(Nov 3: Slightly updated; see below.)
I’ve been asked some quite specific questions today about the City of London Corporation by a protester who, like pretty much everyone else, is struggling to get to grips with the essence of this very peculiar ancient British organisation. I must confess that I didn’t have all the answers, but I did have some. Here are some early thoughts based on this conversation and others I’ve had. I think it’s important to rein in one or two of the more effervescent assertions that are out there.
The first big question is: what exactly can the City Corporation block, in terms of financial regulation?
The answer is: nothing directly. Financial services industries in the UK are regulated by the Financial Services Authority (though that particular detail will change under current government plans.) What the City of London Corporation does, par excellence, is to work behind the scenes to shape a national and political consensus about financial regulation. (I’ve got a shortish New Statesman article coming out soon that looks at this a bit.) Over the centuries, the City of London Corporation was able to assert itself as a zone of financial freedom within the British body politic, preventing encroachment and regulation by sovereigns and politicians. These days, the financial services industry has grown so vast that it is able to look after itself to a significant degree, so the City Corporation plays more of a supporting role in this respect. But it is a most powerful role. Its influences reaches into all sorts of places.
Next: what exactly is the connection of the City of London Corporation to the world of offshore tax havens?
This is a much harder one to answer. In Treasure Islands I describe the City Corporation (as do many others) as something of an offshore island inside the British nation state. However, my final chapter (in the UK edition) describes two closely intertwined things. First, the City of London Corporation, which is essentially a huge lobbying organisation attached to the local authority for the “Square Mile,” London’s prime financial district. The second is the “City of London” – a term used more generally to describe UK financial services in the City of London and elsewhere. If we are talking about foreign (or semi-foreign) tax havens like the Cayman Islands, the important relationships should be considered as being a relationship between Cayman and “The City”, rather than with the City Corporation itself. This relationship is of massive, almost transcendental importance for the UK, and is one of the biggest reasons why the City is so powerful and hard to reform. However, I don’t think there is any particular jurisdictional aspect of the City of London Corporation itself that creates a special link with foreign (or semi-foreign) tax havens.
Also, to clarify, the City of London Corporation is not a tax haven in the sense of the Cayman Islands, as providing a tax-cutting platform. (I never said it was, but some people I think have got that impression from Treasure Islands.) You can’t be located in the Square Mile (and thus under the jurisdiction of the Corporation) and therefore escape tax, as you could in the Caymans. That’s not the point at all. The City of London Corporation is an offshore island in the sense that it is a unique and partly separate jurisdiction inside the United Kingdom, subject to most of the normal rules and laws that affect the rest of us, but also with its own specially carved out rules and laws. Beyond this, the UK itself also has many of the elements of a tax haven, as Treasure Islands outlines in great detail.
I think that there has been a little confusion over some of this. (And, as I’ve mentioned on several occasions, early editions of Treasure Islands contained a couple of claims that went a little further than they should have. I have pointed to the main ones here; those have been corrected in subsequent editions.)
Next question: What exactly are the powers of the Lord Mayor?
First of all, the City outlines his main roles in brief overview here. But in this context, I thought I would now share an email I received this morning from someone who has worked all his career in tax, finance, marketing and consultancy, both employed and freelance, including with HMRC and KPMG. The City of London Corporation has over 100 Livery Companies, which originated as trade associations but have evolved into something rather more ritualistic and ceremonial. This email is about one of those Livery Companies, the Worshipful Company of Tax Advisers (WCOTA).
Since the London St Paul’s protest, which I thoroughly support, and George Monbiot’s piece about the Corporation of the City of London, I have noticed that in 2005 there was set up the Worshipful Company of Tax Advisers – apparently up by some members of the Charted Institute of Taxation, the professional body of the tax advice industry. This interested me as I used to work in that field and was once qualified under that Institute.
What is interesting is that as a Worshipful Company it has as one of its four objectives the duty to support the Mayor of London and the Corporation. I understand that all Worshipful Companies have this. However, the WCOTA website note of its activities includes: ‘The Company provides regular briefings to the Lord Mayor and his staff on tax matters. During his year in office, the Lord Mayor travels extensively, with the status of a minister, meeting ministers and officials of overseas governments and overseas business people. Those visits are aimed at facilitating international trade and promoting the UK’s financial services industry. The Company’s contribution is to help him understand the related tax issues and to lobby for improvements.’
This may be self evident. However, I notice that many of the present and past officials are well known experts in their fields, many of whom have written widely or sit personally on HMRC liaison bodies. As such, it means that the Corporation has the very best advice available anywhere as to taxation law and regulation when it goes about its business, as well as a conduit to influence within the HMRC.
I also notice from the WCOTA website that there is a company of Solicitors, formed in 1944, and that ‘The late Alderman Sir Kenneth Cork, the well-known insolvency expert, who became Lord Mayor 1978-79, decided to encourage new companies to represent modern occupations. As a result, no less than six were granted livery in 1977-78; the Chartered Surveyors, Chartered Accountants, Chartered Secretaries and Administrators, Builders Merchants, Launderers, and Marketers.’
Thus, as well as having the various undemocratic powers etc that you describe in your book, The Corporation has had a clear strategy to incorporate into itself the relevant expertise that have helped it to have the very best advice to assist its establishment as a ‘tax haven’ over the past few decades.
One other observation is that it is clear that the nomenclature and meeting ritual of the Company sounds most reminiscent of Free Masonry (I used to be one of those, too!). I wonder if this approach underpins the persistent structure of the Corporation, as being an organisation with secrets, as opposed to a secret organisation, with a carefully selected population of members who are happy to participate in the charade of ritual and commitment to the organisation, above all that lies outside it.
WCOTA has a specific committee called ‘Lord Mayor’s Briefing Group’, the members of which are detailed on this page. A quick google of the committee members names shows most to be very senior tax specialists.”
This raises all sorts of fascinating questions. Others will be now looking further into this. It will be fascinating to see what emerges from the woodwork. The City Corporation can draw on the world’s biggest pool of financial expertise, they are the voice of globalised capital, with extraordinary powers: intellectual powers (see below), political powers, lobbying powers, massive financial clout (multiplied by the financial clout of the banks themselves) and they are able to do all of this more or less unseen. This is an old boys’ club with a global focus, spreading its lobbying efforts from Brussels to Beijing. In Treasure Islands I quote Maurice (now Lord) Glasman, one of the Corporation’s fiercest critics, helping explain why it has been able to fly so low under the radar. It is, he says, “an ancient and very small intimate relational institution, which doesn’t fit into anybody’s preconceived paradigm of modernity. Here is a medieval commune representing capital. It just does not compute.”
A quirky but important note in the context of the Old Boys’ club: in the corporation’s history there have been over 800 Lord Mayors – of which just one was a woman.
I have more to say about the protests (which I, too, of course, support.) But that will have to be all for now. With just three hours’ sleep last night (I have small children), I hope this post was more or less coherent.