How Ashcroft got a peerage and no tax bills

lord ashcroft- a non dom peer for a decade-picture courtesy the Guardian

Lord Ashcroft must have been laughing all the way to the tax office for the last decade if the revelations produced by the release of Whitehall memos telling the story of the scrutiny of his peerage are anything to go by.

 They show that the ultra canny lord successfully managed to pull the wool over the eyes of the scrutiny committee, enlist the loyal support of leading Tories to keep his non dom status and befuddle and exasperate some of the country’s leading mandarins. No wonder he is a billionaire, pity any business partner negotiating over the small print with him.

 By concentrating on the semantic difference between being a “long term resident” rather than a “permanent resident” Lord Ashcroft managed to both escape paying tax and still get a peerage with all the status and influence that implies in both Parliament and the business world.

 It is totally clear from the reaction of Baroness Dean that the scrutiny committee believed that he had agreed to the terms and conditions to pay tax in order to get his peerage. But in fact under a deal negotiated by the then chief whip, James Arbuthnot, and Sir Hayden Phillips, the Whitehall mandarin in charge of the negotiations, it was nothing of the sort.

What yesterday’s hearing by the Commons Public Administration committee reveals is a question mark over Sir Hayden’s role – whether he knew that the deal he was negotiating had let Ashcroft off the hook. Certainly Sir Hayden was probably fed up to the back teeth with the issue and probably wanted it sorted out. But it is rather surprising that he insists he did not know of the tax implications.

 What I have been told by a very senior Whitehall source is that Sir Hayden happily took on the job because another figure Lord Wilson, then Cabinet Secretary, didn’t want his hands dirty over such a hot political potato. It is therefore possible that the jovial Sir Hayden got out of his depth in dealing with such a slippery customer as Lord A.

This leaves the issue of how much senior Tories knew about it all. It is crystal clear that Arbuthnot knew exactly what was going on. He seems to have been up to his eyes in securing Ashcroft the peerage. I find it hard to believe that William Hague was also  in ignorance. Ashcroft  is very close to Hague, funds his Parliamentary office and jets around the world with him as shadow foreign secretary. Even at that time his office could have had a look at Ashcroft’s chequebook- and see where the donations came from. So it is possible that Hague could have known at the time, not just in the last few months, that Ashcroft was not paying tax.

Two figures come out well in this sorry saga. Tony Wright, the Labour chairman of the committee, who stuck to his guns and held the inquiry, despite a childish boycott by Tories on the committee. The other is Gus O’Donnell, the present Cabinet secretary. By releasing the documents rather than keeping them secret, he has shed a lot of light on a very murky tale about the award of peerages. Both have done voters a great service in the run up to the election.

This blog is also on the Guardian’s Comment is Free website.

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