Monday, 9 February 2015

Ed Miliband and the Storm in a Teacup

Dear xxx 
More than 18 months ago, David Cameron announced that you and he had reached agreement on increasing transparency around the ownership of companies based in your jurisdictions. This was to reduce the opportunity for them to be used for tax avoidance, evasion and other illegal activity. 
He said that you and he would focus on beneficial ownership, and that you would publish the true owners of shell companies based in your jurisdictions. He claimed that this was a “very positive step forward” ahead of the G8 meeting in June 2013, and followed it up with a letter saying that 
“Beneficial ownership and public access to a central register is key to improving the transparency of company ownership and vital to meeting the urgent challenges of illicit finance and tax evasion”. 
However, since then no Overseas Territory or Crown Dependency has produced a publicly accessible central register of beneficial ownership. And, despite his initial enthusiasm, David Cameron has done nothing to ensure that they are produced.
Ahead of the General Election in May, I am writing to put you on notice that a Labour government will not allow this situation of delay and secrecy to continue. Labour will act on tax avoidance where the Tories will not. 
All UK Overseas Territories or Crown Dependencies will have to produce a publicly accessible central register of beneficial ownership within six months of the election of a Labour government. If any Overseas Territory or Crown Dependency does not meet this deadline, we will ask the Organisation for Economic Co-operation and Development (OECD) to put them on the OECD’s tax haven blacklist. 
Yours sincerely,
Ed Miliband 

First, I have a few interests to declare -

I have been a member of the Labour Party since I was 18 years old.

The second declaration to make is that I have stood for election to the States of Jersey twice, where my campaigns received donations from individuals whose employment was in the finance industry (or at least dependent on finance), a trade union which represents hundreds of finance workers in the Island, plus my own person income which until that point had been from employment in finance and law.

That interest combined with the fact that the majority of my friends and family (and no doubt constituents too) are either employed in finance or employed in industries which are dependent on finance, and the fact that the tax revenue we make from finance funds the public services that I want to see protected, is why I make no apologies for holding the view (and policy) that maintaining a strong finance industry is fundamental to our Island's economic future.

It is precisely because I hold that view that I have cringed at virtually every statement and comment I have seen issued since Ed Miliband sent his letter to the heads of government of the British Overseas Territories and Crown Dependencies, and why I believe that the media have deliberately fanned the flames of hostility to generate more hits for themselves.

The most important fact surrounding this situation is this - Ed Miliband is most likely going to be the next Prime Minister of the UK. Whether you like it or not, Labour has consistently been ahead in the polls since Ed Miliband took over as leader of the party, and is most likely to emerge from the forthcoming election as the largest party (with or without a majority).

Given that this is not only a possibility, but a likelihood, the last thing Jersey should be doing is ridiculing what a potential Prime Minister says. We must treat what he says with absolute seriousness. Ed Miliband has already proven that he has no problem whatsoever taking on the Establishment over an issue of principle, as he demonstrated with his stance against Rupert Murdoch and News International. Despite his geeky exterior, he is a formidable politician who puts action behind words, doing what is morally the right thing, even if it is politically the harder path to go down.

If Ed Miliband becomes Prime Minister and decides to put Jersey on the UK's blacklist (which is separate from the OECD blacklist) then our finance industry would be practically wiped out over night and, no matter how unfair Jersey may consider it, the UK government has the power to do that so we must be wary.

So when he speaks, we must listen and respond calmly and reassuringly. Playing party politics over this (which is some of what we have seen so far) is the wrong way to deal with this.

If the UK government says they want us to create a publicly accessible central register of the beneficial ownership of companies, then rather than kicking our toys out of the pram and crying "no, that's not fair!" (which, by the way, carries no sympathy whatsoever amongst ordinary UK voters) we have to adopt an approach that is more conciliatory and responsible, where we demonstrate our willingness to cooperate so we can negotiate constructively over either how we implement such a register in a way that doesn't harm Jersey, or alternatively (and probably preferably) act to reassure the UK that it isn't necessary for us to do so for this reason or for that reason.

Our finance industry operates in a global market, and you cannot expect to be allowed to play the game if you aren't prepared to accept the rules agreed by all the players. Since 2008 international perceptions and priorities have changed and we are kidding ourselves if we think we can ignore what the major economic players have to say about how we provide our services.

