as in so many other areas of life, less is often more. As W S Gilbert so memorably put it in Iolanthe:  

“The House of Lords throughout the war

Did nothing in particular

And did it very well.”

Modern governments have lost the art of doing ‘nothing in particular’, and we are the poorer for it.

Nowhere is this better illustrated than in the plans to replace tax credits, housing benefit, jobseeker’s allowance and several other benefits with Universal Credit. Sounds like a great idea, doesn’t it? Real simplification there. Well the trouble is great ideas need to be put into great practice, and what we have seen so far in this respect is not, to put it mildly, encouraging.

As I said above, one of the great things about tax credits is that HMRC administers them. So who shall we ask to administer Universal Credit? Yes, that’s right, the Department for Work and Pensions. Judging from their draft Universal Credit regulations, this may not have been a very good idea.

As I mentioned above, one of the recurring problems with tax credits was the mismatch between credit claims and income levels when the latter were subject to variation, whether as a result of getting a job, losing a job, getting a pay rise, getting promoted, changing jobs or simply being self-employed and thus earning a variable level of income. The tax credit system has recently been to base the initial assessment on the previous year’s income (oh happy memories of the pre-self assessment taxation of sole trades and partnerships) and to adjust this to a current year basis only if the claimant declares a drop in income.

This has been achieved by having a very large disregard for income increases (£25,000 from 2006-07 to 2010-11), which was a reaction to the furore in earlier years when the disregard was only £2,500 and lots of people had tax credits clawed back. We have already seen, in the light of the financial crisis,  a reaction to this deliberate policy of allowing people to receive what are effectively tax credit overpayments in the form of a reduction ion the disregard to £10,000, and it is due to fall to £5,000 for 2013-14, at which point Universal Credit will supersede tax credit.

The current government clearly hates the whole concept of the disregard, with its inevitable overpayments of credits, and thus the Universal Credit system has been designed to operate in real time. 10 out of 10 for ambition, but how is that going to work in practice?

From a PAYE perspective, it is going to work because of the introduction of Real-Time Information, currently being trialled for implementation in 2013-14. This will require employers to submit to HMRC details of all earnings paid to taxpayers at the time of payment, which is wonderful in theory, although the all-party parliamentary taxation group recently expressed doubts as to whether RTI could be delivered. Let’s just say we’re all going to have lots of problems if it can’t.

Assuming it can, this should make Universal Credit work for employees, provided HMRC tells the DWP all the income details (why is the DWP administering this, again?) Which just leaves the self-employed. As mentioned above, until 1996/97 it was felt necessary to have a prior year basis for taxation of the self-employed, who thus only moved onto an actual year basis of reporting 15 years ago, and are now to be expected to move onto a real time basis. See what I mean about ambition?

HMRC does not intend to obtain information from the self-employed about their taxable income other than via self-assessment, and VAT returns. So if you have a 30 April year end, you report your profits to HMRC 21 months thereafter. OK for income tax, but not great for a real time Universal Credit system.

So we need a monthly profit reporting system for the self-employed. But don’t small businesses constantly complain about increasing red tape and the growing burden of bureaucracy, and don’t we the government tell them that we’re cutting red tape and making their life easier? Yes to both of those, but let’s introduce a new requirement for them to tell the DWP (who they have nothing to do with at present) every month about their trading profits. Fantastic, they’ll really love that.

So this is going to be tricky; presumably every small business will be required to produce monthly management accounts, and it will be bonanza time for accountants? Well, no actually. Income will be reported on a ‘simplified cash income basis’, and apparently ‘these requirements have been designed to make it possible for claimants to report monthly without employing an accountant’.

At this point I would like to request a transfer to the parallel universe in which the author of the guidance lives, where self-employed taxpayers religiously keep their books up to date monthly and hand them to their accountant with a cheery smile as soon as their accounting period ends. Meanwhile, back in the real world that the rest of us have to inhabit…………..

The one compensation for small business owners faced with these monthly returns is that, once they have completed a year’s worth of them, they will be able to add them together (or give them to their accountant to add them together) and, hey presto, they will have their year end accounts for self assessment purposes. Whoopee, joined-up government! Except that they won’t be able to do that.

