Isabel Hardman

Cameron leaves the goal open for Clegg and Miliband on tax avoidance

Cameron leaves the goal open for Clegg and Miliband on tax avoidance
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It's fashionable to say Downing Street isn't very good at strategy. So fashionable, in fact, that sometimes journalists worry they're being unfair to the Tory leadership. But today we saw yet another example of the Prime Minister leaving an open goal for not just the opposition party but also his own Coalition partners to score. On Monday, Google's Eric Schmidt visited Downing Street for the regular Business Advisory Group meeting. He was allowed to leave by the back door, and the Prime Minister's aides were adamant that David Cameron wouldn't 'confront' the Google boss on his company's tax arrangements. All he planned to do was to take the group through his agenda for the G8, they said.

So today, Nick Clegg and Ed Miliband jumped into the void left by Cameron's reluctance. After his 'I love Coalition' speech this morning, Clegg told journalists that even if the Prime Minister hadn't spoken to Schmidt about tax, he had. This is what he said:

'My overall approach to tax is the obvious one, in fact I put this directly to Eric Schmidt from Google and other business leaders at a meeting in Downing Street just a couple of days ago, which is, you know, we are bringing the tax burden on corporations down by lowering the rate of corporation tax, but in return people have to pay their fair share. Now look there is a really complex issue here which is that you've got tax and it is in a sense a symptom of the kind of growing pains of globalisation, because you've got the tax system which is a national, many of them are quite archaic, quite complicated, kind of rooted in an old economy, and now you've got these new corporate Goliaths who kind of operate in a sort of disembodied way, particularly those in the kind of digital sector, who quite unsurprisingly, can exploit what they think is the best deal for their shareholders and for themselves, in the kind of cracks and crevices between the different national tax systems… and we are the first country which as chair of the G8 is putting this absolutely at the core of our G8 presence is saying that we've got to make sure that the rules apply much more evenly and much more strictly across the piece so that big companies can't play cat and mouse with different national tax administrations.'

Now, aside from the fact that Clegg clearly thinks the tax world is some kind of giant Warhammer game, with fantasy figures swooping into cracks and crevices all over the place, this was another clever piece of work from the DPM as it made him appear more in touch with the public mood than his Tory colleague.

Meanwhile, Ed Miliband gave a similarly bizarre speech about Willy Wonka and Mr Burns from the Simpsons in which he directly attacked Google. The speech was at Google's own Big Tent event, which made the comments all the more powerful. Miliband said:

'I can’t be the only person here who feels disappointed that such a great company as Google, with such great founding principles, will be reduced to arguing that when it employs thousands of people in Britain, makes billions of pounds of revenue in Britain, it’s fair that it should pay just a fraction of one per cent of that in tax.

'So when Google does great things for the world, I applaud you. But when Eric Schmidt says, its current approach to tax is just “capitalism”, I disagree. It's a shame Eric Schmidt is not here to hear me say this directly.

'And when Google goes to extraordinary lengths to avoid paying its taxes, I say it’s wrong.'

This is another example of the Labour leader's own David and Goliath strategy: standing up to big powerful people and speaking without fear or favour.

But both these interventions could so easily have been avoided had Downing Street decided that the PM was just going to mention the awkward issue of tax avoidance with Schmidt. Instead, it was left open for Clegg and Miliband to play the tough guys. Which is why it's not just fashionable but also right to say that Number 10 has a bit of a strategy problem.