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The deal

Constitutional plutocracy

Political chatter in Britain is much exercised over the issue of Michael Ashcroft’s hitherto secret status as a non-dom, despite his promise to take up permanent residence in the UK as a condition of his being made a “lord”:

“Hague told Tony that Ashcroft would pay huge amounts of tax,” said a source. “That was the deal. That was what we all understood at the time.”

That was the deal, complains the Guardian source indignantly, as though the fact that someone allegedly reneged on a deal is more objectionable than the fact that such a deal could ever have been made in the first place. All parties in this row, indeed, seem to have agreed not to question the assumption that it is entirely normal and unobjectionable that one should be able to buy a peerage, with whatever combination of massive political donations and vague undertakings to pay tax like the little people do seems most appealing to the aspiring “lord”.

At the time of Ashcroft’s “elevation”, it is true, there were some dissenting voices:

[F]ormer Tory MP Sir Anthony Grant said: “This is a mistake. It looks very bad. I think we want to detach ourselves from this notion that people only have to give money and then they can waltz into what is, after all, part of the legislature.”

Yet criticism of Ashcroft now focuses on an alleged broken promise, rather than the fact that the very possibility of making and accepting such a promise was already an index of deep constitutional corruption — corruption of such long-standing pervasiveness and gravity that it makes the MPs’ expenses scandal look like the trivial sideshow it was; corruption so familiar, perhaps, as to be almost invisible. But it would be in no leading politician’s interest to point this out: why endanger a convenient way of rewarding wealthy friends for giving you money?

  1. 1  Nate  March 8, 2010, 1:43 pm 

    This seems to be taking an offended stance based on an assumption that he was made a peer for financial reasons, if the conservatives wished make him a peer for other reasons such as, thinking he would be an asset, but said, “We can’t do it unless you agree to pay full tax” Then the fact he went back on this afterwards is the issue.

    You suggest that the agreement was “we want you to pay tax so we’ll make you a lord” I think the whole lot is a mess but at least hit them for what is wrong not a straw man argument.

  2. 2  Wrestling Dick  March 8, 2010, 1:59 pm 

    thinking he would be an asset,
    thinking he would be an asset,
    thinking he would be an asset,

    I think you just bazooka’d your foot there, Nate.Your Wurzel Gummidge foot that is.

  3. 3  Chris Bertram  March 9, 2010, 12:31 pm 

    I’m not completely convinced that you’re reading that right. Rather, what I think may be going on is a leakage of transactional language everyday speech as a result of the pervasiveness of the market in our culture. People often say “Here’s the deal ….” as the preface to an explanation of something, for example. I’m not sure that when the indignant “source” says “that was what we all understood” they are necessarily asserting that Ashcroft made a promise and then later broke it.

    You may be right though.

  4. 4  ANO  March 9, 2010, 1:59 pm 

    I don’t think the promise to take up “permanent residence” in the UK was a “vague undertaking”. At the time the promise was made, being a “permanent” resident meant being domiciled in the UK for income and capital gains tax purposes, as opposed to being non-domiciled in the UK for income and capital gains tax purposes. The status Ashcroft appears to be claiming now of “long-term resident” came into the law only in 2008. That status enables certain non-doms (long-term residents who are still not “permanent” residents) not to pay tax on their unremitted non-UK source income and gains if they pay HMRC a fee of £30,000 per annum.

    I cannot see how Lord Ashcroft can claim the status of “long-term resident” for tax years prior to 2008-09, since that status didn’t exist. At the same time, it seems clear he has not paid tax on his worldwide income since receiving the peerage. So whether or not the “deal” was the price for the peerage, Ashcroft reneged on it.

  5. 5  Steven  March 9, 2010, 3:26 pm 


    a leakage of transactional language [into] everyday speech as a result of the pervasiveness of the market in our culture

    I agree that there’s a lot of that about, and it is an independent (and fascinating) issue. But in this case the lines from the Guardian report immediately before the quote about the “deal” tend to reinforce my reading, I think:

    Ashcroft’s declaration last week that he was a “non-dom” has been seen to contradict “clear and unequivocal” assurances given to the then Tory leader, William Hague, that he would take up permanent residence in the UK before the end of 2000. This assurance was seen as crucial. Members of Blair’s inner circle suggest the former prime minister now feels he has been misled.

    “Hague told Tony that Ashcroft would pay huge amounts of tax,” said a source. “That was the deal. That was what we all understood at the time.”

  6. 6  dsquared  March 9, 2010, 4:11 pm 

    “Residence” and “domicile” are two fundamentally different concepts for tax purposes (see) – if all these politicians (particularly Hague, who was a PPS at the Treasury), were fooled by someone playing around with the distinction, then that’s pretty sad. The big issue here is exposure to inheritance tax IMO – it is much more difficult to shift your domicile than your residency and domicile determines IHT exposure. If Lord Ashcroft were to become domiciled in the UK (presumably after having lost his UK domicile at some time in the past), then it wouldn’t necessarily have too many financial consequences for his tax bill at present – particularly if he’s a resident and isn’t taking advantage of the £30k non-dom charge, which I suspect is what is meant by the curious circumlocutions everyone in the Tory Party uses when asked a question about his domicile – but he would be picking up a big liability for IHT which would be very difficult to shift at a later date.

  7. 7  Robert Hanks  March 9, 2010, 5:16 pm 

    I think you’re misreading this, Steven. The story (which is not necessarily the same as the facts) goes: Tory party nominates Lord Ashcroft for peerage – not for financial reasons, but purely because he’s such a good egg. Government says, no, he’s not a taxpayer. Tories say, OK, but he really is a very good egg, so what if he becomes a taxpayer – can he be a peer then? That’s the “deal” being discussed in that story, and not in itself corrupt.

    The deal you and Anthony Grant are objecting to, I think, is the one between Ashcroft and the Tories, which went something like “I’ll give you lots of money if you’ll let me tell you what to do about stuff and get me a peerage.” That deal is deeply corrupt; but I doubt that Hague ever mentioned it to Tony, or to anybody else, or even to himself.

  8. 8  Steven  March 9, 2010, 6:22 pm 

    That’s the “deal” being discussed in that story, and not in itself corrupt.

    Whether that part of it is corrupt or not is a matter of opinion, I suppose, as is what exactly amounts to bribery in general; I certainly feel there is something piquant about the “deal” being, as quoted, that he “would pay huge amounts of tax”. If your version of the story is correct, whether it is “huge amounts” or pennies would be neither here nor there, would it?

  9. 9  ukliberty  March 9, 2010, 7:39 pm 

    Steven’s point is sound – there appears to be no discussion about the rightness of how such people get into the Lords. Criticism of Ashcroft is based on ‘the deal’ (although I wonder quite what “a source” can know if it), (mis)understanding tax jargon, and throwing lumps of hard consolidated mineral matter while standing in dwellings made of a transparent, brittle material

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