Multinational Chairman's Group

Referred to by the Daily Mail in 2003 as 'discreet', the Multinational Chairman's Group is extremely obscure.

Criticism of Blair government

Plans to outlaw an overseas-earnings tax loophole may mark the end of new Labour's affair with British industry, writes Andrew Lorenz
THE handful of men running Britain's biggest companies filed unobtrusively into No10 Downing Street. It was just before the March budget and the occasion was one of the
rare but important meetings of the Multinational Chairmen's Group.
This discreet club takes pride in its privacy. Outside the small circle of its members, it is little known even within the upper echelons of the Confederation of British Industry, under whose auspices it meets. As the unofficial guild of British industry's world leaders, the group has a powerful voice and one of its most im-portant functions is to hold occasional heart-to-hearts with the prime minister. 
The industrialists who met Tony Blair that day had several concerns, including sterling's strength against the flagging euro and the increasing volume of employment regulation. What they heard was reassuring. We are on your side, the prime minister told them. We want to help you. The executives left satisfied that the pro-business platform on which new Labour had been elected held good.
Yet less than a month later the same business leaders were infuriated when Gordon Brown stood at the dispatch box of the House of Commons and served up a shock.
His bombshell was contained in a proposed change to the provisions governing taxation of overseas earnings. To the layman, it might have seemed an arcane item. But to the multinationals, it hit at the heart of their profitability and competitiveness.
The tax, known to industrialists as the "mixing" tax, currently receives double taxation relief. Profits repa-triated to Britain from subsidiaries in countries with low corporation-tax rates can be routed through offshore subsidiaries where they are "mixed" with profits from higher-tax countries to lower the overall amount due to the Inland Revenue.
In future, Brown said, "mixing" would be outlawed as part of the Treasury drive to close corporate-tax loopholes. Instead, all overseas earnings would incur a British tax rate of 30%. Moreover, he planned to in-troduce this new regime remarkably swiftly - within months.
Inland Revenue briefing papers initially estimated that the regime would raise Pounds 100m a year, a projection that was later increased to Pounds 300m. For the government this proved to be the underestimate of the year. The CBI, after rapidly canvassing its leading members, reckoned the cost at Pounds 4 billion.
Privately, the industrialists went ballistic. Using the hotline with big business opened up by new Labour before its 1997 election, they inundated Blair's office and the Treasury with complaints.
"First we get this message from Tony Blair and then, out of the blue, comes this thing from the Treasury. It is the same old story: the government says one thing and does another," said one chairman.
Another agreed: "This was a very stupid decision. It was arbitrary and not thought through. They are los-ing the support of industry."
Publicly - notwithstanding The Sunday Times' revelation on April 9 of the tax revolt - the executives kept quiet. "We do not want to paint the Treasury into a corner because that will just make it very hard for them to back down," said one.
But on Tuesday, Chris Gent, chief executive of Vodafone AirTouch, Britain's largest company by market worth, breached the vow of silence. Speaking on BBC Radio 4's Today programme, Gent said the govern-ment should change the tax rule "to stop hitting unintentional targets". Unless the Treasury backed down, Gent suggested, Vodafone could be forced out of Britain. Ireland is seen as the most likely base if it did relo-cate.
Vodafone later tried to stop further escalation by saying it wanted to hold private talks with the Treasury. The company fears a government-orchestrated backlash similar to that which greeted Sir Richard Sykes, chairman of Glaxo, when he complained about the government's refusal to license the company's Relenza anti-flu drug.
Certainly, criticism of Vodafone was not long in arriving. On Friday, Polly Toynbee, a Guardian columnist and new Labour camp follower, wrote a vitriolic attack on "telephone bullies" and "parasitic companies that take all and give nothing back". She also reported - sourced to the Treasury - that 40 companies had lobbied Brown in the past three weeks.
The battle lines are drawn: the mixing tax has become the anvil on which new Labour's much-vaunted relationship with business could be broken. GENT had a very good reason for going public. In less than a year, Vodafone's two giant acquisitions of AirTouch in America and Germany's Mannesmann have cata-pulted it from having virtually no overseas earnings into being one of the three biggest overseas earners in Britain. Under the Treasury plan, Vodafone is facing an astronomical increase in its tax bill.
Gent is not alone in speaking out. "This is ridiculous. My company is not going to pay this tax and the same goes for many others," said one furious chairman. "The result will be that some of us find ways around it and others will move their bases out of Britain."
Jonathan Symonds, finance director of AstraZeneca, the British-Swedish pharmaceuticals group, said: "We have to preserve our competitiveness. These proposals would increase our effective tax bill and make us uncompetitive against our American counterparts who have a tax charge 5% below us."
Even the Treasury has got the message that it might have misread the position. Within a month of the budget, it announced that it was postponing implementation of the measure for nine months while it con-sulted the multinationals.
But many companies share Gent's anxiety that nothing much will change. "The concession of extending the deadline did not solve the problem and I honestly do not know whether they will change," said a chief executive. "I think this is important to them as part of their taxation policy. We see what happens now as good financial management within the rules. They see it as tax evasion. So we and they remain on a collision course."
