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John Rentoul

John Rentoul is chief political commentator for The Independent on Sunday, and visiting fellow at Queen Mary, University of London, where he teaches contemporary history. Previously he was chief leader writer for The Independent. He has written a biography of Tony Blair, whom he admired more at the end of his time in office than he did at the beginning.

"The Independent's must-read man" - Daniel Finkelstein

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Danny Alexander: As I was saying ...

Posted by John Rentoul
  • Monday, 31 May 2010 at 08:18 am
I do not approve of the use of foreign or dead languages, but a fortiori. What I said yesterday was that at least David Laws had rendered the public service of puncturing Liberal Democrat sanctimony and hypocrisy. Now his successor as Chief Secretary, Danny Alexander (right), has shut, bolted and chained the escape route that might have suggested that Laws was a one-off by repeating the message: "Meet the new politics; same as the old politics."

Alexander's transgression is different from Laws's. He "avoided" paying capital gains tax (in the sense that he wasn't liable for it) on the sale of a London home. It was his second home for the purposes of claiming MPs' expenses, but he benefited from the CGT exemption on the main residence, because he sold it within three years of its having been his main residence. No rules broken and nothing wrong with it, except the uneasy feeling that an MP can make a personal gain out of a property subsidised with public money.

So, morally wrong, technically right; unlike Laws, who was morally right, technically wrong (as Stephen Pollard put it).

But the key point is that Alexander has done what Hazel Blears did. She was criticised in shrieky voices by Liberal Democrats at the time and paid £13,000 to HMRC. The Telegraph quotes Nick Clegg at his most pious in the first televised debate:

There are MPs who flipped one property to the next, buying property, paid by you, the taxpayer, and then they would do the properties up, paid for by you, and pocket the difference in personal profit.

As I say, it is a good thing that Clegg can no longer make the fundamentally dishonest promise of a new, clean, holy politics. Politics is politics. It is a noble but human endeavour.

I also predicted yesterday that Laws's replacement by Alexander would not only weaken the bonds between the coalition parties - because Conservatives admired Laws so much - but those holding the coalition known as the Liberal Democrats together, because of resentment against the leader's helper being promoted over better qualified candidates. Oh, how Chris Huhne and Vince Cable must be dancing little jigs today.


matgb wrote:
Monday, 31 May 2010 at 10:11 am (UTC)
Small point John, but a crucial one.

You're factually wrong.

Clegg criticised the MPs that bought homes "paid for by you" in that quote.

Alexander sold the home he bought in 1999. He was first elected as an MP in 2005. He had lived in London, but when elected, bought a family home in the constituency, and moved to it.

Blears was criticised for repeatedly buying, doing up then selling 2nd homes. Alexander didn't do that, he merely got elected, and move house. But, y'know, those pesky little facts.

You might want to edit the post a little bit, comparing Alexander to Blears is possible, well, defamatory? It's been awhile since I read up on what counts, but...
markpack wrote:
Monday, 31 May 2010 at 10:18 am (UTC)
As MatGB says, you seem to have skipped over the point about who paid for the home.

But if you think following the tax rules and not paying tax which isn't due is morally wrong, presumably you think all MPs (and indeed yourself!) are morally in the wrong for using "loopholes" in the income tax rules which allow you to avoid paying income tax on the first part of your income?

After all those income tax personal allowances are a clear, public and long standing part of the income tax system just as the 36 month rule is for Capital Gains Tax.

If the standard is that you should pay tax even when a straight forward following the rules doesn't require you to pay tax, then presumably you'll be turning yourself into the morality police too for using income tax allowances. And I really hope you've never put money in an ISA either... :-)
Reply to both of you
j_rentoul wrote:
Monday, 31 May 2010 at 10:53 am (UTC)
Between 2005 and 2007, Danny Alexander claimed, I think (and if I am wrong about this I will happily retreat), for the mortgage payments on his London property as his second home under the Additional Costs Allowance. Some of the costs of the property were therefore subsidised by the taxpayer before he sold it. Of course it is marginal, but it is no different in principle from what Hazel Blears did, which she felt required her to voluntarily pay £13,000 in lieu of CGT.
Re: Reply to both of you
markpack wrote:
Monday, 31 May 2010 at 11:02 am (UTC)
The Hazel Blears case is very different because she was accused of flipping her home - switching round the designations to get financial advantage. In Danny Alexander's case that hasn't happened. There hasn't been any switching back and forth.

The point at which a property in his constituency was designated his main home fits with both the technicality of the rules and also - perhaps more importantly given the problems with the rules - common sense.

There was no subsequent changing of definitions for financial gain.

Re: Reply to both of you
wisechimp wrote:
Monday, 31 May 2010 at 02:03 pm (UTC)
I think the point is that the majority of the population who look at this situation from a common sense point of view (rather than those who are chartered accountants!) will think it doesn't sound right that MPs can have a house funded by the state, but when the house is sold the MP gets to pocket the profit. According to Nationwide the average house price in greater London rose by over 20% in the period Alexander was getting his allowance. There's no way anyone impartial looking at that is going to think that's fair.

The fact that Clegg attempted to gain the high ground on the expenses scandal only makes things worse. I wonder what impact revelations like this would have had on the election result.
shock news!
mrnonnymouse wrote:
Monday, 31 May 2010 at 11:03 pm (UTC)
Re: shock news!
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Replay to shock news
replicawatch101 wrote:
Friday, 16 July 2010 at 12:21 pm (UTC)
Guardian Media Group (GMG)over its coverage of the supermarket group's tax affairs, enjoyed a tax holiday last year of offshore companies to avoid paying up to £1bn in corporation tax

Income Tax India
(no subject) - raybanwayfarer - Saturday, 22 January 2011 at 12:25 pm (UTC)
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