February 11, 2015
Mark Field (Cities of London and Westminster) (Con): It is understandable, especially this close to a general election, that political fervour over tax avoidance comes to a contentious pitch. Politicians on both sides of the House would do well to reflect on the fact that there was virtually universal consensus on the appropriate level of regulation to be applied to the financial services industry in the decade or so before the crash in 2008. Since then both the erstwhile Labour Administration and the current coalition Government have made often courageous moves to take a global lead to clamp down on tax avoidance and evasion.
Those moves were courageous because taking unilateral action in that arena has been likely to disproportionately damage the UK’s own narrow economic interests. Moreover, while this Government have flagged up in successive G8 and G20 summits their desire to take that lead, they have also risked being criticised for a lack of delivery, as we have heard today, simply because other nations have been less willing to follow. The truth remains that for as long as the UK has a globally competitive financial services sector, effective regulation against tax avoidance can be achieved only by concerted, international and, ideally, global agreement.
Over the past four years, I have been an adviser to the law firm Cains, and as a result I have seen at first hand the work that has been done within the Isle of Man and other Crown dependencies to get our house in order in the sphere of tax avoidance and transparency. A key focus for the Isle of Man is engaging with the emerging markets to drive investment into the rest of the UK, not least the north-west region of England.
For decades, the Crown dependencies have also had a close and effective working relationship with the City of London. For the Isle of Man, this includes connections with many of the leading law firms, accountancy practices and banks in the City. This is a very important route in providing inward investment into Europe and the UK by foreign nationals and in assisting UK businesses to expand overseas. That involves not just financial services but, for example, precision engineering, aeronautical engineering, professional services generally, property development, shipping, yachting, and aircraft registration. As the local Member of Parliament representing the City of London, I am all too aware of the importance of the services provided by the Crown dependencies to the wider UK economy.
In recent years, the Isle of Man has attempted to strengthen its links with the UK regions, many of which desperately need good economic activity, with a view to providing them with foreign direct investment and jobs. It is working closely with the neighbouring cities of Liverpool and Manchester, and it has signed a memorandum of understanding with Northern Ireland. It believes that by working in a mutually supportive manner with the UK, wealth and jobs are generated for all of us, including those in the more deprived parts of the UK. Specifically, the UK banking industry’s competitive advantage is increased by having access to the Isle of Man funds, which have contributed some £40 billion a year in liquidity to domestic lending. That international offering of UK banking is in my view augmented by what would sometimes be called tax havens, but which are centres of excellence for things such as expatriate banking services.
Transparency lies at the heart of any effective tax avoidance regime. For some years, the UK Government have often led the way in ensuring that standards apply to all UK dependencies so that anti-money-laundering measures and countering the financing of terrorism are at the forefront of our ongoing commitments. Consistent initiatives over recent years have ensured that tax evasion, corruption and related criminality are subject to the strictest international standards.
As the Chancellor of the Exchequer rightly pointed out over the weekend, we are also subjecting so-called tax havens to a new rigorous beneficial ownership regime. The Isle of Man, for example, has already co-operated on this by ensuring and verifying the integrity of the company beneficial ownership information it collects, particularly through taking a leading role in the regulation of trusts and company service providers. As a result, the UK tax authorities have been provided, and continue to be provided, with effective access to all these markets. Nevertheless, the Governments of all our Crown dependencies have always been committed to maintaining domestic legislation, policies and procedures that ensure effective compliance with the international standards; and, where necessary, to progressing further measures in future to implement evolving international standards and the very best practice.
I wanted to put this on the record today because much feverish and worryingly inaccurate commentary surrounds the activities of our Crown dependencies, which, as I say, often provide great liquidity and real benefit, particularly in some of the poorer parts of the UK. Compliance with the highest international standards is at the heart of their activities nowadays. Our own Government have much to be proud of in their keen insistence that tax evasion become a thing of the past.