The future career of Margaret Hodge, the prominent Labour Party politician and parliamentary candidate for Barking in next week’s election, is today uncertain as critics accuse her of “hypocrisy” over allegations relating to her personal tax affairs published in The Times.
It is reported that 96,000 shares in a private steel trading business established by Hodge’s father were transferred onshore using the Lichtenstein Disclosure Facility (LDF). The LDF is a controversial tax deal established in 2009 enabling the transfer of assets out of the Principality of Liechtenstein, a tiny European country with notably low tax rates, to the UK.
It was created as an incentive for those with undeclared income or unpaid taxes to repatriate their assets by offering preferentially time-limited tax liabilities, substantially lower penalties and no threat of criminal prosecution.
The Stemcor shares Hodge received in this way in 2011, following the winding up of the Liechtenstein Trust, were worth about £1.5 million. Her shareholding was properly declared in the parliamentary register of members’ financial interests, but she has not spoken of offshore vehicles or the LDF.
In 2013 Lady Hodge was identified by The Times as the 15th richest member of parliament, being worth £18 million. Following her appointment as chairwoman of the Public Accounts Committee (PAC) in the last parliament, Hodge personally led an effective campaign against certain aspects of tax avoidance.
She criticised major multinationals such as Google, Amazon and Starbucks saying: “There is a growing anger among ordinary people who pay their taxes that the system is not fair. That big corporates and the rich find ways to avoid tax. It may be legal, but it is not moral.”
Criticism of how the LDF works in practice was made in the final PAC report of the last parliament. It found that “the current system still causes the odds to be stacked in favour of tax evaders using offshore accounts.” Nigel Mills, the Conservative candidate for Amber Valley told The Times: “To criticise the disclosure process while using it yourself appears hypocritical. Any reader of the committee’s report would want to know that someone involved in preparing it had used [the process] themselves.”
In February this year Hodge, 70, ruled herself out of the race for London Mayor in 2016. In an interview with the Evening Standard she instead expressed her preference for remaining in Parliament in order to build on her PAC experience. She even hinted that she would take on a government role saying: “I have built up so much knowledge and experience, particularly in the last four or five years. I want to use all of that. I have learned so much about making public bodies work better, and getting good value for money, it would be crazy not to build on it.”
Today’s revelations regarding Hodge’s financial affairs, compounded by recent criticism of the Labour Party’s mansion tax policy and her muted enthusiasm for the leadership of Ed Miliband, will mean that her colleagues’ support for achieving her ambitions in the later years of her political career may be somewhat less forthcoming.
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