Boris Johnson versus Ken Livingstone: who has the killer punch?

In the year after losing the mayoralty, Livingstone claimed on Thursday, he earned just £21,645. In fact, the accounts of his now famous personal company, Silveta Ltd show he invoiced a total of £232,550 for his services that year. Channelling that money through Silveta – whose sole shareholders are Livingstone and his wife – allows him to take advantage of corporation tax (at 21 per cent), rather than have all his income subject to income tax (at up to 40 per cent) and National Insurance (up to 9 per cent) paid by Johnson, Paddick, Jones and most other mortals. It all sat rather badly with Livingstone’s denunciation of tax avoiders as “rich b——s” who “should not be allowed to vote”. And the continued wriggling last week suggested a candidate with secrets still to hide.

Ever since Livingstone’s tax arrangements were revealed – by The Sunday Telegraph – in February, they have dominated the election. In a leaked memo on March 25, Heneghan admitted the “relentless attacks on Ken, specifically around the tax issue” had made the Labour campaign “difficult” and “dented our ability to get up our own messages”. Around the same time, Anthony Wells, of the pollster YouGov, credited the tax story with changing the race from an effective tie to an eight-point Boris lead.

In his memo, Heneghan described George Osborne’s Budget – with its “granny tax” and cut in the 50p rate – as a “golden opportunity” to turn the tide. Tory strategists were certainly nervous about the effects that the Budget and the Government’s “fortnight from hell” over fuel strikes, pasties, and party funding, might have on the Boris vote. Internal polling at the height of the row is believed to have shown a drop in Johnson’s lead, though his personal ratings remain buoyant.

But now the tax issue is back, exploding into a campaign that, with less than a month to go, has come alive. Sharing a lift with Livingstone at the London radio station LBC on Tuesday, the mayor burst out with four-letter fury at his opponent for having said that he, too, avoided tax. Paddick, a former policeman and fellow passenger, said: “I didn’t know whether to prevent a breach of the peace or arrest Boris for threatening behaviour.” As the figures provided by Johnson on Thursday show, Livingstone’s claim is indeed a “——- lie”.

Team Ken has been trying hard to move the story back to policy, where they made headway in January with a populist – if fraudulent – promise to cut Tube fares. In a sublime comic moment, Livingstone called on his opponent to abjure “negative campaigning” – this from a man who has launched two poster campaigns depicting the mayor as a criminal, compared him to Hitler and had him followed by a campaign worker dressed as a chicken. Meanwhile, Len Duvall, Labour leader on the London Assembly, has attacked the tax “soap opera” as “peripheral,” “farcical,” and a “monumental insult to the electorate”.

One reason Livingstone’s tax has become central is that it dramatises his key weakness. “Trust is at the heart of this election, and what the tax issue shows is that Ken says one thing and does another,” says Lynton Crosby, Johnson’s campaign director. According to the polls, Livingstone has, and always has had, the more popular manifesto policies; but that appears to matter little if voters do not believe you will deliver them. On this reading, Johnson’s fairly bare policy cupboard may in fact be better than Livingstone’s suite of expensive promises to thrust free money at people, money whose source he cannot satisfactorily explain.

Among the most interesting features of the election is the fact that if it were decided on simple party lines, it would already essentially be over. Labour has had double-digit leads over the Tories in London in every “general election” poll for the past two years. But up to a third of those Labour voters are today refusing to back Livingstone.

Some simply prefer Johnson’s personality. Increasing numbers of liberal voters are also repelled by what a Jewish Guardian columnist, Jonathan Freedland, a former Livingstone voter, called his “statements, insults and gestures that [have] offended me, my fellow Jews and – one hopes – every Londoner who abhors prejudice”. A private meeting between Livingstone and lifelong Labour-supporting Jews left them feeling, in the words of their leaked letter to Miliband, that Labour’s candidate “does not accept Jews as an ethnicity and a people”.

