Manx Heritage Foundation: TIME TO REMEMBER: Tony Brown
MANX HERITAGE FOUNDATION ORAL HISTORY PROJECT ORAL HISTORY TRANSCRIPT
‘TIME TO REMEMBER’
Interviewee(s): Mr Tony Brown MHK
Date of birth:
Place of birth:
Interviewer(s) Roger Rawcliffe and Charles Guard
Recorded by: Charles Guard
Date recorded: No recording date
Topic(s): Collapse of Savings & Investment Bank Clifford Irving and Jack Nicholson Pressure from the European Union New Companies legislation Changes in legislative set-up Financial Crime Unit Bills Zero Company Tax Bill Distribution Tax New Customs and Excise Agreement Common Purse Agreement Terry Groves’ ‘Think Tank’ Tourism in the 60s, 70s and 80s New Residency Policy Money laundering Department of Home Affairs
Tony Brown - Mr B Roger Rawcliffe - RR Charles Guard - CG
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RR ... you, better than anybody, both by length of …
Mr B Hmmm.
RR … looking at the Island and being involved in it all…
Mr B Right.
RR ... and by being in the [unclear] ...
Mr B Yea.
RR ... you’d have a better idea than anyone else.
Mr B Hopefully. (laughter)
RR In general, I mean, I’m going to go and see John Aston …
Mr B Yes, yes, I know what you mean …
RR ... about specific matter …
Mr B Yea, yea.
RR ... but, but just to sort of, go back to the very beginning … when you came in, it was 1981, I think, wasn’t it?
Mr B That’s right, and this happened in 82’, so we were new members.
RR What were your – have you any recollections?
Mr B Well, absolutely. I mean, well, I came in November ’81, this arose in early ’82 – I can’t remember which month it was.
RR Well, the licence was withdrawn on something like the 26th June 1982 …
Mr B Right.
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RR ... ‘cos we all had to go in for two weeks, the whole lot.
Mr B Yes, yea, well, I can remember - remember it happening; one, very much so because I was a new member – literally a new member; and suddenly there was this emm … I was at home working at the time, or somewhere in town, and the police were looking for us (laughter) because they’d sent the police out to get the Members of Tynwald to come in …
RR Had they?!!
Mr B ... because there was – the Governor had called – because he was Presiding Officer then – had called an urgent meeting of Tynwald in private to discuss an issue, and we weren’t even told what it was, I mean, we were just told that there was an urgent meeting of Tynwald to be held in private – I think, that afternoon, it was, I think. You’d find that out, but I mean, it was, I was – what! You know, a new Member, didn’t know this sort of thing happened (laughter) and of course, under the old …
RR Well, I hope it didn’t happen very often!!
Mr B Well, it didn’t – I think that’s the only time I ever remember us going into Private Session in Tynwald. Because, one, it’s so unusual, anyway, although in those days, you see, Keys, it was a regular thing for Keys to go into private … ummm, but it wasn’t regular for Tynwald, and it was certainly irregular for the Governor to summoned Tynwald to sit in private. That was quite – I think that was quite unique, actually. I certainly have never heard of it before.
CG So the police came for you then?
Mr B So the police were looking for us to say you were needed urgently for a sitting of Tynwald which was going to take place that afternoon in private, that the Governor had summoned, because, of course, he’d Tynwald to sit. And so I remember that very clearly as sort of – ‘Wow,’ you know, ‘this is something different, I wonder how often this happens?’ ... so yes, so, as a new Member, I mean this was sort of a real shock as, you know.
RR Aye, it would be!
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Mr B I can actually remember the … I mean, I remember the feeling was sort of ‘Wow’ – you know, quite exciting, ‘what’s this all about?!’ ‘Cos we hadn’t been told what it was, we were just told that there was an urgent meeting. So, you know, your brain’s going, ‘what’s this about – I wonder what’s what?!’ And there was no hint of the SIB [Savings & Investment Bank] at all – you know – certainly to me – I was a new Member. It might have been known by executive council members, but it certainly wasn’t known by …
RR Until it all came up, I certainly didn’t know.
Mr B Yea? So of course then, you know, I had to rush about, and then get changed and come into Douglas, which we did, and we were then in Tynwald and briefed on it. And that’s really the end of that aspect of it, ‘cos of course, it is in Private Session.
CG Who briefed you?
Mr B Oh – it would be Edgar Mann – he was Chairman of …
CG Yes, yes right.
Mr B Chairman of Treasury in those days – it would be Edgar, I would think.
RR We saw him the day before yesterday.
Mr B Yes – he’s doing well I think, from what I hear, yea. So that’s where we went and that really is, in a way, that was the initial reaction. Certainly the reaction after that and the implications of what went on sort of developed as people found out what happened – we all remember the stories, the major press when it came out, and everything. And the impact generally – I remember within government was Members feeling very down, I mean, Treasury and everybody really feeling, ‘Oh, this is an absolute disaster for the Isle of Man,’ – because it was – it was a major, major issue. And sort of realism at higher political level – because I was very much a junior one – that something had to be done, and done quickly to safeguard the future of the Isle of Man. I mean, the Isle of Man was in a serious situation. I mean, in those days, don’t forget, we only had one and a half million pound in reserve. We had literally budgeted to keep going – struggling to keep going. And in those early days – ’81 through to about – well, 4
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certainly ’85, I mean the income to the Isle of Man was pretty restricted. I mean we were struggling to fund education. I mean, I can remember very well, you know, Victor Kneale jumping up and down because the Department of Education – sorry, the Board of Education in those days – was being put under considerable pressure about school meals, about provision of facilities for the schools and so on. And that was just one area – I mean, health services was under pressure – so money was very, very restricted, and this was a major blow, so I can remember very clearly, you know, Chairman of Ex Co [Executive Council] and all those really being concerned about this. So the atmosphere was very down, I remember that, but very determined to improve it. And the thing that came out pretty quickly really – and in those days, don’t forget, which is different to today, because Tynwald was also the government as well as the parliament, which it now isn’t, but it was then, because all the Boards were Boards of Tynwald, so therefore Tynwald was the government, which is why it went into Private Session in a way, because it was then the government, as Tynwald, dealing with it. I mean, that wouldn’t happen today. Because what would happen today is; the work would be done and then there would be a statement made in Tynwald in public, which is right these days.
