I was rummaging through various links today and came to the UK Foreign Office White Paper on the Overseas Territories published in June 2012. This contains, on page 14, the following interesting statement in a section headed ‘Our Constitutional Relationship':
The UK, the Overseas Territories and the Crown Dependencies form one undivided Realm, which is distinct from the other States of which Her Majesty The Queen is monarch. Each Territory has its own Constitution and its own Government and has its own local laws. As a matter of constitutional law the UK Parliament has unlimited power to legislate for the Territories.
I would add that I can see no difference in the case of the Crown Dependencies. But I thought I should check that out and found this, which is admittedly a report from the House of Commons Justice Committee in 2010, but which might be seen to represent current opinion:
We note the depth of feeling of some witnesses to this inquiry who have indicated serious grievances with various aspects of the governance of the Crown Dependencies and their desire for the UK Government to step in to address their Crown Dependencies 45 concerns. However, the Crown Dependencies are democratic, self-governing communities with free media and open debate. The independence and powers of self-determination of the Crown Dependencies are, in our view, only to be set aside in the most serious circumstances. We note that the restrictive formulation of the power of the UK Government to intervene in insular affairs on the ground of good government is accepted by both the UK and the Crown Dependency governments: namely, that it should be used only in the event of a fundamental breakdown in public order or of the rule of law, endemic corruption in the government or the judiciary or other extreme circumstance, and we see no reason or constitutional basis for changing that formulation.
As a matter of general principle, we note that, in a very small jurisdiction, there must always be the possibility that individuals wielding very significant economic, legal and political power may skew the operation of democratic government there. Just as the establishment of democratic government in Sark was a matter of good government, any threat to the ability of that system to operate fairly and robustly has the potential to raise good government issues which might require UK Government intervention. This is a matter on which the Ministry of Justice needs to keep a watching brief.
That opinion is unambiguous and is that if needs be the UK can intervene to ensure good governance in the Crown Dependencies.
And why is this? Take this 2007 report on the Overseas Territories by the National Audit Office. It says:
The Territories are a UK Government-wide responsibility. The Foreign and Commonwealth Office, (“the Department”), leads overall policy and maintains the main UK presence in Territory, with other Government departments helping to discharge specific aspects of the UK responsibilities. The Department seeks to achieve a balance between allowing populated Territories the maximum autonomy they aspire to and ensuring that the UK can meet its responsibilities and minimise its exposure to potential liabilities. Over the years the UK's exposure to risk has been varied, including; contributing to the costs of natural disasters and of meeting various international obligations; funding liabilities and deficits in Territories' public finances; and the need to bolster regulation in vital areas like transport safety and security. Other areas, such as the regulation of offshore financial services, clearly pose important and growing risks, though these have not yet resulted in direct costs to the UK.
In other words, the UK unambiguously picks up the bill when things go wrong and that is why it has the right to intervene.
Has anything changed since then. This is form the 2015 UK government report on the Overseas Territories:
The Overseas Territories programme fund
The Overseas Territories programme fund supports the work of government to maintain the security, stability and prosperity of the Overseas Territories by promoting good governance, economic development, security and environmental preservation. More specifically it:
- Manages risks and reduces the UK's liabilities in the Territories ;
- Is used to develop and implement effective criminal justice systems that introduce new techniques such as restorative justice and witness protection;
- Makes non-discretionary obligations to cover standing commitments such as annual subscriptions to international organisations and the UK's international obligations such as to the polar regions;
- Builds the expertise of the Territories by funding training and secondments for their public servants and by encouraging the exchange of experience through the Jubilee programme;
- Helps the Territories meet their environmental challenges through the Darwin Plus: Overseas Territories environment and climate fund which will disburse around £2 million per year to environmental and conservation projects in the Territories.
In 2014-15, the Overseas Territories programme fund will spend more than £4.7 million in support of a wide range of projects across the Territories.
So the answer to that is that we are still picking up the actual bill and are still acting as guarantor, as we also are, I think, in the Crown Dependencies.
