A real test

Although woken at the crack of dawn by my daughters this morning (note to self - buy thicker curtains for their room) it was not until about 8am that I heard the interview on the Today programme with the new head of the exam markers' watchdog, Ofqual (Offmark would have been a much more satisfying name), following up her remarks about imperfect marking. The BBC News website has the story...



However, spare a thought for the poor students who are taking English exams in other parts of the world. When in Bermuda last week, the hot topic of conversation was that GCSE students are having to get up as early as 4.30am to get to the exam halls for 5.30am and 6am exam starts. This is to avoid, it is said, the prospect that someone in the UK could leave an exam after 30 minutes and then start emailing the questions to Bermuda, thus giving those students an unfair advantage. The Royal Gazette had a piece about this yesterday.



Given that the time difference is 4 hours (at the moment) this means that a UK based student could start sending information over at 5.30am Bermuda time (assuming the exam started at 9am in the UK). Quite what the Bermudian student is supposed to do with this information at this time of the morning is beyond me. I would have thought if people are going to cheat then there are better ways of preventing it than penalising a whole cohort of students. I also understand that this is a new arrangement as of this year, and the students got all of a couple of weeks' notice. Clearly, if it continues, the students with wealthier parents or families in the UK will come over here to take their exams and not be caught up in this mess.

Rejoice! Rejoice! Rejoice!

Non-doms: Gordo's got it wrong

I have been wrestling with the issue of the much trailed non-dom levy. On the one hand I am all in favour of people paying their fair share of tax, but on the other I am dismayed that it is being done in such a cack handed manner which is likely to damage the economy. Whilst I have little sympathy with US businessmen who are to be taxed on their worldwide income or pay £30k since a UK citizen working in the US would not even get the benefit of that option, I can see that the arbitrary change is a bit tough on people who have managed their affairs in the expectation that the tax system would remain stable.

However, rather than imposing the flat, reggressive £30k levy, there are a couple of sensible reforms that the Chancellor could make in a few weeks which would not be such an obvious cause celebre amongst the ex pat business community.

1. Change the rules so that any income derived from employment based in or mainly undertaken in the UK is subject to UK taxation, regardless of where the payment for that employment is made. Currently, non-dom workers can be paid through off-shore companies for work done in the UK. This would be similar to the crackdown on consultancy companies, which were used as tax efficient vehicles.
2. Levy a small percentage of the value of any real property held by an offshore company. Lots of properties (including the entire HMRC estate, via Mapeley STEPS) are held in offshore properties to be tax "efficient" and where properties are held in an SPV, this SPV can be sold avoiding the need to bring income into the UK or pay UK stamp duty as the only transaction is the sale of the SPV, in the BVI or whereever it is located.

There is no reason why foreigners working and living in the UK should be getting a free ride on the work done in the UK or property owned here. But the compromise (to keep a competitive advantage) is that we do not seek to tax money earnt and kept offshore.

Banking 2.0

I have recently become intrigued by the newish phenomenon of P2P lending over the internet. Irritatingly, I recall reading an article all about it but now cannot locate it - I am convinced it was in the Spectator, but it appears not.

The principle is simple - you agree to lend money at a particular rate, and then the website lends it out to borrowers who want the money at that rate. The trick is that the website cleverly splits your money into parcels as small as £10, so if one lender defaults, the loss is not major. The downside is that whilst the returns are greater than traditional bank interest, your money is tied up for the lifetime of the loan (up to 5 years), although for some people, this might be a good thing.

I have signed up on Zopa.com and have experimented by lending a measley £100. You can either lend in the general market (where Zopa does all the work once you have set the criteria) or you can take part in the Dutch auction and bid to lend money to people who are on the listings section. In the US, a rival site, Prosper.com, has a vibrant listings section, but on Zopa it is quite small and many of the people on there seem to be having a laugh. For instance, people borrowing a couple of thousand pounds but claiming that their income exceeds their expenditure by £500 or more each month, which in my mind does not really stack up. I have offered £20 to a lister, but I think I will steer clear as the borrowers are obviously hoping the "personal touch" seep through and the lenders will allow their heart to rule instead of their head, and I have no intention of becoming a one man Northern Rock (although I have just got 8.5% on my £20 for 3 years, which is not bad, let's see how it goes)

If you are interested in Zopa, please click on the link in the side bar and sign up so that we both earn £30 or you can sign up here.