RR Hmmm.
Mr B Hmmm, but there was a very – they were very determined – I remember it well – they were very determined and determined very quickly, that we needed to become a high quality jurisdiction – it was the only way forward for us. We had to have a high standard, because if we didn’t have a high standard we – nobody would touch us. And they made that decision pretty quickly if I remember.
RR Yes, I wonder when that …
Mr B That would be …
RR ... ‘cos you got your shock in the first instance, sort of thing.
Mr B Well, they started introducing legislation, I would have thought, within twelve months.
RR Oh certainly, oh definitely – it was less than that, it was less than that.
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Mr B There was new legislation, and that – but that was quick, you know.
RR You got Noakes and Duncan Naylor in by January.
Mr B Yea.
RR You’d got Farrant in by September, I should think.
Mr B Yea – so the legislation came through quickly. The err …
CG The Executive had made this decision?
Mr B Oh yea.
CG Yes – that would be on Tynwald, obviously.
Mr B Well, Keys – the legislation came straight into the Keys. There was legislation in relation to the Jim Noakes one. I think that was secondary legislation under – I’m not sure if it was under Statutory Boards Act, it would be?
RR Don’t know – he was appointed under contract in some manner …
Mr B Yea.
RR ... but the FSC legislation came in in the next year.
Mr B Yea, but it was Statutory Board legislation – secondary legislation under the Statutory Boards Act.
RR Was it? Oh.
Mr B It went to Tynwald – I remember that ...
RR Yea.
Mr B ... and so that all came very, very quickly. I mean, these things – it just – I mean, they must have sat down in the summer recess and said, ‘Right, let’s get this put together now!’ I mean it was such an important issue. 6
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RR It certainly was done quickly.
Mr B Yea.
RR We – I mean, the day the licence was withdrawn we were asked to go in and do it, and we spent two – all our staff – all our qualified staff – 25 of us I think – spent two weeks, weekends and everything …
Mr B Yea.
RR ... and reported back two weeks later. Were you at the meeting we reported back at?
Mr B No … I don’t, I don’t – well, oh, I might, I might have been. I can’t remember.
RR Charles Cain came out with a typically Charles Cain alteration that the bank was – there was nothing wrong with the bank …
Mr B Aye – I must have been there.
RR … it is only rumour. And at the end of the meeting he said, ‘Of course this bank is bust!’
Mr B Yea, yea. Oh, I must have been there then, because I mean, we would all be invited to that in the Millennium Room.
RR I don’t think the whole of the House of Keys – certainly not the whole of Tynwald were in there – it was in the Millennium Room.
Mr B Yea, but they’d have been invited, you see?
RR Oh, yea, I’m sure they might have been invited.
Mr B Yea, I’m sure I’d have been there.
RR That would be likely.
Mr B Yea. I mean, the big thing was, there was a sense of real urgency to get this 7
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sorted out. I remember that very well. I mean, again, as a junior Member I wasn’t that involved, I mean, you know, we were being told, ‘Look, we’ve got to do this’…
RR Yea.
Mr B ... and quite clearly we supported it, because you know, well, it was the future.
RR Yea.
Mr B Don’t forget we had, you know, two thousand young people out of – or two thousand people, I should say, unemployed.
RR Of course.
Mr B So there was high unemployment, and that’s – I mean, two thousand people, thereabouts, out of a working population of only about eighteen thousand in those days, so it was actually very high …
DC Yea.
Mr B ... and that in itself was a big drain.
RR ‘Cos people forget that, don’t they?
Mr B Yea. So you know, we had very little in reserve, very little income (laughter) and so on. So, you know, when you put all that package together you could understand the criticality of seeing if we were going to have a future. And they only saw the future being in the finance sector – in its broadest sense. Then this was really important to get right.
RR Edgar Mann made that point.
CG Edgar told us an extraordinary story the day before yesterday. I’ll just tell him about – as you said – reserves at a million or a million and a half, whatever – no possibility of paying compensation to these people …
Mr B No. 8
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CG ... so he had contacted the Chairman of the Isle of Man Bank to ask whether the government could have a loan of four million pounds …
Mr B Right.
CG ... on very good rates. And he said he was summoned across the road to the Board.
RR Have you heard this story before?
Mr B No.
CG And – I’d never heard this before – it’s extraordinary – he was kept waiting in a corridor, and never invited in to see the Board, but the Chairman came out and said, ‘I’m awfully sorry, Edgar, but the Bank decided that they don’t want to be bothered – or they’re not interested in giving you a loan – goodbye.’
RR It was worse! They said, ‘It’s not our fault – we have no responsibility for the puddle you’ve got yourself in.’ But they did – because when, at various times when the bank account came in, in 1974, and we’ve got a copy of a Minute, which the inspectors got umm … the Isle of Man Bank guy said, ‘We don’t want this – we’re not going to pay for it – you can’t have it.’ And that occurred from time to time.
Mr B Aye.
RR And one of the members of the members of the Ex Co [Executive Council], was a Director of the Isle of Man Bank?
CG At the time when the legislation was coming in …
RR At that time?
CG ... and he bitterly opposed it.
RR Oh, the year before, this was …
CG I can’t think – who would that be? 9
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Mr B Isle of Man Bank?
CG Clifford Irvin or Jack Nicholson, or …
Mr B Could be Clifford.
CG Clifford?
Mr B I would have thought it might be Clifford.
CG But there was the chairman of Ex Co [Executive Council] …
Mr B Yea.
CG ... cap in hand, being told – and that’s why …
RR He was chairman of Finance Board.
