Isle of Man News - POSTED Thu 22-07-2010

London MP defends Isle of Man and other offshore finance centres

by John Gregory

London MP defends Isle of Man and other offshore finance centres

CONSERVATIVE MP Mark Field aimed to set the record straight on offshore finance centres, including the Isle of Man, in Westminster yesterday.

 

The MP for the Cities of London and Westminister believes the debate over the role of small international finance centres has been 'remarkably one-sided'.

 

Mr Field said: "As international organisations and major governments seek to understand the cause of the global financial crisis, small international financial centres (IFCs) have repeatedly endured political attacks and misguided criticism.

 

"From pejorative sniping about their being tax havens for avaricious bankers to allegations that they provide secrecy jurisdictions for shady figures in the international business community and are in part to blame for shortcomings in the financial markets, the debate over the role of small IFCs has been, to date, remarkably one-sided.

 

"This is unfortunate as it demonstrates a fundamental lack of understanding of their function and the benefits they provide to the wider global economy."

 

He said there is a mutually beneficial relationship between the City of London and many Crown Dependencies and overseas territories "demonstrated not only by the massive capital flows between the two which aid market liquidity and investment in the UK, but also legal and consitutional similarities and the transfer of skilled professionals".

 

"To give some idea of the scale of those capital flows, UK banks had net financing from Guernsey alone of $74.1 billion at the end of June 2009."

 

"Unfortunately, because the public debate is largely myopic when it comes to IFCs these benefits are often overlooked or conveniently ignored.

 

"This is in part as a result of small IFCs relatively low profile from, for instance, a lack of seats at the intergovernmental bodies which design global financial regulation.

 

"There now needs to be a much greater understanding of the role and proven benefits provided by small international financial centres as part of the City of London's transaction chain."

 

Mr Field, who made his comments in a debate in Parliament about offshore financial centres, then went on to dispel common myths.

 

One of them was that the UK's Crown Dependencies are fiscally unsustainable.

 

He said: "The debate within the UK Government has naturally been framed by events surrounding the collapse of Iceland's banking system.

 

"When the Icelandic banks imploded in September 2008, it quickly became apparent that the contagion would spread to British savers and ultimately to the British taxpayer.

 

"Furthermore, the role of the Isle of Man as a core financial intermediary between British savers and Icelandic borrowers illustrated the UK's exposure to offshore centres.

 

"However the subsequent Treasury review undertaken by Michael Foot went some way to allaying the two main concerns.

 

"In particular the worries over the fiscal sustainability of UK Crown Dependencies proved to be overstated.

 

"Throughout the past years IFCs like Gibraltar, the Isle of Man, Guernsey and Jersey have amassed large budget surpluses while diversifying their tax base as Foot recommended.

 

"Indeed the Foot Report commented on the fact that none of the Crown Dependencies have taken on significant levels of borrowing."

 

He closed his speech by saying: "Too few people who now seek to impose regulation on offshore jurisdictions truly understand how those jurisdictions actually operate, their positive rankings of compliance with major international regulatory standards or their beneficial role in promoting investment and growth in the wider global economy."

 

 

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