- David Cameron back in power following General Election, but it was a disappointing night for Ed Milibands Labour and Nick Clegg’s Lib Dems
- Jersey’s External Relations Minister believes the Island’s constitutional relationship with the European Union will now be called into question
- Comment: Read what the JEP thinks below
JERSEY’S constitutional relationship with the European Union will almost certainly be called into question under the new UK Conservative majority government, says External Relations Minister Sir Philip Bailhache.
Conservative Party leader David Cameron pledged some time ago that if re-elected he would want to hold a referendum in 2017 asking the UK electorate whether or not they wanted the UK to remain as a member of the European Union.
Mr Cameron returned to 10 Downing Street after a dramatic night which saw the Scottish National Party sweep Labour out of almost all its strongholds north of the border, while the Liberal Democrats suffered savage losses and question marks were raised about the futures of Ed Miliband, Nick Clegg and Nigel Farage.
Tories claimed the biggest scalp of the night as shadow chancellor Ed Balls went down to defeat by a margin of 422.
Long-term critic of Jersey John Hemming also lost his Liberal Democrat seat in Birmingham to a Labour candidate.
Senator Bailhache said today that although the Island would want to continue to work with the new UK government in the same way as with the previous coalition, the outcome of the proposed referendum would be a challenge.
‘Our position is that we do not seek any change in our relationship either with the UK or with Europe, but if the UK electorate votes to leave the European Union, our relationship will change, whether we like it or not,’ said the minister.
‘We have already given some thought to the problem and I have had many meetings with UK Members of Parliament of all parties to explain our position, so hopefully there is now some understanding of our relationship, but a great deal more has to be done.’
Jersey’s negotiations with Europe date back to the early 1970s when the UK took the decision to enter the then Common Market.
The resulting agreement, Protocol 3 of the UK’s Treaty of Accession, gives the Island access to Europe for trade purposes but also maintains its independence.
Sir Philip said that although at this stage the situation was hypothetical, Jersey would want a relationship with Europe that would be in the Island’s interests.
- Our reporter Tom Ogg attempted to stay up all night watching the events unfold.
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‘In order to achieve that, we would probably expect the UK to give us an entrustment, to enable us to negotiate a new relationship,’ he said.
In terms of financial services and taxation, the minister said that David Cameron had already said publicly that he did not consider Jersey to be a tax ‘haven’.
‘We have explained to the last UK government that Jersey is committed to an agenda of transparency and discouraging tax evasion and aggressive tax avoidance, and that remains the policy,’ he said.
‘Automatic exchange of information will come into force in the near future and that will make it extremely difficult for UK residents to use Jersey to avoid their fiscal obligations.’
Colin Powell, the adviser to the States on international affairs – who was involved in the original negotiations in 1970 – said that one of the concerns was that businesses would stall decisions until the outcome of the referendum was decided.
‘I was involved with the positioning of Jersey in relation to Europe back in 1970/71, when the UK decided to enter the Common Market,’ said Mr Powell. ‘The question was where Jersey as a jurisdiction would stand.
‘One of the concerns, as happened then, because of the uncertainty – and I think will happen again – is that it does affect decision making for businesses.
‘If they are not sure which way things are going to go, perhaps they will put off making decisions until they know the outcome.
‘There was a bit of a standstill in 1970, while people were waiting for the position to be made clear.
‘Financial services is our major industry and although it will not affect existing business – people will not just walk away – others will be naturally reluctant to make any concrete decisions. That would hold things back.
‘I had a discussion about 18 months ago with officers in Dublin and the Irish government has similar concerns, because of their very close trading relationship with the UK.’
THE sigh of relief being heard across the finance industry this morning as David Cameron returned to number 10 may be short-lived. The threat of a Miliband-led Labour assault on offshore jurisdictions died at the ballot box yesterday, but the uncertainty of Jersey’s future relationship with the European Union now takes centre stage.
With an in/out referendum on the UK’s EU membership a central pillar of the Conservative manifesto – and with Jersey’s relationship with Europe inextricably linked to that of the rest of Britain – the Island must now wrestle with some profound constitutional questions.
Should Jersey pin its colours to the Tory mast and follow where Cameron leads? Against the background of resurgent nationalism in Scotland, should the Island seek independence and attempt to renegotiate its position as a stand-alone state? Or is now the time to talk seriously with Guernsey, and even perhaps the Isle of Man, about working together to create a confederation of smaller states, the whole carrying greater political clout on the international stage that its individual parts?
One thing business – and especially multinational finance firms which have, or are looking to, base operations in Jersey – wants is stability.
There is danger that these companies which are so vital to the Island’s economy may tend towards delaying major decisions until some certainty in relation to Europe returns.
And that could cause yet more delay in securing tenants for Jersey International Finance Centre.
Like the rest of us, the Council of Ministers must wait and see what happens in the UK. Diplomatic work by External Relations Minister Sir Philip Bailhache and others has already started to prepare for what might come next. Islanders now need to engage with a complex debate to help inform government policy.
In the next few years, ministers and senior civil servants will earn their salt if they can negotiate a place in any new European order which is good for Jersey.
Island leaders must rise to the challenge of statesmanship and maintain strong and constructive working relationships with key players in several jurisdictions.
In 2013, Professor Alastair Sutton, Jersey’s former EU adviser, said that the Island had to fight its corner vigorously as nations jostled for position in a new order to make sure the financial services sector had access to European markets, and that Jersey maintained its distinct market position as a place where people want to do business.
Standing still is not a option.