We must swim with the tide, not against it. The yah-boo jeering from the media at Miliband is completely destructive, does not represent mature politics and does not secure Jersey's position because in the UK it will either be ignored or it will be treated as a sign that we don't want to co-operate.

We are an Island of 100,000 people when the UK is a country of 65 million people. Defiance will not get us anywhere. It is constructive engagement with all UK parties that is necessary to see that any potential UK government is content with how Jersey operates.

The Jersey government has officially made this (quite measured) response -

Jersey Finance has made this (slightly less, but still quite measured) response -

Whereas the JEP's editorial comment today was embarrassing to behold, not least because right under the headline "Get your facts right, Miliband", the JEP proceeded to then refer to him by his brother's name David, rather than Ed. You just couldn't make that sort of comedy gold up.

But the JEP response (which inevitably helps shape the tone of the public discourse) was, in my view, irresponsible, and will have helped turn the public against Miliband, when the last thing Jersey needs is for there to be widespread hostility against the British Prime Minister, and for there to be mutual distrust.

This is the exact sort of destructive response that has prompted me to write this blog. Other media (ITV in particular) has been particularly inflammatory, hysterical and inaccurate.

So I want to go through some of the accusations labelled at Miliband and show why they are complete nonsense and why our approach to these sort of things needs to be more mature and less inflammatory if we are to secure our finance industry for the future.

First, here is the full press release (including the text of the letter) sent out by the Labour Party, most of which the contents have been ignored by the media, both local and national -

The first point to address is the claim that "this is a cheap shot at Jersey by the Labour leader".

This is demonstrably nonsense.

The letter that has been sent out has been sent to 10 different jurisdictions. It has been sent non-discriminatory to all Crown Dependencies and major British Overseas Territories.

This is not a unique letter to Jersey, based on a purely Jersey context, but a blanket letter to encapsulate a broad issue across the board.

Jersey has not been singled out in any way with this letter.

In fact, the only time the word "Jersey" appears once in the Labour press release, is when they are actually specifically saying that we are ahead of all the other jurisdictions (including Guernsey) in terms of where we are with a public register, but that we had set ourselves a deadline to report back to the UK which we have missed.

When a letter is sent to the heads of government of 10 jurisdictions, each with unique economies and regulatory systems, it is blatantly obvious that not all of what is said will apply 100% to Jersey.

The JEP editorial goes on to say that Miliband should get his facts right, as Jersey meets all international best-standards practices... despite the fact that at no point has Miliband ever suggested that that wasn't the case! A total strawman argument. He's proposing a new standard, which he has every right to do.

ITV has claimed that Senator Gorst has "rubbished Milibands claims" without once referring to what those claims actually are (as I've said, there is only one clear claim and it is true), followed by an interview where the Chief Minister speaks very calmly around subsidiary matters of Jersey complying with international standards, and not the specific issue in the Miliband letter.

Such a headline from ITV is not just factually incorrect, but is deliberately attempting to muddy the waters and make an enemy out of the Labour Party.

Jersey Finance in their statement have made the point that Jersey already collects all of the information that the Labour Party want to be accessible, but that it is only available to law enforcement agencies, rather than on a public register. They argue that a public register would be of dubious value.

That is a fair argument for them to make.

Their job now (in conjunction with the Jersey government) is to make that case to the Labour Party so that we satisfy them that it is not necessary in Jersey's case, and the other jurisdictions will have to do their own thing.

But if the UK is adamant that they want the register to be public, then it doesn't matter one iota that no other jurisdiction does it, we either have to implement one, or we risk ruining our relationship with our single greatest economic partner.

It will be up to use to decide how we best approach that issue in a calm and measured way. Slinging mud will not help us.

Jersey has absolutely nothing to fear from a Labour government in the UK led by Ed Miliband, unless we specifically create a conflict which is not in Jersey's interests.

What everybody needs to understand is that there is no future for a finance industry based on tax avoidance. Tax avoidance is out of fashion. When the government of the UK is inflicting austerity on it's people, every pound that is avoided in tax is a pound that has to be taken out of the local school, or the NHS, or fewer police on the street etc.

The UK, and all countries, have every right to ensure that they collect all the tax that is due, whether it is evaded or avoided.

