I’ve recently come back from my honeymoon in Jamaica. The last time I was on the island was four years ago, as a guest of the Jamaican government.
Faced with a HNW tourist image problem, with Kingston regularly splashed across the foreign news pages as one of the murder capitals of the world, Jamaica wanted Spear’s to report on ministerial plans to turn the relaxed reggae island – better known for its
achievements in sprinting and cricket than banking – into a global off-shore financial centre to rival the Cayman Islands and the
Bahamas, along with new tax incentives to lure HNWs to buy luxury property and take up residency.
So how are these tax haven plans going? According to the David Hare or John Le Carre school of accountancy, the Caribbean (along with Panama) has now taken over from Switzerland as the number one choice for money laundering or management of off-shore assets of the ‘tax conscious’ international rich – from oligarchs to the sort of Mayfair-based private equity villains akin to Stirling Rogers, as played by Rupert Graves in David Hare’s latest BBC drama, Turks and Caicos.
Hare’s Turks and Caicos drama predictably cranks out all the worst cliches about the Caribbean being awash with dirty foreign money, and even murkier global business figures who think that the Caribbean’s lax attitude to music copyright – Jamaica, for example, is one of the very few countries in the world where you don’t need a license to play (or pay for) music on a radio station – equally applies to money regulations. In Turks and Caicos, Hare insinuates that illicit money
that used to sit in vaults in Geneva and Zurich (now under intense scrutiny from US federal authorities) has now been sunk into Caribbean ‘second or third home’ luxury apartment real estate and hotels which Hare likens to ‘prisons for the rich’.
Well, I spent most of my honeymoon in a beautiful villa (cottage number 16) on the Round Hill resort in Jamaica and it certainly didn’t feel anything like a prison. We would have welcomed a much longer incarceration, with smiling uniformed staff offering chocolate covered iced bananas on the beach at 11am before one’s first freshly made Pina Colada.
Round Hill is a throwback to the old-fashioned days of Jamaica glamour before the invention of the ‘all-inclusive’ holiday with an impeccable pedigree as a honeymoon choice. The exclusive resort, founded by John Pringle in the 1950s with Noel Coward as his first ‘shareholder’ resident, was where John Kennedy took his new wife Jackie on their honeymoon.
But if the Round Hill resort – with a head bellman still working every day in his eighties – is proud of its Noel Coward connections and Jamaica old-world glamour, do not be deceived.
Dirty money, tax haven
Jamaica is a country which punches – and certainly runs – way above its weight. The island’s recent history, especially its struggle to re-invent itself after the Jamaica banking crisis of the 1990s, is very far removed from the anachronistic media stereo-typing of the David Hare ‘dirty money, tax haven’ school.
This is neither fair on the Caribbean or even at all accurate – especially in the case of Jamaica, which may be a small country but its ‘independent’ attitude could teach even Britain important economic lessons, particularly in the financial, property and perhaps, above all, the island work/balance ‘happiness’ sector.
Do you remember Cameron once commissioning a national report on the state of our happiness? Well, he would have been better off sending a team to Jamaica to see how they manage to keep smiling through an economic journey that has not been easy.
In short, as a result of lack of banking regulations and cheap credit, Jamaica has already gone though an accelerated economic boom and bust property cycle that is a painful reminder of what life will be like in countries such as Britain once interest rates and mortgages go up again – as they surely will sooner rather than later.
When I was last in Jamaica, the old tourist slogan for the island was ‘Once you go, you know’. As of last November, this was changed to ‘Now that’s what I call all right’.
On first impression, however, things do not necessarily look ‘all right’ at all. When you drive around the island, as we did, the first thing you notice are the number of half-built looking concrete houses (many the size of large villas) that litter the sides of the road – especially around the coastal resorts of Montego Bay and Port Antonio.
The half-built houses, with rusting steel girders poking through the concrete walls like ribs, remind one of the coastal roads around Florida and Ireland, where the property boom has well and truly ended and banks have invariably seized the worthless building plots.
