Tuesday, March 24, 2009



I find the approach of both the Press and Gordon Brown to the Tony McNulty affair intriguing. What he has done in claiming £60,000 of tax-free expenses from the taxpayer in relation to his (or perhaps his parents’) house in Harrow is precisely the same behaviour as that adopted by a tax avoider. He has used a rule introduced by parliament in a situation that no reasonable person could have thought that the rule was intended to cover, in order to extract money from the taxpaying public.

As I understand it, the parliamentary relief for second homes was introduced in the early 1970s to recognise that where an MP had a constituency outside London it was impractical for him to live in his constituency and at the same time perform his parliamentary duties. At that time parliament frequently sat into the early hours of the morning, by which time most public transport had ceased.

Transport for London’s Journey Planner tells me that it takes 30 minutes to travel from Westminster Station to Harrow-on-the-Hill Station. Furthermore the last train (which, to be fair, takes two extra minutes) leaves Westminster at 31 minutes past midnight, well after parliament has ceased sitting. On the rare occasion where there are late night sittings even the night buses take only a little over an hour. Virtually everyone who works in London has an hour’s commute to get to work and to get home again.

Clearly the rule on second homes was not intended to cover a situation where an MP can readily travel back and forward to his home without impacting on his need to service both his constituency and parliament. Mr McNulty does not need to live in upmarket Hammersmith to fulfil either his parliamentary or his constituency work. He lives there out of choice. Parliament could hardly have intended that the taxpayer should be expected to provide a second home for an MP whose first home is within ready travelling distance of Westminster.

Exploiting the letter of the law contrary to its clear intention is what most of us would understand by avoidance, whether it is a tax law or any other sort of law.

I do not know what Mr McNulty’s views on tax avoidance might be. I assume that he has no moral objections to others adopting the same behaviour towards the law as he does. The English abhor hypocricy in their politicians. My own attitude to tax avoidance is that I have no right to seek to impose my moral principles on those who believe that compliance with the letter of the law is sufficient without needing to go behind the letter of the law and limit one’s use of it to the purpose for which it was intended. Equally I have no criticism of Mr McNulty adopting the same view.

However Gordon Brown has frequently made clear that he believes that sticking to the letter of the law without regard to the intention for which it was enacted is both immoral and unfair to the general body of taxpayers. In these circumstances how can he endorse such behaviour by awarding the perpetrator with a post in his government? “Do as I say, not as I do” is not an attractive proposition. It is blatant hypocricy!

And how about the Press? A leader in today’s Times (24 March) homes in on the efficacy of the parliamentary rules and seeks to make no moral judgement, yet on a later page the paper gleefully later berates Lord Myers for having been the Chairman of an offshore fund, describing the mere existence of that job as a “blow to the peer’s credibility”. It is hard to understand how simply being involved with an offshore fund – which I suspect has no particular tax benefits to UK resident and domiciled individuals – is a blow to a person’s credibility, whereas exploiting a badly drafted parliamentary rule to extract a substantial unintended benefit from the taxpayer does not even attract opprobrium but merely a call for the rule to be reviewed?



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