Jersey has cleaned it's act up a lot, and is rated highly by the IMF and OECD. But to say we are completely without problems is to be dangerously complacent.

When things like Jimmy Carr's K2 scheme are linked to Jersey, the UK gets annoyed. If we can demonstrate ourselves to be willing to work as a partner to ensure that sort of thing doesn't happen in the future, then we can be in the UK's good books.

What will place the Island in real trouble is if we have a repeat of what we had last year when Senator Bailhache attempted to delay the implementation of a Tax Information Exchange Agreement on the basis that it would be bad for Jersey for us to go ahead with it when other jurisdictions were lagging behind.

Thankfully the States showed it's contempt for his proposition, but had it been accepted it would have sent out a message to the world that we were uncooperative and had something to hide.

The Chief Minister was utterly spineless and naive for re-nominating Senator Bailhache for the position of External Relations Minister after this whole episode, where he is essentially in charge of the Jersey London office (which I recently visited and is very impressive) to spread the word for Jersey there.

That is the real threat to our finance industry that we face. The Jersey Nationalists who are stuck in the old days and don't realise that the new market is one based on transparency so that legitimate businesses benefits from the services that Jersey provides, and absolutely mitigates the chances of dodgy business going on. That's what the world wants to see and we are right when we embrace it wholeheartedly, rather than drag our feet in the ground like Senator Bailhache wanted us to do.

If the media wants to find the real threat to Jersey, they should start by looking within our own shores first.


[Edit 10/02/15]

The story continues and the media continues to do a terrible job at reporting it.

Here is another ITV article but this time from Guernsey's point of view -

Here they again say that Deputy Le Tocq has hit back at the claims made against Guernsey.

So here is the letter that Deputy Le Tocq has sent to Ed Miliband -

No where in this letter does Deputy Le Tocq hit out at the single claim that Miliband has made about Guernsey, which is that Guernsey has not introduced a public register of beneficial ownership. Why has he not contradicted that point? Because it's true!

Yet ITV have simply allowed the Chief Minister to get his own message across, without even attempting to challenge him.


  1. Purely political strategy by Ed Milliband, he is no doubt aware that the Guernsey/Jersey have stated they are not willing to do so alone, in other words every country covered by the OECD should all comply at the same time!!!

    Heaven help us all if Ed Milliband becomes the next PM.

    1. Ed Miliband is provided us with some options.

      Either wait until all other OECD countries do it, but be blacklisted by our main economic partner in the meantime.

      Or implement a public register, or make equivalent concessions to satisfy the UK.

      As UK Prime Minister he will be entitled to make us choose.

      I'd prefer we had that discussion and made our choice wisely rather than playing party politics and taking the mickey out of someone who in a few months will have the power to economically decimate this Island.

  2. You might note that the UK does not have a central register at all, even one which is kept under wraps. Given the City of London also functions as a tax haven, you'd think they should, wouldn't you?

    “Beneficial ownership and public access to a central register is key to improving the transparency of company ownership and vital to meeting the urgent challenges of illicit finance and tax evasion”.

    1. Maybe they should, but it isn't relevant to what Ed Miliband wants us to do.

      We're an Island of 100,000, they're a country of 65m. We aren't calling the shots.

  3. I agree with a number of your points, especially in relation to entering a measured, constructive dialogue, however there are elements of your comment I would take issue with:

    Recent polls do not appear to share your confidence that Miliband is 'most likely' to be next prime minister.

    Secondly, I may be misinterpreting your comments, but is one of your central complaints that you would wish to dictate the manner in which independent news organisations cover a particular story, in order to avoid upsetting a particular interest group or political party ? In the light of recent events, and the questions raised over freedom of the press and of political and religious expression, I sincerely hope that it is me that has misunderstood.

    I believe you would aid your position if you undertook a more detailed review of the operation of our finance industry. To make a sweeping statement that if Jersey were 'placed on the UK's blacklist' that ' our finance industry would be practically wiped out overnight' is both crass, and shows a real paucity of understanding of both our constitutional position, and protection afforded us under broader EU legislation, and the geographic reach and source of the business the island attracts. The days of Jersey relying largely on 'tax avoidance/evasion' by a primarily UK centric client base are I am afraid, long gone. In fact you seem to acknowledge this very fact in your next statement:

    'Our finance industry operates in a global market, and you cannot expect to be allowed to play the game if you aren't prepared to accept the rules agreed by all the players' - This is absolutely correct. And the UK is certainly not 'all the players'. What they want matters, but it is by no way the whole story. Demanding that we implement measures that no other European state has in place is not within the 'rules agreed by all players'

    1. Labour are averaging a poll lead, despite two off polls in the past few days. But it doesn't take into account that the majority of minor parties (SNP, Plaid etc) will never back a Tory government, so Labour has a head start already.

