Jersey did very well out of the strategy that Powell mapped out for it, and the 1970s continued where the 1960s left off. Many of the big North American, European and British banks opened branches in St Helier. They brought the money in and sent it out again, often on the same day. But that allowed them to, in essence, stamp “Made in Jersey” on it, rather than “Made in Britain”, which lowered the tax burden. Jersey’s officials began to describe the island as a “specialist offshoot of the City”: London without the rules, or the taxes. [...]
“They know that Jersey has political stability, doesn’t have political parties. It’s not going to be faced with a sudden swing to the left, or swing to the right, or whatever direction, a change of tax arrangements. It’s also got fiscal stability,” Powell explained, during a long evening interview in his surprisingly modest office in St Helier. [...]
Technically, officials had a choice: they could either raise taxes for foreigners, or cut them for locals, providing everyone ended up being treated the same way. In reality, however, Jersey had no choice at all – not if it wanted to keep its finance industry. Dozens of other small jurisdictions had followed its lead into financial services and, if it raised taxes for everyone to 20%, all the lucrative trade would evaporate from its computer screens, only to condense in places with lower levies: the Isle of Man, Dublin, Singapore or Hong Kong. [...]
On 17 February 2008, Britain said it would nationalise Northern Rock (which had its own Jersey trust named Granite), the first in a series of banks brought into public ownership. The final cost of picking up the pieces of these exploded banks was in the hundreds of billions of pounds. Jersey did not contribute a penny to cleaning up the mess it had made.
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