CG Sorry – Chairman of Finance Board – that’s why nobody got any compensation because they couldn’t get no money!
Mr B They did later, they did two – we did …
CG Well, they did eventually, but ...
RR It was certainly going to be limited, anyway.
Mr B And that was during Miles’ time, we did that.
RR Yes!
Mr B That was, that was late eighties.
RR Yep.
Mr B But interesting – just on that – it’s amazing, when you think about that, because today, I pretty well suspect the political scene would be so different – this isn’t going in the book – because, today, if that sort of thing happened, you bet your 10
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bottom dollar, the view would be, ‘Right, we’ll take our money out of the Isle of Man Bank and we’ll use Barclays, or we’ll use TSB,’ – it’s a wonder it didn’t happen.
CG Yea.
Mr B Isn’t it, really?
CG Yea, isn’t it?
Mr B You said, ‘Right, if that’s how you feel, we’ll take all our business away from you!’
RR Well, I would have been sorely tempted if I’d have been Edgar!
Mr B (blows a ‘raspberry’) If I’d have been in that position I’d have …
CG Yea.
Mr B ... I’d have said, ‘Right, fine, I’m moving it out!’ Anyway, that was how the world was.
RR Anyway, I think that’s enough – that’s very interesting, actually, most interesting, something …
Mr B And I mean, that’s very much as a junior Member, that, I mean, I was the youngest Member of the House.
RR Well, that’s right, all the people we’ve been talking are people who were involved in it, and it’s very interesting getting that …
Mr B Yea, absolutely.
RR ... that account.
Mr B I mean, as the youngest Member of the House, I’d never had that sort of involvement in anything before – I mean, local authority level you never did.
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RR No, no.
Mr B It was all new to me, and it was quite, well, as I say, quite an impact, I remember. Right!
RR Now, now here we are in – whatever year we’ve got to …
CG 2007.
RR 2007 … and looking forward. How do you see – I mean, I’ll try and get it narrowed down – I’m trying to look at how the Island will go forward. And the first sort of batch of problems we’ve got is pressures on us from people like European Union, OECD, United States. Now, how do you see that being coped with?
Mr B Well, I think as we have done in recent years, we’ve coped with it very well, and I think we’ve been very fortunate, we’ve had a good professional team dealing with that, I don’t think there’s any doubt about that, with clear political support to secure the Isle of Man’s position. And I think it’s recognised that the pressures that we get from the USA, the OECD, the UK, are just going to be on- going.
RR Well I think that’s right.
Mr B And therefore we are very conscious of that, and I think, from our point of view, we will – I think we’ve recognised that we’ve got to get on with dealing with that on a regular basis – it’s not going to go away. When we deal with something, something else will come in and so on.
RR So we’re going to have to have smart footwear?
Mr B Yea.
RR Footwork.
Mr B Yea, absolutely. But not only that, it’s not just that, actually we’re going to have to continue to spend lots of time responding to issues that are being raised by these bodies on different basis all the time, which is because they are seeing us 12
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as a tax haven – which in reality …
RR Well, America certainly do, because …
Mr B Well, America certainly do because they look at the list that was originally produced, and the original list that was produced by the OECD, I think it was …
RR Yes, I think it was, yes.
Mr B ... it was, yes – of course listed what they called, the ‘black list.’
RR Which was almost everybody …
Mr B The point we got off it, means the USA don’t care, because they just look at the original list and say, ‘Well, you are part of it.’
RR Well, there’s another Bill going through the Senate at the moment supported by this Obama man.
Mr B Hmmm.
CG Barack Obama?
Mr B Yea.
RR Supporting the thing saying, ‘And the Isle of Man is a – is for …’
Mr B They’ve mentioned …?
RR Mentioned in the legislation.
Mr B Regularly.
RR We’re regularly mentioned as evil.
Mr B Oh yea, yea.
RR Yea! 13
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Mr B But that’s, that’s because they were …
RR On the original list.
Mr B Well not only that, I mean, they were trying to come into here and were told they couldn’t – in the way they wanted to – but I don’t know all the detail of that.
RR They tried to get information, apparently.
Mr B Yea – and they were told they had no jurisdiction to do it, and they didn’t like that – being the Americans – we can go anywhere – well, no, you can’t!
RR They’re bullies.
Mr B But basically, I mean, so we recognise that there is an on-going there, we are going to have to – the best word I can use is ‘manage’ the situation, whilst, at the same time, always pushing ahead of the game to be one recognised, as we are, actually, as a top-drawer jurisdiction in terms of what we do.
RR And Edwards said that, and I think that was totally fair.
Mr B Absolutely. And even since then, I mean, there’s been continual reports from different bodies like the IMF, like the OECD themselves, even, saying the Isle of Man is really top-drawer stuff. And the business sector, again, the few I’ve met already, say, I mean, ‘Yes,’ you know, ‘the Isle of Man is the top-drawer stage.’ So I think we’ve got to manage the situation that comes from these bodies, but also we’ve got to promote how good we are and continue to be good and to modernise our legislation and to try and keep ahead of the game. One of the things that we know has come out of a report – and I don’t know which one, again, so forgive me, ‘cos I do tend to forget some of these, is that the general view is that there will only be a small number of countries – jurisdiction, as they use the term, who will be – who will survive the onslaught of the bigger countries in terms of trying to dispense with areas where people can go to low tax areas like the Isle of Man, Jersey, Guernsey and so on, and out of that, the Isle of Man is seen one of the potential top-drawers for that, because of how we’ve operated over the years, and because we have such a good reputation. So I mean, certainly the view of myself in what I’ve found out more so since 14
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becoming Chief Minister, than I knew before, because of course, not being a government officer, there’s a lot of gap in that.
RR Hmmm.
Mr B The detail I now know, and the optimism, really, I think is the best way of putting it is, that we are very optimistic that we have a good future, but we’ve got to keep ahead of the game, we’ve got to keep standards high, and we’ve got to make sure that we deal with any issues that come up very effectively and efficiently, really.
