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A vote on the government’s Financial Services Bill – a key piece of legislation needed before the UK leaves the EU – had been scheduled for tonight.
However, after MPs put forward an amendment to make British-controlled tax havens more transparent, the bill has now completely disappeared from today’s House of Commons Order of Business.
The amendment, tabled by Labour MP Margaret Hodge and Tory MP Andrew Mitchell, would have forced the Isle of Man and the Channel Islands to publish a register of beneficial owners for all companies based in the low-tax Crown dependencies.
Unsurprisingly, the amendment quickly gained the backing of the Labour Party, the SNP, the Greens and the Lib Dems. However, former Tory Cabinet ministers Ken Clarke, David Davis and Sir Oliver Letwin also indicated their support, making the possibility of it passing almost inevitable.
But now, with almost certain defeat looming, Theresa May has decided to pull the bill entirely.
Responding to the government’s highly unorthodox decision, Naomi Hirst, a Senior Anti-Corruption Campaigner for Global Witness, said:
“It’s outrageous that the Government has pulled today’s vote on transparency in the UK’s territories. We cannot wait for the rest of the world to get on board before we open up our tax havens. Anonymously owned companies, many of them formed in the UK’s Crown Dependencies, can act as getaway cars for terrorists, dictators, money launderers and tax evaders all over the world. The Government should be fighting to introduce public registers, not thwarting the will of Parliament.”
Whilst Jonathan Reynolds, Labour’s Shadow Economic Secretary to the Treasury, tweeted:
“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.
This has nakedly been pulled to prevent the Govt being defeated. A Govt without a Commons majority is in office but not in power. How long can this go on?”
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
Whilst Duncan Hames, a Director of Policy at the anti-corruption NGO, Transparency International, also slammed the government’s move, stating:
“For too long the British Government has shielded Britain’s Overseas Territories and the Crown Dependencies from calls by anti-corruption campaigners for greater company transparency”
“As a result of the Hodge-Mitchell amendment the profound concerns of MPs across the political parties is impossible to ignore.
“Before this Bill returns to the Commons, it’s imperative on the Government to be unambiguous in their determination to see company registries in these territories opened up.”
However, the government responded by arguing that the amendment could have infringed on the rights of the islands’ democratically elected governments, stating:
“Crown Dependencies are their own jurisdictions with their own democratically elected governments.”
“They are responsible for their own fiscal matters.”
“Given the beneficial ownership amendments were tabled on Thursday, it is only right their implications are given proper consideration.”
Whatever the government’s true reasons behind today’s decision, the optics of pulling a bill to allow the naming and shaming of tax avoiders is hardly likely to go down well with ordinary hard-working taxpayers.