Whether the tax change stays or goes, the relationship between Labour and big business is being se-verely tested. Heavy energy users have already been alienated by the Treasury's refusal to make adjust-ments to what is widely seen as an ill-conceived energy tax.
But the mixing tax was still more damaging because it affected a wider, larger and more powerful corpo-rate constituency. The companies that will be hardest hit - among them Vodafone, Glaxo Wellcome, Smith-Kline Beecham, AstraZeneca and BP Amoco, which together paid Pounds 1.16 billion in British tax last year - are, by definition, Britain's largest businesses.
While Downing Street officially adheres to its pro-business credentials, there are signs that it is prepar-ing to fight fire with fire. Last month, on the day the prime minister addressed the CBI's annual dinner, the Financial Times carried a front-page story headlined "Blair to warn business on its influence". The paper pre-dicted that the prime minister would tell his CBI audience that he had broader priorities than appeasing the business community.
A senior government member was quoted as saying: "There is a feeling that business is behaving in-creasingly like any other pressure group. Well, if that is how they want to play it, that is how they will be treated."
In the event, this dog did not bark. Hours later, when Blair addressed the dinner, his speech contained nothing that could be remotely construed as the predicted shot across the CBI's bows. Clearly, a diplomatic decision had been taken not to raise the temperature.
BLAIR'S omission did not deter Sir Clive Thompson, the chairman of Rentokil Initial and the outgoing and outspoken CBI president, whose farewell speech contained a compendium of the criticisms being lev-elled at the Blair government by large sections of business.
"You may consider us a pressure group," Thompson said. "But a huge proportion of this country's peo-ple today are in business. We are the many, not the few."
Thompson focused on two main bugbears. One was the burden of red tape and its corollary, employ-ment litigation, which he and many others say are piling up under the Blair government, hitting smaller com-panies particularly hard. The other key issue for Thompson is the strength of the pound against the euro and the damage that is doing to Britain's manufacturing competitiveness.
A number of industrialists who favour British membership of the euro are becoming increasingly con-cerned that the government is losing its original determination to manoeuvre the country into a referendum on the issue.
Business, though, is by no means united on euro membership - a division that only serves to highlight the government's dilemma about how to approach the business community. For the moment, despite the adversarial rumblings, neither side wants to provoke an outright schism.
Thompson prefaced his criticisms at the CBI dinner by telling Blair: "All of us who have worked with your government are impressed by your enthusiasm and energy, by your determination to listen and make a dif-ference."
Even on the mixing tax, conciliatory noises are being made. John Coombe, finance director of Glaxo Wellcome and chairman of the 100 group of FTSE finance directors, says: "We need the elected government to understand that this is a serious issue as far as we large multinationals are concerned, and that it is im-pacting on their relationship with industry.
"They've been very good so far and have brought in useful changes. Yet on this one issue they have failed to consult adequately. We're not just sticking our heads in the sand. We think there's a middle path and by adjustments to the legislation the government can achieve something that is reasonable."
The key factor motivating companies' desire for compromise is realpolitik. Despite the belated signs of life shown by William Hague's Tory leadership, few if any industrialists believe Blair will not be re-elected.
The great unknown is what a second Labour government will do - whether, for instance, it will import from continental Europe more enterprise-stifling regulation. As Thompson told Blair at the CBI dinner: "Please resist the siren voices calling for more employment legislation when preparing your next manifesto."
But if the mixing tax proves to be less an aberration than the harbinger of a harder line on business, then the row will mark the beginning of the end of the affair between British industry and new Labour.
WHY INDUSTRY IS COMPLAINING.
THE POUND.
The euro is weak, the pound is strong, presenting an obvious problem for British exporters. Big spend-ing plans translate to climbing interest rates and many manufacturers believe this will keep the pound un-necessarily strong .
Tax for British-based multinationals.
The Treasury will stand firm on budget plans to outlaw so-called "tax-mixers", which could cost British multinationals billions .
ENERGY TAX.
The government's new tax on energy use, which will raise Pounds 1.75 billion, has caused widespread ill-feeling. It has been likened to the industrial equivalent of the poll tax and could force companies to scale back investment plans or even move abroad. The Engineering Employers' Federation (EEF) says tens of thousands of jobs will be lost in the manufacturing sector .
IR35.
The IR35, which came into force in April, made freelance IT professionals pay the same level of tax as company employees. It is estimated it will generate an extra Pounds 475m, but thousands of IT workers are considering emigrating.
The Revenue estimates that the new laws will affect 90,000 self-employed workers, who will see their annual tax bills rise by Pounds 4,000 .
NATIONAL INSURANCE ON SHARE OPTIONS.
Chancellor Gordon Brown objected that some companies were reducing their tax burden by paying staff with share options. The Treasury's solution was to slap a 12.2% national insurance tax on share options in its social security bill.
Many companies claim that to attract staff they will have to pay the NI contribution themselves .
RED TAPE.
The British Chambers of Commerce calculates that the government has increased the costs of doing business by Pounds 5 billion a year through extra regulation .