      Pointing out when the media say something stupid and irresponsible is not the same as saying the media should or should not be allowed to say something.

      The majority of Jersey business is either with or through the UK. If they shut that off, we are in serious trouble. That isn't crass, that's just a fact.

      The UK isn't all the players, but it's the main one. The UK has the right to legislate for us (despite what the Jersey Nationalists say) and has the right to put us on their blacklist if we don't do what we say. I never said it was or was not fair, I'm just observing it as a fact. if the UK changes their mind tomorrow and says it doesn't want to deal with offshore centres who don't have a public register, then that is the new rule and we have to play by it (or make a damn good case to the UK as to why they should make an exception for us, rather than whinging that it isn't fair).

  4. Cont'd:

    'Jersey has absolutely nothing to fear from a Labour government in the UK led by Ed Miliband ..' - I think we all know that this is certainly not the case. Labour has a number of politicians who have a history of being openly hostile to the offshore islands.

    'The UK, and all countries, have every right to ensure that they collect all the tax that is due, whether it is evaded or avoided.' - Avoidance by its nature is legal, and within the legislation in place at any time in the governing country. Therefore all the tax that is due excludes that which is legally avoided. It would be helpful to our industry if you could make this important distinction at every opportunity.

    'What everybody needs to understand is that there is no future for a finance industry based on tax avoidance. ' - Please see the above point.

    'When the government of the UK is inflicting austerity on it's people, every pound that is avoided in tax is a pound that has to be taken out of the local school, or the NHS, or fewer police on the street etc.' - This is plain political posturing, in much the same way as 'every Pound legally avoided in tax is one less Pound the government is able to spend on bombing innocent people in the Middle East'. This is a subjective, not objective argument. What about the innocent people in Jersey who would lose their jobs, homes, livelihoods etc.. from a collapse in finance because of the closure of businesses offering perfectly legal services ?

    'Jersey has cleaned it's act up a lot, and is rated highly by the IMF and OECD. But to say we are completely without problems is to be dangerously complacent.' - Could you please reference the document that makes the claim that we are completely without problems ?

    'The Chief Minister was utterly spineless and naïve' - Is there really any need for this ? You rail against 'yah-boo jeering' and appeal for 'mature politics' earlier in your blog. Please act as you would wish others to do.

    I realise that you would favour a Labour government in the UK, and you probably feel that this would enhance your ability to foster a greater level of participation, and importance, within the UK party. You are however employed by all the people of Jersey to defend our best economic interests. I like the message of suggesting a constructive dialogue between the parties, but please do not let this translate to mere appeasement with a potential UK labour government for your own personal gratification and self-aggrandisement.

    1. My observation is that actually some of the most hostile MPs to Jersey come from the Lib Dems, and they're history. We had 13 years of a Labour government before and that didn't seem to do us much harm.

      I have made the distinction, but you and the other defenders of tax avoidance deliberately and persistently distort it. Tax avoidance IS avoiding tax which is due, because it involves utilising loopholes for a purpose they were not created for. It may not be illegal, but it is not within the spirit of what the tax laws intended.

      The point on austerity is below worth answering.

      I have already referenced two things which show we aren't without problems. The fact that things like the K2 scheme can and do go through Jersey, and Senator Bailhache trying to politically wreck attempts to introduce TIEAs (if your concern for our finance industry is so genuine, you'd be better contacting him -

      I'll continue calling Gorst spineless and naive until he stops being both. He is a terrible Chief Minister and is doing our Island serious harm.

      Every word I have said in this blog is said with the intention of defending our best economic interests. Just because your vision for Jersey is one which tolerates aggressive tax avoidance and austerity, doesn't mean you need to patronise us all by suggesting we are somehow acting against Jersey's interests by rejecting that right-wing dogma.

