THE GUERNSEY FLIRTATION: DEATH OF A BRIEF ROMANCE

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This story began back in the summer of 2011. A report was commissioned on what Cornwall could learn from Guernsey in autonomous governance. I pointed out at the time that Guernsey was a tax haven and that, although it might be said that the interest was the government model not the financial model, I did not think they could be easily or at all separated. The economy and finance are central to the success of any constitutional entity in the world whether or not recognised formally in a constitution. I said that any idea of Cornwall aiming to learn from Guernsey, a tax haven, should be dropped.

I returned to that theme several times as more difficult news came in from the Channel Islands. Reality dawning, Cornish nationalism appears quietly to have dropped any interest discernible to outsiders in pursuing a Guernsey model.

Both Labour and the Conservatives want transparency from Guernsey and the other tax havens so that the real owners of assets can be identified. Three years ago Ed Miliband, the Labour leader damned Guernsey and other tax havens for letting companies and people “dodge taxes by hiding behind front companies and trusts” (Financial Times 15 January 2012, the newspaper’s words). Since 2013 David Cameron, the Tory prime minister, has tried, so far unsuccessfully, to end the hidden tax activities of the crown dependencies and overseas territories, places like Guernsey, Gibraltar, the Isle of Man, and the Cayman Islands. Now Miliband has said that a Labour government will take decisive action against them within six months of the May 2015 election if they do not reveal who they are sheltering from British taxes: see here.

Guernsey is not a route Cornwall should aim to follow. The brief encounter is over.

Earlier post

Guernsey and Cornwall 31 August 2011 – this post links to all the others on this topic

ENGLISH DEVOLUTION AND BYPASSED MK

Mebyon Kernow (MK), the Cornish nationalist party, is being left behind.

There isn’t widespread, eager support for this party and its political nationalism; in the last election it contested, a by-election last December for two seats on Camborne town council, a favourable area for MK, only 14 percent turned out to vote although there were two MK candidates to vote for and each of MK’s candidates received support from less than 4 percent of the electorate. Enthusiasm for MK? No.

The petition calling for a Cornish parliament – a law making national assembly – is gathering a trickle of signatures from Cornwall and elsewhere: after nearly five months I estimate less than 1000 from people in Cornwall have signed, a pitiful small proportion.

In the real world all three currently major parties, Conservative and Labour and Liberal Democrat, have now said they support devolution within England. The Tory Libdem government is pressing ahead with city deals. So far twenty eight councils are involved, including Plymouth. City deals are the devolution of powers to cities and city regions, with some cities working with neighbouring areas in a “combined authority”. The primary aim is to better advance local economic growth and each area will have different and tailored devolved powers such as housing and transport; local enthusiasm and competence are essential.

The government’s approach in practice is somewhat incoherent (see this sensible scrutiny ) but English devolution is happening at last. The process having begun, it will be impossible to stop or reverse.

The word “city” is perhaps misleading: it is clear that counties are included and Cornwall, Cumbria, and Essex were specifically mentioned by Nick Clegg last October 2012.

Labour has supported the city/county devolution policy and expanding it, writing this week to every council leader (scroll to the very bottom to link to the letter; he specifically mentions devolution to cities and counties).

MK will argue that all this is about local government and what it seeks is a national government for Cornwall separate from England; that is more than “more powers” for Cornwall. However, the kindest that can be said about the MK approach is that it has been bypassed. The devolutionary future of England is here already and MK has been left behind in a nationalist fantasy.

Notes

First set of city deals 5 July 2012

Second set of city deals 19 February 2013

Comment on the city deal project 30 October 2012

Camborne by-election result 19 December 2013

MK election results 2013 and before

The petition is here.

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AVERAGE PAY IN CORNWALL 2013

The Office for national statistics (ONS) has published the provisional ASHE data for 2013.

Table 8.7a shows that the annual, median, gross pay for men and women in fulltime employment and resident in Cornwall was £22 246 [revised to £22 234: see 2014 average pay post].  The mean was  
£26 239.

For England as a whole the figures are £27 375 and £33 975.

The tables also give pay by place of work and by constituency and separately for men and women and for part time workers and at different percentiles.

Average pay in Cornwall 2014 is here.
ASHE: Annual survey of hours and earnings

OH GOD, IT’S GUERNSEY AGAIN

… or perhaps Sark

If you’re new to this story and would like a run down of Cornish nationalism and Guernsey please read the explanatory posts at the foot of this one.

