The political winds in the United Kingdom have shifted dramatically in ways that will doubtlessly touch these shores.
UK voters demanded change in the election on July 4, and change they will get, with the end to a 14-year era of Conservative rule ceding to a decisive victory by the Labour Party.
Issues driving voters’ decisions included rising inflation, a string of unpopular prime ministers, scandals, increasing disaffection over Brexit, and general dissatisfaction with Conservatives.
Indeed, 411 seats out of a possible 650 went to Labour, with the Conservatives losing 252 seats and right-wing support fracturing among smaller parties.
That means that Labour, led by newly appointed Prime Minister Sir Keir Starmer, could be in power for multiple five-year terms.
This shift could have far-reaching impacts for the people of the Virgin Islands and other UK overseas territories.
Consider the economy. Labour has earned a reputation of taking a heavier-handed approach to managing the private sector than Conservatives. For the VI’s financial services sector, this will very likely mean more scrutiny and increased regulation at a time when the territory is already struggling to keep up with ever-changing international standards.
Labour leaders also have been among the chief critics of offshore financial centres, which they have often slapped with the pejorative label “tax havens.” And while much of that talk is probably bluster, a Labour government will almost certainly up pressure on the territory to implement a truly public beneficial ownership register.
Premier Dr. Natalio “Sowande” Wheatley said this month that the VI will expand access to its existing register by the middle of next year, but he firmly ruled out “uninhibited” public viewing. This stance is unlikely to appease the new Labour government.
Such looming conflicts mean that an already challenging operating environment for VI financial services could become even more burdensome at a time when incorporation numbers are steadily dropping.
Dr. Wheatley and other leaders, then, will need to hone their diplomacy and redouble efforts to clearly explain the territory’s position to the new UK government. If they can win over Labour sceptics who have a shaky understanding of the offshore industry, the territory would emerge stronger.
Other areas of concern under the new government include the UK’s ongoing reviews of its relationship with the OTs, which unfortunately were stalled by the snap election.
The VI and other OTs must work together to ensure that the new Labour leaders resume the reviews straightaway, building on the work previously accomplished with an eye toward completion this year.
Similarly, while governance issues such as those raised in the 2022 Commission of Inquiry may not neatly split across party lines, the VI will need continued UK support to continue navigating the many governance reforms currently under way. That’s particularly true in VI law enforcement, which is primarily a UK area of responsibility.
VI leaders, then, must insist that Labour officials engage with the territory and pledge financial, legal and other support for the much-needed reforms.
An election on an island 4,000 miles away may sometimes seem irrelevant to what happens here, but nothing could be further from the truth. VI policymakers and other residents must always keep a close eye on political winds in the UK.