House of Commons
London SW1A OAA
I am deeply concerned at reports that Britain may be about to bail out the Crown Dependency tax havens which include the Cayman Islands, Bermuda, Jersey, Guernsey, the Isle of Man, Gibraltar, the Turks and Caicos islands and the British Virgin Islands.
The tax havens drain £25 billion out of the British economy each year through tax avoidance. They are exposed to huge losses from hedge funds and other financial instruments.
Jersey is predicting a budget deficit of £100 million. The Cayman Islands want a loan of £287 from the British people.
Meanwhile the bankers are enjoying yet more bonuses and ever higher pay.
If the tax havens are allowed to die, as they have lived, by the invisible hand of the free market, bankruptcies in the tax havens would annihilate the astronomical debts which have built up in the global derivatives market, which would undoubtedly have a beneficial effect on the world economy.
The Brown Government has bailed out the banks, thus (arguably) saving us from a Great Depression, but has not gone down the road of a radical restructuring of the banking system. The argument is that if we regulated our banking system, the bankers would and go elsewhere, leaving the City at a competitive disadvantage. However, the Anglo-Saxon variety of free-market capitalism is in fact the market leader in unrestrained greed. Merkel and Sarkozy are calling for more financial regulation, and even Obama is more aggressive than the Labour Government in his approach to regulation.
I would be grateful if you would ask the Treasury whether they are aware of the growing popular anger against the banking system, which will pass a tipping point if the financial system continues to amass huge personal wealth, while passing on the debts incurred by their mistakes to us, the taxpayers. To bail out these tax havens could prove to be the straw that breaks the camel’s back.
I would also be grateful for the views of your own party on this matter.