Ashcroft: new questions about his peerage, his tax and his homeIan Cobain
Friday November 9, 2007
Lord Ashcroft, the multimillionaire bank-rolling the Conservatives' controversial campaign in marginal constituencies, was last night coming under increasing pressure to explain whether he has honoured pledges, made before he received his peerage, that he would return to the UK and pay income tax.
One promise that he would return was made by the then Tory leader, William Hague, in order to secure the peerage more than seven years ago. A similar assurance had already been given by Lord Ashcroft himself when he settled a libel action with the Times newspaper. Former Conservative treasurer Lord Ashcroft. Photograph: Chris Young/PA
However in 2004, five years after the assurances were given, Lord Ashcroft's main residence was declared in the House of Lords expenses register to be the central American tax haven of Belize, thousands of miles beyond the reach of HM Revenue and Customs.
A spokesman for Lord Ashcroft, who is estimated to have a personal fortune of around £800m, said he had been registered as residing in Belize because he did not have a main residence in the UK at the time. He denied any suggestion that the peer had reneged on the assurances given before he received his peerage. Lord Ashcroft has repeatedly declined to say where he does reside, however, and it is unclear whether he currently pays a penny in UK income tax.
There were calls for an explanation from Lord Ashcroft among Labour and Liberal Democrat MPs and peers who believe that he is using his affluence to influence the outcome of polling in a number of key constituencies, where he makes no secret of his substantial donations towards the Tories' campaigns.
His donations to the Conservatives are running at hundreds of thousands of pounds a year. He has also made loans to the party of up to £3.6m and provides free flights for the party leader, David Cameron, and other senior Tories.
David Heath, the Lib Dem spokesman on constitutional affairs, said: "No one should take a place in the legislature of this country who doesn't pay taxes in this country. If he has reneged [on his agreement] it's very simple: he should no longer be a member of the House of Lords. He has a stark choice. He has given assurances - it's up to him to show he has kept them. If he has nothing to hide, he should make clear he pays taxes in this country like everyone else."
Labour peer Lord Campbell-Savours, who as an MP raised questions about the then Michael Ashcroft's relationship with senior Conservatives, said: "If undertakings were given, they should be honoured."
Lord McNally, the Lib Dem leader in the House of Lords, said: "I'm amazed that this issue hasn't been cleared up conclusively, particularly since he's now playing such an active role in British politics."
There was no comment from the Conservative party.
After Lord Ashcroft's nomination for a peerage was rejected in 1999 - in part because of his status as a tax exile - Mr Hague wrote to Downing Street demanding a change of heart on the grounds that the businessman intended to become resident in Britain "in order properly to fulfil his responsibilities in the House of Lords".
Mr Hague added: "This decision will cost him (and benefit the Treasury) tens of millions a year in tax, yet he considers it worthwhile."
Despite this assurance, Lord Ashcroft was said to be resident in Belize during 2004, almost five years later. In October that year, in the House of Lords register of peers' expenses claims, Lord Ashcroft's "location of main residence" was declared to be Belize. A House of Lords spokesman said: "The peers themselves have to put it in writing when they inform the accountants office of their main residence."
Lord Ashcroft has a house in London a short walk from the Lords; it has been owned since 1997 by a company registered at the peer's address in Belize.
In the last seven years he has spoken four times in the Lords, twice after apologising for being late, and has submitted eight questions. Between 2004-6 he voted 63 times out of a possible 259.
Denying that the peer had reneged on the assurances given several years ago, his spokesman said: "I have known Lord Ashcroft for eight years, during which time I have worked closely with him. In all of that time he has, to the best of my knowledge, reneged on nothing."Private matter
Asked about his domicility and tax status, the spokesman refused to answer, insisting it was "a private matter between him and the Inland Revenue (sic)". Asked whether he might change his mind and discuss the matter, he replied: "Hell is more likely to freeze over."
Despite the lack of clarity over his tax status, Lord Ashcroft shows no reluctance to express his views over the use of UK taxpayers' money, most recently in a newspaper article last month in which he criticised MPs' new communications allowances.
He was the party's treasurer when William Hague nominated him for a peerage in 1999, but was turned down on the recommendation of the public honours scrutiny committee. A pledge was then made that the businessman would return to the UK, and a series of letters, which came to light during a case at the high court, outline how that agreement was made.
After writing to Tony Blair at Downing Street, saying that the then Mr Ashcroft was prepared to forfeit tens of millions of pounds a year in taxation, Mr Hague wrote to the chairman of the honours committee, the Liberal Democrat peer Lord Thomson, insisting his party's treasurer had met all of the committee's concerns.
Lord Thomson then wrote to Mr Blair asking him to ensure that Mr Ashcroft was resident in Britain before he took up his seat. In March 2000, when the peerage was finally confirmed, Downing Street issued a statement that "in order to meet the requirements for a working peer, Mr Michael Ashcroft has given his clear and unequivocal assurance that he will take up permanent residence in the UK before the end of the calendar year".
Lord Ashcroft also agreed to return to the UK when settling a libel action against the Times in December 1999, agreeing to the wording of a statement published on the front page of the newspaper, which read: "Mr Ashcroft has told the Times that he recognises the public concern about foreign funding of British politics, and that he intends to reorganise his affairs in order to return to live in Britain."
Lord Ashcroft subsequently stood down as party treasurer, but returned in December 2005 as deputy chairman, a position which many say conceals his true influence within the party. With interests in finance, telecommunications and the security industry, he is ranked at 89th in the Sunday Times' latest list of the country's super-rich. Because his donations are made through companies which he controls and not in his own name, it is difficult to be certain of their full extent. But he is thought by some to be by far the biggest donor to the Conservatives.
The records of the Electoral Commission show that during the 12 months to last June, the peer donated £209,136 through one of the companies which he controls, Bearwood Corporate Services. He also provides services in kind, notably opinion poll research. Another company, Flying Lion, provided David Cameron with flights declared to be worth £19,819, although some opponents have insisted they have been undervalued.
Since the introduction of new election law seven years ago, caps on spending by parliamentary candidates come into force only once an election is called, leaving them free to spend limitless amounts between elections.
During the three months preceding polling day in 2005, one of Lord Ashcroft's companies donated around £540,000 to Conservative candidates in more than 60 constituencies, and further substantial donations were made during the phony election campaign of last month.
Lord Ashcroft says all he is doing is helping Tory candidates in marginals compete on equal terms with sitting MPs, pointing out that this year members of parliament voted themselves a new £10,000-a-year communications allowance for contacting constituents.
With Labour MPs fearing the Tories are outspending them in many key marginals, Gordon Brown is expected to impose limits on constituency-level and natioinal expenditure. Such a move would be highly controversial, as it would lead to accusations that Labour was moving the goalposts to enhance its election prospects. It could also provoke retaliation by a future Conservative government, possibly through curbs on trade union financial support for Labour.
The Tories have also become increasingly reliant on loans made by Lord Ashcroft. In April 2005, shortly before the last general election, he lent the party £2.5m. That sum was paid off with interest the following January 31, from a sum of £3.6m which he had loaned to the party the previous day. That loan was subsequently repaid, with interest.