None of this changes the fact that where possible devolved power is desirable and I am not suggesting otherwise. What I am making unambiguously clear are three things.
The first is that we are responsible, including financially.
The second is that we equally unambiguously have the right to intervene.
And thirdly, matters relating to financial services and their regulation are clearly seen as being within this remit.
So for all those in the Crown Dependencies and elsewhere who suggest this is not true, I suggest you take your heads out of the sand, stop living in the world of make belief that characterises everything in the offshore world, and instead note the reality that you can ultimately only act with UK consent, and there are those who think that should be withdrawn, and know they have the power to do it.
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Two points regarding the Crown Dependencies:
1. The recent relationship with the CDs is a problem of the UK’s making. The 2007 reorganisation of the Home Office, and the removal of responsibility for the CDs to the Ministry of Justice, means that what the CDs do is not a priority unless it impinges directly onto the central remit of judiciary, courts and prisons.
2. Your quote above actually means almost the opposite of what you hope. What it is saying is that although the UK retains the right to legislate for the CDs, it has no intention of using it.
There is one piece of egregious endemic corruption in both Jersey and Guernsey – namely that powers are not separated, and the Bailiff in both bailiwicks is both chief judge and speaker (or really president) of the legislative assembly, with the power to prevent elected representatives from asking specific questions should he so desire. The piece you quote from was, I believe, part of the response of a petition by Jersey people to the Privy Council to address this corruption, in the same way that Sark had been forced to renew its processes.
The UK declined to intervene. The right to intervene only has value if you are prepared, on occasions, to use it, and there is no indication that any UK government minister has the courage to do so.
I am aware that at present it is unlikely these powers will be used
All I am seeking to show is that they could be – and it is a conscious decision not to do so
Which tells you everything you need to know about the calibre of the people that form our current government. Persecute those who claim social security, to the point that many have committed suicide, but do sweet FA about Crown Dependencies and Overseas Territories permitting tax avoidance and tax evasion.
James writes:
“there is no indication that any UK government minister has the courage to do so.”
First point: why the word “courage”? What “courage” is required? I can think of one reason why this courage might be required, but I am interested in what James meant.
Second point: maybe the word “inclination” is better. There is plenty of evidence that e.g. Jersey needs some form of outside intervention or clear pressure to secure certain reforms. But the atmosphere in Whitehall is not receptive to hearing these complaints, added to which the people making the complaints are viewed as “outsiders” which is kind of the point.
Richard,
The CD’s are clearly separate. They are not part of the UK, nor are they part of the EU.
What you quoted says clearly that the UK government should only intervene if there is a threat to “good government”. Crucially, the UK government would be acting via the Crown.
The UK cannot make laws for the CD’s because they are separate states, connected only by the Queen and long history.
Interference would no doubt lead to a demand for full independence. Aside from military force, it’s hard to see what argument the UK would have. Note: Ireland attained independence, and that actually WAS part of the UK.
A dependency is not a separate state
You really do fail at the first hurdle
And the argument re Ireland is fatuous: it was a state before it became part of the UK, which was as recently as 1800
But Guernsey and Jersey have always de facto been part of the UK – since at least 1200
I’m afraid I have to disagree.
Guernsey and Jersey have not been part of the UK since at least 1200. Not least because the UK didn’t exist until 500 years later.
They remain NOT part of the UK. The UK, for example, is part of the EU, while Guernsey and Jersey are not.
The connection is William the Conqueror. The Crown still “owns” the Channel Islands, UK citizens have no say at all, unless acting via the Crown, and only then in certain extreme circumstances.
Both Guernsey and Jersey might well have been incorporated into England, or later the UK at some point, but that didn’t happen (as Cyprus may have become a Greek or Turkish island, while Catalonia and Normandy could have remained separate).
Guernsey and Jersey could still be annexed by force, but I can’t see that happening.