Livingstone, a serial abuser of Third Reich analogies, even managed to crowbar Hitler into an attack on the performance of the Northern line – and his unrepentant support for the homophobic anti-Semite Islamic preacher Yusuf al-Qaradawi offended gays as well as Jews. Livingstone’s gay fundraising event had to be moved to cheaper premises after not enough tickets were sold.

But there is a smaller, though highly influential, Labour group who want Livingstone, as one London MP puts it, to be “thrashed and humiliated” in the belief that he sums up all their party must ditch if it is to regain power. “Sectarianism, embrace of Islamist extremists, wild and uncosted spending promises, support for the takers in society, not the givers – that’s what he represents,” says the MP. “Exactly what costs us our credibility.”

Some of them also see a Livingstone caning as a way to dump Ed Miliband, who has backed his candidate beyond the call of duty. “If we cannot win this in a Labour city in a mid-term, we will have to look again at our leadership,” says the MP. The special nature of the contest, and of Livingstone, may, however, give Miliband an alibi, and Labour is famously poor at sacking bad leaders.

The other possibility is that Livingstone could still win. Johnson’s campaign has been “underwhelming,” says Number 10. Ministers, meanwhile, have left few stones unturned in their effort to lose Londoners’ votes – as well as the Budget, the fuel debacle, and embarrassment over party donations, they have reopened the toxic subject of a third Heathrow runway. A little below the radar, Livingstone is working hard in suburbia, which he all but ignored in 2008, with hundreds of thousands of telephone and doorstep contacts, and has been rewarded with improved poll numbers there. London’s demography, too, increasingly favours Livingstone. More and more Londoners are not white, and not being white is, according to the Downing Street pollster Andrew Cooper, “the number one driver of not voting Conservative”.

Livingstone has made a particular effort to court the Muslim vote. The main Muslim borough, Tower Hamlets, is one of several, mostly but not exclusively Labour, where there have been dramatic increases in the electoral roll since 2008. There are about 400,000 more voters in London now than four years ago. Most of this is probably innocent enough: the capital’s population has been rising. But in Tower Hamlets, Livingstone has enjoyed the active support of the extremist Islamic Forum of Europe, which helped achieve staggering swings towards him there at the 2008 election. If Tory supporters stay at home, thinking it’s in the bag, differential turnout could still clip it for Labour.

Whatever happens in the election, something important already seems to have happened in the campaign. Yesterday, George Osborne, said he would be “very happy” to follow Johnson in publishing his tax returns, and those of other ministers. It may no longer be possible for anyone in public life to “do a Livingstone” and avoid tax. Quite unintentionally, the man once dubbed Red Ken may have changed politics for good.

Show us your money

It was a single intemperate sentence, but it could alter the nature of British politics. Writing in 2009, in a column in the Sun, Ken Livingstone denounced the Tories as “rich bastards” who exploited “every tax fiddle”, and claimed that “no one should be allowed to vote in a British election, let alone sit in Parliament, unless they pay their full share of tax”. Unfortunately for Mr Livingstone, it has since emerged that he has employed arcane and complicated tax arrangements that have given rise to widespread accusations of tax avoidance. The issue became a running sore for his campaign, culminating in yesterday’s release of the tax records of all the main candidates for Mayor of London (though Mr Livingstone’s remain significantly more opaque than his rivals’, with many details still to be clarified).

The immediate consequence of this affair could be to torpedo Mr Livingstone’s campaign. Yet it will also have longer-term effects. The release of tax records is commonplace in America, but had been unknown in Britain. Now, it could become a prerequisite of mayoral campaigns – and general elections. Some will argue that this is overly intrusive, and will keep able but wealthy people out of politics. Yet that has hardly been the case in the US. Instead, it has shifted the focus from what people earn to whether they pay their fair share. This is surely welcome. Indeed, in an age when there is so much suspicion of the political class, it should be a basic requirement that those whose decisions reach into every wallet in the land – who claim, as the Chancellor has, to find tax avoidance “morally repugnant” – can show that they are subject to the same rules as the voters. We urge all three party leaders to follow Mr Livingstone’s grudging lead, and embrace the transparency that they have so frequently advocated.