The UK Government's "prejudiced" view of offshore centres and its general misunderstanding of the industry could harm London's position as the international finance capital, ex shadow chief secretary to the Treasury Howard Flight warns.
Flight, who held the post from 2000-04, says the Government doesn't understand how offshore works and irrationally discriminates against perceived tax 'havens'.
Speaking at the International Investment Conference on Wednesday, he said: "If you mess around with them [Crown Dependencies] you will damage London itself as companies will move offices and products to other places."
Flight describes the Dependencies as "duty-free zones of London" and argues seducing international business people though attractive tax conditions in the UK was key in rebuilding London as a financial capital in the 1980s.
He slams the Government's handling of the Foot Review, which is currently scrutinising offshore financial centres, and believes "nothing will happen" as a result of the report.
"The idea there's hidden money in Crown Dependencies is great nonsense," he adds.
"If the Government is trying to destroy the offshore financial service industry, it could obliterate 60% of GNP of some jurisdictions. It would cost a lot to make that up and create alternative jobs. So nothing will happen.
"It's clear the Treasury doesn't know what it wants Michael Foot to do. He has to invent his own parameters of what to look at."
Contact: Sarah Griffiths at [email protected]
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till