Profile: Christopher Wales, Brown's buddy at Goldman Sachs

by James Bennett

08 Dec 2005

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Enter the revolving doors and all you can see are high, imposing ceilings, commanding dark art deco-style marble walls, angled corridors and minimalist modern art hung to perfection – all of which combines to give a distinct air of financial clout.

It’s like being transported into the 1920s Fritz Lang film, Metropolis, where the favoured live above ground and the less favoured below. But this is no film set. It’s the main lobby of the building that used to house the Daily Express and now plays home to Goldman Sachs in London’s Fleet Street.

An immense feeling of power and influence spreads across the impressive entrance hall and continues up to the spacious top floor breakout room overlooking the River Thames where I meet one of the investment bank’s managing directors, Christopher Wales.

The words influence, power and financial clout are not used lightly. During more than a quarter of a century, Wales has achieved what many in the profession, in both the public and private sectors, would hope to accomplish in a lifetime.

From a doctorate in medieval history and a PhD thesis entitled The knight in 12th Century Lincolnshire, a 16-year stint at Andersen, then six years on the influential council of economic advisers, to becoming one of the most senior members of the oldest global investment bank is no mean feat. But, even more importantly, Wales is one of the most connected people in business and politics – on first-name terms with the prime minister and the chancellor.

‘I keep in touch with Gordon and spoke to him a few days ago,’ says Wales, not wanting to dwell too much on the fact he is one of Brown’s closest confidants. ‘He did say to me that I should let him know when things were going wrong, but then he added that was everyday,’ he laughs.

Wales is a staunch Labour supporter and joined the party in the late seventies because ‘he couldn’t believe we’d elected Margaret Thatcher’.

During the early eighties he worked alongside the former shadow Treasury spokesman, a young Tony Blair (the pair ‘did two or three finance bills together’), managing to establish himself among the senior ranks of the party as an authority on the economy and taxation – a role that would alert the future chancellor to his expertise.

‘I became known within the party and over the next few years worked with several senior party people including (former Labour leader) John Smith. I was then asked to do some forensic work on particular tax issues and when I came back to London, after a stint in Stockholm for Andersen in 1994, I was asked by Gordon Brown to look into various tax issues.’

Wales’ proximity to the top ranks sparked Brown to ask him to join the six-strong council of economic advisers where he became his principal adviser on taxation policy. Wales’s expertise then led to one of the most important pieces of work he carried out under Blair and one of the biggest revenue earners – around £5.2bn – Brown’s budgetary coffers have ever experienced.

‘In 1997 the government was looking for some help to put together and design a windfall tax on utilities. It was designed to recognise the fact that those companies had, to a large extent, been privatised to up their value. Really, it was an attempt to recapture some of the lost revenues to the Inland Revenue, but the key thing was to find a methodology to the rationale for it and we found a very good way of doing this. Gordon was very pleased with it.’ ‘

Wales contentedly cites this as a key piece of work, but says his biggest achievement has been ‘preventing certain things from happening’, although he refuses to be drawn on what these ‘never-before-seen’ tax proposals might be.

‘One of the delights of the job is that things that get out into the public domain are, by and large, things that you are keen to see through. Occasionally you get policy proposals that are not appropriate, so preventing some of these things happening to business can give you great satisfaction.’

Despite the stereotype of taxation experts as penny-pinching villains, Wales is regarded as a good cop and during his time on the committee, ensured that everyone got a fair deal, not just the tax regulator. ‘From the things that did happen, a number of areas on the structural simplification agenda of taxation were very dear to my heart. I’ve always felt that within the UK system there were a number of quite significant features that forced businesses down a particular torturous tax route – so why not make it easier for them?’

This is a field he has determinedly ploughed during his 26-year career and, in a sense, sums up Wales’ mission to ensure a simple, but fair taxation system that allows UK businesses to compete effectively and profitably in a global marketplace. The culmination of this mission, he says, was the creation and launch of the Oxford University centre for business taxation (see box) on 4 November this year.

Based at the Saïd Business school and backed by £5m-worth of funding from the influential Hundred Group of Finance Directors, the centre has been set the goal of using academic weight, alongside HM Revenue & Customs and business expertise and assistance, to achieve a more competitive tax system for British businesses.

