Even when I was young –and that was many moons ago – the British Empire was on the wane. There were plenty of red bits still on my school atlas but that could well have represented the bloodshed of some self-determination battles. For today’s younger generation The Empire is a cinema on Leicester Square but the cost of Britain’s former domains is still coming home to roost.
The Guardian recently ran an article stating that Britain could be forced to bail out one or more of its offshore tax havens at huge cost, according to a Treasury report. The document, still in draft form says the economic crisis has wrecked their finances.
In October off-shore expert Michael Foot will set out a number of options to government ministers. Britain already has a huge mountain of debt from fighting the financial crisis but there is anxiety over the health of Britain’s overseas territories and crown dependencies.
According to the Guardian the 1988 collapse of Barlow Clowes and the Spanish pensions problem prompted a select committee of the House of Commons to commission the National Audit Office to investigate contingent liabilities arising because of responsibilities for off-shore centres and territories whether from financial or even natural disasters.
The Guardian reports that early drafts of Foot’s report suggest that the government may need to make provisions for the financial failure of British tax havens. Experts suggest the failure of a major tax haven could potentially cost the UK tens, if not hundreds, of millions of pounds.
So how does this affect Gibraltar? When I first started writing my Gibraltar column in 1993 the finances of the Rock were still a hot topic. However times have moved on with a healthy financial centre and internet betting companies boosting its economy. There is apparently in the draft nothing to suggest that Gibraltar is at risk but had the Rock been defeated in the EU tax case that sought to deprive Gibraltar of its fiscal independence the situation could be different. Indeed there is concern as Spain is challenging that decision from the Luxembourg-based court.
I asked Fabian Picardo MP, who speaks on financial matters for Gibraltar’s Opposition in the Rock’s parliament what his party’s take on this issue was. He told me: “There are no circumstances in which the Opposition would wish to see Gibraltar once again have to rely on hand-outs from the UK; something the GSLP weaned us off in the late 80’s. The most basic economic management would now make such a scenario unnecessary. In any event, Gibraltar is quite different to the other offshore territories which are being referred to as we do have a tradition of personal and corporate tax payable by residents.”
However there could be a cloud on the Rock’s horizon. The Guardian suggests there is an ongoing government review of on-line gambling sites, such as those based in the Isle of Man and Gibraltar. London may seek to impose more stringent regulations on them, which could threaten their off-shore futures.