We now learn that Guernsey is apparently among those places with overseas payroll services which enable UK companies to legally avoid paying a total of about £100 million a year in employers’ national insurance to the British government.

The story is here and here.The latter has some interesting comments and suggestions that we should be looking at Sark not Guernsey. That debate continues here.

The loophole has now been closed off by the UK government.

£100 million a year represents money lost for spending by the government in the UK including Cornwall. (Cornwall’s pro rata population share would be around £860 000 a year.)

I think the time has come for Cornish nationalism to say explicitly that it does not wish to see Cornwall becoming a mainland Guernsey – or Sark.

Earlier posts

Cornwall and Guernsey 31 August 2011

More for Cornwall to ponder on Guernsey 18 September 2011

Cornwall and Guernsey again 9 November 2011

Cornwall and Guernsey: yet more 4 December 2011

Loophole Cornwall 3 July 2012

The Guernsey exemplar 24 November 2012

Meanwhile
other islands flex

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LOOPHOLE CORNWALL?

Last August I wondered about Cornish nationalism looking to Guernsey as a possible model for governance for a devolved/semi-independent/independent/autonomous/self-governing Cornwall. Although the nationalist interest is governance not the financial model, I do not believe they can be easily separated. I think the economy and finance underpin and are central to the success of any constitutional entity in the world whether or not recognised formally in a constitution.

In the succeeding months I have looked at the Guernsey financial model and Guernsey as a tax haven and the biting reality of what that means; the story did not get better as my posts on this show. The financial touches on governance and Guernsey is not a model for Cornwall.

Now comes a series in the Guardian and another story about the Channel Islands, dubbed in a scathing editorial the the Loophole Islands. The latest Guardian article on Guernsey is here.

Read too ‘Guernsey dreams up another way to abuse the world and shift money to tax havens’ from the Tax research UK blog, 27 June 2012.

The crown dependency governance model means that the Loophole Islands are responsible for their own taxation policy and they have used that to create tax havens. I wish to move away from the original story to another one; there are legitimate questions here beyond governance. I find partitive nationalism’s views on the funding of an autonomous Cornwall vague and asked some questions most recently here. Let me add to them. Exactly what are partitive nationalism’s economic and financial vision and ambitions for a self-governing Cornwall? What would be Cornwall’s desired financial arrangements with England and the rest of the UK, assuming the UK survives the Scottish referendum? Would that Cornwall be responsible for its own tax policy, setting its own rates and raising all the income it needs from within Cornwall? Would it then look to emulate the crown dependencies? Would it, for example, seek lower company and personal tax rates? Would it additionally seek to create in effect a Loophole Cornwall? Have a look at the article in the Scotsman linked at the foot of this post.

A time for clarity, I think, from the various and diverse strands of Cornish nationalism.

Earlier posts on Cornwall and Guernsey
Cornwall and Guernsey: yet more 4 December 2011

Cornwall and Guernsey again 9 November 2011

More for Cornwall to ponder on Guernsey 18 September 2011

Cornwall and Guernsey 31 August 2011

And this from the BBC: Guernsey government may be model for Cornwall 23 August 2011

And this story in the Guardian 26 November 2011.

This article in the Scotsman for 19 June 2011 asks whether the Loophole Islands are a model for an independent Scotland.

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CORNISHING PAY

I noted way back in this post in 2009 that the Conservatives were seriously thinking about localised pay (and benefits) and in several posts I have explored the issue, especially the advantage for public sector workers in Cornwall of national pay rates. I have listed those posts at the foot of this one. Now the Tory Libdem government is preparing to implement localised pay in this week’s budget, firstly in the civil service but soon for other public sector workers currently with national pay agreements like teachers and nurses.

Economic efficiency
Public sector workers will have their pay Cornished, that is cut or frozen until it matches local private pay. The justification for this is economic efficiency, a level playing field in pay between the public and private so that one does not artificially out-recruit and out-retain the other. In most of Britain this will mean public sector pay ultimately falling.

8 percent gap?
The advantage of public over private pay averages about 8 percent in terms of hourly pay. This hides variation. The explanation for 8 percent is set out in this ONS study which reaches the figure after taking into account differences in the two sectors such as age and qualifications. That study does have some significant caveats; for example, the ASHE data relates only to employees not to self-employed people and the data is about April which is a time when bonuses in the private sector are not paid, both of which are likely to reduce the gap.