Alleged 'red tape'

I gather that the slightly mysterious Multinational Chairmen's Group (MCG) has this week lobbied Blair with the fairly unequivocal message that he had better pull his finger out over industrial policy or they will move their principal operations out of the UK. In the slightly quirky way in which the British name things, this "chairmen's" group also includes chief executives, but Blair will be assured that he is dealing with the very top of our industrial hierarchy. The line-up is said to include BP and Shell, GlaxoSmithKline and AstraZeneca, Vodafone, British American Tobacco, Rio Tinto, HSBC and Unilever.

This isn't exactly the equivalent of Spain's Opus Dei, but Blair will have been in no doubt that he is fac-ing the British industrial equivalent of the Mob. These are people who, collectively, can call the economic shots, if they so wish, just as effectively as the trades unions did back in the Seventies. And it seems that they are heartily sick of a spin-culture in which presentational lip-service is paid to free-market economics, while industry is concurrently burdened with intrusive regulation and ever- higher taxes.

Among their gripes, they claim that the (now diluted) corporate- governance guidelines of former in-vestment banker Derek Higgs have disfranchised chairmen; that public spending is inefficient and wasteful; that, as a consequence, the transport infrastructure is hopeless and getting worse; that non-domiciliary executives are discriminated against and that new caps on personal-pension provision are a hidden super-tax. The threat is that, since Blair's Government has created a hostile environment in which to do business, multinational companies will find somewhere more agreeable to base their operations unless some political olive branches are extended.

BREAKFAST with Blair was almost a cosy affair for the nine multinational business leaders who trooped into Downing Street just before 8am yesterday - at least compared with the ride the Prime Minister endured later in the day when he had tea with the more vocal TUC delegation.

Over coffee and croissants Mr Blair and the team from the Multinational Chairmen's Group, led by Niall Fitzgerald, Unilever chairman, discussed in businesslike fashion world trade issues and, according to sources, touched on more delicate issues nearer home, including the euro, competitiveness and economic policy.

Other businessmen in the select group around the table were Lord Browne, chief executive of BP, Sir Philip Watts, chairman of Shell, Lord Blyth, chairman of Diageo, Sir John Bond, chairman of HSBC, Sir Rob-ert Wilson, chairman of Rio Tinto, Martin Broughton, chairman of BAT, Sir Christopher Hogg, chairman of GSK, and Arun Sarin, new chief executive of Vodafone. Downing Street, irritated by weekend reports about the confrontational billing tied to the meeting, at-tempted to downgrade the importance of the encounter, describing the hour-long discussion as a "useful ex-change of views" at a "private meeting". Group members were equally anxious to downplay the meeting and were coy about discussing the more sensitive subjects on the agenda, notably whether an exodus of capital and leading companies is in prospect unless Britain joins the euro.

The group - whose existence is largely unknown - was set up to try to rise above the hurly-burly of nor-mal government and business debates and avoid the mistakes of earlier business lobbies by providing an international rather than domestic perspective to issues. It meets informally three times a year and has an annual meeting with the Prime Minister.

