Ken Livingstone drowning in a sea of hypocrisy

The Green candidate for the London mayoral elections yesterday challenged every candidate to publish their personal earnings to end any speculations about tax evasion in a Newsnight debate. All candidates agreed to do so. Today, Boris Johnson made public what he had earned in the last year and the amount of income tax he pays. The accounts show that he pays full income tax and was right to reject Livingstone’s claim that he ran a tax avoidance scheme similar to that of the former mayor. 

To no surprise to most observers, Livingstone was not quite so forthcoming with the amount he earned. Despite his promise on Newsnight, today he only disclosed the amount he paid himself through a company, which is exactly the vehicle he used last year to avoid paying income tax to the tune of £50,000. What he really received we will never know since he refuses to reveal it. The partial account reveal that he paid 14.5% in tax, which is a lower tax rate than any dinner lady at City Hall would have to pay.

One of his strongest supporters, Steve Richards from The Independent called his decision to construct a tax avoidance scheme a ‘catastrophic error of judgement’ on Newsnight tonight. Many Londoners will have another word for it: hypocrisy. 

Boris versus Ken - does Labour want to win?

Only less than a month to go to the London Mayoral Elections and most observers agree it is still too close to call. While the Labour candidate Ken Livingstone has been leading the pack in January, London Mayor Boris Johnson has closed the gap and many people now believe the election is his to lose. 

That is a remarkable situation in a city that is essentially solid Labour territory. Several factors may have contributed to this. There is first the mayor’s popularity. He is well liked by many Londoners and polls indicate that this appeal stretches across the party political divides. He has also consistently articulated a non-partisan vision for London and fought London’s corner with the coalition government. That’s why many people who consider themselves traditional Labour voters have in fact voted for Boris Johnson last time, and may do so again this May. 

The popularity of Johnson is matched by Livingstone’s lack of the same. He is widely seen as a divisive candidate and the polls indicate that he fails to command the support of many Labour voters. The reason for this is to be found in his fractious relationship with the Labour party (he left the party to become the Mayor of London fighting against the official Labour candidate), but also in some of his character traits. While Johnson often gives the appearance of a gaff-prone bumbling politician, Livingstone comes across as calculating. His recent remarks about the Jewish community in London echo his previous outbursts in public which many people perceive as close to anti-semitic. 

But more importantly, to many ordinary people his actions speak louder than words. While he previously publicly denounced tax avoidance schemes, he ran such a scheme himself since 2009. He also frequently uses derogatory language labelling bankers ‘rich bastards’ but gave his own partner the job of his personal assistant with an annual salary to the tune of £92,000 of annual salary. This salary is more than any Welsh minister would receive, and only fractionally lower than that of Cabinet ministers in Westminster. 

These are implausible actions for somebody who keeps praising his own socialist credentials. Given Livingstone’s difficulty with ordinary Londoners, the Mayor’s most recent outburst in a radio show may thus do Johnson no harm. In a way, it is a reminder that Boris does not suffer fools (or slander) gladly and it may count in his favour. 

Still, with Livingstone neck to neck with Johnson the outcome is not certain. The support afforded to Livingstone by the Labour leader Ed Miliband is nothing short of a gamble however. And one Miliband may wish he'd never made in the wake of one of the biggest by-election defeats in British history. As Labour was trounced last week in Bradford where its 40 year electoral domination was turned into dust by George Galloway from the Respect Party, Miliband must hope that Livingstone can pull it off. Or perhaps not. Miliband is Jewish and sometimes, standing next to Livingstone, looks like he wishes he was blessed with another candidate. He is not the first nor the only one in his party. 

Red Ken caught red-handed

I do not think most Londoners will have to look long and hard for a word when they hear about Ken Livingstone’s tax avoidance scheme that he set up in 2009 and has run ever since. I believe the word is ‘hypocrisy’ and, no doubt, he will be branded with it again and again throughout the electoral campaign in London. But how did we get here? Let us recap. 

Ken Livingstone has been more than straightforward when it comes to say what he thinks about people who use tax avoidance schemes. He repeatedly called them ‘rich bastards’. It turns out he included himself in this description. 

The easiest way to avoid taxes is of course to channel any of your income through a company over which you have complete control. You are the sole owner of that company, and the only one who brings in the income. The tax you pay on company earnings is 20% while income tax would have come in at the rate of 40% (or a whopping 50% if you earn more than £150,000). That is a pretty saving of dozens of thousands of pounds. Of course anybody can do this, but most people who do not have access to sophisticated legal advice and work as self-employed simply pay the tax on the income they declare. 

Not so Ken Livingstone. As it was revealed on the weekend, Livingstone channeled his income since 2009 through a company which allowed him to save income tax to the tune of £50,000. This handsome sum neatly describes the gap between his rhetoric and his own action on tax avoidance. 

While he castigated everyone who had such a tax avoidance scheme as ‘bastard’, he himself established the very same scheme, plus split the fees that he got for speeches and  his own media work between himself and his wife, which again saved him a pretty buck in tax. 

Very few people will be sorry for all the puns coming his way now, given that he has been caught red-handed doing exactly what he accused others of doing. Oh, and in case you wondered how his rhetoric stacks up on the 1% versus the 99% of which he so eloquently spoke, yes, you guessed right: he fairly and squarely falls into the category of the 1% top earners in this country with more than £230,000 income per annum (per company books of course). Only, so while he is one of the 1%, he chose not pay tax as many others in that group do. I guess, we can now safely label him with the word he used for others: ‘rich bastard’.