  5. A quick question to you in light of the above comments:

    If Labour were to enact legislation that you viewed as being unfair, and was likely to be catastrophically damaging to Jersey's economic interests, would you give up your membership of the labour party ?

    1. Probably. I have a line in the sand that I can't cross. I had threatened to leave the Labour Party if they had supported military intervention in Syria. Thankfully they didn't, but I was ready to leave if they did.

  6. So, as usual, we swiftly degenerate into answering points which weren't raised, and trotting out dogmatic political rhetoric in place of reasoned argument of the facts.

    'some of the most hostile MPs to Jersey come from the Lib Dems' - Yup, absolutely true. And ignoring my statement that 'Labour has a number of politicians who have a history of being openly hostile to the offshore islands'.

    Well done for referencing 2 things which show we are not without problems. Now perhaps you would care to provide what I actually asked for ? 'Could you please reference the document that makes the claim that we are completely without problems ?'

    If you are so keen to keep referencing our Chief Minister in the terms discussed, perhaps you would confirm that you are not actually against 'Yah-boo jeering' and actually revel in immature politics ?

    I can't find my defence of 'aggressive' tax avoidance ? Perhaps you could give me the legal definition which distinguishes between avoidance and aggressive avoidance which I have not defended ?

    I'm also failing to see my defence of austerity. Like all ideologues or fundamentalists, you seek to conflate dissenting opinions as having to be 'anti-X' simply because one is 'pro-Y. That is not how the real world works. You have demonstrated yourself, in your desire for a spirit of consultation, rather than confrontation, that it is possible for seemingly opposed viewpoints to be mutually exclusive. However you appear to have a rabid intolerance of others demonstrating such plurality.

    1. I think you'll find that you were the one bringing up all sorts of consequential points that had nothing to do with what points I was making in the first place.

      I never referenced a specific document making claims that Jersey had problems, because it is not fundamental to the point I was making.

      Calling a politician spineless because they act in a spineless way is not immature. Calling him funny looking or attributing policies to him that he does not have (difficult, given he doesn't have any policies at all) would be that.

      I never trust anyone who jumps up when tax avoidance is mentioned to say that it isn't illegal when no one had made the argument that it was illegal. I don't trust it because time and time again I see that right-wingers actually consider tax avoidance to be morally legitimate because they want to sabotage the state in whatever underhanded ways they can.

  7. I'm glad that you are fair enough to acknowledge my points were consequential.

    'But to say we are completely without problems is to be dangerously complacent.' - I'm just asking for proof of anybody saying we are completely without problems. Surely you have this proof if you choose to make this comment ?

    The Chief Minister has no policies at all ? No, you're not immature at all. That's obviously a completely rational thing to say.

    Care to answer my question on the legal difference between aggressive tax avoidance and tax avoidance ?

  8. In fairness, I did say the consequential points were irrelevant.

    I'm saying we aren't completely without problems and I've gone on to explain why. I never suggested I was quoting an academic. You can either disregard the two points I used to back up my opinion or you can ignore the inconvenient facts. I would very much like Jersey to have no economic troubles at all, but I don't believe in burying your head in the sand.

    Glad you agree that the Chief Minister doesn't have policies.

    The two are terms which mean a million different things to a million different people. I would describe tax avoidance as using schemes or exemptions for the purpose by which the law intended them to be used (e.g. spending income on work-related tools, which then becomes tax deductible), as opposed to using schemes or loopholes for a purpose not intended by law (e.g. using multiple companies to direct money through via loans, because they are treated differently to income for tax purposes).

  9. Whilst the UK is taking steps to ensure that Jersey is not used by people to avoid paying taxes, which are due, perhaps they could also introduce measures to ensure that Jersey is also not used by companies to improperly sell Viagra and other medicines without a license to people in the Uk or tacky sex toys. I am sure the selling of Viagra without a license is illegal and I know of one person who is selling it on their tacky website. This person should be investigated for the dodgy sales – not only for the illegality - but for tax and social reasons.

  10. Nigel George Romeril10 February 2015 at 21:48

    I am really looking forward to the Evening Post article on Marion Cameron exposing his dangerous pandering to the the Eurosceptic right and trying to outflank UKIP by holding a referendum on UK membership of the EC.
    A vote to leave the EC could be disastrous for UK business, already the BCC and the CBI are not keen on the idea, and it would have implications for Jersey as we would leave with the UK.
    But the policy seems to be not to stir up the sleeping right in the island.