Of course, micro lending is also used as a development tool, and if you are not worried about getting a return and just want to do good - I recommend you check out www.kiva.org.

Ken's cant

This week Ken Livingstone has been busy justifying the new increased congestion charge for drivers of cars in emission band G or above - which will be up at £25 per day with no rebates for residents.

Ken says that if people want to drive polluting vehicles, they should have to pay for the privilege.

This is a fine sentiment, but bears little scrutiny, when you examine his scheme.

• All cars pollute to some extent. The scheme is favourable to small cars, and neutral for cars just within band F.
• There is no charge for driving outside of the operation hours of the scheme - but what difference to London's air quality and climate change is there if big cars are driven at night or at the weekends?
• The zone covers a completely arbitrary part of London - why are band G car drivers in South, North and East London all exempt?
• The scheme makes no allowance for the number of people in a car. Two band F cars each emitting CO2 at the rate of 224 g/km and each carrying one person is far more polluting than one band G car emmitting 230g/km, but carrying two or more people.
• There is no allowance for the amount of CO2 actually emitted by a car on a particular day: a smaller car might be driven around all day - free of charge - whereas the large car may just take one short journey but be subject to a £25 charge. This is mad, when the smaller car has pumped out more CO2 over the course of the day.

And finally, not all the cars in the scheme are 4x4 giants of the road. Try getting more than three children and two adults in anything smaller than a people carrier (with compliant child car seats). Sure, there are people carriers which are not in band G, but many of them are.

The sad truth is that Ken Livingstone is a bitter little man who wants to do what he can to make the lives of people he hates as difficult as possible. He has no genuine interest in the environment - if he had he would be thinking hard about some of the points above.

Yes, I do drive a car in band G - it is an estate car. Just about the only time I drive it on my own is to move it onto residents' parking in the morning and usually when I am in it, it is full. If the scheme goes ahead, I will have to get a new car as we live 15 feet within the zone and I could not even move my car a few yards into a resident's bay without being caught on camera - although this means I will change my car sooner than I would otherwise and thereby cause even more carbon to be emitted.

So our only hope is Boris.

MP's expenses and pay - a simple solution

Two problems: (1) Members of Parliament are paid a salary which is too low to attract talented people; (2) Members of Parliament have expense allowances which are not transparent/are misused.

Solution: Roll up the the total salary paid to an MP together with the total amount which could be claimed via allowances (adjusted for London MPs smaller housing allowance) and place the entire amount for each MP into an account to be operated by that MP. The MP should then be free to use this budget as he or she sees fit (in connection with his/her activities as an MP), including to boost his or her own pay. Clearly, the bigger the salary, the smaller the budget for other things.

This solution would mean that there would be no incentive for MPs to employ family members in jobs to boost the family finances artificially. It would also make it much easier for MPs to pool resources - share staff and subscribe to centralised services. Not having set amounts to be claimed for certain activities would make MPs more businesslike and encourage them to shop around for the most efficient service and thus stretch their budget the furthest. This amount could then be increased each year in line with inflation, but then it would be up to each MP to set his/her own pay. Might make for some interesting decision making....

Curious timing

There has been much in the media lately of private schools being forced to justify their charitable status to the Charities Commission which has been gleefully implementing the new Charities Act 2005 - or as some of us would have it - doing the government's dirty work.

Quite why it is thought to be a good idea to make it more expensive to send children to private schools - and therefore out of the reach of more people - escapes me, rather in the same way as it escapes the Charities Commission that saving the public purse the cost of educating a significant number of children and improving the economy by providing thousands of well educated young people is actually a public good.

It is no co-incidence that my alma mater, the Dragon School, is in the Observer today which reports that it is giving lessons in generosity in a bid to be more charitiable in the eyes of the Charities Commission.

