Guernsey is an important partner for the UK

UK prime minister David Cameron's recent comments about it being unfair to refer to Guernsey as a tax haven were encouraging (see Badge of honour?). But they made me stop and think about whether the British public completely understand the added value and benefit that an international finance centre such as Guernsey brings to the City of London and the wider UK economy.

It is often easier for those in the UK media to beat the drum on perceived tax loopholes as they make for more outrageous headlines. Indeed, the coverage given to the prime minister's remarks in September was almost non-existent apart from in Guernsey and neighbouring Jersey.

It was a similar scenario when Nick Clegg, the UK's deputy prime minister, recognised our contribution to the UK back in September 2012. Describing the Channel Islands as "hugely important", Mr Clegg said the islands were "an important gateway for the wider financial sector and indeed the economy in the United Kingdom".

One area they could be recognising is private equity funds. Guernsey is a jurisdiction with a proven track record in private equity funds because of our first-class financial services infrastructure. It means that many UK-focused private equity funds, a number of which are based in Guernsey, are raising capital from pension funds and other institutional investors for investment into UK companies. In turn, this creates jobs for the benefit of the wider economy - often filling the void left as a result of reduced lending from high street banks to British businesses.

Also, at a time when the UK government is trying to kick-start the economy following the effects of the global financial crisis, private equity investors have continued to invest in the UK, creating (and saving) many jobs and businesses that generate taxes.

Employment growth

Figures from the British Private Equity & Venture Capital Association (BVCA) show that about £5.7bn was invested into 820 UK businesses by private equity firms in 2012, such businesses employing around 135,000 full-time equivalents. Typical employment growth was 0.7 per cent compared with a national average of 0.1 per cent.

Guernsey, with its tax neutrality, has certainly played its part as a gateway to this increased investment, which allows for more to be spent on vital public services, infrastructure and commerce in the UK, creating jobs and raising taxes from such employment. The island also ensures that investors - many of whom are ultimately UK taxpayers investing in UK pension funds - are, in effect, not taxed twice on the same income.

And let's not forget that Guernsey's captive insurance sector, the largest in Europe, provides a product not otherwise available in the UK and has been integral to the government's NewBuy scheme to boost UK home ownership.

It's also been evidenced how Guernsey banks play a key role in underpinning the whole UK banking system, with City of London banks heavily reliant on global offshore centres for net financing. Figures from 1999-2008 showed that the Crown Dependencies provided on average 75 per cent of the net financing from all offshore centres to the City, while banks in Guernsey provided more than US$70bn of net finance to the City throughout 2008, supplying much-needed liquidity at the height of the financial crisis.

Recent research undertaken by our counterparts in Jersey has painted a similar picture of the important part its banking system continues to play in the operations of its UK parent banks - and Guernsey should be viewed no differently. Indeed, the Capital Economics report, published in July, revealed the island helps the UK generate around £2.3bn in tax revenues each year and supports 180,000 British jobs.

This shows that Guernsey and the other Crown Dependencies help to facilitate investment and employment in the UK economy. Perhaps this is what the UK prime minister and his deputy have been alluding to, recognising that we are part of the solution and the fabric helping to drive forward British society.

Fiona Le Poidevin is the chief executive of Guernsey Finance

She writes a regular blog about Guernsey for Private Client Adviser

What do you think? Email acting editor jennifer.palmer-violet@wilmington.co.uk