LAST week we were given an inkling of what the man from the UK Treasury will be looking for when he writes his report about us.

The man in question is Michael Foot, formerly of the Bank of England and, crucially, a former governor of the Bahamas central bank.

The report has been commissioned by the UK government because of concerns from the OECD, the European Union, US President Barack Obama and others that offshore financial centres might have had something to do with the current global financial meltdown.

It isn’t only Jersey he is investigating, of course – Guernsey and the Isle of Man are in there, as well as the 14 UK overseas territories who get more sunshine and are too far away geographically to attract frequent visitors, like the Bahamas and the Cayman Islands.

Mr Foot, who has this week been in the Island ‘visiting’ our politicians and financial regulators, has been painted by the national media as something of a horned beast out to get us. In contrast, a senior regulator described Mr Foot as a ‘friend’ of Jersey during the Institute of Directors lunch earlier this month.

Friend or foe, Mr Foot’s preliminary thoughts were issued on the same day as the UK Budget, which I guess is an indication of the importance with which the UK Prime Minister regards them. But if anti-tax haven supporters were looking for immediate retribution, I think they might be disappointed.

Essentially Mr Foot seems to be looking for sensible answers to sensible questions. He starts by outlining the ‘challenging economic environment’ we are living in and the limited policy tools we islands have at our disposal to cope with it.

And he says: ‘Important questions for this review are the ability of each financial centre to weather the downturn and to remain competitive in the future, and the implications for the centre and FOR THE UK (my capitals) if there were significant failures of individual firms located in these jurisdictions.’

Of course we are expected to meet international standards of anti-money laundering legislation, review our laws – and provide a compensation scheme.

There is also, says Mr Foot, ‘the growing focus on tax avoidance’, not to mention the US Stop Tax Haven Abuse Bill, that will ‘shape international opinion in the short to medium term’.

The important bit is that this is not just another IMF-type review of regulation. This is about looking at how the Jersey (and other) economies depend on the UK/City of London, and vice versa, and the impact on those economies if a large cog in the system should fail.

The most interesting part of the document is in the appendix. It outlines the amount contributed by the financial services industry to the Gross Domestic Product of each island, as follows:

Jersey, 53%; Bermuda, 41%; Isle of Man, 40%; British Virgin Islands and Cayman, each 36%; Guernsey, 32%; Gibraltar, 20%; Anguilla, 12%, Turks & Caicos Islands, 11%.
The dependency of this Crown dependency on its finance industry could not be overestimated.

Fiscal stimulus? What fiscal stimulus?
I HAVE yet to be convinced by the content of the ‘fiscal stimulus’ package announced by the Island’s Treasury Minister.

Senator Philip Ozouf used to run the Economic Development department, when the days were long and the tills were booming. While he was there he had around £16 million to play with.

In his new role the budget is slightly higher. There’s £156 million in the Stabilisation Fund and what worries me is not the amount itself, but what it might – or might not – be spent on.

The proposals indicate that the bulk of it – around £112 million – will just go back into the kitty to provide tax take that won’t be forthcoming because of the recession.

We knew, of course, that there would be a £100 million shortfall at the end of this year because of the zero-ten corporate tax scheme. We thought politicians had that one covered, with the extra Goods and Services Tax, 20 means 20 measures and all. Now it looks as though the £100 million black hole has turned into a £200 million-plus black hole.

Senator Ozouf’s £44 million ‘fiscal stimulus’ (and what a buzz word it is) consists of £13 million worth of construction work which the States were planning to do anyway sometime in the future, £5.5 million on skills training schemes, £1.5 million for his old department and the remaining £25 million on income support.

To be honest, I’m not really sure how income support can be considered a ‘boost’ to the economy – spending taxpayers’ money to keep the wolf from the door of the jobless is surely more of a drain than a stimulus.

As for the £13 million of construction work, sure, it will keep people employed for a couple of years – as long as those doing the work are Jersey resident tradespeople and not seasonal workers from other parts of the British Isles.

As for skills and training schemes, we’ve seen these come and go before. I can remember in the last recession there was one designed to help people who had lost their jobs to prepare for interviews and so on. We never found out whether the money put aside for it was ever used.

As for Economic Development, they will get another £1.5 million to pay public relations firms and mentors who more often than not advise new businesses to ring the local media to get some free publicity. The problem is that as the recession deepens, the number of people starting up new ventures is decreasing. In fact at the time of writing it has virtually come to a full stop.

So a public consultation on this fiscal ‘stimulus’, put in train by the Corporate Services Scrutiny Panel, is most welcome, although whether any of us will be concerned enough to put our ideas forward is debatable.

In contrast to the economy, public lethargy – as shown by the recent meeting on States Members’ pay – has never been higher.