Members of the Multinational Chairmen's Group of UK-based international companies who met Mr Blair yesterday included HSBC's chairman, Sir John Bond, Unilever's chairman, Niall FitzGerald, and Voda-fone's chief executive, Arun Sarin. Other companies represented included BP, Shell and British American Tobacco. Tony Blair was accompanied by Patricia Hewitt, the Secretary of State for Trade and Industry. Business leaders are worried that Mr Blair may make concessions to the trade unions, who are demand-ing more rights in the workplace, in an attempt to bolster his position inside the Labour Party.

Digby Jones, general secretary of the CBI, who will address next week's TUC conference in Brighton, attacked union demands for a return to secondary picketing, saying this would mean the dead not being bur-ied as during the 1978-79 "Winter of Discontent". Mr Jones criticised the "relentless build-up of employment legislation". He warned: "If you are in a board-room in Detroit, Tokyo or Seoul, why would you think that Britain had done anything other than gone back 35 years? And they might just think of putting their investment cheque in another country. Does that help the average trade union member?" The intense lobbying of the Government by both sides of industry has worsened relations between them. The CBI has accused the unions of being a barrier to public-sector reforms, and says they cannot speak on behalf of employees because only a small proportion of private-sector workers belong to a union.

Known as the Multinational Chairmen's Group, this secretive cabal loosely affiliated to the Confederation of British Industry is critical of new personal pension plan limits, changes to corporate governance, in-creased taxes and red tape. Their assault comes as former Vodafone boss Sir Chris Gent takes up the cudgels separately against Labour. "Gordon Brown is an old-style socialist who believes in tax and spend," said Gent. "Public spending has gone up UKpound 500 million or 60 percent since Labour came into office and business is having to pay for it." Gent, who has joined free market think-tank Reform, is also very worried about falling standards of education.

The meeting was originally scheduledas part of the preparations for the autumn meeting of the World Trade Organisation. That is still on the agenda but in addition the likes of Niall FitzGerald of Unilever, Sir John Bond of HSBC and Lord Browne of BP hope to bend the Prime Minister's ear about the accumulation of issues that are creating a tone of negativity and anti-business sentiment in this country. Many of Government's worst offences are not deep matters of principle but - rather shamefully in busi-ness eyes - reflect instead ministers' need to court short-term political popularity with scant appreciation for the long-term consequencesfor business or the economy-So why has the love affair soured?

Among those around the table will be the best of corporate Britain. Sir John Bond from HSBC, Britain's best performing company; Niall FitzGerald, the chairman of Unilever; Lord Blyth, chairman of Diageo; and his counterpart at Glaxo Smith Kline, Sir Christopher Hogg. Lord Browne, chief executive of BP, will be there and is expected to be joined by representatives of Vodafone, Shell, Astra Zeneca, Rio Tinto and British American Tobacco. On the agenda is "international business and trade".

