[Ed: Part 1 of this essay was published here yesterday.]
As for this issue of legislation, the UK has always had the right to legislate for the Crown Dependencies. It is only since the development of our “off-shore finance centres” over the last forty years or so, that some people have started to put their own interpretation of the constitutional position, rather than what the true position is. There is also an argument that this new interpretation of the constitutional relationship has come about because of new vested financial interests being at play. Because of this action by the Crown Dependencies, many in the UK and elsewhere are going to think that financial interests there have too much influence with their governments
Do the Crown Dependencies governments have public support for their actions?
Bearing in mind the magnitude of what has happened, it has to be questionable as to on whose behalf the Crown Dependencies’ governments were acting. Have they been acting for vested financial interests, or for their own citizens? It is debatable as to how much authority the three Crown Dependencies’ governments have to act as they have done on this issue. It has never been a particular election issue, so none of the senior politicians concerned with this can argue that they have a democratic mandate on this.
In fact, many people in the Crown Dependencies dislike the image of “off-shore financial centres” that they have, and they believe that their economies are far too dependent on the financial sector. Certainly this issue of beneficial ownership will only really bother a few people in the financial sector, rather than the general public. So when some of these senior politicians from the Crown Dependencies attempt to persuade MP’s to their point of view, it is fair to ask, “just who are they representing?” People in Guernsey, Jersey and the Isle of Man are entitled to maintain that their “authorities” are “not acting in our name.”
Why all British territories should be singing from the same hymn sheet
Withdrawing this Finance Bill has simply delayed it, for what many will perceive to be no good reason. The issues are still going to have to be debated and voted on. It has to be pretty obvious that if the UK is presenting itself to the world as getting its financial transparency in order, that such efforts have to include the British Overseas Territories and Crown Dependencies. Otherwise, those territories will be seen as a convenient loophole, one which the City of London has long had a very profitable relationship with for some time.
It is important too, that there is level playing field at work on this issue. This means that the UK, the Crown Dependencies, and the Overseas Territories, need to all be working towards the same objectives, singing from the same hymn sheet. It is simply not consistent to have the three groups of the UK, the Crown Dependencies, and the Overseas Territories, operating with different agendas. So Guernsey, Gibraltar and the British Virgin Islands, for example, should have broadly the same financial services legislation, in line with UK requirements. It really is time for them to be all working together, and not having this conflict, which the Crown Dependencies have been engaged with, and some Overseas Territories have done so as well.
It is also not helpful for the Crown Dependencies to argue that this Bill is dealing with “domestic legislation” for them, which they argue they are normally consulted on. Many would argue that this is not “domestic legislation,” and even if it was, the UK has every right under its good governance responsibilities to legislate as it sees fit.
As for consultation, the Crown Dependencies have had an immense amount of consultation already, so no one can argue that it has not been more than sufficient.
The need for the UK to consider financial compensation
It is far better to recognise the fact that all the Crown Dependencies and Overseas Territories who are involved in the “off-shore financial sector” could never have done so without the tacit agreement of the UK government. Therefore if any British territory suffers financial income loss through any changes in financial legislation, and in this case, the proposals on beneficial ownership, then the UK government should step in with financial assistance.
If the UK sets the lead, then the rest of the world must follow on this
There is of course a need for a world- wide level playing field and clearly a number of countries need to improve, including the USA. The UK government therefore needs to be seen to be taking strong economic measures against any country which does not take the same sort of action as that of the UK.
Champagne corks off
No doubt those in power in the Crown Dependencies will be full of praise for what they see as a victory. They will be celebrating, along with some of those involved in one sector of the financial sector. However, their actions, unless they change course quickly, will result in more UK MP’s and the UK general public having a worse opinion of the Crown Dependencies. Is that a good thing? I somehow think not.