The writer, an MP, chairs the All Party Parliamentary Group on Anti-Corruption and Responsible Tax
For too long the UK has been a “laundromat” for corrupt wealth. The ongoing Ukraine tragedy highlights our complicity in allowing dirty money to spread. But it should not have taken a horrific war.
These deep-rooted problems became clear to me when I chaired parliament’s public accounts committee. Hearings with tech giants demonstrated multinationals using complex financial structures to avoid tax. Then a plethora of leaks, from the Panama Papers to the Pandora Papers, revealed the same structures were used by wrongdoers to launder money. Latest estimates suggest that economic crime costs our economy a massive £290bn annually.
Russian oligarchs are not the only players. Kleptocrats from across the globe, drug traffickers, people smugglers, arms dealers and other criminals “clean” illicit cash in the UK too. And our defences are overrun.
Decades of lax regulation under both Conservative and Labour governments, pathetically feeble policing and an unacceptable lack of transparency have allowed it. The UK’s relationship with offshore tax havens and an army of enablers — accountants, lawyers, bankers, advisers — have helped make us the jurisdiction of choice.
The economic crime bill announced in the Queen’s Speech gives us a unique opportunity to drive out dirty money. Clean finance isn’t just morally right, it’s good for business. We will never enjoy sustained prosperity on the back of corrupt wealth.
There’s a host of necessary fixes: greater transparency of who owns companies, trusts, land and assets; tougher agencies for consistent enforcement of laws; robust protections for the press, judges, whistleblowers and civil society to hold wrongdoers to account; effective regulation for the professionals that conduct money laundering checks. But real reform cannot end there.
Financial malpractice is now contaminating our public sphere. There has always been unacceptable behaviour in politics but instances were occasional and they were punished. Recently this has moved from the fringes to the mainstream. “Partygate” has rightly caused public outrage but other serious wrongdoing that threatens our democracy is accepted. We are losing our moral compass.
Dirty money donated to buy political influence. Soft power purchased through institutions like football clubs. Citizenship bought through golden visas. Peerages awarded for donations. Public appointments becoming political appointments. Too often the government treats taxpayers’ money as its own, awarding contracts to chums.
The checks and balances in our democracy are being systematically weakened. Under the shock of Covid, protections buckled and wrongdoing peaked. Take the government’s VIP fast track for awarding contracts. Or egregious lobbying exemplified by Owen Paterson. And abuse of the “revolving door”, such as the Lex Greensill affair. Politics has become too transactional — in the UK that’s particularly dangerous because access and influence are cheap.
We can begin to arrest this slide, as I lay out in a report for The Policy Institute at King’s College London chronicling the growth of economic crime in Britain, which links this wrongdoing to declining standards in our politics. A climate where avoiding tax is considered “cool” and financial flows are barely policed has produced a culture that allows bad behaviour to flourish. And when financial wrongdoing thrives it infects the public sphere; turn a blind eye to dirty money in our economy and that translates into corrupt influences in our democracy.
It doesn’t have to be like this. A comprehensive programme of reform could restore integrity and set the UK back on the road to being trusted. The choice is ours.