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ANNA JONES: HSBC has taken out full page adverts in several papers this morning offering sincerest apologies for the standards in place at its Swiss operations eight years ago.  It comes as the row over tax rolls on and the Labour leader, Ed Miliband, promises a root and branch review of HMRC, so why was the former Chairman of HSBC appointed as a Trade Minister by this government?  Well he served in the Department of Business for the three years under the Business Secretary, Vince Cable and Mr Cable joins me now from Twickenham in West London.  A very good morning to you, Mr Cable, HSBC is arguing that it has undergone a radical transformation, it has taken out these full page adverts apologising for a lapse in standards in the past, do you have full confidence in HSBC now?

VINCE CABLE:  I don't know.  I mean I’ve written to the Chairman asking for reassurance on this issue.  The abuses that took place in relation to Switzerland I think ten years ago, almost that, the issue that I was particularly concerned about was the recent revelations by the whistle-blower in Luxemburg that things had been happening more recently so I’ve written to the Chairman of the group just asking for reassurance that this is not happening.  I think there is a danger in this whole debate of mixing up history and the present.  I think some of the worst abuses that took place where in the, you know, a decade ago when all the big banks operating out of London had teams of people who were helping British people avoid British tax and that has now been shut down largely, as far as we can establish but what concerns me is what’s happening now under our government, I want that absolutely stopped.  

AJ: Ah, we look as if we might have just lost that line there to Vince Cable.  We last the line briefly to Vince Cable, we were talking about HSBC, I am told that line has been re-established.  Apologies for those technical problems there, Mr Cable, you were telling us that you still had concerns about HSBC, what exactly are you worried about?

VINCE CABLE:  Well the issue which I am primarily concerned about is to ensure that these things are not happening now.  I mean it is one thing for things to have happened ten years ago and we do need a proper explanation of that but what is absolutely essential is that the practices are not continuing and that’s why I’ve written to the Chairman to particularly respond to the accusation by the whistle-blower that similar things have been happening out of Luxemburg quite recently.

AJ: Some of these campaigns like ethical banking, how angry are you about what’s happened at HSBC in the past?  

VINCE CABLE:  Well what is emerged is striking and totally unsatisfactory.  I think the worst period we went through was ten years ago when all the leading banks were offering industrial scale tax avoidance to British citizens to avoid British tax and they were doing it out of London and the last government rather belatedly got round to organising a code of conduct but only a handful of banks agreed to it.  We have moved quite a bit from there but still there are things happening which most definitely should not be happening.  

AJ: And when did you first hear about the allegations against HSBC and its Swiss arm?  

VINCE CABLE:  I heard about them very recently, certainly in terms of Lord Green.  He was appointed by David Cameron as a Conservative peer who came to my department with a clean bill of health, he was a good Trade Minister as it happens but I think it is now for him to answer the specific allegations that have been made.   

AJ: Well yes, and I’ll come on to that appointment in a moment but I am interested to know when you heard the allegations because the suggestion is that the government should have known back in 2010 about some of these allegations, that’s when the French authorities started sharing information about them, it’s when the whistle-blower says the UK government should have known so why didn’t the Business Secretary know in 2010?

VINCE CABLE:  Well he was vetted by the staff at Number Ten Downing Street before the Prime Minister appointed him and certainly as far I was aware he had a completely clean bill of health when he came to the Department.   

AJ: Well yes, you actually did say when he came to into the Department, you talked about him having a long career as an international banker, you said he was one of the few to emerge with credit from the recent financial crisis and someone who set out a powerful philosophy for ethical business.  You must regret those words now.

VINCE CABLE:  Well all those things were true at the time.  Whether they are fair or flattering we don’t know because he hasn’t yet spoken on his role in the matter and I would certainly like him to do so.  

AJ: I suppose the thing I’m trying to get at is why you weren’t aware of some of the allegations that were around at the time.  There were press reports about tax avoidance and HSBC and Lynn Homer, the Chief Executive of HMRC this week has said that they she was confident that they would have told Minister that they were going to receive this information on HSBC back in 2010.  You were Business Secretary, why weren’t questions asked about this bank?

VINCE CABLE:  Well I have already explained, when Lord Green was appointed he was appointed by David Cameron as a Conservative Lord and he was vetted by the staff of Number Ten Downing Street, he came to us to do his job as a Trade Minister.  I certainly had no awareness of these activities otherwise I would have raised objections at the time because tax avoidance, certainly abusive tax avoidance, is completely intolerable.  

AJ: Well yes and Ed Miliband has said this weekend hasn’t he, he has accused the coalition of shrugging its shoulders on the issue of tax avoidance, he says there needs to be a review of HMRC, do you agree that it has failed in its duties?

VINCE CABLE: No but it could be doing a great deal more.  It certainly has tightened up a great deal in the last few years under our government.  I mean we inherited the situation where HMRC’s resources have been cut back severely, where banks were operating out of the UK as I say, doing industrial scale tax avoidance out of London, not out of Luxemburg and Switzerland and the last government belatedly tried to stop it through voluntary activities so things have moved on a long way since then and there is now a much tougher regime, as it should be but I fear far too much is still happening and there is a disproportion because small traders are being pursued aggressively by HMRC over small VAT failures, we get people who are being pursued because they have perhaps over-claimed by a few pounds on benefits and all their benefits are stripped away from them.  The treatment of small people and poor people is very severe but the big fish, the companies and rich individuals are not being treated as seriously and that is wrong and it must change.  

AJ: Lord Fink talked about tax avoidance this week as you will know, he said the phrase tax avoidance is so wide that everyone does tax avoidance at some level, do you think he’s right?

VINCE CABLE: No, absolutely not and that is a very disingenuous observation.  I mean there is obviously a distinction, a formal distinction between illegal criminal tax evasion and legal tax avoidance but within tax avoidance it is now accepted in legislation that you can have abusive tax avoidance which is designed to frustrate the will of parliament.  That is quite different from ordinary individuals claiming some tax relief on their ISAs, I mean that is a totally different kind of behaviour from deliberate systematic attempts to avoid paying British tax and dumping the burden on many other poorer people.  

AJ: Okay, Vince Cable, sadly time is against us and we have no more time anymore but apologies for the technological problems earlier on and we appreciate your time.  

VINCE CABLE: Thank you.