Dodgy Dave’s Offshore Chickens Come Home to Roost
The furor over Cameron’s perfectly legal tax haven isn’t about his family money. It’s about his six years spent handing Britain over to the 1 percent.
JURA, Scotland — The Tarbert Estate, on the ruggedly beautiful Hebridean island of Jura, off the west coast of Scotland, is one of David Cameron’s favorite bolt-holes. Jura, which has a population of some 200 people, spread over 142 square miles, was once described by George Orwell, who wrote Nineteen Eighty-Four on the island, as marvelously “ungetatable.” That is part of the attraction. It’s why I holiday here, visiting my in-laws; it’s why Cameron likes to holiday here, too, visiting his.
Not that we should expect the prime minister to be visiting Jura anytime soon, though — however much the idea of escaping the turbulence thrown up by the leak of the so-called “Panama Papers” must appeal at the moment.
The sprawling 19,000-acre Tarbert Estate is run by the prime minister’s stepfather-in-law, Viscount Astor. Technically, however, it is owned by a company headquartered in Nassau, in the Bahamas. Yes, Cameron’s offshore retreat is itself an offshore enterprise. And so Cameron’s favorite Scottish escape now also serves as an inconvenient reminder that the lives of the rich and famous are ordered according to their own rules and norms, vastly different — as the Panama Papers reveal — to those that govern the rest of us.
That Cameron is rich is hardly news to Britons. He has never hidden his gilded upbringing. The son of a stockbroker, he was educated at Eton College, arguably Britain’s most prestigious, and certainly most famous, school. He was born with a silver spoon in his mouth and soon graduated to using a silver knife and fork, too. As he told the House of Commons on Monday, “[aspiration and wealth creation] are not somehow dirty words.”
Cameron has always acknowledged his good fortune, but, until now, this good fortune has never caused him serious difficulty. The revelation in the Panama Papers that his father established an offshore investment trust based in the British Virgin Islands has changed that. Worse still was the clumsily handled admission — which was only wrenched out of him a few days later — that Cameron himself held shares in the ironically named Blairmore Holdings Inc. until January 2010, at which point, just months away from becoming prime minister, he sold his interest.
It should be stressed that there is no indication that Cameron ever broke the law and that he paid tax on the dividends accrued from his late father’s offshore investments. Nevertheless, the taint of unearned privilege is not easily removed. Making matters worse, Cameron had previously criticized high-profile celebrities who took advantage of complicated offshore financial vehicles to minimize their tax liability. He hosted a G-8 summit in 2013, which was supposed to create new arrangements by which governments could crack down on international tax avoidance, and then, that same year, as we now know, he helped water down EU proposals to shine a more powerful light on potentially shady offshore practices.
Stung by criticism — and scrambling to contain the fallout — Cameron published his most recent tax returns last week, a move that, though standard in the United States, is considered a radical break from convention in Britain. But these, in turn, simply demonstrated the extent of Cameron’s wealth. The revelation that he had — again, legally — been gifted 200,000 pounds by his mother five years ago, the better to avoid inheritance tax obligations, only added to the sense that the prime minister is too rich to be wholly in touch with the concerns of the average voter. Unfair? Perhaps. But politics is not a game of fairness.
The Panama Papers drama is another helpful reminder of the distinction between what is legal and what is seemly. The opportunity to minimize tax liability is not the same as a license — particularly as an elected official — to do so. This helps explain why, remarkably, Cameron has endured calls this week that he ought to resign, even though no one has yet satisfactorily demonstrated why he should step down. His tax affairs, though small bore in comparison to those of the truly ultra-wealthy, just feel mildly dodgy. And in today’s Britain, mildly dodgy appears to be enough to prompt the citizenry to break out the pitchforks.
If this is the case, however, Cameron himself bears some of the blame. In the six years that he has been prime minister, Cameron has repeatedly stressed, “We’re all in this together,” as if repairing Britain’s battered public finances post-crisis was not just a matter of economic prudence but also, in some inchoate sense, a moral necessity. Every part of society was expected to contribute.
As it turns out, however, some would contribute more than others. One of Cameron’s first decisions was to increase the rate on the so-called value-added tax — a levy on consumption that is unavoidably regressive — to 20 percent. Almost as quickly, he cut the rate of income tax paid by the wealthiest 1 percent of Britons from 50 percent to 45 percent. This was justified on the grounds that doing so would actually increase revenue by making avoiding tax less attractive — but, even so, the political symbolism was only too apparent: The Tories cut taxes for the rich, because that is what Tories exist to do. Meanwhile, the local government services upon which the poor depend, to a disproportionate extent, have been squeezed like never before.
The “optics,” as they say, of all this were already bad enough but have been made worse by a nagging sense that something, somewhere, has gone rather badly wrong in Britain. The sense that there is one set of rules for the wealthy and another for the ordinary is widely felt. In 2008, the government agreed to bail out some of the country’s largest banks; yet, in 2016, the government is reluctant to bail out a stricken steel industry upon which as many as 40,000 jobs depend. One rule for the City of London, another for the remains of Britain’s manufacturing base.
That the comparison is inexact matters little. (The banks were rescued because abandoning them to their otherwise wholly merited fate risked destroying the entire British economy; the steel industry, by comparison, is of less account.) The economics make sense; the politics are more painful.
There remains a sense that there has not been a full reckoning with the crash and the ensuing recession. The bankers most heavily implicated in it have resumed their plutocratic ways. London has become a playground for the global 1 percent, as Russian and Persian Gulf money pours in. The divide between the have-lots and the have-less has rarely been so obvious and so dramatic.
That has consequences — not the least of which is an uptick in public cynicism and a corresponding diminishment of trust. A kind of social fabric is wearing thin. And without trust, public institutions, upon which the governance of the nation rests, are corroded to the point at which they eventually collapse. It is a breeding ground for festering discontent and populist revolt. The ability of massive multinational corporations, such as Google, Apple, and Amazon, to effectively negotiate their own tax rates only adds to an increasingly pervasive sense of unfairness. In other words, we are all in this together only if you take a very generous definition of “we” and “in” and “together.” It is a question of morals, not laws.
Cameron will survive this storm. The Labour Party, led by veteran left-winger Jeremy Corbyn, remains in the business of demonstrating its own unelectability, and so the Tories will slog on — even though, perhaps perversely, the lack of a credible opposition actually magnifies the anger felt at a government that is safe, but increasingly unpopular.
But the damage to Cameron’s reputation is done. It is enough to leave the prime minister pining for the peace and quiet of Jura — a retreat he will now probably only enjoy again after he has retreated from front-line politics. He has, to this point, been a lucky prime minister, who has paid little price for his failures — the most notable of which being a persistent inability to meet his own government’s economic targets and balance Britain’s public finances. But all generals, even lucky ones, run out of luck eventually.
Photo credti: Chris McGrath/Getty Images