Local effect of UK elections unclear

Conservatives say one thing, Lib Dems another

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Hopes that the new UK government
will return to a more positive relationship with the Cayman Islands were put in
doubt yesterday, when details of the coalition agreement between the
Conservative Party and the Liberal Democrats were released.

Under the point ‘tax measures’ the
agreement stated: “The parties agree that tackling tax avoidance is essential
for the new government, and that all efforts will be made to do so, including
detailed development of Liberal Democrat proposals.”

The Lib Dems stated during the
election campaign they would be able to raise £2.4bn by attacking income tax
avoidance, £1.4bn by halting the abuse of corporation tax and a further £750m
in stamp duty from eliminating a tax loophole.

In
a House of Lords debate in March 2009, Lord Oakeshott of Seagrove Bay, the
Liberal Democrat treasury spokesperson, attacked
the culture of tax avoidance stating: “Tax havens are sunny places for
shady people. No one sends their money to Monaco or the Cayman Islands because
they are centres of excellence for fund management.”

He went on to question cuts to the
revenue and customs tax avoidance team claiming: “Barclays will be laughing all
the way to the Cayman Islands.”

The fact that the Liberal Democrats
do not have a track record of a positive relationship with the Cayman Islands
may be a concern for those here who hoped the relationship with the UK would
improve under a new government.

Cayman Finance chairman Anthony
Travers commented on the new UK government: “No doubt, the Liberal Democratic involvement
will result in heavy emphasis on anti-tax avoidance measures, but tax
avoidance, as I mentioned at the Cayman Finance Summit last week, is always a
function of domestic legislation and have very little bearing on the
relationship between Cayman Islands financial institutions and the United
Kingdom.”

In the fall of 2009 Cayman Finance
organised a meeting with Conservative MPs at the House of Commons in the
anticipation that a Conservative victory would lead to positive changes within
the Foreign & Commonwealth Office. 

Assurances were given at the time
that a Conservative government would re-establish a relationship with the
Cayman Islands based on mutual respect, Mr. Travers said. Although no one could
have anticipated the current coalition, “we have no reason to doubt that that
assurance would hold good under the current arrangements,” he added.

After last week’s general election
the new Conservative Prime Minister David Cameron, and his deputy, Liberal
Democrat leader Nick Clegg struck a deal on a full coalition government after
five days of negotiations on Tuesday.

The former Conservative Party
leader and shadow foreign secretary for the past five years, William Hague, was
appointed Foreign Secretary on Wednesday.

In an interview in June 2009 with Conservativehome,
a Conservative think tank and blog owned by Lord Ashcroft, Mr. Hague said about
the Foreign and Commonwealth Office’s relationship to the Overseas Territories:
I
do believe that the Overseas Territories are owed a clearer sense of leadership
and responsibility from the British government. I have already signalled to the
Foreign Office that ministers in a Conservative government will take much more
interest in this area of policy than Labour ministers have ever appeared to.”

Former
Cayman Islands Monetary Authority Chairman Timothy Ridley does not expect the
relationship to change in substance.

While
the new minister may be a little bit more polite, Mr. Ridley, believes he or
she will follow the same course as the last.

“Based on the Conservatives stated intention to cut public spending massively in UK, I assume they
will support and push for massive cuts here,” he said. “Whether they will back
away from requiring some form of direct taxation here, I am unsure. But they
will certainly insist on sustainable revenue, which we do not have right now,
whether direct or indirect.”

Mr.
Ridley said, “we can expect the new UK government
to fight very hard for the City of London as a
financial centre.”

This
will mean pushing back on the EU Alternative Investment Fund Manager Directive.
While Cayman may benefit from this pushback, the Islands remain just a bystander in the process, Mr. Ridley said.

Mr. Travers added Cayman Finance would
anticipate meeting with Mr Hague in the future to reaffirm “the positive nature
of the relationship that coexists between the Cayman Islands as a leading fund
centre and the fund management which exists in the City of London.”

No OT minister yet 

A spokeswoman for the UK Foreign and Commonwealth Office
said a junior minister in charge of overseas territories who would replace Chris
Bryant had not been chosen by late afternoon Thursday.

Former Conservative party leader William Hague is the
new Foreign Secretary with overall responsible for foreign policy, including
overseas territories, but a junior minister will be appointed to take over Mr.
Bryant’s role.

The new British cabinet was announced early
afternoon, British time, on Thursday.

“We’re still waiting for junior ministers to be
appointed. We thought it would happen today, but it’s looking more likely it’ll
be tomorrow,” the FCO spokeswoman said Thursday.

 

 

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2 COMMENTS

  1. I have to laugh.

    There was never no "effect" on the Cayman Islands. Where we will see the effect, will be when the new Foreign & Commonwealth Minister is selected by the Conservative government, and he is advised by the special interests as to what his attitude should be with us. The change of government has nothing to do with the Foreign Office’s approach to the Overseas Territories. With the Cayman Islands, money talks and shapes our destiny so long we are under them.

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