RR One of the comments made to me yesterday, I think it was, was that a lot of the income tax legislation, and a lot of the companies legislation is in a sort of muddle, because it’s been altered, altered, altered, and it really could do with being consolidated.
Mr B Well, we’ve got a new companies legislation which we brought in last year, and …
RR Yes, but it doesn’t consolidate all the old stuff, ‘cos …
Mr B It consolidated a lot of it though, didn’t it?
RR Yes, but not the whole of it.
Mr B Not all of it.
RR Really, what one could do with is, new Companies Act which scrapes away all the points …
Mr B Yes, yes.
RR ... because you’ve nowhere you can actually look it all up in one place, because the sort of things that, that, the William Cain issue, with a list of all the stuff with all the amendments put into it, like. There’s a collection of pieces …
Mr B Yea – well you can get the Jutus [sp ???] now – the Jutus will give you that. The Jutus will give you that … 15
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RR Yes.
Mr B ... or what we call the Jutus Blackhall [sp ???], which is the consolidated …
RR Yea – oh you can get it, but …
Mr B But it is – I understand what you mean, it’s not as easy to follow.
RR And it was always said to me, that part of the problem is that you can’t – well you’ll know, as Speaker – you can’t do a Consolidating Act, without people being able to go through every clause again.
Mr B And amend it and do whatever.
RR (laughter) So you hope that all the laws will [unclear] to do?
Mr B Certainly – sorry, I’m just looking for something while I talk. Certainly the Bill that came through the House of Keys last year was, in a way, an urgent priority Bill of company legislation to modernise and upgrade some of our legislation. My understanding to that is that it has, in fact been, already been effective in attracting new businesses to the Island because it provides provisions.
RR As far – I mean, there is some anxiety about some of the aspects of company law …
Mr B There is, yea.
RR ... because some of the safeguards that one had, like not having corporate [unclear] and so on, are now – have been taken out.
Mr B Hmmm.
RR So it is not all – it’s not got total approval.
Mr B Well, no, I mean this is one of the problems, though, isn’t it? I mean, you’ve got the old style legislation, you modernise it, and one, they’re doing that – and certainly the Treasury, I know, spent quite a lot of time with the business sector talking about the new legislation, consulting and so on, and again the different 16
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pressures that came through from different sectors or different people, wanting it to be looser than it is, wanting it to be tighter it is, and if, I suppose came … we got it that tight.
RR We need to keep a reasonable degree of tightness about it.
Mr B Oh, absolutely – I don’t – I mean, again, it comes down to a high standard of business, and we’ve got to be sure of that.
RR And the corporate services thing which we – I pushed for – Charles Cain and I took to do twenty-five years ago …
Mr B Yea, that’s right.
RR ... and Jim Noakes said, ‘Oh, it’s not needed,’ – it’s now there, and it does enable you to control people who operating these things.
Mr B Yes, but one of the problems we had was with the – my understanding, before we brought this new companies legislation in was, that we actually had a double belt and braces because we had the corporate service providers legislation and the companies legislation, and because of provisions in there, it actually meant we had a double whammy for business, which wasn’t necessary.
RR Yea, it could well have been …
Mr B But I mean, anything to do that, I mean, I think the answer to the question is, where we need legislation to make change, then that will be driven. I mean one of the things as Chief Minister that I’ve – and that’s what I was looking for and I haven’t got it here, it must be at home. One of the things that I’ve made a priority in terms of being Chief Minister is, in fact, a greater recognition of the need to pass legislation when we need it, and to prioritise it. I mean, departments tend to be busy and leave that.
RR Yes, the prioritising can be a problem, can’t it?
Mr B Yea – well, what happens is, because of other pressures, the legislation, which takes a while, tends to be down here on the pile, not up here. What I’ve said is, ‘No, it’s got to come up here.’ And I’ve readjusted the legislative year, so our 17
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legislative year internally here, corresponds with the Keys legislative year, not annual year, which is what was happening before. So when somebody said, ‘Oh, we’re going to introduce it in 07/08,’ they thought they had until the end of 08, when in fact they didn’t, they only had until June 08.
RR Hmmm.
Mr B So, you know, I’ve now changed all that, and also the way that they now have to report, they have to report back to me.
RR But the departments have to sort of, under the present dispensation, departments have to do all the spade work first, before it comes …
Mr B Yep – they will have …
RR Which does cause a bit of debate, I imagine. It shouldn’t!
Mr B Well, it shouldn’t do because if, I mean you shouldn’t – I mean, my view is, you shouldn’t just say, ‘I’m going to have a Highway Act.’ ‘Well, what’s in it?’ ‘I don’t know – I just want one.’
RR No, no.
Mr B I mean, what you should say is, ‘This is why I need one.’ Because most of the things – and I know this from my department days – you know what you want because you are working it up anyway. So the stages are that they would have to provide a paper and it hasn’t come in, this aspect, yet. They will have to provide a paper to Council of Ministers which will outline the principles of what they want in the legislation. Then they will – if the Council say, ‘Yes, we want that legislation,’ – because we might not, it’s no use waiting till the end, which is what happens now, we will say, ‘yes, go away with that,’ and we might say, ‘that’s important, it’s a priority,’ – and it might be based on their recommendation or ours. Once they do that, they then go away to the AG and draft up terms. It’s actually not much different than a Private Member coming forward and saying, ‘I want to introduce a Private Member’s Bill, and this is the principle.’ So we’ll have more detail than that, but that’s what it will do. They then will go away to the AG, work up the Bill, and then the Bill will come back to Council for approval for introduction. There will be consultation or whatever 18
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goes into all that, if necessary, and so on. So, instead of Council waiting until the end when the Bill is already been through all the stage of consultation and the drafting, we will know from the beginning, not the end stage, because the end stage is very much late in saying, ‘We don’t like that bit, we don’t like that.’ So that will make a change there. And the other thing is that through me, the departments will have to report regularly as to where they are with their programme. So an officer in here is designated to chase up the departments.
