It is in the UK's power to end tax havens

Cameron needs to lead on tax dodging, because he has the power to stop it.

Tomorrow, David Cameron will be welcoming senior ministers from some of the UK’s tropical isles to London for a high level summit. Despite these jurisdictions’ sandy beaches and sunny weather the talk will be of tax, not tourism, as the likes of Bermuda, the Cayman Islands and the British Virgin Islands rank as some of the most significant tax havens in the world.

Cameron’s grand plan is to invite these jurisdictions to sign up to an international treaty on cooperation and information sharing with other countries tax authorities. Cameron is keen to show that the UK is committed to getting its house in order ahead of the G8 summit in Northern Ireland next week. With a huge domestic backlash at home over tax dodging by companies like Google, Amazon and Starbucks, Cameron is hoping the appearance of leadership on the global stage can win some positive headlines at home.

But show and appearance is all we will see over the next few days. The treaty Cameron is asking British tax havens to sign only tinkers around the edges of their secrecy. It will still leave the UK running many of the world’s most significant tax havens. That the government continues to allow multinational companies and rich individuals to use the UK’s tax havens to dodge taxes around the world, robbing the world’s poorest countries of vital revenue, is a scandal of truly epic proportions.

Experts from the Tax Justice Network have criticised this treaty for falling short of what would be needed to break open their secrecy. For a start it only requires jurisdictions to share information when they receive requests from other countries’ tax authorities, rather than automatically and routinely sharing information. Neither does it require tax havens to actually collect information on rich individuals and companies that shelter their money offshore. 

It is not entirely surprising the treaty is not exactly watertight. It is drafted by the OECD, a Paris-based think tank, comprising 34 of the world’s richest countries, tasked with setting the standards for international tax rules: a body that has steadfastly resisted any major change to those rules for over a decade.

At the 2009 G20 summit, when Gordon Brown famously hailed the “beginning of the end for tax havens”, the OECD was tasked with producing a ‘blacklist’ of uncooperative tax havens. So rigorous were the rules for this list that within one week there was not one country on the list.

However, the failure to reign in Britain’s tax havens is not one of diplomacy. It reflects a total lack of political ambition. The simple fact is that these islands are not separate sovereign countries and Cameron does not need to negotiate with them. They are in fact British territories, and the UK government has the power to legislate for them.

Cameron could simply abolish the UK’s tax havens by passing a law requiring them to end their secrecy, establish rigorous financial regulation and making profits and wealth their subject to effective taxes. 

The government has acted in the past to enforce laws on these island jurisdictions before, abolishing the death penalty for Britain’s Caribbean Islands in 1991 and as recently as the year 2000, acting to decriminalise homosexual acts in the Cayman Islands. 

The British government has even acknowledged its full ability to enforce financial regulation on the UK’s tax havens. The OECD noted in a 2012 report (pdf) “the UK acknowledged that – from a constitutional perspective the UK has unlimited power to legislate for the OTs [Overseas Territories]”. 

Cameron has tried to make huge political capital of talking tough on tax. Last year Cameron announced his intention to tackle tax havens during his G8 presidency with huge fanfare, saying: “There are too many tax havens, too many places where people and businesses manage to avoid paying taxes.” Again in Davos at the World Economic Forum the bold rhetoric was out in force, stealing lines from UK Uncut, when he told businesses that “carry on dodging their fair share” to “wake up and smell the coffee”.

To have any hope of living up to his tough tax talk, Cameron must legislate to abolish Britain’s tax havens. He is fully capable of closing down these tax havens, but is just choosing not to.

Grand Cayman. Photograph: Getty Images

Murray Worthy is an economic justice campaigner for War on Want.

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Brexit is teaching the UK that it needs immigrants

Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past.

Why did the UK vote to leave the EU? For conservatives, Brexit was about regaining parliamentary sovereignty. For socialists it was about escaping the single market. For still more it was a chance to punish David Cameron and George Osborne. But supreme among the causes was the desire to reduce immigration.

For years, as the government repeatedly missed its target to limit net migration to "tens of thousands", the EU provided a convenient scapegoat. The free movement of people allegedly made this ambition unachievable (even as non-European migration oustripped that from the continent). When Cameron, the author of the target, was later forced to argue that the price of leaving the EU was nevertheless too great, voters were unsurprisingly unconvinced.

But though the Leave campaign vowed to gain "control" of immigration, it was careful never to set a formal target. As many of its senior figures knew, reducing net migration to "tens of thousands" a year would come at an economic price (immigrants make a net fiscal contribution of £7bn a year). An OBR study found that with zero net migration, public sector debt would rise to 145 per cent of GDP by 2062-63, while with high net migration it would fall to 73 per cent. For the UK, with its poor productivity and sub-par infrastructure, immigration has long been an economic boon. 

When Theresa May became Prime Minister, some cabinet members hoped that she would abolish the net migration target in a "Nixon goes to China" moment. But rather than retreating, the former Home Secretary doubled down. She regards the target as essential on both political and policy grounds (and has rejected pleas to exempt foreign students). But though the same goal endures, Brexit is forcing ministers to reveal a rarely spoken truth: Britain needs immigrants.

Those who boasted during the referendum of their desire to reduce the number of newcomers have been forced to qualify their remarks. On last night's Question Time, Brexit secretary David Davis conceded that immigration woud not invariably fall following Brexit. "I cannot imagine that the policy will be anything other than that which is in the national interest, which means that from time to time we’ll need more, from time to time we’ll need less migrants."

Though Davis insisted that the government would eventually meet its "tens of thousands" target (while sounding rather unconvinced), he added: "The simple truth is that we have to manage this problem. You’ve got industry dependent on migrants. You’ve got social welfare, the national health service. You have to make sure they continue to work."

As my colleague Julia Rampen has charted, Davis's colleagues have inserted similar caveats. Andrea Leadsom, the Environment Secretary, who warned during the referendum that EU immigration could “overwhelm” Britain, has told farmers that she recognises “how important seasonal labour from the EU is to the everyday running of your businesses”. Others, such as the Health Secretary, Jeremy Hunt, the Business Secretary, Greg Clark, and the Communities Secretary, Sajid Javid, have issued similar guarantees to employers. Brexit is fuelling immigration nimbyism: “Fewer migrants, please, but not in my sector.”

The UK’s vote to leave the EU – and May’s decision to pursue a "hard Brexit" – has deprived the government of a convenient alibi for high immigration. Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past. Brexit may have been caused by the supposed costs of immigration but it is becoming an education in its benefits.

George Eaton is political editor of the New Statesman.