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Vince Cable slams Tories over tax avoidance and immigration before election divorce

February 18, 2015 8:10 PM
By Lucy Tobin in London Evening Standard
Originally published by East Midlands Liberal Democrats

Vince Cable in EastwoodVince Cable has just ranted about tax avoidance -"there's one law for the rich and another for the poor"- followed by the Tories' immigration target - "senseless" - and the Chancellor's spending review - "very damaging".

So it's fair to say the Business Secretary and Chancellor George Osborne probably aren't regular drinking buddies.

Do they get on at all? "We have a good, businesslike relationship," is the response. I take that as a no.

Back when the Coalition wedding took place in the Downing Street Rose Gardens, Cable was keen for his Liberal Democrats to view it as a merger of convenience rather than a marriage; now the 71-year-old is tearing into the Tories ahead of their election divorce.

He's annoyed about tax avoidance and how big businesses such as Boots and HSBC use pricey advisers and complex mechanisms to cough up less to the Revenue than small firms.

It's an oft-made complaint, though it sounds a bit odd from the man who has been Business Secretary for the past five years.

Shouldn't Cable be trying to change the tax rules firms face, rather than lamenting that they dodge them? "I'm not in charge of tax," he sniffs.

But the Lib-Dem with one of the highest profiles to end Coalition governance wants to show he is on the side of small business - and his Conservative colleagues aren't.

"The share of start-ups being launched by people who were born overseas is significantly higher than the British average, and entrepreneurs just can't prosper without a global talent pool.

"Much of the dynamism of entrepreneurial culture, particularly in London, benefits from both European and non-European migrants. That's why I'm a strong critic of the Conservative Party's net immigration target.

"It has squeezed out a lot of workers from outside the EU who are badly needed by business.

"A while ago, I visited an engineering company which made engines for Mclaren F1 cars. Their chief engineer, who was Indian, was coming to the end of his work visa and had to travel back to India to apply again for another - it's massively disruptive to a high-pressure schedule, for him and for British business.

"But this is happening all the time. Companies are constantly telling me about the problems they are having bringing critically important people into this country."

It's an issue Cable will address when he talks to members of Business Connections, the Evening Standard's network for small and medium-sized businesses, in Westminster next Tuesday.

He reckons that over his past five-years of work, "we have succeeded in shifting the emphasis of government onto SMEs".

He adds: "With policies like apprenticeships, the focus has moved from big companies to small ones, while the mandate of UKTI, the trade promotion body, is now to get more medium-sized companies into exporting."

Cable is most proud of establishing the British Business Bank, which has organised 26,000 start-up loans, as well as extending business rate relief and abolishing employers' National Insurance contributions for staff under 21.

But he says the continual reluctance for some of the biggest banks to fund SMEs is "a matter of regret" and laments the slow pace of change in Government.

"It's taking an eternity" for state-backed Royal Bank of Scotland to sell off the Williams & Glyn business, he adds. "It's a massive frustration."

Cable's most difficult weeks in Government were not dealing with the controversy over the Royal Mail sell-off but the negotiation of the spending review.

"I fully support the deficit reduction, but government financing is so old-fashioned," he says.

"Unlike in business, investment is treated in the same way as current spending, which is nonsense. Any sensible business would look at things like apprenticeships where, for every £1 you invest, you get an £18 return into the economy in a separate way to spending on, say, health - but here that's ignored. The way that the Government conducts spending reviews is very damaging."

In the past week, Cable has been writing angry letters on another issue: HSBC's tax scandal.

One went to Osborne about whether the "various inquiries" into HMRC's role are watertight, and another to the HSBC chairman Douglas Flint about the bank's claims to have cleaned up.

"A lot has been done [on tax avoidance and Switzerland] but not enough. Most allegations cover the period long before I came into government," he quickly adds.

"But though the enforcement activities of HMRC are now being stepped up, arguably they should have been doing a lot more.

"Small firms are constantly being chased over VAT, and relatively small issues, yet these multi-million-pound tax dodgers seem to get away with it."