RR You having been Speaker is actually rather useful for the mechanics, isn’t it? (laughter)
Mr B It is. Not that Malarkey thinks that these days. (laughter) He said, ‘Chief Minister, having a Chief Minister who knows his Standing Orders – it’s very stressful.’ (laughter)
RR It sounds rather good!
Mr B For many, yes.
RR I would say, over the years, you know, having dealt with legislation, and new ideas and things, that the Isle of Man Government has been fairly responsive to the private sector, over the years.
Mr B Yea, yea, yea … and I think that’s right, I mean, I’m talking generally now about legislation because, you know, if we have a programme, I mean, we’ve already taken more Bills through this first three months, through the keys, than the first year of the last administration.
RR That’s right – and you’ve only been going – for what?
Mr B Three months. So, you know, we’ve already driven more in the – I mean, there are two new Bills on for first reading at this session. I mean, the programme is being pushed and pushed. And, for example, you know, the departments – I prioritise with departments with things like Financial Crime Unit Bills, and so on, so that they are actually – they’ve been brought up the agenda, and unfortunately that’s – that’s what I was looking for, but you will get it, if you want a copy. I mean, we will be publishing, hopefully next week, is my aim, our legislative programme for the next three years. 19
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RR That would be useful, yea, it would …
Mr B And, I mean, I have – I’ve readjusted things to bring things forward and …
RR Hmmm, no, that would be very useful for looking forward.
Mr B Absolutely. And some have gone back into a more realistic timescale. But I will be, from here, managing that programme and asking departments and their Ministers especially, if there’s a problem, ‘Why aren’t you progressing this legislation?’ Because without that drive from here, it just stays back here, because we’re too busy.
RR Hmmm, hmmm – well you can see that.
Mr B Yes. So whether the financial business orientated or whatever, it’ll go forward.
RR On the second reading subject, there are two specific issues, one is the zero company tax rating, where there is – the way in which we do the claw-back …
Mr B Hmmm, yea.
RR ... for Isle of Man companies that don’t dish out enough dividends – makes some people say, ‘Well, you haven’t really done it at all.’ (laughter) I mean, that is quite seriously being said, I think …
Mr B Yea.
RR ... by the jurisdiction – somebody …
Mr B Yea – is this the? ... this is the … there’s a name on it …
RR Yes, there is.
Mr B ... Jurisdiction Tax … I don’t know …
RR Hmmm.
Mr B ... this is the one I think Alan Bell covered in his speech. 20
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RR He did, he talked about it.
Mr B He’s going to review that.
RR I’m not – yes, he’s going to review that.
Mr B Yea – we’re going to review that, because of concerns are being expressed.
RR If you don’t declare a dividend for an Isle of Man – for an Isle of Man company which has Isle of Man resident shareholders, and you don’t distribute more than 55 pence [unclear].
Mr B That’s it – Distribution Tax!
RR It’s a Distribution Tax?
Mr B Yes.
RR Then you could tax the company on the amount that you should have distributed …
Mr B Yes.
RR … to those Isle of Man shareholders pro rata. So you’ve got two thirds Isle of Man shareholders, you can raise two thirds of the tax, because you can do it with a dividend …
Mr B Yea, that’s it.
RR … with the dividend, the individuals pay themselves.
Mr B Yea.
RR That’s right.
Mr B I mean, I think we have to recognise, there’s bound to be periods of readjustment, because, what was brought in was the principle of the zero tax for the reasons that we know are important. 21
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RR Yea, yea.
Mr B The other was to be ahead of the game, because it …
RR Well, I think you did that alright!
Mr B Yea – and it is easier for us to do, because of, you know, where we get our income from – from more than one area. And I think that in doing that, there is bound to be on the way issues where what was seen as quite straight forward in fact, hang on – there’s an implication here. So that one, I know, Alan, I mean, we asked him to, he’s already said he’s going to review that.
RR Talking about the – the strong revenues the other way, has the new – my cousin Cannan, I know, has been asking (laughter) – my wife’s cousin, Cannan, has been asking (laughter) …
Mr B See (laughter) he distances himself now!
RR It’s not really her cousin, either! (laughter) ‘cos Derek Qualtrough is her cousin who’s also David Cannan’s cousin.
Mr B Right, okay.
RR Anyway, so at night I spend my time having battles with David Cannan over the years.
Mr B Yea. I mean, the new Customs Agreement is …
RR Will that make a difference to the revenue? Significantly?
Mr B Well, the New Customs – I – there’s bits I can’t say, because …
RR No, no, no – I’m not going to put it in, anyway.
Mr B No, I appreciate that, but still …
CG You’re still what – talking?
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Mr B Well, we’re still finalising certain aspects. What I can say is that the new Customs and Excise Agreement is not a big issue for us. Because, in fact, in that, the big change relates to a two year notice period as against six months, so in fact, it’s to our advantage. And that’s something that the UK has been keen to have. And there’s some minor adjustments in it, so the basic principles of that are straight forward, and that’ll be going to Tynwald once it’s signed off. The one area that is certainly going to – the one area that is going to make a difference is the Sharing Agreement, which is not – it’s outside the Customs Agreement – we have a Sharing Agreement.
RR That’s the mechanics, isn’t?
Mr B The mechanics – and that’s certainly going to help us focus in a slightly different way.
RR Hmmm.
Mr B But in of income, I mean, potentially – potentially in the longer term I think it will be of greater benefit to us in terms of how we see ourselves.
RR Be more political, wont it?
Mr B Well, the windfall – we’ve heard of windfalls.
RR Yea.
Mr B We’ve had windfall things because of the volatility of the other agreement.
RR Hmmm.
Mr B The home codes were very beneficial to us as we know, and those will all be changed, so, in terms of – without saying too much, ‘cos I can’t – I don’t see there’s a major problem, though I’m not an expert …
RR No, no.