The regional figures for the public and private hourly pay gap in April 2011 are in Table 25.5a here.

Consequences for Cornwall
If public sector pay in Cornwall is cut or stalls to reflect the lower private sector pay, will Cornwall still attract, for example, the best nurses and teachers and administrators to build a career here? Will the landscape attractions of the county and the way of life outmatch the high cost of buying a house here and the increasing cost of petrol and travel to work in a dispersed county with poor public transport on lower pay? I don’t think so. Will teachers and nurses on Cornish pay be able to afford a suitable house and if they can’t will they come here? I think some people here overestimate the comparative attractiveness of Cornwall; there are other places in England as beautiful and with an attractive way of life – and with lower housing costs. Man cannot live on surf and Ozymandias engine houses alone.

Of course occupational pensions, based on career average pay, will depend on people’s pay too so it is not only now that living standards will be affected but in old age too.

Localised public sector pay could turn out to disastrous for Cornwall, adversely affecting the quality and performance of its public sector.

Taking money out of the Cornwall economy
What the Tory Libdems will be doing is taking money out of the Cornwall economy: those Cornished public sector workers will have less to spend and that will not help our county economy. Cornwall GDP is 72 percent of the EU average so for a third time we shall qualify for EU aid (though the GDP figures do not well reflect individual experience but rather the disproportionate number of retired people and the nature of jobs here). I suppose removing the pay advantage of the public sector here might in theory encourage the private to step up its endeavours and be able to recruit the talented more easily. A decade of EU aid appears to have achieved too little economically that is solid and lasting and does taking money out of such an economy make sense? Isn’t there a lively danger of government localisation trapping the people of Cornwall in a longterm low wage economy?

Party politics
I think I should add that regionalising pay and benefits is not a clear-cut party political issue. Labour between 1997 and 2010 considered regionalised pay and writing in the Daily Telegraph this 28 January Liam Byrne, Labour’s shadow for Works and Pensions, argued for a regionalised benefits cap asking, “How can a ‘one-size-fits-all’ cap be fair to working people in both London and Rotherham?” And see this 2006 report that says that “Since at least 2003, Gordon Brown has been toying with the idea of having different regional pay settlements across the UK.”

Sources

ONS ASHE data about regional pay Table 25 for April 2011 (Table 25.5a shows that male fulltime gross median hourly pay rates in the south west region were £15.15 in the public sector and £11.50 in the private sector. The mean average figures were £17.41 and £14.04)

Growing number of myths about local pay determination Alastair HATCHETT 17 January 2012

Estimating differences in public and private sector pay Andrew DAMANT and Jamie JENKINS July 2011

Public sector pensions and pay Carl EMMERSON and Wanchao JIN February 2012

Regional pay: Can it work this time?Stephen BEVAN 30 November 2011

Earlier posts

Cutting Cornwall 1 December 2011

Localising benefits 31 July 2010

Tory-Libdems to localise NHS pay in Cornwall 19 July 2010

Vote Tory today, cry tomorrow 1 February 2010

Tories eye benefits and wages in Cornwall 6 September 2009

And see this (‘£7,000 pay gap for Westcountry workers’ in Western Morning News 16 December 2011)

ADDENDUM 23 March 2012: This is the NHS employers organisation submission to the NHS pay review body on market facing pay, March 2012

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CORNWALL UNEMPLOYMENT AND JOB VACANCIES

The Tory Libdem management of the economy is failing: their austerity grows and economic growth doesn’t and unemployment is rising. I have charted this rise in the regularly updated Cornwall data post.

The latest claimant count figures for Cornwall – which do not present unemployment in its entirety – are dispiriting.

However, the TUC blog Touchstones has published its analysis of August 2011 claimant count figures and vacancies and their ratio for local authorities in England, Scotland, and Wales (scroll to “Download our analysis for every area”). There are 152 local authorities in England and in terms of arithmetically how many claimants there are for each vacancy Cornwall sits at 32nd (where 1st is best, the fewest claimants for each vacancy). Cornwall is thus at the 80th percentile, that is the ratio for Cornwall is as good as or better than 80 percent of England local authorities.