However, I wonder if it is more of a co-incidence that my other mater, Eton College, has been in the public eye following the broadcast of only the third ever documentary in its history filmed with its co-operation. A Boy Called Alex was shown last week on Channel 4 launching the new series of Cutting Edge (the documentary filmed at Eton about 15 years ago, when I was there, was also under the auspicies of Cutting Edge) and it traced the story of the remarkable Alex Stobbs pursuing his goal of conducting Bach's Magnificat whilst battling cystic fibrosis.

The film showed Eton at its very best. Not only is Alex a music scholar on a full fees bursary but the school was providing him with every possible assistance so that he could continue to attend whilst being treated for his debilitating condition. The film showed hardly anyone from Eton other than head of music, Ralph Allwood (a dedicated teacher if there ever was one) and Alex's nurse and a few interviews with Alex's contemporaries who were performing. As a result, it portrayed a school comprised exclusively of motivated and talented students. Hmmmm.

But as much as the film boosted Eton and showed what it is doing for a musical prodigy, it also raised awareness of cystic fibrosis. So, I wonder what parents of cystic fibrosis sufferers now think of Eton and whether they would want to strip it of its charitable status - especially that famous one, Gordon Brown?

Ken on Dispatches

The Dispatches programme last night on Channel Four was a rare example of the media giving serious attention to the office of London mayor. For most Londoners, if you do not read the Evening Standard, you would not hear anything about what goes on in City Hall. Although I was delighted to watch Ken take a pasting. I thought that Martin Bright dwelt too heavily on trivia and conjecture and thereby diluted all his decent points.

Amongst the trivia, the "revelations" about Ken's drinking and the news that out of tens of millions, the LDA has made a few grants to companies that have soon after failed. On the latter, it would be extrordinary if any public body making grants to businesses did not have the occasional failure - thriving businesses with strong cash flows rarely apply for grants. If Bright had evidence of corruption or negligent procedures, he should have put this on TV, but his hackneyed tactic of turning up at abandoned offices was not worthy of the complex issues being discussed. As to the drinking, I couldn't give a monkeys.

The issue of Ken's foreign policy is more of an issue. Whether London has its own missions in foreign cities is neither here nor there if they actually provide some benefit to London and its economy. However, it would have been more interesting to know what is the cost benefit analysis of a London "embassy" in Beijing or Mumbai - rather than a sneering commentary.

The programme dwelt heavily on Ken's relations with Venuzuela. The deal can be summed up simply as it is a bad deal for the poor of Venuzuela and that it would no way cover the costs of the half price travel for 250,000 people as Ken claimed it would.

However, the fact that the Mayor of London is able to conduct his own foreign policy independent of the UK government is frankly absurd. Whose fault is that? Surely those who framed the legislation have got this to answer for and is an obvious area for reform by the next Conservative government.

The allegations around spending public money to discredit Trevor Phillips and to pay for people working on Ken's re-election campaign were the most significant and direct allegations of corruption.

But where was the material about Lee Jasper (as revealed by the Evening Standard) or Ken's approach to local democracy when he extended the Congestion Zone into west London? Or why he thought it a good idea to put bendy buses on London's streets or why traffic has apparently been deliberately fouled up by badly phased lights and pedestrianisation schemes, such as around Trafalgar Square? Why was there no investigation or explanation of the cost of Ken to the London tax payer and where was the analysis of the delays caused to the Tube modernisation from the battles he had with Brown over PPP?

Still, for all its faults, if the Dispatches programme encourages more people to back Boris, it is not a bad thing.

Me and John McCain

Nearly eight years ago, I had some spare time between finishing law school in June 2000 and starting my training contract in March 2001. So I headed out to the US and found a nice little House of Representatives race in western Massachusetts where the Republicans, in the form of Pete Abair, were making a concerted effort to win back the only district in Massachusetts which was even vaguely winnable, but which had been Democrat since Bill Clinton entered the White House.