Mr B ... but we have been briefed by experts and we know where we can go on this one. 23
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RR And you’ve got a certain amount of local facility for tweaking the rates …
Mr B Yea.
RR ... which we’ve already been doing.
Mr B Yea. But there’s also a greater emphasis on how we deal with it – in terms of how we work.
CG Was the Agreement up for renegotiated now, anyway, or has it come to a head because of …
Mr B No, it’s just something that’s been raised.
CG It’s been raised … right. But will it all become public eventually?
Mr B The Sharing Agreement never is, the Sharing Agreement is the mechanics, but the Customs and Excise Agreement is public.
RR Do you remember, I mean, in your time in Tynwald, how the repealing of the Common Purse Agreement went up and up and up – we don’t hear about it any more, do we?
Mr B No, no.
RR Well, we can’t do.
Mr B Well, the reality is, because tourism’s depreciated so much, there’s no benefit.
RR No, and we wouldn’t get it back by exchanging that.
Mr B But the world has changed – I mean, more – the first ten years of me being in here, it was nearly – I should say – a regular debate on the breaking the Common Purse Agreement.
RR I know.
CG Yes. 24
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Mr B There’s no advantage to us to break it, because, all that would happen now, with the way Europe is, they would just bring in other controls on us, so we wouldn’t win.
CG It was the issue in the ’86 election.
Mr B Yea, it was, which was good.
RR But when we had the Terry Groves ‘Think Tank,’ which I was on …
Mr B Yea, that’s right.
RR ... none of us, except for one I think, were in favour of touching the Customs and Excise Agreement.
Mr B Yea, yea. Well most Tynwald Members weren’t. Charlie Kerruish was a driver, Edgar Mann was a driver on this.
RR Yea, well, that was the obstinate ones, wasn’t it?
Mr B Yea, but I mean, what they saw it was – and I think in some fairness, really, when you look at the period, certainly, Charlie was in, through the sixties, seventies into the eighties, I mean, their view was tourism was still important. And Charlie was ten quid boat fare and have it, you know, no Customs Agreement. Luckily we’ll get boats flying into the Isle of Man with thousands of people on from the North of England spending loads of money buying booze and fags – putting it very crudely, that’s how he saw it.
RR Yea.
Mr B The reality is it might have happened, but we’d be where Jersey and Guernsey are now.
RR I don’t think it would have happened because people do other things, don’t they?
Mr B Yea. But if it had have happened, we’d now be where they are. We would not be in the – such a strong position. 25
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RR Oh no, that’s absolutely right!
Mr B So there’s no doubt it’s in our benefit.
CG Say something about – I don’t know how much you can say – you were talking to me when I was speaking with you the other day, about our relationship with Jersey and Guernsey.
Mr B Hmmm.
CG I mean, are we closer allied with them, or are – do you see us in competition with them – what’s your sort of relationship going to be with them? Whatever you can say …
Mr B My view is that we have to have a ‘Country’ relationship in terms, you know, there are common factors sometimes that we need to deal with. I certainly will not accept that the Isle of Man is held back because of any actions of Jersey and Guernsey, and I’ve made that clear. My view is that that Isle of Man is a separate country, we are in no way, culturally, anything like Jersey and Guernsey, and we have different basis, but we have similar principles in terms of how we do business. But we shouldn’t be held back because they don’t want to do something, or visa-versa. So we’ll work together where it’s to all our benefits, because we have to, because sometimes we need to be that bit bigger, like any big countries would work together when it’s necessary, but we are certainly recognised – we are competitors, we are in the business to get people that they’re going after, and we need to do that effectively, and I’m certainly not going to be held back because of the views Jersey or Guernsey. Certainly happy to talk to them, but we won’t be held back.
RR If you look at the three islands, we have a huge economic power ...
Mr B Hmmm.
RR ... which we – as you rightly say – as you used to say, ‘Hey, we’re not going to do that!’ or, ‘you can’t push us around like that!’ It’s significant, and if our money – if they tried to move in on us, and take all our – destroy our things …
Mr B Yea. 26
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RR ... that money would go out of the City of London as well.
Mr B Absolutely, absolutely. And I mean this is an issue we’ve also put to the UK, is that we’re actually beneficial to them, because …
RR Well, it is, because we’re gathering …
Mr B ... most of our money comes through us to the City of London.
RR That’s right, that’s right.
Mr B I mean, the other thing, just following on from that, Charles, which I think is worth saying is, it’s all very well that we can pass legislation, we can create a climate and the business sector have to go out then and get the business, and we work with the sectors, but one thing that is very important, and I think it’s going to become more important now that we are moving forward, is the standards on the Isle of Man of accommodation, of our towns, our villages, our businesses, our restaurants – I mean, they’ve got to be lifted up, because the type of business we want to attract to the Isle of Man will not come here with what we’ve got.
CG No.
RR The trouble is with things like hotels and restaurants, they need enough customers. When, every time we say we’re going to build a new hotel, it always worries me a bit, because they’ve got to pay their way …
Mr B That’s right.
RR ... unless the government subsidies it, which is a – quite sticky.
Mr B Yea, well, we’re not going to do that.
RR The same is true of restaurants; you’ve got to have enough people who will pay …
Mr B It’s a bit of a chicken and egg, isn’t it?
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RR Yea, yea.
Mr B I mean, it’s really – if the standards aren’t good, and we often hear the term, ‘The chairman’s wife syndrome,’ – if she comes to the Isle of Man and says, ‘God, it’s alright, but …’ – then they don’t come here.
RR No, no.
Mr B Miles Walker was very keen, and rightly so, to attract some of the international businesses like Next and those that are down in Strand Street, which weren’t there fifteen years ago – and why – because that was being said to him then.
RR Yea, yea.
Mr B Now we know that there are wives of some of the business people that come over and now see that, and say, ‘Great! – good Marks & Spencer, a good Next, a good …’ whatever … but, we need to improve the environments that we have – the streetscape and everywhere.
RR Yes!
Mr B I remember this from my days in the GLD …
RR Yea, yea.
