Britain’s overseas territories are an asset, not an anachronism
Far from historical oddities, Britain’s crown dependencies and overseas territories make an important contribution to the United Kingdom – and Brexit provides an opportunity to unleash even more of their potential, says James Price
Hopefully you have by now become aware of Labour’s abject attempts to give away the Chagos Islands, along with billions and billions of your cash. A casual observer might be forgiven for assuming that the only reasons Britain has held on to various atolls and isles is for military purposes.
In fact, the various crown dependencies and overseas territories (CDOTs) are far more than anachronistic hangovers from empire, and do a great deal for the family of entities that comprise the United Kingdom.
To help first with some definitions/future pub quiz questions: crown dependencies, like Jersey, Guernsey and the Isle of Man, are self-governing, with the UK managing their defence and international affairs. And British overseas territories, such as the Cayman Islands, Bermuda and Gibraltar, are former colonies. Though they are also self-governing, Britain holds greater legislative power compared to crown dependencies.
Services exports
These dependencies are also often unfairly maligned as tax havens, but they are net contributors to the UK economy. CDOTs account for 4.4 per cent of the UK’s services exports – more than Spain or Italy, or indeed any Asian country except China. And they already help the City’s global dominance, channelling enormous sums of money into the country and fuelling finance with access to worldwide asset pools. In turn, this stimulates investment, drives productivity and more than offsets lost tax revenues.
For instance, Jersey contributes nearly 1m jobs and £6.5bn in employment taxes, while the British Virgin Islands support 134,000 jobs and £2.7bn in tax receipts alone.
In fact, the weight of cash flows for certain markets, for example the reinsurance world, would mean that whole sectors would struggle to be viable without the low-tax benefits that these areas provide.
But having now done the painful work of separating ourselves from the European Union, these CDOTs are also prime places to help develop some bona fide Brexit benefits and further improve our economy. A new paper by the Adam Smith Institute, out today, details many of these technical but exciting opportunities.
These dependencies are also often unfairly maligned as tax havens, but they are net contributors to the UK economy
For example, by embracing our post-Brexit regulatory flexibility, we could work with CDOTs to carve out industry specific regulations so that they function as testing grounds for innovations that can later be rolled out in the UK. This could be a real game changer when it comes to AI regulation, as well as new developments in health tech and energy. Helping these nimble jurisdictions follow us into the CPTPP would mean that more global capital would flow first to these low-tax, well-regulated CDOTs, and subsequently into Britain.
And introducing conditional licensing to align CDOT and UK economic interests would encourage foreign firms to use CDOT incorporations as a path towards listing on the London Stock Exchange, giving the platform a lifeline during its current bleak period.
That’s not even all. The services bonanza listed above is only part of the economic picture. Anglofuturism is the glorious idea that if we sort out mass migration and rediscover our sense of national identity, we can thrive in the 21st century, and it can be fuelled by these areas. Tom Ough has written about the bounty hiding amidst ‘the white darkness’ of the British Antarctic Territory. This includes vast potential mineral wealth, fossil fuels and rights to a geostrategic foothold in a future where this part of the globe will be keenly contested. Trump might get Greenland, but we have Port Lockroy, complete with its own post office.
All of these opportunities, taken together with the geostrategic benefits that these historical idiosyncracies grant us, make them a wonderful, and under-loved, part of the fabric of modern Britain. From the Caribbean to the RAF base on Cyprus, from the depths of Antarctica to the Crown Dependencies off our shore (and most certainly to the Chagos Islands), we should celebrate these wonderful places that contribute so richly to our islands’ story.
James Price is a senior fellow at the Adam Smith Institute