The highlight of the campaign was a visit by John McCain. I wrote it up at time in an email I sent home to a long mailing list (this was before I discovered the joys of blogging). Since Mac is now back, I thought this was a good time to reprint the extract from my email, with a few snaps I took on the day, so here it is:

"From the time he touched down in his jet, to the time he took off again, he was on our turf for no more than 2 hours, yet still his visit has been the major event of the campaign. For the programme to be a real success we were relying on the weather, since the first event was a welcome rally at the airport, complete with the West Springfield high school band in attendance. In fairness, whilst as a Brit, I would never think the weather in October reliable enough for an open air event, it has been pretty good - Don's [the campaign manager] jeep still hasn't got it's cover on (although the snow today may change that). However, the day McCain came the temperature dropped 10 degrees and the heavens opened - raining particularly hard during his speech. I nearly missed his airport speech, as one of the less helpful volunteers had left all the refreshments for the event back in the campaign office, and I was sent off with Matt - one of the more helpful volunteers (volunteer is not quite the right word for Matt, as he is actually getting credit points towards his college degree for working on the campaign - if I could have done that in Bristol, I might have got a first!), to fetch it all. Heading back towards the airport, Matt said "there he is" pointing towards the small jet flying across the road.

We had spent the previous evening painting signs for everyone to wave on his arrival. I had seen campaign workers distribute such signs when I was down in Philadelphia for the National Convention back in August, indeed I had even waved a sign saying "Welcome Dick Cheney" (usually a strange sign to wave but appropriate enough at a Dick Cheney welcome rally). With this expertise alone I was made head sign honcho, and merrily got a whole group of people painting "Welcome Senator McCain" and "We love McCain" etc with several different colours of emulsion paint. The "McCain Abair 200?" sign was supposed to suggest that Pete will be his running mate for President some time in the next decade, but no one else really got it. I seem to have been put in charge of all graphics - which is very funny, since I can't draw for toffee - although I am with the right party, since I can do an elephant from behind - the elephant being the symbol of the Republican Party. I have been producing flyers,

I made the 'This Bear is for Abair' sandwich board [above], and the office volunteer wall chart. However, I am most proud of the fact that my flyers for the McCain event were adapted and turned into adverts in the local press - so my artwork has now been published! In the end, with all the rain, nobody really waved a sign, as they were too busy holding umbrellas.

McCain made light of the rain, referring to "this balmy Arizona day" (he is Senator for Arizona). Later he joked that in Arizona they have so little rain that the trees chase the dogs. We then put him on a bus with the press, which we called "The Straight Talk Shuttle" in deference to his "Straight Talk Express" campaign earlier in the year. The press were on top form asking him such tough questions as "Senator, do you think there needs to be more civility in politics?" (he does) and "Senator, certainly the country's thoughts and prayers were with you through your cancer surgery this summer, what is the prognosis?" (excellent).

With our police escort, no less, we got to our destination probably at the same speed (there is not a lot of traffic that can be held up in Holyoke, MA), as we would have done anyway, but it gave the proceedings a touch of glamour. The main event was being held in a converted warehouse, and cunningly renamed, "The Wherehouse?" (reminds me of the joke about the dyslexic pimp, who bought one). The first problem was that we had set aside a room for the big sponsors who had contributed $500 or more, where they were going to have their photos taken with McCain. However, this was not being properly policed and every Tom, Dick or Harry was wandering in. Then the press wanted to come in. I was pretty sure they weren't allowed in, but was not confident enough to chuck them out. Finally Don turned up and told everyone in a loud voice what the situation was, and I had great pleasure in helping him to evict the interlopers. Luckily, despite not paying $500 I was allowed to have my photo with McCain - sharing my moment with Matt. Apparently, it is the done thing to send the photos off to the office of the famous guy in the photo, where he will then sign it and return it to you. I am thinking I should sign the photo myself and send it to McCain, as a memento of his visit. [I still have this somewhere, but sadly not scanned]

Upstairs for the main event, and more speeches. It was all going so well, the tree/dog joke, and some other choice lines until McCain, trying to refer to Pete, called him 'Brian', corrected himself, and said 'I mean Jay' and proceeded to call Pete 'Jay' until enough people in the crowd called out 'Pete'. He recovered pretty well, when a minute later he referred to entering his 'declining years' and then added, 'as I just demonstrated'. Then when Pete took the microphone again, McCain came up behind him, and said, 'You can call me Frank'. Still, Pete took it all well, so when Matt and I were idly drafting his thank you letter to contributors, Pete accepted Matt's suggestion to style himself Pete 'Jay' Abair at the bottom of the letter.

