Alistair Darling recently called the Isle of Man “a tax haven sitting in the Irish sea”, and it used to be a common joke that Athol Street, home to the offshore branches of many international banks, “was the only street that was shady on both sides”.  But both jibes appear past their sell-by date. 

The island has embraced new industries, steering a prosperous course in a post 9/11 world that is increasingly hostile to places cloaked in financial secrecy.   

The Isle of Man is now one of the leading centres for the computer gaming industry, employing 460 highly skilled people.  This is more than it seems in a place that is only 33 miles long, with a working population of just 44,000.  The largest provider of e-games for online casinos, Microgaming, chose the island as its base when the industry took off about a decade ago, and other companies followed.  The aerospace, information technology and shipping industries are also flourishing. 

Government figures show the financial sector now accounts for only 36% of GDP, and many would be happy to see that figure drop further.  John Webster, Chairman of the Manx e-gaming association and non executive director of over a dozen other Manx companies, says that the quality of the island’s labour pool has increased dramatically in recent years, enabling it to attract industries on a permanent basis. 

Mr Webster said: “The island used to attract subsidiaries of banks, who often brought over their own staff from the UK, but these new industries have their world headquarters here, which gives a much greater economic impact, especially on employment.  We shouldn’t really be called a finance centre anymore, but a business centre.” 

Mr. Darling’s suggestion that the island is only there for banks who want to attract rich tax-dodgers reawakens stereotypical images, especially as the top rate of income tax is still only 18%, and corporation tax is 10% or sometimes less. 

However, Mr Webster says: “We’ve got a really diversified economy now.  There are over 200 separate manufacturing companies, for example, which most people in the UK probably don’t realise.” 

The fact that the island boasts a quality of life that many see as superior to that in the UK has undoubtedly helped.  As late as the mid 1990s, most young graduates who were born on the Isle of Man ended up settling in the UK, enticed by greater job opportunities and higher wages.  Many are now choosing to stay. 

“This is the first generation where it will be an advantage to be Manx,” says Peter Carron, a politician at the House of Keys, the island’s independent parliament. 

“This used to be a poverty stricken isle, with the average wage half of what it was in the UK.”  He cites the island’s excellent education system, with schools that are often smaller and better funded than their UK counterparts, as a keystone to the economic renaissance. 

Resident Steven Woodford agrees.  Mr Woodford was born on the Isle of Man but ended up working for a London-based IT firm.  But he moved back with his young family nine years ago, attracted by the less hectic pace of life, beautiful scenery and good schools. 

“It’s a great place to live,” he said.  “And very safe – there’s hardly any crime.”  He now runs his own IT firm, with no shortage of clients from the scores of high tech industries based in the capital, Douglas. 

He says he has no trouble getting people he wants to employ from the UK to relocate.  “They normally take one look and love it.  You don’t realise how crowded everything is in England until you get here.” 

Perhaps referring to the uncluttered roads (there are no motorways), he adds: “I can do a full day at work and still be back in time to have tea with the kids.” 

The future looks bright, and the move away from finance has been timely.  Both Gordon Brown and Barack Obama have led the way in cracking down on tax havens, which they see not just as a possible safe refuge for terrorism funds, but also as an unwelcome siphoner of valuable tax revenues. 

The Isle of Man, keen to divest itself of these negative images, has recently signed a number of new tax agreements, making it on to the G20 ‘whitelist’, a group of nations that have publicly agreed to share information with the authorities on individuals or corporations that are being investigated for tax fraud. 

The days when comparisons were made with slimly regulated places like Monaco and the Cayman Islands may well be coming to an end. As a former government economic adviser in the 80s and Chamber of Commerce President in the 90s, Mr Webster has seen plenty of positive economic changes, but sees no room for complacency. 

The Isle of Man, as a self-governing Crown dependency with no representation at Westminster or the EU, rises or falls purely on its own efforts.  In an echo that will be familiar to many UK businessmen, he says that there is still too much bureaucracy holding back business, “with no real commitment from the Manx government to minimise it.”  If the red tape can be removed, he sees no reason why the island can’t go from strength to strength. What about Mr Darling’s comment? 

“We’ll never see an end when it comes to that finger-pointing,” he says.  “It’s true that other places have higher requirements to pay tax, but we have a good regulatory system with no unpleasant surprises, which is what attracts business.” 

Mr Webster defends the right of  any country to set its own tax rates, and feels that the current hostility coming from Westminster has a jealous ring to it.  “All firms are looking to cut costs,” he says, “especially at the moment, and the island is lucky in that it can go its own way in trying to attract them.  You’ve got to remember that we are all competing for a reduced amount of business in the world.”