These goliaths of the City are the leading lights of a cabal called the Multinational Chairmens' Group. Little is known of this low-key alliance, but it is nonetheless highly influential. What its members will tell Blair is likely to make him shift just as uncomfortably as he did last Thursday in response to Lord Hutton's ques-tions.
They will unveil a pointed and devastating charge sheet. It will centre around why big business has run out of patience with Labour policies and the government attitude in general.
Gordon Brown, the chancellor, Blair and ministers have grown accustomed to business turning against them. Numerous attacks over red tape and the burden of regulations have developed a rubber quality and just seem to bounce off the accused. The complaints have mainly come from small and medium-sized firms that are angry about the extra taxes that have come their way.
This is different. For the first time, the big business guns have been turned on Labour and specifically Blair and Brown.
So what has tipped them over the edge? And what will be the consequences of the showdown if the prime minister does not respond? Business leaders are warning they're not bluffing.
The very real scenario he is facing is of an industrial and corporate Britain without many of the huge multinational players. The spectre of Britain being an outpost rather than the nub of a company's business - where its research and development centres would be and associated industries would spring up - is haunt-ing Blair.
While there will be no overnight shift of operations away from Britain, the picture being painted is of big multinational companies becoming so fed up that they drift away.
Last week HSBC responded to a comment in these pages that it was considering moving from its Lon-don headquarters. It denied an imminent move was planned. But a senior bank spokesman added: "As part of its stewardship of shareholders' interests, the board does consider at regular intervals the optimum loca-tion for HSBC to be based. It takes into account the overall business climate, the fiscal regime, regulatory standards and a number of other considerations."
As one source who will be at the Downing Street meeting says: "There is a very real chance that we will wake up in five years and find that the big head offices are not really that at all - they are just nominal places. The real business will be driven from elsewhere."
The group will detail a number of key points. They range from concerns over specific issues to broader complaints about the constraints on doing business in Britain today.
NEW PENSION PLANS that will cap personal funds at Pounds 1.4m are a particular worry. The change is due in 2005, unless lobbying by business groups pays off. The move is billed as a "super-tax" on execu-tives.
Under the rules, pensioners collecting more than Pounds 70,000 a year would be subject to an effective tax rate of 60%.
The chairmen argue that for British firms to attract and keep the best employees they need to be able to pay them well and provide attractive pension plans. At present, companies have the same schemes for all staff, from the lowest clerk to the highest executive.
They will also suggest that Treasury figures about how many people this will affect are underestimates; many more could be hit than the 5,000 often mooted.
As a result, companies are being forced to look at ways to provide other incentives, including separate pensions or an increase in basic salary.
One of the broad problems suffered by these multinationals is their relationship, or lack of one, with the Inland Revenue. They believe there should be more dialogue, so that when companies devise new products or arrangements, the Revenue can advise about how they will be treated. At present, there is no assistance given.
One businessman says: "In most other countries, when business needs guidance, it is there and avail-able. We find that there is no meaningful dialogue with the Revenue, and that makes life very difficult."
The second point on the charge sheet concerns changes to corporate governance.
Business believes that instead of leading to a tightening of the codes that everyone could agree with, the debate has turned into a battle with the government that has spiralled out of control.
HSBC in particular is concerned about this.
Although the proposals by Derek Higgs, the former investment banker, have been watered down, there is still great unease over the plans. The main complaint is that they will weaken the role played by the chair-men of big companies.
The third point will also concern many voters across the country: tax. While middle Britain is waking up to the fact that Labour has turned into a tax-and-spend party, business realises it is going to have to pick up more of the tab for increased spending on public services. It is not that these companies resent the spending on public services, just that it is being spent in an inefficient way.
The Adam Smith Institute, the free-market think-tank, has just concluded that the tax burden in Britain is rising faster than any other European country. It says that this tax year people had to work until July2 before they had paid off the taxman.
Madsen Pirie, the institute's president, commented: "Britain used to be an attractive place for people to invest and do business, but punitive taxes are changing all that. This will have an impact on investment and therefore job creation."
The fourth point relates to Treasury plans to shake up the corporation-tax rules.
Concerns have been raised, particularly over the issue of the abolition of tax relief on assets such as plant and machinery through capital allowances. Relief would instead be based on accounting depreciation, which could hit company cashflows.
There is also a consultation over proposals that would have stopped non domiciled people from escap-ing paying tax on assets kept or earned overseas. The likely result is that there will be a five-year limit on how long they can avoid it.
However, big business believes this will hinder its attempts to secure management talent.
In what amounts to its fifth line of attack, the group will argue that multinational companies employ a lot of "non-doms" and that there needs to be a flexible attitude as far as the length of their stay is concerned. Some will need and want to stay for 10 years.
Brown believes his proposals could raise Pounds 5 billion a year.
Having suffered a broadside over a range of business- specific issues, the prime minister and his advis-ers are unlikely to find any respite. Instead, the discussion will turn to key infrastructure problems that are hampering the multinationals.
Transport is a key failing. Again, like the tax issue, this point will resonate with the public. It is simple one; business cannot move its goods and services around. A crumbling rail network and a creaking motor-way system are admittedly age-old problems. But business leaders are angry that Labour's attempts to do something about it have failed so miserably.
A RECENT Business Week survey found that British companies were dominating the European best performers league. Of the top 50 companies, 17 were British and six were in the top 10. HBOS was top of the pile.
The magazine said the secret of that success was that "British companies operate in a freer environ-ment than many of their continental competitors. They do not suffer from the same labour restrictions, heavy social-security burden and other structural impediments".
However, the chairmen who will confront Blair on Tuesday believe that environment is being eroded to the point of collapse. Pirie thinks Labour and business are on the brink of a permanent break-up. He is also certain where the blame lies - No11 Downing Street.
He says: "Businessmen were prepared to give Labour the benefit of the doubt because they were prom-ised fiscal stability and a low-tax environment. They have now had their eyes opened. They are, in effect, reaching for the phone to call their lawyers; they will be in the divorce courts soon."
The man who built up a small mobile-phone firm into Britain's biggest company has certainly grown ex-asperated with Labour. Sir Christopher Gent, who recently left as chief executive of Vodafone, argues in his column in today's News section that the drive to put billions into public services without reform will have seri-ous consequences.
He argues: "We compete in a global marketplace. Ultimately our growth will depend on improving pro-ductivity, which is alarmingly poor by international standards."
He believes much of the extra money is being dissipated in inflationary public-sector wage rises and employing unproductive layers of supervision.
Vodafone is the sort of modern enterprise Labour loves to be associated with, but the landscape of six years ago when FTSE executives were tripping over themselves to shake Blair's hand is no more. They are now bringing lists of damning indictments.