Kack
Just go and read what I noted
The Crtown – which only acts through the UK government – does not agree with you
In which case you are, very simply wrong
I won’t repeat myself again. I don’t need to
You have no evidence and I have it all
And if you are in doubt 0- see what happens if you try to pass a law London does not like. It will never get Royal Assent
So much for indepedence
The crown does not only act via the UK government, it acts via the governments of Canada, Australia, NZ also.
But it sure as heck only acts via the UK gov’t in the case of the Crown Dependencies so please stop showing yourself to be a pedant
“The UK cannot make laws for the CD’s because they are separate states, connected only by the Queen and long history.”
This is simply untrue.
Throughout history the UK has legislated for the Crown Dependencies countless times. I seem to recall that the legislation establishing ITV’s right to broadcast is an example as is some the law to do with aviation.
Usually the Crown Dependencies approve and accept it, but there have been one or two times where the UK has unilaterally done it. There is even an example of a case where the Royal Court in Jersey directly applied UK legislation which had been passed saying that it extended to Jersey, but which the government of the day had simply forgotten to inform the Island authorities that it had done so.
The right to legislate is well documented
But tax havens have got used to living in a world of make believe
I don’t really see how it would make much difference to the UK to be honest. As far as I know all the revelations linked with UK personalities are totally legal. Laws against capital transfers have been repealed a long time ago, so there is no law against setting up off-shore companies. Unless you are arguing people have not declared dividends from off-shore entities (which would be tax evasions without a shadow of a doubt), I don’t see what they did wrong. They will have to pay taxes when they finally want to use the money for consumption in the UK. They could probably get around inheritance taxes, but not the repatriation taxes as far as I know…
Investment funds are often off-shore since they attract funds from many different clients in different countries. This allows investors to avoid being taxed in the country of the investment manager, which seems fair to me. The investment manager still needs to pay taxes on fees he charges, but the clients themselves are shielded. This does not remove the obligation to pay taxes on the profits once the investment is repatriated, but it does allow for an overall lower tax rate, due to the higher compounding… Again this is entirely legal. I don’t see how you could avoid that unless you agree to tax unrealized profits. I mean the easiest thing to do is to lend to a local bank: how do you tax that money in the UK? You’d have to require all countries to harmonize corporation taxes to achieve that…
Note what I have written on the cost to the UK this afternoon
Your argument is not just wrong but that of a supporter of the abuse of the people of this country
And do remember law is no guide to right or wrong: apartheid was legal once in South Africa and the death penalty is in far too many countries now
“Investment funds are often off-shore since they attract funds from many different clients in different countries. This allows investors to avoid being taxed in the country of the investment manager, which seems fair to me.”
I doubt the majority of people in these countries who aren’t able to use the ‘wealth management’ services provided by tax havens would think that’s fair. Those governments who are being deprived of tax revenues, especially those in the developing world, wouldn’t consider that fair either. Still, I suppose you and other defenders of tax havens would then say that since governments are all inefficient/corrupt/only staffed by the talentless/’all taxation is theft’ (delete as applicable) it’s all justified.
And anyway, only little people pay tax eh?
Anyone who believes Guernsey/Jersey are corrupt/tax havens evidently has a, how shall I put this…somewhat limited understanding. Crown Dependencies are independent. As you said, they rely on the UK for defence, okay sure, the one time Gsy/Jsy actually needed defending the UK did nothing, but that was 75 odd years ago.I say to the writer of the post get ‘your head out of the sand’, stop trying to puff your chest out with a basic/ignorant any understanding of Oversea Territory/CD rights. The biggest tax haven in Britain is London, we don’t have international coffee houses pay a couple grand a year here. The CD’S have financial regulators. Oh, and if you’ve heard of the OECD (suggest you have a look) – white listed (which is good by the way). James, I’m just going for lunch now, I’ll send my request for a BLT to Westminster ASAP.
I have been told such things so often
Ands you are always wrong
And I have always been right
As I am, with evidence provided (unlike you) on this occasion
You carry on living in make believe
I choose the real world