Ultra-rich lobby group with influence at No 10
Quote:They are among Britain's wealthiest businessmen, with access to the heart of Downing Street. Yet little has been known about the elite group of multinational chairmen, or exactly what they talk about during their breakfast meetings with the prime minister. Until now, that is.
Downing Street documents disclosed to the Guardian reveal how the secretive lobbying group, which consists of the heads of Britain's most powerful corporations, including BP, Unilever, HSBC, Shell and British American Tobacco (BAT), have used their private access to protect the pensions of the ultra-rich.
The exclusive club, known as the multi-national chairmen's group, consists of fewer than 10 executives. Its members are invited to Downing Street to tell the prime minister how they believe government policies are affecting international corporations.
Downing Street has been forced to release the prime ministerial documents after a two-year battle over freedom of information. They show the executives:
· outmanoeuvred Gordon Brown, then chancellor, to shield "fat cat" pensions from his proposals to tax them more heavily;
· wanted Tony Blair, then prime minister, to lobby George Bush to treat corporations more favourably in return for supporting the invasion of Iraq;
· and lobbied for less "burdensome" red tape so multinational corporations would continue basing themselves in Britain.
The behind-the-scenes personal approach to Blair helped persuade the government to back down on Brown's plans to tax the pensions of super-high earners more punitively. More "business-friendly" measures were then brought in. These allow a few highly paid executives to amass tax-free pension funds of up to £1.8m.
Link To Audio
Audio, Rob Evans: 'From the very very top multinationals'
Originally Brown proposed a 60% tax on pension pots above £1.4m. The Treasury had estimated the new tax would hit only 5,000 wealthy people, although others argued many more would be affected.
Seemingly impervious to the business arguments, Brown was refusing to water down his proposals. So nine businessmen in the group sought to go over the chancellor's head at one of the meetings with Blair on September 2 2003.
Before the meeting, Geoff Norris, Blair's special adviser on business, had briefed the prime minister. He wrote: "The group had raised concerns with the Treasury on the £1.4m earnings limit and received a fairly unpromising reply ... They would like to discuss with the prime minister whether there was any prospect of movement on this issue ..."
He said the group was worried that "recent policy pronouncements on pensions and speculation about possible tax rises have all contributed to a sense that the business-friendly emphasis of the government is fading".
The executives at the meeting, including Lord Browne, then of BP, Arun Sarin of Vodafone, Sir John Bond, then of HSBC, and Sir Christopher Hogg, then of GlaxoSmithKline, claimed the proposals would drive businessmen away from Britain.
Martin Broughton, one-time head of BAT, told the Guardian: "Tax issues regularly featured in these meetings as being a key issue for international companies determining where to base their business."
Niall Fitzgerald, head of Unilever at the time, said the proposed tax would have made it "increasingly difficult to attract the best and brightest from around the world to work in the UK with consequent negative effects on the UK's competitiveness and the UK's attractiveness as a location for international companies". The lobbying, allied with protests from other business groups, forced Brown to rethink. Within a few months, he had loosened the proposed cap on their pension pots so that more of their money would escape the tax net. The extra tax will only be payable on pension savings over £1.8m, not the originally proposed £1.4m, and will not come in until 2010.
He delayed the start date of the new regime to give the rich more time to re-arrange their finances. He also reduced the tax rate from 60% to 55%. The super-rich can thus shelter an extra £400,000 from the taxman - at Brown's original proposed 60% tax, that sum would have incurred a £240,000 tax bill.
The executives who attended the meeting say the rule changes do not benefit them personally, as the provisions only applied to future pension pots and their own pensions were already in place.
Downing Street released the heavily censored documents after Richard Thomas, the information commissioner, ruled that the public had a right to know how lobbyists influenced ministers. The briefing by Norris also shows that in 2003, the businessmen believed Blair was not extracting as much as he could from Bush's administration in return for supporting the invasion of Iraq.
They wanted Blair to lobby Bush more vigorously to allay worries about, for instance, tighter regulation of corporations and tax changes. The executives also wanted to persuade Blair not to bring in tougher rules after the scandals involving Enron and other American corporations.
The revolution is not an apple that falls when it is ripe. You have to make it fall. - Che Guevara
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