My Lords, I am pleased to declare an interest. I am the representative of the Cayman Islands Government in the United Kingdom, a remunerated post. I have never spoken or asked a question on behalf of Cayman in this House, and do not intend to do so today. Rather, I shall talk about all the British Overseas Territories.
I congratulate my noble friend on her speech. She has a notable track record of support for the territories and is a stalwart defender of them, as has been said by the noble Lord, Lord Boateng. However, that is my first point: why should we have to defend the territories? They are an incredible success story—and a great British success story, as the noble Lord, Lord Boateng, has just said.
Like your Lordships’ House, we would not invent them if we were starting from scratch today, but over hundreds of years they have worked and they still work today—even more so, I submit. They work because they are democracies with parliamentary assemblies based on the Westminster Parliament; because they have the rule of law and the security provided by the Crown; because they have the right to self-determination but have always voted to stay British; and because they are innovative and make the best of scarce resources. They are good for Britain because they, and the Crown dependencies closer by, put a lot more in than they take out.
Recently, I think I heard the Premier of Montserrat, which was completely devastated by the volcano in 1995, say, “If you’re served a lemon then you may as well make lemonade. And please tell the noble Lord, Lord Boateng, that we’ve drilled down the side of a volcano, got geothermal energy and are selling off some of the rich volcanic rock and ash that covered our capital to a depth of 12 metres”. That is innovation and diversification in action and, with the additional help that the noble Lord called for, they could do so much more.
This debate is about economic diversification, and the word “diverse” certainly applies to the overseas territories. Every single one is different. From Pitcairn—I can tell the House today that 4% of its population are visiting Parliament; that is, two of them—to the Falkland Islands, Anguilla, Bermuda and Tristan da Cunha, they are all small islands, except Gibraltar, which is almost an island, and, as has been said, each requires different solutions for economic growth.
Before I move on from the word “diverse”, I want to mention biodiversity. Some 90% of the biodiversity of the United Kingdom is not in the United Kingdom at all; it is in the British Overseas Territories. What native species do we have left in the UK that have not been lost? Soon we might have no red squirrels left, and even hedgehogs are becoming an endangered species. However, the overseas territories are packed with wildlife on land, in the air and in the sea. In the overseas territories we have some of the best marine parks in the world, and most of our coral reefs are still intact. Of course they are under pressure and too many species are on the red list, but at least we still have them and we have to ensure that we never lose any more.
Could the Minister please press his colleagues in the Foreign Office to look favourably on the Pitcairn bid to create the largest marine reserve in the world around the islands—836,000 square kilometres of pristine ocean? I understand that there is a concern that if we declare it we cannot enforce it, but they have suggestions for that in the excel lent booklet that they have produced on the bid. We often cannot fully enforce our own fishing grounds but that does not stop us declaring that they are our waters. We should do the same for Pitcairn.
It does not require mega-investment to diversify the economy of many of these Territories. Ecotourism is a natural area for economic diversification, and that could work in nearly all the Territories. Tristan da Cunha has made a breakthrough with its gourmet lobster and exports 40 tonnes per annum to the EU, having fought for years for the right to do so with that mere 40 tonnes. It is also hoping to go upmarket with its island-produced knitwear, and if it improved its harbour then a lot of diversification would automatically follow.
Now that the airport is under construction in St Helena, I am certain that, with the drive and ingenuity of the St Helenians, we will see diversification there, too, and a huge boost to sustainable tourism.
Of course, tourism would be boosted in most of the territories if they were not discriminated against in air passenger duty. It cannot be right that it is cheaper to fly to San Francisco than to Turks and Caicos or the British Virgin Islands. The territories are not asking for APD to be scrapped but for it to be rebanded simply to remove the grossly unfair advantage given to most of the United States, which is 2,000 miles further away.
As my noble friend said, the Government are to be congratulated on their robust defence of the Falkland Islands and Gibraltar. Oil companies continue to explore in the Falklands because they have the assurance that the UK will support the right of the islanders to self-determination. I welcome the similar support offered to Gibraltar. Of course, Gibraltar diversified into online gaming, but the Treasury did not like it. We live in a global online world, and if the Treasury stamps out online gaming in Gibraltar because it fears loss of revenue, it will pop up in another less well regulated and non-British jurisdiction, and the Treasury will still have lost the revenue.
We all know that one size does not fit all in policies for diversification in the overseas territories. However, at very little cost the British Government can assist, and I, too, congratulate the Foreign Office on the initiatives it is taking in encouraging the territories to collaborate with other government departments and county councils to learn best practice. The business event it is organising for the JMC is totally focused on economic diversification. It is a first, and even if it is only half successful, it will be far better than nothing and better than what went before.
The territories have their own laws in place on human rights, equality and diversity and proper procurement procedures et cetera, but I worry at times that the UK Government may foist too many regulatory burdens on them which may make them uncompetitive. I think Bermuda has the largest population with 65,000 people, Pitcairn has just 48 or 52 people—it is about there—and the average is about 23,000 people. We cannot keep territories of that size competitive if we overburden them with all the quangos and authorities that we have in a country of 55 million people.
It is on competitiveness that I wish to close my remarks. Some of the territories and Crown dependencies are top financial centres and are rated alongside the
Londons, Hong Kongs and New Yorks of this world. They contribute billions to the UK economy. The Michael Foot review, set up under the previous Government, showed conclusively that they did not cause the economic crisis of 2008. In July, Jersey published a report,
Jersey’s Value to Britain
, which showed that £1 in every £20 of money invested by foreign individuals and companies in assets located in Britain reaches the UK via Jersey, and each year Jersey banks send around £120 billion of their deposits to parent operations in the UK. The same goes for most of the other overseas territory and Crown dependency financial centres. A recent World Bank report—I think it was in April—showed that massive investment routed through the financial centres of the world is pouring into the eight African countries that have economies growing at more than 10%. British financial centres are putting money into developing infrastructure projects in the UK and emerging nations, not taking it out. Two days ago the Premier of Bermuda spoke at the Islamic finance conference and said that Bermuda would seek to diversify into Islamic banking. That is diversification of a kind, but still within the umbrella of international finance.
These financial centres cannot diversify into something totally different, and nor should they. I deplore the neo-colonial attitude of some activists who say that they should be closed down and get overseas aid instead. These territories are a source for good in the world, and I thank the Prime Minister for his robust declaration that they are no longer tax havens and that we should look at much larger nations which are not as well regulated as the territories. He is absolutely right. Professor Sharman’s report showed how easy it is to set up a shell company in some states of the USA, with no checks whatever. If the NSA is looking for sources of terrorist financing, it should spend less time looking into Angela Merkel’s and the Pope’s phone messages 5,000 miles away and look 50 miles down the road at 1209 Orange Street, Delaware, where a little two-story block has more than 200,000 companies registered. No questions are asked and nobody knows who owns them.
The overseas territories are well regulated, as the Prime Minister has now acknowledged. We all support the principle of a global level playing field and therefore welcome the action being taken to secure this through the development of new international standards for automatic exchange of information that will have global application. Business is global and regulation must also be global and apply to all. If all territories and countries are treated equally under international regulation, as they must be, I am absolutely certain that the British Overseas Territories will still be the world-class jurisdictions of choice, and places of which we can all remain proud.