Mr B ... and the same applies to Castletown, Ramey, Peel – they’re all tired!
RR Well, we may get Castletown right if we …
Mr B It’ll be alright.
RR ... get rid of Mr – whatever he’s called – the Health & Safety man!
Mr B Oh, don’t worry about it, it’ll be sorted. I mean, it’ll work – it’ll be okay because it’s got no choice – it has to go forward, I mean …
RR It would have been a disaster if it – you’d just have a hole, wouldn’t you?
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Mr B Yes – well, that’s not going to happen, is it?
CG This business that you are talking about, it’s difficult in the sense that – I mean, you could say to Brown’s Café in Laxey, which has just re-opened under new management, with the most appalling menu, I mean, it may suit somebody – it’s bacon, eggs and sausage, or bacon chips and egg …
Mr B Well, I’m alright, then! (laughter) That’s why he said that – he knew me!!!
CG Well I mean, you’re talking about sophisticated summer café …
Mr B Hmmm.
CG ... it’s got nothing – it’s a transport café.
Mr B Hmmm, hmmm.
CG Now what do you do about that and other similar premises, when you’re in government – it’s the handling of that ...
Mr B Well …
RR I think the one in Port Erin gave up.
Mr B Which one?
RR Given up – the, the …
Mr B In the Bradda?
RR Yea.
Mr B Oh, that’s because of the Commissioners!
RR Oh, it’s the Commissioners, is it?
Mr B Well, I’m told, what they did, the Commissioners, is to put their rent up to twenty-five grand a year! 29
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RR Oh no.
Mr B And he said, ‘I’m not paying that!’
CG No.
RR Can’t stand it!
Mr B He said, ‘I can’t stand it – I’ll shut.’ And that’s what he’s done, and now they’re trying to sell it!
RR Yea.
Mr B I mean, what nonsense!
CG Yea, yea.
Mr B I mean, I hope they have a meeting in Port Erin because they’ll crucify the Commissioners, you know! Already, the feed-back I’ve had from people, ‘cos I used to work over there, people I know from Port Erin – they’re going mad!
CG I bet!
Mr B Selling Bradda Glen!
CG Yea.
Mr B I tell you what – they won’t know what’s hit them if they do! I don’t know how it’s going to wind up, but the people – there’s a number of people I know that are getting wound up.
CG Have you got a policy for improving the townscapes and the service industry, so to speak?
Mr B Well, I think the point is, you know, you said that about Laxey, right? Go to Castletown, we’ve got The Sunflower, that in Laxey is The Sunflower …
CG Yea. 30
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Mr B ... but we’ve also got The Garrison and Paolo’s.
RR Yea, The Sunflower has its place ...
Mr B Yea.
RR ... if you’ve got the others.
Mr B Yea – but we’ve got the others. So I think the point is …
CG Oh yes, I get that.
Mr B Yea – but the point is, that whilst they’re doing that, there’s a gap in the market for someone else, so hopefully somebody else will come in and do it.
CG Right.
Mr B The point that he’s doing that – or she – is presumably because they know that’s what they can do well – hopefully, anyway.
CG Yes, yes.
Mr B They might not be able to do a high class restaurant well – so don’t go into it.
CG No.
Mr B So it’s ‘Horses for courses.’
RR Hmmm.
Mr B The big trick is how do we encourage and create the market?
CG Right.
Mr B And that’s the point Roger comes back to. I’ve always had this thing about hotels, ‘But we’ve got a number of big hotels, why do we need more, because we’re struggling to fill what we’ve got?’ But it is the chicken and egg situation.
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RR We need the quality in the hotels we have got.
Mr B Absolutely, absolutely.
RR I mean you go to The Hilton …
Mr B That’s basic!
RR ... and it’s dismal …
Mr B It’s basic, it’s basic … well, it is.
RR Well it always was basic.
Mr B Yea … well, it was the style of the sixties, wasn’t it?
RR When we go back to when this book starts – it would be 1960 ‘cos that’s when I first started coming regularly was 1959 – hadn’t been before, it was depressing.
Mr B Yea – oh aye.
RR Coming onto that aspect, because that’s where it started, with New Residents Policy, wasn’t it?
Mr B Yea.
RR Do we have a new Residents Policy of any sort – we’ve got the cap, which presumably is saying to rich people, ‘There’s a wonderful environment.’
Mr B Well, we’ve got the tax cap, which is a potential for them.
RR Yea.
Mr B I mean, certainly, the policy at the moment – and I’m just looking at the clock because I’ve got to go at half past eleven.
CG You’ve got to go now, yea.
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Mr B Which isn’t here – I’m outside – the view, certainly at the moment is that we have the residency legislation available to us, but there is no …
RR Oh, this is the Control of Residency?
Mr B Yea.
RR The other way round ‘Residency’?
Mr B Yea.
RR Yea – I’m talking about the encouraging of people to come.
Mr B Oh well, I mean, the encouraging of people – I think we – the policy is still to encourage people linked to businesses to come into the Isle of Man, and, again, what we’ve been doing, and again started in Miles’ time, is encouraging younger people to come in with their families because that benefits the Isle of Man.
RR And that relies on the finance sector.
Mr B Absolutely, so, and that’s been effective. I mean, go back to when I was Minister of the DHSS in 1986 to ’89, our population of people over retirement age was 24%, when the UK was at 19%.
RR Hmmm.
Mr B Now that’s reversed – not because we’ve been killing them, but (laughter) – I don’t mean that! But because we’ve changed the age profile that younger people come in …
RR Yea.
Mr B ... and that’s still our still our policy to do that, so, in other words, for business to be successful, the spin-off being bringing more people in for those businesses. I think it’s fair to say in certain sectors of our business, we’d be looking at more high tech stuff – in terms of, you know, the days of bringing in a hundred engineers to work in a factory because of manufacturing, I mean, 33
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they’re not there …
RR No, no.