On the way back to the airport in the bus, there weren't so many press, so I saw my opportunity to speak to the Senator. I had already met him briefly in the Wherehouse? where I had tried to explain that I would have tried to get on his campaign if he had won the primaries - he had looked slightly baffled. This time I had a better cover. A few days earlier, whilst reading the Spectator magazine over the Internet (for those who are not familiar, despite its name, it is a political weekly, not another type of magazine you'd expect to find on the net under that name, although I am sure they get plenty of hits due to mistaken identity), I was frustrated to see that the cartoons were a bit too small to read some of the text. So I sent an email to the online editor. As I was writing, I had the idea to suggest I wrote an article on politics and the internet, or on the US political campaign. Much to my surprise, the editor, Toby Young, wrote straight back, saying yes, but how about an article on US politics and the Internet? So I replied, yes - when do you want this article and by when? Again, I got a reply within the hour - 1000 words by Monday, if you can. So my assignment became a pretext for speaking to McCain. By a stroke of luck, his primary campaign stands out as the best ever use of the Internet by a politician or political campaign, so my pretext was further enhanced. Most of what he told me was already in articles had previously read, but it was nice to hear it from the horse's mouth, so to speak.

McCain is a living legend in the US. The story of his 5 years as a Vietnam prisoner of war leaves in no doubt his status as a true hero. The Vietnamese offered him early release, since as he was the son of the US General in command of the Pacific region (although not directly in charge of the war), it would have broken the morale of the other captives. When McCain refused, he was tortured more. He said the beatings weren't so bad, because after a while he would just pass out. I hate it when people are described as heroes, when all they are doing is taking the only route to survival - they deserve praise indeed, but McCain had a way out, and for good reason didn't take it. After returning, he went into politics. As a politician he has led the crusade to clean up US politics, in particular the pork barrel system, whereby in return for supporting a piece of legislation, the Congressman or Senator inserts an 'earmark' or rider into the bill, spending, X million dollars on some project in the home state.

This is the concept of 'bringing home the bacon', and some of it is worthy, and many legislators boast about how much they have brought home to their state or district. However, much of it is promoted by lobbyists hired by the Congressman's constituents, at great expense, and often lots of money somehow makes its way from the lobbyist to the politician. The other corrupt part of the system is the 'soft money'. Individual campaigns, such as this one I am working on, cannot accept donations from companies or from individuals in amounts exceeding $1000. However, the National Parties can take unlimited amounts of 'soft money' from corporations and spend it on behalf of campaign. Also companies (or unions or anyone else) can set up Political Action Committees or PACs as they are known, which can give up to $5000 to a campaign. Because of this, and the astronomical cost of campaigning, the Republicans are totally dependent on money, for example, from the drug companies, whereas the Democrats get millions from trial lawyers. The drug companies want to keep their products less regulated, but the trial lawyers want more regulation, giving them more opportunity to sue, you guessed it, the drug companies. About the only workers with any rights are union workers, because the only people to give money in return for workers rights, are the unions.

McCain was never the favoured candidate of the Republican Party because he was standing up against this system, and in the end, it was the sheer weight of Bush's warchest - raised as per above - which sank him. Personally, the whole thing has come as a shock to me, although if I have explained it properly, you will understand the system better than the average American - or dare I say, American journalist. I am just pleased to find myself on the 'right' side of this argument.

McCain's visit raised some valuable dollars - not anywhere near the $50,000 we wanted, but more importantly it raised the profile of the campaign ten fold. We were on the evening news (if you pause at the right spot, you can just see me in the background) and on the front of all the papers. We have used footage from the event as the basis of our Campaign commercial - which I have tried to put on the Internet ..."

If this post gets any traffic, I might be tempted to post more of my juvenile correspondence home. If you would like to read more, let me know in the comments.

Party funding - does it matter that much?