At the moment, self assessment returns of trading income are made on an accruals basis. In other words you account for what you have earned and expended, not what you have received and paid out. If you have bought stock and not sold it, you exclude it from your purchases for the year, and include it next year when you sell it. So for most businesses, other than those that literally buy and sell for cash with no time lags, accounts on a cash basis will bear no clear relation to accounts on an accruals basis, so they will need two sets of accounts, one for HMRC and one for the DWP.

Well, not necessarily. In a move not entirely unconnected with the impending introduction of Universal Credit, the government announced in the 2012 Budget a consultation on a cash basis of accounting for smaller businesses (being those with turnover below the current VAT registration threshold of £77,000). Thus, as the UC regulations state:

“the book-keeping a Universal Credit claimant who also reports his/her income for income tax has to maintain will be streamlined if the tax system is changed in line with this consultation.”

While this sounds great, it does beg some key questions, not least in what circumstances a UC claimant would not be reporting his or her income for income tax purposes, but let that pass. By ‘this consultation’, does it mean the HMRC consultation? If so, why do the UC regulations not simply adopt the proposals in the HMRC consultation as the measure of income for UC purposes, thus achieving consistency? You will have gathered from this that they don’t do so. Or does it mean the UC consultation, in which case the DWP appears to be approaching its aged grandmother HMRC and gently explaining to her how to suck eggs? On the basis that it means the former, there are three fundamental areas of mismatch between the proposed computation rules:

  1. 1.       Mixed use of assets

The UC regulations only permit the deduction of expenses incurred ‘wholly and exclusively’ for business purposes, whereas there is a long and honourable tradition of allowing the deduction of identifiable parts or proportions of expenditure which are incurred wholly or exclusively for the purposes of the trade. There are common flat rate deductions, but there are differences in the acceptable measures of use of home as office. Also, cash basis is to be optional for self assessment but mandatory for UC purposes.

  1. 2.       Exclusion of ‘unreasonable’ expenditure

No deduction will be allowed for UC purposes for any payment incurred ‘unreasonably’. What does this mean, given that there is no guidance In the regulations As there is also a wholly and exclusively test, it must be possible to incur expenditure wholly and exclusively for business purposes which is nonetheless incurred unreasonably. How exactly is this possible?

  1. 3.       Carry forward

In case you think I am splitting hairs, how about this example? The proposed cash accounting system for tax, based on a one year period, carries forward negative balances against future positive balances. The draft UC regulations treats them as zero. I am indebted to Taxation Magazine for the following example of the absurdity of this provision:

Wenlock and Mandeville sold Olympic merchandise, selling £5,000 per month each in May, June and July at a 50% profit margin. Wenlock bought all his stock in May, and Mandeville bought his at the start of the month in which he sold it.

  Wenlock Mandeville
Sales £5,000 £5,000
Cost of stock purchased £7,500 £2,500
Deficit / surplus (£2,500) £2,500
Reportable for Universal Tax Credit £0 £2,500
Sales £5,000 £5,000
Cost of stock purchased £0 £2,500
Reportable for Universal Credit £5,000 £2,500
Sales £5,000 £5,000
Cost of stock purchased £0 £2,500
Reportable for Universal Credit £5,000 £2,500
Total income reportable for Universal Credit £10,000 £7,500


So despite having exactly the same trading results, Wenlock has to declare £2,500 more income for UC purposes than Mandeville, presumably as his punishment for stocking up in advance rather than buying to order. Clearly this is ridiculous and unacceptable, and some provision for carrying forward negative balances has to be made.

But it gets worse. You will note that the above example features no expenses other than cost of stock. On a cash basis expenses for a full year will often be included in the month they arise, such as annual subscriptions, insurance premiums etc. Also, rather bizarrely, the method of converting pre-tax income to post-tax income for UC purposes is to deduct tax payments like any other expense in the month they arise.

Thus, given that January is often a poor trading month as the country recovers financially from the annual Christmas over-spend, lots of businesses are going to show negative results for that month, given that they also pay their balancing payment and first payment on account for self assessment. So lots of inherently profitable businesses will be able to claim UC for January, and possibly also July due to the second payment on account. No doubt tax avoidance gurus are already plotting other ways to manipulate the system as we speak.

According to the regulations there appears to be no such thing as a partnership, but partners will need to provide details of their share of partnership income, which will be calculated on a different accounting basis, within 7 days of the month end for UC purposes. Hark, is that a pink thing with wings I see hovering over the office, saying “oink, oink”?