Tobacco smuggling

The Guardian has reported that the group was the means for British American Tobacco to prise open a meeting with Stephen Byers over the issue of smuggling:

A few days later, however, everything changed. Mr Broughton was able to go over Mr Byers' head, as a member of a shadowy group of privileged lobbyists - the "multinational chairman's group", whose members include BP, Shell, the drinks firm Diageo, Unilever, and Vodafone.

Mr Broughton was on the shortlist of those invited to eat bacon and eggs with the prime minister in the Downing Street stateroom overlooking the rose garden.

Mr Byers, too, had been summoned to the breakfast table by Mr Blair on March 14. The company chairman seized the opportunity, button-holing the minister who had been avoiding him. After shaking hands in No 10, Mr Byers was left with no alternative but to change his tune. "In the margins of that breakfast briefing," as an official note records, "the secretary of state agreed to [a] meeting".

That afternoon, BAT's lobbyists rang the department in triumph: "Mr Broughton has secured a meeting with the secretary of state".

Mr Millson later boasted : "It was said we have been very successful in getting the one-to-one meeting with Byers ... There are few companies that have achieved this."

"Dear Martin", Mr Byers wrote back, in warmer nomenclature than before. He apologised for the "error" in redirecting his earlier letter.

The secretary of state had been pressured into a private meeting with a firm into which he was trying to order an official inquiry. By contrast, ASH, the anti-smoking campaigners, say they asked for a similar meeting with Mr Byers, and were refused.

Mr Broughton followed up with intensive lobbying of No 10, sending Mr Blair a long letter demanding that he cut taxes on cigarettes, and hinting that smuggling would continue unabated into Britain if he did not cooperate: "The chosen tax policy contains within it the seeds of its own destruction."

In April, he told BAT shareholders at the annual general meeting: "There is really no need for a DTI investigation."

Whitehall refuses to release the minutes of the subsequent meeting with Mr Byers. But we obtained BAT's version from their archive, which they have been forced to disclose in settlement of a US lawsuit.

Pensions

As reported in the Guardian, after a two-year battle over freedom of information Downing Street has eventually disclosed the prime ministerial documents revealing that the executives of the Multinational Chairman's Group "outmanoeuvred Gordon Brown, then chancellor, to shield "fat cat" pensions from his proposals to tax them more heavily; wanted Tony Blair, then prime minister, to lobby George Bush to treat corporations more favourably in return for supporting the invasion of Iraq; and lobbied for less "burdensome" red tape so multinational corporations would continue basing themselves in Britain."

Concerning the pension tax it is mentioned that:

Originally Brown proposed a 60% tax on pension pots above £1.4m. The Treasury had estimated the new tax would hit only 5,000 wealthy people, although others argued many more would be affected.

Seemingly impervious to the business arguments, Brown was refusing to water down his proposals. So nine businessmen in the group sought to go over the chancellor's head at one of the meetings with Blair on September 2 2003. [...]

The lobbying, allied with protests from other business groups, forced Brown to rethink. Within a few months, he had loosened the proposed cap on their pension pots so that more of their money would escape the tax net. The extra tax will only be payable on pension savings over £1.8m, not the originally proposed £1.4m, and will not come in until 2010.

He delayed the start date of the new regime to give the rich more time to re-arrange their finances. He also reduced the tax rate from 60% to 55%. The super-rich can thus shelter an extra £400,000 from the taxman - at Brown's original proposed 60% tax, that sum would have incurred a £240,000 tax bill.

People

Lord John Browne (BP) | Arun Sarin (Vodafone) | Sir John Bond (HSBC) | Sir Christopher Hogg (GlaxoSmithKline) | Niall Fitzgerald (Unilever)

Resources

Multinational Chairman's Group