Ever since Lord Nolan reported on standards in public life as cover for Labour's plans to introduce "transparency" in party funding (before it blew up in their face so spectactularly), I have been suspicious of attempts to limit the ability of individuals to donate to political parties. It is unfair, for example, that a busy person who chooses to donate more than £5000 must appear on a public register, but a person with a lot of free time can work unpaid for a political party and it is lauded as a healthy part of the process. In the US, it is treated as a question of freedom of expression that political donations can be made - albeit with certain limits imposed on donations to individual candidates.

As usual, I digress.

In amongst the funding scandal have been regular discussions of whether or not political parties should be funded by the state - here, for example. Given that both Labour and the Tories could probably get by on £20m per year and presumably the Libdems on a lot less, the amounts in question are a drop in the ocean, even when compared to the running costs of Parliament let alone overall government spending which runs at about £1bn per day.

Clearly, if there were to be state funding, the key issue would be as to how the money is handed out - and the advantage of incumbency would be completely unfair and open to abuse. Surely a perfectly fair route would be to combine donation limits with tax relief and/or match funding.

To be clear, I do not think donations should be limited, but sometimes when the writing is on the wall it is better to go for the least bad solution.

One rule for them...

Speaking as someone working in a sector regulated by the various bits of draconian anti-money laundering regulation, I have no sympathy for politicians such as Peter Hain who have so flagrantly managed to breach the funding rules and then try to explain it away as "administrative error".

At least one solicitor has been sent to prison for failing to abide by the money laundering rules when the judge agreed that he was completely unaware that there was any criminality involved or that he had profited by more than his usual fee of £399 for doing the work he was asked to do by a acquaintance - details here. On the appeal against the sentence of 15 months (reduced to 6 months) the judge also noted that the solicitor, Mr Griffiths "had lost his practice as a result of the conviction and the impact on his health and personal life had been ‘dramatic’". However, he agreed with the first instance judge that ‘society demands a high degree of professionalism from solicitors’, and predicted that Mr Griffiths will ‘rightly’ be struck off the roll.

Compare this to the standard demanded of our politicians.

Offset your infidelity

My friend Tom over at the Wobbling World blog (the link to which in my blogroll, I have just repaired) has recently highlighted an amusing little site - Cheat Neutral. This site allows anyone who is considering adding to the general misery of the world by cheating on their partner, to offset their cheating by making a donation to keep a faithful partnership together.

The site is a joke, obviously, but makes the serious point that carbon offsetting is also a joke. Although I am no expert in this area, it did strike me sometime ago, that if a person is concerned about the size of his carbon footprint, then the sensible thing would be to try to reduce that footprint before spending money on schemes which purport to reduce carbon dioxide on the other side of the planet.

POCA - I may have been too hasty

In my analysis of POCA 2002 (see below) and a money laundering offence having been committed by Abrahams and the Labour Party in their breach of PPERA, I forgot that there is now a de minimis level of offence before POCA kicks in - I think (and I need to check, and will update this when I have) that the original offence needs to carry a penalty of more than one year's (maybe two) imprisonment. The breaches of the PPERA would only carry a penalty of 1 year, so in that case POCA would not be engaged.

Mendelsohn should go - says Dianne Abbott

Dianne Abbott was on Channel 4 News this evening calling for Jon Mendelsohn to be fired or resign, and used the phrase "beggars belief" in response to the suggestion that Watt did not know that the arrangements with Abrahams were illegal.

Abbott also made the very sensible point (which had occurred to me earlier) that no new laws are needed, political parties just need to abide by the ones already in force. Indeed, how could politicians be expected to abide by new laws if they cannot manage the ones already in place. Some people will use this episode to argue for state funding. It would be like the Dangerous Dogs Act - tough cases make bad law.

Jon Mendelsohn - beggars belief

At PMQs today, Gordon Brown stated that Jon Mendelsohn has put out a statement (which I have not been able to confirm or get sight of) stating that on his appointment on 3rd September this year he was told by Peter Watts of the "arrangements" under which David Abrahams donated money to the Labour Party, but that, whilst irregular, these arrangements had been approved by the Electoral Commission. Mendelsohn, although apparently accepting the statement in respect of the Electoral Commission, decided he need to "regularise" the position and took steps to contact Abrahams (which he did by way of a letter delivered to Abrahams, just as the story was breaking).