And what about companies? The regulations talk about ‘value extracted’ being the measure of income, at the point of extraction. But given that family company director / shareholders have full control over both means and timing of extraction, much planning will no doubt go into structuring dividends to make the majority of months eligible for a claim – indeed achieving this for 11 months should not be beyond the wit of an adept tax planner.

This will presumably be the trigger for a fundamental re-think of these regulations, even if the inconvenience and unfairness caused to business owners is not. There is no point in the advances made by government and HMRC against abusive tax avoidance if every Tom, Dick and Harriet can drive a coach and horses through the Universal Credit regulations and establish claims to which they are, by all that is right, not entitled. We are entitled to expect better than this from our government and civil service, and we should shout loudly and persistently until we get it.

Young untried political leader comes to the fore in his party in the wake of repeated election humiliations. Following dramatic election success that changes the political landscape, at young leader’s right hand sits the party’s economic guru, given an unprecedented amount of power over domestic policy, leaving leader to concentrate on the big world picture.

It arguably worked really well for a number of years after 1997, whether the arrangement arose from a deal struck between the politicians concerned or not. Right hand man showed huge competence in the domestic, particularly economic, sphere, and leader went off to save the world, or at least provide a passable solution to the biggest problem in UK domestic policy of the past 30 years. And then it all started to unravel, as foreign policy became indistinguishable from US policy, and you know the rest.

What is interesting, given the fact that the Blair / Brown relationship, and in particular the amount of power over domestic policy ceded by the Prime Minister to his Chancellor, was pretty much unprecedented in UK politics, is the extent to which the current government has followed a similar pattern, both in conception and practice.

George Osborne is very close to David Cameron. There are suggestions that Tony Blair and Gordon Brown were close only so that they were handy to stab each other in the back should the need arise (“keep your friends close and your enemies closer”, as Michael Corleone said in The Godfather Part II, and as Chinese military strategist Sun Tzu may have said a very long time before). I have not heard similar suggestions about David and George.

What is clear is that George Osborne’s role in the day to day running of the government is every bit as key as Gordon Brown’s was to Tony Blair’s Labour government. He is the Conservative Party’s key political strategist and chief tactician, who masterminded the 2010 election campaign and oversees all major policy decisions of the coalition government, as well as having a key say on the government’s public statements and appointments within the Conservative party.

Apparently Downing Street and Treasury sources are at pains to “point out that during a decade of the last government there was a dysfunctional stand off between Numbers 10 and 11 and that it is essential the chancellor and prime minister meet daily and get on.” Hmm – interesting take on political history that.

There is no doubt that Tony Blair and Gordon Brown loathed each other. But it appears to be taking significant liberties with history to suggest that their stand off was ‘dysfunctional’. Indeed, I would argue quite the contrary; for the vast majority of their joint period in office the relationship may have been frosty at best, but it was extremely functional, particularly in the realm of domestic politics and the economy in particular. Even if that resulted from Gordon doing exactly what he wanted in that sphere.

So if we are judging by results, might we conclude that government functions better when PM and Chancellor hate each other’s guts than when they get on well? Of course that is pretty unfair to the current incumbents in some ways, given that they head a coalition government, whereas Tony and Gordon pretty much had political free reign, and that they are operating, not in a benign economic climate, but in the face of the worst financial crisis in living memory. But just how unfair is this analysis on closer inspection?

George Osborne was responsible for the Conservative Party’s 2010 General Election campaign. The one where Labour went to the country after 13 years in power having overseen the worst banking crisis in history, led us into economic meltdown and overseen the MPs expenses scandal and ……………….. the Tories didn’t win. There is a substantial body of political opinion that reckons that this was the equivalent of missing an open goal, so perhaps Mr Osborne cannot be held so blameless for his current travails.

Given that the economic crisis shows no sign of abating, that he perpetrated a series of humiliating U-turns in the wake of the 2012 Budget and that Ed Balls delights in calling him “a part-time Chancellor”, might George Osborne consider cutting back his time-consuming role as tactician and strategist of the Conservative party? Apparently not, if the above quote is anything to go by. Yet the electorate in 2014 or 2015, not to mention history, will judge this government and its Chancellor not on how effectively he managed his party, but on how successfully he managed the economy. So if I were Mr Osborne I know what I would want to be concentrating on right now.