Yet there is a crucial difference between Ireland, Florida and Jamaica. When I asked our driver why there are so many abandoned houses, he just shrugged and replied. ‘Yo man, not abandoned – just not finished yet’.
The banks don’t own the properties – the owners still do, but they can often only afford to build a floor or section at a time. The reason for this is that because it is so difficult (following the Jamaican financial crisis of the mid 1990s that was a precursor for the global banking crisis that later followed) for Jamaicans to get bank loans, mortgages or credit.
As a result, most Jamaicans live without personal debt – at least on the sort of home-owning and consumer scale that is endemic in the UK.
So that’s one reason why Jamaicans might appear to be happier than many of their more debt-ridden UK counterparts. Although interest rates are well over 10 per cent in Jamaica – 15 per cent is the norm for bank loans and the few mortgages that are given – nobody much cares what the rates are because they have no real choice but to live within their means. However modest that may be.
Although Martin Amis may have recently declared that ‘money has won’ in the English class wars, ‘debt has won’ may have been a more accurate state-of-the-nation assertion.
Although the idea of living debt-free may seem quaintly old-fashioned, it may be worth remembering that debt also has a mental and physical price to pay, whether you have a £3 million mortgage on your ancestral farm or are using your Richard Prince as a collateral to put down a deposit on a new Sunseeker yacht. What struck me about Jamaica most on my second visit were the perpetual smiles on so many local faces. Money does not equal happiness.
When we were picked up by our taxi driver one evening from the Geejam Hotel in San San (where Amy Winehouse recorded her last album) to go into Port Antonio for dinner, he apologised for being about fifteen minutes late. He then smiled brightly and admitted that he had been late as he had been out playing soccer for his local village team.
But isn’t it dark outside? I asked. ‘Yes man, it was dark out there but the ball is white and there is a moon as well. None of us have a TV so we just play soccer at night. We love it’. Turned out that while my wife and I had been draining our pina coladas at the hotel bar waiting for him, his village team called Drapers had just won the local island football tournament – with a cash prize of $200
for each member of the team.
Joyfully showing me an envelope stuffed full of dollars, you would have thought Draper’s had just won the FA cup.
What other lessons are there to be learnt from Jamaica for George Osborne? Having the world’s fastest man as a global icon has
led to a sense of renewed self-confidence in Jamaica’s ability to take on the world (lets leave the Venezuelan oil subsidy aside for a
moment, as that is a future economic ticking time bomb across the Caribbean).
Tourism – not financial services and HNW tax-breaks – is what has saved the Jamaican economy. And a national sense of being proud of the island’s unique and colourful history. Tourism, of course, is what George Osborne also needs to remember is critically important to the UK economy – now bringing in over £26 billion a year and growing faster than manufacturing.
The value of tourism is the real lesson that Osborne can learn from Jamaica. And the absurdity of insisting that owners of ‘heritage assets’ such as stately homes and historic houses are now called by ministers to have to pay 20 per cent VAT on the repair of their historic homes when greedy new developers who build Barratt-style housing estates on green belt land don’t have to pay any VAT at all.
The Historic Houses Association (HHA), who has just celebrated its 40th anniversary, has published an important new policy document called ‘Heritage Means Business’. As Richard Compton, the HHA president, states in the introduction: ‘Historic houses, castles and their gardens are part of the character of Britain. Even before Downton Abbey – filmed at an HHA house – they were the most popular attractions bringing people to the UK’.
The national contribution of historic houses – culturally, socially and through education – is almost beyond measure to the UK economy.
Although only around 350 HHA member houses regularly open their doors to the public – that’s considerably less than the number of all hotels in Jamaica – these houses welcome over 13 million visitors a year.
That is over 11 million more visitors than the island of Jamaica receives every year. If Osborne is serious about keeping the economic
recovery going, he should read the HHA’s new policy report carefully.