This account raises the following questions:

1. Did Watts give the same explanation to anyone else re Electoral Commission approval?
2. Did Mendelsohn really believe this explanation - unlikely since (a) it flies in the face of the whole basis of transparency in political funding and (b) he sought to undo the arrangements.
3. Why did Mendelsohn not seek to verify Watt's explanation or mention it to anyone else? Or did he?

The whole thing stinks to high heaven.

UPDATE: Mendelsohn's statement is now on the BBC website and he said in respect of the explanation offered to him by Watts: "He told me these donations fully complied with the law and I had no reason to doubt that information" - except you think as a senior fundraiser, he might know what the laws says and might have dug a bit deeper.

I have a feeling that the Watts/Abrahams defence to all this is going to be that the money was really given to Kidd and Ruddick (although it would be harder to say this with a straight face in the case of the other lady who signed a blank cheque) and they freely made the choice to donate to the Labour Party - except it wasn't and they didn't. As I commented on Iain Dale's Diary earlier this week, it was either a taxable gift or they were given the money as agents. I suspect that Mendelsohn knew that the reason Watts said it was all OK was that it was originally a "gift" from Abrahams to Kidd/Ruddick, but if he says that, he will look even more daft as on any proper legal analysis, they were clearly Abraham's agents.

David Abrahams, the Labour Party and the Proceeds of Crime Act 2002

It has widely been accepted (including by Gordon Brown) that it is illegal to disguise the source of donations made to a political party. Various people have raised the spectre of money laundering, so I thought it might be helpful to set out how a money laundering offence might have taken place, given the facts we know about David Abraham's donations to the Labour Party.

Under the Proceeds of Crime Act 2002 ("POCA") it is an offence for a person to "become concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acqusition, retention, use or control of criminal property by or on behalf of another person" (section 328) and under section 329 "A person commits an offence if he: (a) acquires criminal property; (b) uses criminal property; (c) has possession of criminal property".

It seems to me that the donations became criminal property when they passed from Mr Abrahams to Mrs Kidd and Mr Ruddick with the intention that they be passed to the Labour Party as donations with the purpose of disguising their source, because under section 340 of POCA, criminal property is defined as any property that you "know or suspect" is or represents the benefit of "criminal conduct".

The penalty - up to 14 years in prison and an unlimited fine.

UPDATE (29-11-07): In response to this post, Head of Legal has responded in the comments of his own blog as follows: "I think talk of POCA is wild, too, Danvers. In what sense was the money the proceeds of crime? How did it represent the benefit of criminal conduct? If Janet Kidd told Labour the money came from Abrahams - and Peter Watt did know that - then she acted lawfully, and so did Abrahams. And so did Peter Watt in accepting it. Nobody gets the money by doing anything unlawful. What was unlawful was wrongly reporting the agent as the donor."

My response was: "I am not sure it is as simple as that. If Kidd/Abrahams donated the money to Labour and told Labour (i.e. Watt) that it was Abraham's money but that it should be reported as Kidd's money, they (all three of them) are setting out to breach the PPERA. My understanding of POCA is that just about any transfer of cash in furtherance of a crime constitutes an ML offence. It could be argued that the cash became tainted with criminality the moment it was transferred to Kidd for the purpose of disguising its true origins for the purposes of a declaration under the PPERA.It would be the same if an employer and employee were deliberately cheating on Income Tax and giving the difference to a political party - and the political party knew about the scheme. To be fair, I think to prosecute under POCA would be unfair, but the police love using it to stitch up the nearest and dearest of the real offenders, once they have touched the tainted cash."

Comment moderation

Until I figure out how to delete or overwrite offensive or downright weird posts, comment moderation will be on.


Sorry for that, but if you look at the comments on the post two below, you might understand why.


If anyone can help, please leave a comment....

UPDATE: That was quick. Now have figured it out, so comment moderation is back off. I will also experiment with removing the word recognition stuff as well.

