David Torrance: A haven of autonomy?

Guernsey has its own currency, which works in union with sterling without any real restriction on policy. Picture: complimentary
Guernsey has its own currency, which works in union with sterling without any real restriction on policy. Picture: complimentary
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David Torrance writes that the UK’s Crown Dependencies offer a glimpse into the past and, perhaps, the future

The great French novelist Victor Hugo described the Channel Islands as “fragments of France which fell into the sea and were gathered up by England”. It was an apt description, for the character of Guernsey and Jersey is a fusion of British and Gallic culture that still leaves an impression upon the first-time visitor.

And as the Royal Commission on the constitution put it in 1973, the constitutional position of both Channel Islands is “unique”. “In some respects they are like miniature states with wide powers of self-government,” it observed with obvious puzzlement, “neither part of the United Kingdom nor colonies.”

I visited these two microstates last weekend in a bout of what land reform campaigner Andy Wightman dubbed “constitutional tourism”. But in the context of the referendum debate – and indeed the SNP’s continuing triangulation of “independence” – the UK’s Crown Dependencies offer both a glimpse into the past and, perhaps, the future.

The Royal Commission also made the point that the Channel Islands differed from the UK’s other overseas dependencies “in their proximity to Great Britain and in the antiquity of their connexion with the Crown”. Indeed, they were gathered up by England more than eight centuries ago, with the Crown exercising authority directly.

Loyalty to the Crown has been reasonably constant ever since, although while Guernsey sided with the Parliamentarians during the Civil Wars of the mid-17th century, Jersey backed the Stuarts, hosting Charles II in exile and proclaiming him king – the first territory to do so – within St Helier’s Royal Square.

The monarch is known colloquially as the “Duke of Normandy”, although this title has no basis in law. Her Majesty was name-checked in this regard (along with, erroneously, “the Queen of England”) during a 21-gun salute at Guernsey’s Castle Cornet to mark her official birthday on Saturday. The organisers were chuffed that only 14 such events had taken place around the British Isles.

A Lieutenant-Governor (usually someone from the mainland) represents the Queen in both Channel Islands, while each has virtually autonomous parliaments (or “states”), which elect a chief minister, who then forms an administration. Party politics do not exist, at least formally, while defence and foreign affairs remain the preserve of the UK government.

Within the Bailiwick of Guernsey, matters become a little more complicated. The islands of Sark and Alderney enjoy varying degrees of autonomy – akin to, say, Scotland and Wales within the UK – to the extent that Sark levies no taxes at all. As an official put it to me: “We don’t give them [Sark] anything; and they don’t ask for anything in return.”

The islands regularly liaise with the other parts of the British Isles via plenary meetings of the British-Irish Council, where I’m told Lyndon Trott, a former chief minister of Guernsey, struck up a particularly good rapport with the First Minister during discussions on renewable energy.

Alex Salmond is clearly taken with the Crown Dependency model, regularly citing the Channel Islands (and the Isle of Man) as proof that significant autonomy is perfectly possible when it comes to matters such as currency (both islands issue their own) and fiscal policy (taxes are set without reference to the Bank of England).

The First Minister is, of course, correct, although what works on an island of 65,000 people (Jersey has almost 98,000) would not necessarily work in a nation of more than five million inhabitants. It’s about economies of scale. Unemployment in both islands, for example, is minimal, while public services are arms-length, state run and hardly a burden on the states’ coffers.

In this respect, small is beautiful, which explains why senior Liberal Democrats recently floated the idea of Orkney and Shetland becoming Crown Dependencies which, were it not for an accident of history, they might easily have become. Just this week those two northern isles joined forces with Comhairle nan Eilean Siar (the Western Isles) to demand recognition of their “special status”.

Certain features of Channel Islands life, meanwhile, appear to contradict elements of what the SNP would call unionist “scaremongering”. The BBC’s iPlayer, for example, works free of charge, while both islands issue their own versions of the UK passport and enjoy freedom of movement as part of a common travel area (which also covers the Republic of Ireland).

Both the Jersey and Guernsey pounds, meanwhile, exist in currency unions with sterling, without any real restriction on fiscal policy. Since the 1960s, personal taxation has been lowered to a flat rate of just 20 per cent, there is no VAT (of which more below), no inheritance tax, no capital gains tax, and so on. As a result, the financial services industry looms large in both jurisdictions, competing with tourism as each island’s main source of income.

Salmond would be most likely to reject recent charges that he sees an independent Scotland as a northern European version of this “tax haven”, although that’s terminology that rankles in the Channel Islands. Speaking in London ahead of the G8 summit, Guernsey’s chief minister, Peter Harwood, said the island was “part of the solution on tax transparency, not part of the problem”.

The SNP leader makes a similar distinction between implementing a sympathetic tax regime and tax collection, while the Jersey Post columnist Alan Le Breton recently bristled at mainland perceptions of the island. “In general reportage,” he wrote, “we are daily distanced from our previous description as a member of the British Isles to a mere Crown Dependency, which has a paternalistic, colonial ring to it.”

As in Scotland, the national identity of Channel Islanders is difficult to pin down. Older residents describe themselves as “proud” Guernsey and Jerseymen (or women), while more recent inhabitants, for example those attracted by well-paid jobs in financial services, consider the islands an extension of their British or Englishness. Many, of course, are a combination of the two.

Channel Islanders are European citizens by virtue of their British citizenship, confirmed by the 1981 British Nationality Act, although not actually part of the European Union, not a situation the SNP seems keen to emulate. As a result, Guernsey and Jersey do not pay VAT, although they are subject to the EU’s customs union although not, importantly, its single market for financial services.

But while attractive, the Channel Islands aren’t really a perfect fit for (Scottish) Nationalist aspirations. The Crown Dependencies are not sovereign nations in their own right but “possessions” of the British Crown; Guernsey and Jersey do not occupy seats at the top tables of the world and that – together with theoretical (if not real) sovereignty – is a red-line issue for many “Yes” supporters. This leaves the UK’s microstates in a sort of constitutional no-man’s land, a circle they attempt to square by styling themselves as the southernmost point of the British Isles, which is of course a geographical rather than a legal classification. It’s all delightfully messy.

“We do not doubt that more logical and orderly races than the British would have swept all these away long ago”, mused the Royal Commission on the Constitution, “and incorporated the Channel Islands and the Isle of Man into the United Kingdom.” That, of course, is not an option, but Scotland could yet fall into the sea only to be gathered up by the British Crown under a different guise. It has happened before and, after September 2014, could happen again.