For Cornwall there are 3.5 claimants per vacancy. The mean average for England is 5.3 and the ratio ranges from 2.0 to 22.8 (disregarding the extremely low figures for the City of London and Isles of Scilly).

Thus Cornwall is not bottom of the table and is doing comparatively well. That will not help or comfort the 8384 current claimants in our county and I expect the figures will get worse. Of course the ratio will vary across Cornwall too.

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ENGLISH AND CORNISH DEVOLUTION

In this post I am briefly looking at two related devolutionary issues: the constitutional and financial arrangements of the UK. PESA is the annual Public Expenditure Statistical Analyses by the Treasury.

PESA 2010-2011
The PESA figures for 2010/2011 (tables 9.2 and 9.4) are a catastrophe for the present financial (and constitutional) arrangements of the UK. They show that the latest percapita identified public spending for the four countries of the UK in £:
Northern Ireland 10 706
Scotland 10 212
Wales 9829
England 8588

As an index the figures are Northern Ireland 121, Scotland 115, Wales 111, England 97, UK 100.

Although there are regional figures there are no separate ones for Cornwall.

Imbalance
This imbalance is the result of the discredited 1978 Barnett formula which redistributes tax money on the basis of population not need. The differences above have continued over many years.

The main publically noted contrast is between England and Scotland though there are Barnett distributive effects in Wales and Northern Ireland.

People in England, including Cornwall, are increasingly aware that through the Barnett formula Scotland gets more UK identified public spending per head than England and is enabled to provide a range of free public services that charge in England. For example, prescriptions are free in Scotland but each item on a prescription costs the patient in England £7.40 (though there are exemptions); and compare tuition fees at the university at Falmouth which are to be £9000 a year, and no tuition fees at a Scottish university for a resident of Scotland. The financial differences are there in everyday life.

There is an England again
As for constitutional devolution, the debate for some years has been dominated by the issue of Scottish independence. While the Scottish nationalists prepare for a referendum on independence in a couple of years’ time, slowly, very slowly but discernibly, people in England are now questioning whether the present devolutionary (and financial) arrangements benefit England and are just. People in England are beginning to think positively about issues like English devolution, English-only votes on English-only matters in the Commons, an English parliament, and even independence from the UK. If, as seems possible, Scotland chooses independence outside the UK, the total effect on the other three countries of the UK is difficult to forecast. Parliament at Westminster would become in effect an English parliament with a handful of MPs from Wales and Northern Ireland but that assumes Wales and Northern Ireland choose to remain in the UK on the present terms.

Anyway, after years of manufactured invisibility there is an England again.

Parties
Putting aside Scottish independence and the consequent permutations for the remnant countries, the Barnett distribution and Labour’s asymmetrical devolution, which left England out in the cold, look set to be the end of the UK if the main parties continue to turn away from the England question – the twins of the financial and constitutional issues. This double issue won’t go away.

Cornwall
For Cornish nationalists too all this brings difficulties. There are two central weaknesses in claims for Cornish devolution.

First, exactly what status for Cornwall do nationalists want? I think they are seriously divided: independent British country outside the UK, independent country in the UK, semi-independent part of England, souped up county, an assembly, a parliament? How do they envisage the UK: separate countries, a federal UK with federal and independent institutions, pretty much the present set up with England and Cornwall joining the other three or two, a republic, still a monarchy …? It’s time the nationalists set out their status vision clearly.

Second, the economy and finance. Who will pay for an autonomous Cornwall? That depends to an extent on the shape of desired Cornish constitutional devolution. No one seriously believes Cornwall can live only on the money it could raise; the devolution schemes produced so far certainly do not suggest a financially self-sufficient Cornwall but rather one dependent on others’ largess. A Barnett formula solution? Really? A Guernsey-style offshore model? Really? I don’t think either is now politically practical. This is a pressing question for nationalists: how would Cornwall be financed?

So, Cornish nationalists should be crystal clear what it is they seek in terms of constitutional status and accompanying financial arrangements. The questions are simple: What constitutional status for Cornwall? Who pays?

Earlier posts
Hokey kokey devolution 14 December 2009

How should Cornwall be governed? 24 October 2009

Don’t mention the formula 1 June 2009

Cornwall pays 5 January 2009

Barnett formula to go 25 May 2008

External sites
Letter from the City of London 3 March 2009 to the House of Lords Select Committee on the Barnett formula

Memorandum by CEBR March 2009 (Centre for economic and business research) to the House of Lords Select Committee on the Barnett formula

Unequal shares: the definitive guide to the Barnett formula 2008

Yougov poll August 2011, page 12 of the poll

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CORNWALL AND GUERNSEY

Let me heartily recommend Treasure islands by Nicholas Shaxson which I’m reading.

