Cadbury ‘insult’ is distasteful

There’s something deeply distasteful about the Treasury’s wriggling on Cadbury Schweppes.

The government announced yesterday its idea that offshore Controlled Foreign Companies (CFCs) were OK if the profits were derived from ‘labour’ but not if they were derived from ‘capital’.

It’s an interesting idea, you could say, before realising how deeply old-fashioned it is.

The idea that genuine economic activity derives only from labour and couldn’t possibly come from capital is in fact not just old-fashioned, it’s pretty much Marxist. Nothing wrong with that from a purely philosophical point of view, but it’s not exactly New Labour.

More than that, it smacks of a historic distaste, inspired by religious thought, for money lending, for usury, and for the profits derived purely from cash.

That, in essence, is what the City does, a sector of the economy that is being courted by Labour ministers, is a huge success story and plays a big part in driving economic growth.

Now know what the Treasury and New Labour minsters think of what goes on in the City, then, through their view of Treasury functions offshore. They think it isn’t genuine economic activity.

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