‘If you look at what’s happening in the world economy, globalisation is of tremendous importance and has a huge influence on tax systems beyond just a European level. We have to have the right tax structures to deal with global issues and that involves looking at the fundamentals of the tax system.

‘There’s no obvious right answer, but unless you are prepared to stand back and look at each system as a whole, then the risk is that you do bits in salami slices and you never get to the right answer for the whole thing.’

Wales is passionate about tax and ensuring the UK gets a competitive and even-handed fiscal system. And he says there is still much more the government can do.

‘We need a more straightforward form of business taxation. A lot of the work I was commissioned for between 2002 and 2003 was to move towards the idea of a single source framework of business taxation that takes away the arbitrary distinctions between one kind of income and another.

‘If you look at some of the tax systems around the world there are far fewer divisions in business income and far fewer distortions in sources of income taxed. It would make it much easier for UK companies to operate and compete effectively if they didn’t have to go through all the necessary steps to ensure they remain tax efficient.’

But Wales has some concerns when it comes to the subject of the newly merged HMRC and the way in which he believes tax policy has been left by the wayside.

‘The area I’m most nervous about is how HMRC handles the policy side. If it had been left to me, then I would rather have seen policy teams left as they were. The situation it has moved to now is fundamentally unsatisfactory and it doesn’t really have anybody who has a good overview of tax policy as a whole.

‘Also, if you look at the Treasury today, does it really make sense to have one person looking at business taxation and another person responsible for the international side? Surely there ought to be someone who looks over the top of all that and who has the right economic and tax-related credentials to develop a system that makes sense not just for the UK, but for the international context?

‘By dividing the teams in the way they have – so all the policy makers are nearly all in the Treasury – you destroy that kind of continuity.’

Wales has some strong opinions on the future of UK taxation, which he will inevitably share with his peers at Goldman Sachs, the Oxford tax research centre and even the chancellor.

As I leave our interview and once again reach the minimalist lobby, the receptionist tells me there has been a power cut across the ground floor. Wales may be one of the most powerful business people around, but there are some things that even he can’t control.

CV2004 Managing director, financing group, Goldman Sachs International2003-04 Visiting fellow, faculty of law at Cambridge University2003-05 Member, council of economic advisers at Treasury; principal adviser to the chancellor of the exchequer on taxation policy1998-03 Led EU code of conduct group on business taxation on behalf of paymaster general Dawn Primarolo1990-97 Partner, Arthur Andersen1979-90 Arthur Andersen, London and Stockholm1982 Qualified as a chartered accountant

OXFORD TAX RESEARCH CENTRE

Last month’s launch of the £5m Hundred Group of FDs-funded Oxford University centre for business taxation marked the culmination of years of careful consideration and 12 months’ hard work for Christopher Wales.

Conceived during a conversation with Jon Symonds, CFO of AstraZeneca and until recently Hundred Group chairman, Wales was confident that his vision for a centre to help British business become more competitive globally could become a firm reality.

Symonds invited him to talk to the Hundred Group where the plans were well received. Wales pitched the idea to Cambridge University and the London School of Economics before a decision was made to base the centre at Oxford. The Saïd Business school’s existing focus on finance, corporate governance and regulation made it a perfect fit.

But the centre has its detractors. Richard Murphy, senior adviser at the Tax Justice Network, criticised the centrefor focusing too narrowly on tax issues for the FTSE100.

‘Business taxation only makes sense within a broader range of fiscal issues, so the whole range of taxes and the interaction between them have to be considered,’ he says.

But despite its opponents, a majority of tax, business and government representatives believe the centre is a step in the right direction in order for academia, UK plc and Whitehall to collaborate and debate the best way to improve the UK’s taxation system, so that British businesses can prosper on the world stage.

Christopher Wales' CV

  • 2004 Managing director, financing group, Goldman Sachs International
  • 2003-04 Visiting fellow, faculty of law at Cambridge University
  • 2003-05 Member, council of economic advisers at Treasury; principal adviser to the chancellor of the exchequer on taxation policy
  • 1998-03 Led EU code of conduct group on business taxation on behalf of paymaster general Dawn Primarolo
  • 1990-97 Partner, Arthur Andersen
  • 1979-90 Arthur Andersen, London and Stockholm
  • 1982 Qualified as a chartered accountant

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Financial Planning and Performance AnalystCabinet Office-Greater London-Competitive

 
 
 
 
 
 
 
 

 

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