Labour leadership challenger Owen Smith accepted a £60,000 donation from an accountancy firm which has been accused of promoting tax avoidance on an “industrial scale”.
Smith received the gift from City firm PriceWaterhouseCoopers in November 2011 while serving as a shadow Treasury minister.
He said the benefit – in total worth £58,530 – was a “donation in kind” for “ad hoc advice” provided to Labour during the passage of the Finance (No. 4) Bill.
Smith received this advice for a period of six months, until May 2012.
— Owen Smith 2016 (@owensmith2016) July 17, 2016
Links between the Labour Party and PwC were particularly strong at the time, with shadow cabinet ministers during the last parliament including Ed Balls, Chuka Umunna and Rachel Reeves also accepting free advice worth hundreds of thousands of pounds from the company.
However, some of their colleagues were always suspicious of the cosy relationship and last February Public Accounts Committee chairman and Labour MP Margaret Hodge declared this sort of help from PwC was “inappropriate”.
Hodge’s committee also produced a report at that time which accused PwC of “the promotion of tax avoidance on an industrial scale”.
Hodge wrote in February 2015 that evidence PwC had provided to her committee two years earlier – in January 2013 – was “misleading” – in particular its assertions that “we are not in the business of selling schemes” and “we do not mass-market tax products, we do not produce tax products, we do not promote tax products”.
News that Smith was happy to accept such a significant gift from so controversial a source, albeit prior to publication of Hodge’s report, sits uncomfortably with his claims to be a socialist and promise to close the gap between the “haves and have nots”.
It also highlights a key difference between him and Labour leader Jeremy Corbyn.
.@OwenSmith_MP will make a great Leader for Labour and a great PM. He has the values, vision & policies we need to take on the Tories
— Angela Eagle (@angelaeagle) July 19, 2016
Although Corbyn raised about £220,000 in cash and gifts during last summer’s Labour leadership contest, almost all of that cash came from trade unions. None of it was from big business.
Smith has already come under fire for his previous job as an £80,000 a year lobbyist for pharmaceutical giant Pfizer, triggering a row with Corbyn’s allies who regard having held such a post as Blairite.
Before working for Pfizer, Smith worked for BBC Wales.
Unusually, he secured his full time job for the broadcaster at around the same time as his father took up a senior management post there.
In 2006, Matt Withers of WalesOnLine described Owen Smith as a "Blairite lackey" under the headline "Owen's appointment would make Nye cry"
— Michael Crick (@MichaelLCrick) July 20, 2016
Smith Jnr’s CV states that he began working for the BBC in 1992 months after leaving the University of Sussex, but it is understood he did so on a freelance basis initially before becoming a fully fledged producer. He later worked for the BBC in London.
His father, Prof David Smith, confirmed to Heat Street that he and his son were employed by BBC Wales simultaneously, with Smith Snr being appointed head of radio at BBC Wales in 1993.
In 1994 Smith Snr became Head of Programmes at BBC Wales.
Smith Snr told us: “I didn’t appoint Owen and I wasn’t Owen’s boss.” He also said that they didn’t work on any programmes together, ruling out any suggestion of nepotism.
However, Owen Smith has been able to make some use of his BBC connections. In 2013 he was given two tickets worth £781 to watch Ireland play Wales at rugby. His benefactor? BBC Wales.
A spokesman for Owen Smith said: “When working on complex legislation, MPs routinely take advice from relevant experts. In 2011 Owen was one of several shadow ministers who received some advice from PriceWaterhouseCoopers (PwC) and this was registered as a donation in kind for the work she performed. PwC were able to offer background support on objective analysis of the legislation. Throughout this process, Owen lead Labour’s opposition to the Tory proposals to give millionaires tax cuts. The BBC has tens of thousands of employees of whom Owen was one. He joined them in 1992 and was subject to the normal recruitment processes.”