Westminster blog

It’s normal practice in Parliamentary debates to declare any interests which could be relevant.

During a debate on tax avoidance yesterday, Baroness Hooper – a Tory peer – made sure she mentioned her interest as vice-chairman of the Overseas Territories All-Party Parliamentary Group.

What she didn’t mention is that she is also paid by Barclays (as chair of the advisory committee for Barclays European Infrastructure Fund).

Why is this relevant? Because, as Lord Oakeshott pointed out in the same debate, “Documents leaked to the Liberal Democrats…appear to detail systematic tax avoidance on a grand scale by Barclays”.

The documents in question have been injuncted.

So what did Hooper have to say about the overseas tax havens?

– prompting Lord Myners (no stranger to offshore havens) accusing her of “veering towards her being an apologist”?

UPDATE: Mea culpa. Myners actually used the phrase “apologist” in respect of another Tory peer, Baroness Noakes – although Baroness Hooper assures me: “I’m certainly an apologist for overseas territories”.

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There is no doubt that successive governments have encouraged the overseas territories to be self-sufficient. A number of them have developed highly efficient and successful financial services, based on international best practice…

My final general point is to emphasise, as did the noble Lord, Lord Wallace, the distinction between tax avoidance and tax evasion. The former is legal, the latter a crime…

Professor Avinash Persaud, a member of the United Nations high-level task force on international financial reform, was quoted recently in the Financial Times as saying:

“The attack on offshore centres is a politically seductive distraction from the thorny task of making regulation better in large developed countries and will end up being a discriminatory attack on small developing countries with little voice”…

Today I am trying to redress the balance. I will refer to the British Virgin Islands as a case study.

The financial services sector of the British Virgin Islands is founded on five pillars: robust regulation, intergovernmental collaboration, effective enforcement, transparency and high levels of expertise…

I emphasise in addition that there are no secrecy laws. The industry has developed and diversified, particularly over the past 20 years, to include specialist sectors such as mutual funds, insurance—both risk and captive—professional services provided by fiduciary and insolvency practitioners, and legal and accountancy services provided by globally recognised firms established in the jurisdiction

As a result, financial services now account for more than half the GDP of the BVI, immeasurably raising the standard of living for all inhabitants…

Reputation is everything in financial services. The BVI has long recognised this and I maintain that the same goes for most of the overseas territories…

The United Kingdom needs to remember that it gets a great deal of value and advantage out of jurisdictions such as the BVI. Funds and business flow from the UK here, they flow from here back to the UK…

I believe that there is a real danger in targeting a specific group of countries…Apart from anything else, it would drive the business to other, possibly less well regulated and open centres. ..

It would be very wrong if, in a knee-jerk reaction to the current financial crisis, those overseas territories that operate financial services were to be deprived of the independence that they have now earned.

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I tried to get hold of Hooper last night and again today but she didn’t return my calls