Ed Balls has dismissed allegations of tax-dodging by Labour as “small beer”, as the bitter row with the Tories over wealthy backers showed no sign of abating today.
The shadow chancellor conceded that a £1.6 million donation of shares, rather than cash, by businessman John Mills had been “tax efficient” for the party.
But he insisted the questions facing the Conservatives were on a much grander scale, and again accused David Cameron of “turning a blind eye” to abuses by rich British account-holders at HSBC’s Swiss arm.
The Morley and Outwood MP’s comments came as Work and Pensions Secretary Iain Duncan Smith defended the current political funding system, describing it as “one of the cleanest in the western world”.
He rejected criticism that HM Revenue & Customs had only mounted one prosecution after details of 1,100 clients at HSBC’s Swiss subsidiary were leaked. The bank today issued an apology for activities that took place there around a decade ago, which are said to have enabled widespread tax evasion.
“Our record on this has gone missing in this debate,” Mr Duncan Smith told the BBC’s Andrew Marr show. “The fact is that the HMRC has prosecuted something like 1,600 people for tax evasion and they are spending years in prison now as a result.”
But Mr Balls said ministers had failed to ask questions when the HSBC stash was leaked to French authorities by a whistleblower and handed to HMRC in 2010. Shortly afterward the bank’s chairman Lord Green was appointed trade minister by Mr Cameron.
“The evidence is the Conservatives from the Treasury and in Number 10 turned a blind eye to what was happening at HSBC. That’s what makes people angry,” Mr Balls said.
Liberal Democrat Business Secretary Vince Cable revealed he had written to Chancellor George Osborne to demand answers about the lack of prosecutions.
“It is extraordinary and that is partly why I have written to the chancellor to try to get to the bottom of it,” he said. “The contrast is that there are thousands of small tradesmen who are being fined by Inland Revenue often for small failures in VAT declarations.
“Thousands of thousands of benefit recipients are dealt with very harshly. Some of them are cynical abusers and they should be properly dealt with, but most of them are rather petty and I think it is the contrast between that and what appears to be the ineffectual treatment of big companies which jars with the public.”
Lib Dem chief secretary to the Treasury Danny Alexander told the Sunday Politics show he was looking at whether HMRC needed more powers.
Former Tory Chancellor Ken Clarke played down “bogus” recent rows about the party’s wealthy backers but told the Observer: “I think the Conservative Party will be strengthened if it is less dependent on having to raise money from wealthy individuals.”
The suggestion received short shrift from Mr Duncan Smith who questioned whether taxpayers would be happy to see a model of state funding of parties.
Conservatives have demanded that Mr Miliband publishes a legal document which altered his father’s will to grant him part-ownership of the family home.
Labour has denied that Mr Miliband avoided tax, pointing out that the party leader paid capital gains tax on his share of the north London property when he later sold it to his brother David.