Mr B ... simply because one, we couldn’t cope with them in housing terms, and the other is …
RR Yes – John Webster was talking about that to us the other day – encouraging people to do that.
Mr B Right. And in fairness there is no long stability to that because of what’s happening in China and so on – we all know that. What we could be successful in though, is Design and Development. Now if you go into Design and Development, usually the people in those areas are highly paid, and also the numbers are relatively small, so they are other areas we can and will be looking at.
RR What about the Residency Act that we’ve got? Are you …?
Mr B Well there’s no proposal to implement that. And certainly my view is quite clear, that if we now after it being there for so long, were minded to introduce it, then we would undertake extensive consultation with the public – so they understood the implications and do they really want this to happen, because …
RR In my view, it would be a pity, but …
Mr B Well, there is no strong will to bring it on, but I wouldn’t put it quite like that in the book.
RR You get people in Tynwald leaping up and down at times, but …
Mr B Well, you say this, I mean, the view is, realistically, private – I say privately, accepting that, is that really there is no strong will at the moment to bring it in. I mean, it’s all about pace of the environment – it’s all about the pace of development – how people coming. If people come in slowly and integrate, we all cope with it …
RR It’s not a problem then. 34
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Mr B … if they’re swamped, that’s when people get agitated.
RR And the stray Romanians – we have powers to get rid of anyway…
Mr B Yea.
RR ... if you can find them.
Mr B Yea, absolutely. And in fact, in fairness, they’re here for – usually they’re in and out – most of them are in and out – most of them are in and out, they’re in a year and gone – they’re in six months and gone.
RR Hmmm, hmmm.
Mr B So, you know, they’re not staying long term. There are some, but not a lot of them.
RR Right.
Mr B Most of them come here because they want to earn money.
RR You’ve got to dash!
Mr B Yea, I’m sorry about that. Was there anything else you want to ask, Roger?
RR Errr – I’m sure there would have been, but I think I’ve …
Mr B Well, you can always give me a shout, I mean, basically, I mean, I think …
CG We’ll give you a ring if there’s anything.
Mr B Just to add, I mean, maybe as a final …
RR There are only two other points, I think …
Mr B Go on then, go on.
RR … that are worrying, and one is the growth of bureaucracy … 35
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Mr B Right.
RR … and the growth of unnecessary regulation which applies across the board, not only financial businesses, but to everything.
Mr B Yea. I mean, I think regulation, if I use that – unnecessary regulation – that’s really an art to get that right, isn’t it?
RR Yea.
Mr B And that’s a matter between …
RR One needs certain …
Mr B Yea, the regulator on one side pushing so far, and the businesses on the other side saying, ‘No, no – that’s going too far.’ And sometimes they’ll be right and sometimes they’ll be wrong.
RR Yea – they’re always going to moan about it!
Mr B It’s a judgement – yea, it’s just a judgement, isn’t it?
RR And sometimes you get low grade people going into financial services business.
Mr B Yea, yea.
RR I was in Singers and some guys came in who hadn’t a clue what they were doing.
Mr B We’re certainly not going to allow the Isle of Man to be vulnerable by having weak legislation and regulations.
RR And then we’ve got money laundering problems which also produce a lot of difficulty in practical terms.
Mr B Yea, but we’ve got a new Financial Crimes Unit Bill going through the House which will go through, which will set up a new system.
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RR You can have terrible situations where you can’t be bought but you can be …
Mr B Yea.
RR ... you know – you can’t tell them, and you can go to prison for tipping off and so on, and it’s difficult.
Mr B Yes – so there’s a new financial crimes Bill which is being – it has been – I’ve now prioritised that to come in, and the AGs [Attorney General] and the Department of Home Affairs are working on that and told them to police, ‘cos there’s transfer of police officers out of the new police to work within that unit, but are still able to be pulled back into the police, so that’s being sorted out. There’s the – the other issue was the sort of bureaucracy, and yes, bureaucracy is a pain for all of us.
RR And the number of government employees which is …
Mr B Well yea, I mean, I’ve already made a comment on that, anyway.
RR I know you have.
Mr B So, I mean we’re looking at systems to assess that, because it’s very easy for people, when somebody leaves, just to fill the post. But what they’re now going to be required to do is actually – the Chief Executive assess whether or not, if Charles Guard leaves, do we need another Charles Guard back?
RR Yes, that’s it.
Mr B And if the answer to that is, ‘Yes,’ is that more important than having a Fred Jones ...
RR Hmmm.
Mr B ... here to help do this job because that’s a money earner and that isn’t, and it’s that sort of assessment we’re going to ask them to do, so that’s being progressed now.
RR If that works, that’ll be good, wont it? 37
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Mr B Yea. So that’s being assessed now. The other change is, of course, that the legislation’s now gone through, subject now to Royal Assent, for the Chief Minister to be Head of the Civil Service – political head. So I mean that – I mean I’ve just signed off a piece while you were waiting, which now means, of course, it’s the next stage. So that’s all gone through, and that’ll be developed in policies, then.
RR That was one last thing, and that’s between us and the United Kingdom, do we have any real difficulties doing what we want to do in terms of legislation – the Royal Assent?
Mr B No.
RR My feeling has always been that it’s not been a problem ...
Mr B No.
RR ... but, again, you get people leaping up and down.
Mr B Oh, you hear things said, but in fairness, I think you’ll – I mean, I think in my time, what, some twenty six years or whatever it is now, I think there’s only been one or two – two possibly and that’s way back in the early eighties. But with the – there’s no doubt with the Council of Ministers, the system we now have set up, in fact, that’s been reduced substantially because, of course, it’s now done at political level, and there’s greater involvement politically which William Cain was absolutely right, because it used to be the Attorney just did it, and said to the Council, ‘Here’s a Bill.’ ‘Oh yea, okay.’ You know – whatever, and you’d get this odd blurb from a department or a Member saying we want this. Now it’s all programmed in and all thought out in a better way, I think – or at least, hopefully in a better way.
END OF INTERVIEW
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