It’s an analytical, detailed, and illuminating look at offshore tax havens/security jurisdictions of which Shaxson says there are about sixty in the world. There is a website which introduces the book and discusses its contents.

Tax havens are places that offer companies and mainly rich individuals comparatively low or even nil tax rates on income and capital and inheritance and a way of avoiding or minimising the higher taxes levied in other countries. I think whether one sees them as legitimate tax efficiency for individuals and companies or as depriving countries and people of tax revenue ultimately depends on how one sees taxes: a necessary evil to be minimised or underpinning civilisation. I incline to the latter view.

Read this for a measured argument about the damaging effects of tax havens. There have been recent agreements which limit the scope of some of them but critics dispute their adequacy. Tax havens still flourish.

The ‘British’ tax havens are the crown dependencies (that is, the Channel Islands and the Isle of Man) and the overseas territories like the Cayman Islands and Gibraltar. See this article in the Financial Times 25 March 2010 about Guernsey, one of the tax havens.

Cornwall
I think there is an additional Cornwall interest because of this study about what Cornwall can learn in autonomous governance from Guernsey.

It might be said that the interest is the government model not the financial model. I’m not sure one can separate them easily in 2011 – I think the economy and finance are central to the success of any constitutional entity in the world whether or not recognised formally in a constitution – and it will be interesting to see what the study says on this.

SHAXSON Nicholas Treasure islands: tax havens and the men who stole the world (2011) Bodley Head

Addendum 23 September 2011
An update though little is said. And nothing about the financial model.

And here’s a later post on Guernsey’s finances and economy.

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OIL AND TUPPENCE: GROWTH IN CORNWALL

The other day in the post Cornwall: build and grow I focused primarily on the positive arguments for more houses in Cornwall. In this post I am looking at the reasons for supporting rational economic growth.

Yesterday and today
First think on this: a house, like the others in the street, with no inside lavatory, no running hot water, no central heating, a candle the only light in the cold bedroom. No car, no television, no computer, no telephone, no washing machine, no bathroom.

This is not 1337. It is yesterday. My life as a child here in England. Given then and today, I choose today. I’ve experienced first hand life without and unhesitatingly prefer life with.

All that limiting, monkish stuff has gone because of economic growth and its confreres innovation, enterprise, work, pay, tax revenues, welfare, consumer goods, houses, and a freer society. Yes, a flush lavatory indoors for everyone is part of the consumer society, is a result of economic growth and a progressive demand for a better material life for all. That materialism is an inlet to happiness.

Growth matters because it generates the funds and resources to provide and improve services like education, public health, transport, and urban and rural environments. It makes redistribution politically feasible; it enables us to redistribute some of the generated wealth to reduce inequalities, to share the fruits of regulated capitalism. It brings longer lives and better living standards. For individuals and families and communities growth gives the prospect of a better tomorrow. It brings individuals more freedom, more choice, scope for their talents and encouragement for their enterprise and room to achieve.

Shall the poor stay poor?
We are not in Cornwall on a devil’s carousel of unbridled economic growth, development, house building, consumerism, supermarkets, and concrete. We are not heading for Apocalypse Kernow.

Yes, there are always the dangers in Britain (and everywhere) of excess, greed, and despoliation: these are moral challenges to defeat not arguments against economic growth. We are humans with minds and skills: we can manage stuff, we can control stuff. For example, we can tackle with effect tax evasion; we can reduce grotesque inequalities; we can pulverise poverty; we can keep up our environment and national parks and special places. We can do these progressive things and politics is about how much we try to do them and growth is one of our major weapons for equality and against poverty. Without growth our sallies against inequality and poverty and unemployment will be ineffective; without growth the poor will stay poor.

Oil and tuppence and possibilities
Sydney Smith, an amiable nineteenth-century Anglican parson, said that the Samaritan needed oil and tuppence to do his work. Economic growth is the oil and tuppence, it gives the funds and resources by which we can help others out of the slough of deprivation and disengagement and despair and open up the possibilities of life for everyone; and by which we can experience a better life ourselves.

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