On a summer’s day 40 years ago, ferries from Liverpool and Llandudno, Heysham and Fleetwood, Belfast and Dublin, would have been queuing to dock in the harbour at Douglas. The town’s long, sandy beach would have been full with holidaymakers. A big British band such as The Rolling Stones or The Who might well have been playing at the Palace Lido. But that was before cheap package holidays killed the Isle of Man’s tourist industry, once mainstay of its economy.
Today the beach is empty except for the odd dog walker. There is not a bucket and spade around. The Lido has been demolished. Breakfast in one of the seafront’s tatty Victorian hotels offers a sample of life in an old people’s home. Horsedrawn trams still trundle along the promenade but they are relics of another era, like the island’s £1 notes. “You’ve got to change to survive but it’s a damn shame about the tourists,” says Paul Desmond, who runs the last, traditional, Manx kipper curing yard.
The Isle of Man, 220 square miles of hill and glen with 82,000 inhabitants, has reinvented itself. Its business now is business, not tourists or kippers. A self-governing island, which belongs to neither the United Kingdom nor the European Union, it responded to the collapse of tourism by slashing taxes and developing a financial sector.
Behind the seafront in Douglas, discreet signs advertise banks, insurance firms, investment funds and wealth management companies.
This outcrop in the Irish Sea is a magnet for entrepreneurs, an incubator for new enterprises of the most surprising sort.
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In a nondescript building on a housing estate in Onchan a company called CVI made the laser optics with which Nasa’s Phoenix Lander spotted snow on Mars last year. Another Manx company, Odyssey Moon, is competing to win the $30million (£18.4million) Google Lunar X prize by putting a robotic landing craft on the Moon. A third, Excalibur Almaz, is developing space tourism.
Later this month Nicole Stott, wife of a Manxman, will begin her four months at the International Space Station. The Isle of Man has officially joined the space race. Mrs Stott’s husband, Chris, a space fanatic working for Lockheed Martin in the late 1990s, persuaded the island’s Government to file for the orbital satellite space slots that it is entitled to. In 2004 Allan Bell, the Treasury Minister, needed a headline-grabbing announcement for his budget and declared a zero corporate tax rate for space activities. The response, he says, was “quite amazing”.
More than a dozen space-related businesses operate from the island, including some of the world’s biggest satellite companies. It has a director of space commerce, an honorary representative to the international space community, and an International Institute of Space Commerce.
Manx schoolchildren attend Nasa summer camps in Houston. Tim Craine, the space commerce director, regularly flies to Houston, Cape Canaveral and French Guiana. “I’m very lucky. I could have been director of patient care,” he says.
A deconsecrated Methodist chapel in a narrow lane in Castletown hosts another surprise: the European headquarters of SBOBET, one of the world’s biggest online betting companies. On a typical Saturday a dozen “liability managers” will be glued to computer screens in what used to be the nave, constantly adjusting the odds on hundreds of live football matches as bets flow in at a rate of 200 a second.
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“The adrenalin level is quite amazing,” says Bill Mummery, the executive director.
It is one of about 30 e-gambling companies that have set up in the Isle of Man, attracted by a maximum gaming duty of just 1.5 per cent and state-of-the-art telecommunications. Businesses have long used the island as a testing ground for new technologies. Others firms include PokerStars, the world’s largest on-line poker room, and two gambling software companies, Microgaming and Playtech.
E-gambling has created more than 500 jobs. “The island is about being a global player in niche, high-value, technology-driven markets,” says Mr Mummery.
The Isle of Man’s 1,030-year-old Tynwald, which is the world’s oldest parliament, is thought to have been the first to give women the vote. Joseph Pilates, a German, devised the exercise regime that bears his name while interned in the island in the First World War. It also gave sanctuary to Radio Caroline, Britain’s first pirate station, in the 1960s.
That innovative spirit lives on. The Government runs what will soon be the biggest offshore register for corporate and private jets, and another for superyachts, which generates hundreds of jobs for lawyers, insurers and tax experts. It recently hosted the first conference on basking sharks, which abound in the surrounding waters. In 1995 the Government decided to develop a film industry. It offered to pay 25 per cent of production costs in return for a share of the profits. In the 14 years since, 91 films have been made on the island, and the Government has earned £3 for every £1 invested. Islanders talk nonchalantly of seeing Ren?e Zellweger jogging along the beach, or Johnny Depp in a pub.
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“Freedom to flourish,” is the island’s marketing slogan. Aside from handsome tax breaks it offers entrepreneurs friendly legislation, ready finance, a nimble bureaucracy, and easy access to politicians — their numbers are in the telephone book and Tony Brown, the chief minister, works in his electrician’s shop on Saturday mornings.
It is an approach that has reaped rewards. The tax haven has enjoyed 26 consecutive years of growth. It has no national debt, an unemployment rate of just 2.2 per cent, and has avoided the recession. Per capita income, 24 per cent lower than Britain’s in 1996, is 18 per cent higher. “It’s the greatest economic success story nobody has ever heard of,” says Chris Corlett, head of the Department of Trade and Industry. The island does not flaunt its new-found wealth but it is apparent from the Mercedes, Porsches and Bentleys and from the conversion of dilapidated hotels into seafront apartments.
Even old timers agree that life is better: the young no longer have to leave to find work, the Government pays for islanders to have medical treatment or university educations in Britain, and it is planning to give every schoolchild a free laptop.
But they do recall the old days with wistfulness. More than half the population are “come-overs” — outsiders. Crime, drugs, drunkeness and violence have increased and people no longer leave their doors unlocked. “The old Manx heart and soul is not beating in quite the same way,” says Terry Cringle, 78, a veteran journalist.
He remembers the excitement, after a long winter, when the tourists arrived. Manx girls could see the latest fashions. Manx boys had new girls to chase. “Everybody looked forward to it,” he says. “It was not just the weather. You didn’t feel so isolated. You felt connected to the world.”
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Its own Man
Area 220 sq miles
Population 82,000
Location 20 miles from Scotland, 30 from Ireland, 35 from England, 40 from Wales
Status A British Crown Dependency, outside UK and EU. The UK is responsible for defence but Tynwald, the local parliament, has control over all domestic affairs.
Government The House of Keys, comprising 24 members elected every five years, and the Legislative Council, made up of 11 appointed or indirectly elected members.
Legal system based on the principles of English common law.
Housing A small stock of state-owned houses. The Government puts an emphasis on ownership and assists first-time buyers.
National symbol The ancient triskelion or “Three Legs of Man”.