By Ben Shenton
SOME people collect rare books, others first editions or interesting novels. I have just purchased a copy of the 1994 edition of The Financial & Business Handbook of the Channel Islands – and it makes for interesting reading.
The late and well-respected former States economic adviser Colin Powell contributes with an article titled “ӣƵ as a Business Centre”.
Under the heading “Political Stability”, he writes: “The Island’s Assembly, the States of ӣƵ, is made up of 53 Members, none of whom sit as representatives of a political party. The absence of political parties has provided an enduring stability, continuity and balance in the Island’s government.” It is a pity the authors of the Clothier Report that recommended ministerial government did not share his wisdom. They designed a system for a type of government we neither have nor want (bring back committees).
Mr Powell then talks about our low tax on income, then 20% but now 21.5%, with generous allowances and “low rates of duty on alcohol and tobacco goods, and no value added tax”.
He continues: “The Island has a sophisticated business climate with a close working relationship between government and industry. This is reflected in a flexible approach in responding to changing market requirements, and the promptness of action on part of the administration to the requirements of business.”
This was written many years before we set up the ӣƵ Financial Services Commission and ӣƵ Finance.
“In June 1994 bank deposits totalled £59 billion [£121 billion in today’s money]” and these deposits were held in “76 registered deposit-taking institutions”. Thirty years later there are fewer than 20 banks regulated by the JFSC.
Turning to tourism, we had 683,700 staying visitors, and it is noted that the Island had “carved out a niche for itself in the conference market”.
Another interesting article in the book was titled “Housing and Business Property in ӣƵ”, written by David Letto. He writes that the growth of the finance industry has “put the housing market and the quality of life under considerable pressure”. Fortunately, “the States of ӣƵ has decided there should be a ceiling on the population of 82,000 in order to contain the demand for residential and commercial property”.
He continues: “Generally speaking, accommodation will be available from about £120 per week for a flat and £180 per week for a house.
“There is a wide range of one-bedroom flats available for purchase by share transfer from about £80,000” (which would be £163,538 today – using the Bank of England online inflation calculator). Basic lodging house accommodation “is available from about £40 per person per week”.
The commercial market offered new office blocks with raised floors and ample parking at rentals of around £20 per square foot. Older office stock was around £15.
There are very few wealthy immigrant consents as the government “considers the size of the family and other factors to assess the overall burden upon the Island’s infrastructure” – in other words, consents are decided based on what is best for ӣƵ, rather than what the financial gain is.
After the advent of ministerial government any semblance of a population policy disappeared. Power had been shifted to public sector employees who were financially rewarded if they had bigger departments, for this dictated – by some strange logic – that they had greater responsibility. It was even written into the public sector pension scheme that numbers would not reduce, as you cannot run a Ponzi scheme with diminishing numbers.
ӣƵ is a very different place today than it was 30 years ago. It has gone from being lean and nimble to slow and fat. It has gone from light regulation to onerous, strangling, intrusive regulation. It has gone from low taxation to heavy tax duties, some cunningly dressed up as environmental or health initiatives.
I wonder what the Island will be like in 30 years? My view is that finance, agriculture and tourism will be smaller and very bespoke. Out of necessity the public sector will reduce in size, with many “nice-to-have” services disappearing.
However, we can hold onto our heritage and wealth if we keep to a population target; getting rid of housing qualifications would be the equivalent of committing suicide.
In the old days, if we were faced with the OECD objective of “shuttering” the tax havens by making them close themselves down (because they are so stupid they won’t realise what they are doing), we would have fought back – demanding a level playing field before we made any moves. Now we are rich and fat and compliant we just do what we are told, even if it is not in our best long-term interests.
ӣƵ is nothing like it was 30 years ago and it never will be again. However, we can slow the loss in our uniqueness and identity if we wake up, start thinking as independents, grab hold of our heritage and stop blindly following other jurisdictions in every single policy decision.
