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A key UK Parliament vote that could have seen companies registered in Crown Dependencies forced to unmask their owners has been pulled, averting a potential "constitutional crisis" at the eleventh hour.
The Chief Ministers of Guernsey, Jersey and the Isle of Man were today in Westminster to lobby against an amendment to the Financial Services Bill that aimed to make Crown Dependency registers of company ownership public by the end of 2020.
They feared that, given that each island has its own government, the move led by MPs Andrew Mitchell and Dame Margaret Hodge would have triggered a constitutional crisis. The move would have also had far-reaching implications for Guernsey's financial services sector - the island's largest industry.
Government has pulled today’s main business, the financial services bill. There will be up to three ministerial statements. Awaiting details. pic.twitter.com/5V3WE1NdLW
— PARLY (@ParlyApp) March 4, 2019
The legislation, which was said to be aimed at enhancing tax transparency and clamping down on money laundering, was backed by former Conservative cabinet ministers Ken Clarke and David Davis, as well as Lib Dem leader Joe Swinson, and former party leaders Ed Miliband MP (Labour) and Vince Cable (Lib Dems).
But now that push has been blocked at the last minute, with the government pulling the whole Financial Services Bill from today’s parliamentary agenda.
Shadow Treasury Minister Jonathan Reynolds revealed the U-turn on Twitter this morning.
Since then, insiders have speculated that the vote was being postponed as the Conservative Government feared the bill would fail to pass.
BREAKING - the Govt have pulled the Financial Services Bill from the business today. There were amendments on preventing a ‘race to the bottom’ on financial deregulation and on transparency for the Overseas Territories and Crown Dependencies that we had hoped to pass pic.twitter.com/zOYVDuQ9C2
— Jonathan Reynolds (@jreynoldsMP) March 4, 2019
A Ministerial Statement by Financial Secretary to the Treasury Mel Stride MP has since been scheduled.
It is unclear at this stage whether he will explain exactly why the bill was pulled from the agenda, but it is known that it will touch on the topics of tax evasion, avoidance and compliance.
Political journalist Tom Newton Dunn described the news on Twitter as a “Brexit timetabling disaster”, explaining that the Financial Services Bill was one of six key bits of legislation the government needed to pass by March 29 to make a ‘No Deal’ Brexit possible.
He added: “The reality for [Prime Minister Theresa May’s] minority government today is it’s finding it ever harder to pass any legislation at all, as authority continues to seep away from No10. This cannot really go on for much longer."
Three urgent questions in the Commons today:
— UK House of Commons (@HouseofCommons) March 4, 2019
1) @LouHaigh - knife crime
2) @RichardBurgon - probation system
3) @AndyMcDonaldMP - Eurotunnel
And two statements:
1) @JBrokenshire - Stronger Towns Fund
2) @MelJStride - tax avoidance, evasion and compliance
John McDonnell, Labour’s Shadow Chancellor, has since hit out at the decision, blasting the government for its lack of decision-making.
“More evidence that this government is incapable of getting its business through Parliament. People have just had enough of the Chancellor dragging his feet on tackling tax avoidance. We are demanding action now and no further delays and excuses,” he said.
“The government has been a friend to tax avoiders for too long.”
It's the second sigh of relief for the States of Guernsey in under 12 months on the topic of public company registers. Last year, MPs tried to force the change through an amendment on a different bill related to money laundering, but it too was pulled shortly before it was due to be debated.
In the end, Overseas Territories became the subject of an order, but their governments vowed to fight against it, arguing that they were being unfairly targeted and that the move would make them less competitive compared to Crown Dependencies, who avoided it.
Guernsey already has a register of beneficial ownership - a list showing the key beneficiaries of companies registered locally. Deputy Gavin St Pier tweeted the UK should catch up and "clean up".
It won’t and in Crown Dependencies case, on any objective measure we do not fall into that category anyway. You need to clean up the UK’s own backyard - get on, copy us and regulate trust and company service providers. We can show you how to do it if you are prepared to listen. https://t.co/oSx10WPD73
— Gavin St Pier (@gavinstpier) March 2, 2019
However, the MPs behind the original proposals - and today's shelved amendment - said they were keen to force them upon the Crown Dependencies if they wouldn't enact the change willingly.
On Friday, a joint statement from the heads of Guernsey, Jersey and the Isle of Man explained their position on what they described as an "inoperable" proposal.
Pictured: Dame Margaret Hodge MP (Labour) and Andrew Mitchell MP (Conservative), who are leading efforts to clamp down on the Crown Dependencies, which they describe as tax havens.
"We are not represented in the UK Parliament, and it is a respected constitutional position that the UK does not legislate for the Crown Dependencies on domestic matters without our consent," they commented.
"The proposed amendments attempt to impose public registers of beneficial ownership for all Crown Dependencies and Overseas Territories. We also consider the legislation to be wholly unnecessary in the context of our robust existing approach to the retention and sharing of beneficial ownership information.
"All Crown Dependencies are committed to the highest standards of financial services regulation and transparency. Our jurisdictions are parties to Exchange of Notes for Beneficial Ownership information with the UK and are committed to the aim of exchanging adequate, accurate and current information on beneficial ownership to help combat tax evasion, money laundering and corruption."
The States of Guernsey are yet to issue a statement.
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