The recently published Economist review of the prospects for the Channel Islands, provides a rather gloomy view of the future; a characterisation which few in Jersey or Guernsey would recognise, says Geoff Cooke (pictured), CEO, Jersey Finance…
I was asked by the journalist early in my interview session, what did I think of a well known tax lobbyist. Regrettably my response wasn’t printed, but the now customary accusation of defensiveness followed in the article.
This is something of a lose lose for the Channel Islands as if we allow defamatory and misleading commentary to go unchallenged, we are judged guilty by silence, if we advance a different point of view, we are charged with being defensive.
After two days and a series of intensive interviews the only attributed direct quote in the piece was from a disaffected former assistant to the economic adviser of the States of Jersey; a relatively junior civil service position; perhaps a clue as to the journalists sympathies?
In the interests of portraying a more balanced view of the current and future prospects for our Island communities, I would offer one or two observations, which did not feature in the article.
Commentary on the employment situation in the Island focused on job losses, which of course have been seen around the world. What the article did not flag is that our job losses in finance have been modest compared to major proximate on shore economies.
The long term range for employment in the finance industry in Jersey is between 11,000 and 13,000 employees. We are currently in the mid 12,000s, still toward the top end of the range for the last 15 years. In addition we are seeing new banking licenses arriving with more in the pipeline.
In the year ended September 2011, we saw bank deposits rise by £6bn, investments by £13bn, new company formations increased by 1,845 and 17 new finance businesses had opened in the Island as a result of promotional efforts, with 140 new jobs created. Looks more like a rising tide from where I am sitting!
With respect to tax matters, of course we compete on having a stable low tax regime, but we also ensure we have strong defences to keep tax evaders out, some of the best in the world according to the IMF.
The inference that we were bounced into transparency as a result of threats of blacklisting by the G20 in 2009 is just plain wrong. Jersey was a leader in the OECD Tax Information Exchange Programme as far back as 2002, and was never under threat of blacklisting.
The article goes on to imply a large hole in the States of Jersey Finances but omits to mention we have no debt and no deficit in stark contrast to most western countries.
Diversification is positioned as a despairing attempt to stem the turning of the economic tide, as are forays into new markets. The writer flags the challenges in attracting business from far flung places, but fails to mention that three years after opening an office in Hong Kong, Jersey now receives 20% of it’s banking business from Asia and the Middle East.
To be fair the article finishes on a back handed positive, framing the value of the Channel Islands to the UK in terms of the directing of billions of pounds of value provided to the City, set against tax leakage losses.
In 2009 the UK government sponsored ‘Foot report’ commissioned an in depth study from Deloitte to assess the impact of business received, and tax leakage suffered, so far as the UK is concerned.
The conclusion was hundreds of billions of valuable deposits and investments are introduced to the UK through centres like Jersey and the estimates of tax leakage promoted by tax lobbyists were found to be grossly exaggerated, based on nothing more than raw speculation.
This exaggeration is what I would call a sin of commission, whereas the Economist article reminds me more of being sinned against by omission. The rather gloomy impression given is as a result of what is not said.
I was reminded in putting this piece together of the story of the brawl that broke out in a bar. Instead of punching the guy who started the brawl, some of the pugilists punched the guy they had always wanted to!
We are too often on the end of this kind of treatment in the Channel Islands and I for one do not feel any diffidence nor any need to be apologetic in defending our reputation when unfairly attacked or misrepresented.
After all, if someone swings a punch at you, it’s usually a good idea to defend yourself.