Behaving like the next Prime Minister

I watched the entire interview given yesterday afternoon by David Cameron, presumably outside his home in Witney. According to Iain Dale, he was "statesmanlike". I disagree. I have no complaint with the substance of what he had to say, but I did not feel that Cameron looked like a Prime Minister in waiting as a result of the way the interview was given. Here are my tips to DC on making statements/giving interviews on television:

1. Be sparing. Stick to the important stuff. Let your team/spokesmen deal with the nitty gritty issues and low politics and show that you are above the crap.

2. Be even more sparing on exclusives. if you do them, make the broadcaster work hard. Only speak to a "name" and preferably someone who will be a least a little sympathetic. Gordon Brown got Andrew Marr in Downing Street. Who did Cameron have yesterday? Some unknown journo with an Irish accent who showed little respect (asked Cameron "what your Tories are going to do next" in the same way as hemight have asked Lord Sutch (RIP) about "his" Monster Raving Loony Party). If you have something to say, it must be worth getting a crowd along and having an impromptu press conference.

3. Choose your ground. The Oxfordshire garden is not a good look. If you can't easily get to a TV studio get somewhere set up near your constituency base where you can give a press conference in dignified and professional surroundings - this might just involve upgrading the local village hall. Menzies Campbell gave his interview yesterday via video link from Edinburgh direct to the presenter in London and this just looked more dignified.

4. Deep breath. There was no need for Cameron to react so quickly yesterday - lots of people were piling in and if Cameron had to comment personally (see 1, above) it could have waited at least until this morning - and Cameron's interview with Andrew Marr this morning, ticks all the above boxes.

Mercer leaves Gordon's Big Top

The news on Iain Dale's Diary that Patrick Mercer has ceased to be a government advisor came as scant surprise as he had been in the news earlier last week criticising Brown's trip to Iraq. Like many Conservatives, I had speculated to myself about a suitable punishment for the disloyal Tory MPs who have taken Brown's 30 pieces of silver but I wonder if I was, in the words of David Cameron, applying the old politics.

The "0ld" theory of the political big tent is that it is better to have your enemies pissing out of the tent than standing outside, pissing in. But what happens when your latest circus pony decides to lift its tail and crap on the floor of your big top?

Perhaps I am crediting Cameron and Mercer with too much tactical nouse, but perhaps the reason Cameron was so relaxed about Mercer going over to "assist" Labour was that (a) it helps further "detoxify" the Tory brand (how can Labour make their favourite ad hominen attacks on MPs such as Mercer - as they did when he resigned from the front bench, if they are taking his advice) and (b) it gives the Conservatives a more potent weapon - an opposition back bench MP carries no weight when he attacks the Prime Minister - a government advisor does.

So maybe it will emerge that the gallant Member of Parliament for Newark - Lieutenant Colonel Mercer - was on a mission behind enemy lines. Bercow has said that rumours of his defection to Labour are entirely false, so we just need him to lift his tail and come running back to the Tory tent.

Death duties - another idea

The raising of the threshold for the payment of inheritance tax is very welcome but I would advocate a further reform which would make the system fairer and, in my view, cleverer.

At the moment, if a person's estate is above the inheritance tax threshold, gifts given during that person's lifetime can be counted as part of his estate and taxed accordingly if he dies within 7 years.

A 7 year window concentrates the mind - even a fit 70 year old can see the benefit of starting to plan to reduce inheritance tax. If this window was reduced to 5, 3 or even 1 year, there would be less of an incentive for people to plan to mitigate the inheritance tax payable by their estates. Furthermore, if the window were reduced to one year, this would be a financial bonus for many of those who have terminal illnesses - which often strike before old age, frequently at a time when a person's heirs are still financially dependant on that person - although admittedly the exemption for gifts to a spouse are consistent with this goal, not everyone has a spouse. In fact, I would extend the spousal exemption to children under 18.

However, by reducing the window in which gifts are at risk would be a popular and fair move and would allow money which is passed on to be spent rather than saved (to avoid the risk of a large tax bill) which is also positive for the economy.

It is time to get creative about tax, to make it simpler and fairer.