  11. "The most important fact surrounding this situation is this - Ed Miliband is most likely going to be the next Prime Minister of the UK. Whether you like it or not,"

    Sorry Sam, but I would argue that to the average person not signed up to either the Labour or Conservative parties there appears to be too little difference between the pair to warrant a landslide vote for either. This is why we've seen a quite radical swing in recent years towards other parties.

    I believe if Milliband becomes Prime Minister it will at best be on such weak terms that he'll find himself facing the same coalition quandry as Cameron last time around.

    1. I don't think there will be a landslide in any direction. But virtually all of the minor parties will sooner back a Labour government than they would a Tory one. So all Labour need to do is make modest gains, or even stick with a similar number to now, and they'll be in government, either as a minority government or the senior coalition partner.

      All of those minor parties will almost certainly support Milibands position on this issue.

    2. Do you believe that UKIP (who have constantly polled at around 13-18%, the highest of the minor parties) are more likely to join the Labour party in coalition than the Tories ?

    3. UKIP are unlikely to get more than 5 seats (my prediction).

      They are also a racist party, so Labour will never accept a coalition with them under nay circumstances. I'm 100% confident of that. Our membership simply wouldn't allow it.

    4. That's an interesting comment. So any party whose members act in a racist manner are a 'racist' party ?

    5. So how would you define a 'racist' party ? I believe that UKIP's primary aims are to limit immigration, and to return powers of self-determination to the UK government that have been lost to the EU.

      Looking at the growing ethnic diversity of their membership, and the party's stated policies, I find it difficult to reconcile the left's constant labelling of the party as racist, with the reality of the situation. (As an aside, I honestly believe that this determined misrepresentation by all of the main parties, who seem more interested in telling voters who they shouldn’t vote for, and branding voters racist if they consider voting for UKIP, is driving voters to UKIP, rather than the other way around. People are not idiots, and resent being told what not to think, or do, and especially resent being branded ‘racists’ when they are patently not).

      Of course I agree that UKIP have had more than their fair share of embarrassing racist idiots and bigots in the past as part of their membership, however as you have agreed, the actions of the members do not necessarily determine the official policies of the party.

      So I'm genuinely interested. Which of their policies do you find to be 'racist' ?

  12. Have you been upsetting Maureen Morgan because I reckon she's after your blood.

    1. What she bleating on about this time? Any more idiotic libel I have to refute?

  13. I shall treat you to a meal at the Gas Place cafe if Ed Miliband is the next Prime Minister. Frankly whatever the standing of the Labour Party, they have saddled themselves with a leader who looks even stranger that Gordon Brown smiling.

    Not that I like Lord Snooty (aka David Cameron), but he at least gives the impression of a human being.

  14. Nigel George Romeril11 February 2015 at 20:37

    Looking at the current polls; I would guess at Labour as the largest party, a diminished Lib Dem presence, more SNP, maybe a few Greens, half a dozen UKIP, Plaid and the NI parties about the same as now.
    Cameron sits in No 10 while horse trading to form a coalition goes on but Ed Miliband has the better chance to form a government and becomes PM in late May.

    1. Yup, I think that's a prediction worth putting money on!

  15. For what it is worth, I think the Conservatives and UKIP will do better than expected, ceteris parabis. The main reason is the fact that I expect we will see a politically disengaged vote across all side, Lib Dems will poll badly, though not as bad as some expect.

    The reason why the Tories I believe will do quite well, is that low voter turnouts favour the Conservatives historically (not that history determines the future as Nieitszche pointed out, but nevertheless it's all we have to go on). This election will be a much lower voter turnout and this will harm Labour considerably.

    As a social democrat, I am not confident after reading the polls and recently in London at a pre-campaign meeting that this is not as confident in Labour as what is commented above. Labour are (and this is from unofficial discussions with two campaign organisers), Labour are jockeying themselves not for a win this year but in five years time. The plan is to position themselves for a future victory - obviously not with Ed Milliband of course. There even seemed to be a bit of hope that they don't win it, the cycle is believed to only give them a single term if they do, whereas a better cycle will exist in five years time to allow them the ability to quote "... win a few on the trot"

  16. The same Ed Milliband recently been caught evading his own personal taxes?