While Jersey, Guernsey, Alderney and Sark have their own elected parliaments, they are not constitutionally independent
The Channel Islands of Jersey, Guernsey, Alderney and Sark already each have their own elected parliaments and are responsible for their own public finances, but as the name suggests these crown dependencies are not constitutionally independent.
Lord McNally is the justice minister responsible for overseeing relations between the UK and this tiny cluster of governments in the Channel, under 20 miles from the coast of Normandy. He is also responsible for defence matters and representing the islands' interests on the international stage.
"One of the things which we have always got to manage is the fact that they have some of the responsibility of a parish council but they also have some of the powers of a sovereign state," McNally explains.
Reflecting on a tour of the islands earlier this month, he added: "You've got to pinch yourself when you're meeting presidents and chief ministers, [to remind yourself] you are talking about, in the case of Sark, a population that could fit in a Hackney tower block, and in Alderney, a very small hamlet."
The roots of the constitutional relationship lie in the islands' history within the Duchy of Normandy in 1066, when William the Conqueror invaded England. In 1204, the islands had to decide whether to revert back to the French crown or to stay under the rule of William's line, now the English monarchy. They chose the latter, but insisted on retaining their own system of Norman customary law.
According to the Ministry of Justice: "The constitutional relationship between the Islands and the UK is the outcome of historical processes, and accepted practice … The most recent statement of the relationship between the UK and the islands is found in the Kilbrandon Report. It acknowledged that there were areas of uncertainty in the existing relationship and that the relationship was complex. It did not try to draw up a fully authoritative statement."
The islands have never become part of the UK administratively or legally, and since the 1960s have had their own appeal court process. Ultimately, however, cases can still be referred up to the judicial committee of the privy council in the UK.
Perhaps the most significant link with the UK is that the Channel Islands are part of the sterling currency union, along with the Isle of Man, printing their own variants of notes and coins which are legal tender throughout the UK. They retain a £1 note.
The islands' position within the sterling zone became particularly significant in the 1970s when the UK tightened exchanged controls. This saw a rush of interest in the Channel Islands where the emerging finance industry was able to cater to those wishing to use sterling but retain a freedom to move their capital about.
Also in the 1970s, the islands' semi-detached relationship with the UK started to be mirrored in the strengthening institutions of Europe. Importantly for the local finance industry, the Channel Islands were included into the European community's customs territory, but otherwise were kept outside the EC.
Today the Channel Islands are not members of the European Union but retain this half-in half-out relationship with Brussels. The UK has been encouraging Jersey and Guernsey in particular to start to take on responsibilities for some aspects of their international relations.
In particular, the islands have been granted special dispensation to directly negotiate tax co-operation treaties with OECD countries around the world – an initiative pressed for by G20 leaders three years ago as concern grew about offshore tax.
The largest two Channel Islands have recently set up a joint office in Brussels for the first time. Jersey's assistant chief minister, Sir Philip Bailhache, who believes the island should consider plans for full independence, has seen the frustrations involved in trying to make representations in Europe as a crown dependency.
"We have found in certain respects as a crown dependency, the Brussels bureaucracy is accommodating and willing to talk to us. In other respects, if there is any whiff of a suggestion that there are differences between the Channel Islands and the UK the commission will have nothing to do with us – for obvious reasons the commission doesn't want to get involved in what it regards as the internal affairs of the UK.
"That is our problem – sometimes our interests don't coincide with the interests of the UK and sometimes we'd like to express that before it gets set in stone and draft directives are floating around and it becomes too late to influence the argument."
He points out the UK's decision to allow Jersey to negotiate its own tax treaties as an encouraging sign, but wants Whitehall to go further.
"What the UK has not so far been prepared to do is extend that principle, to allow Jersey to look after its own interests in a broader sense – maybe the view is: 'If you want to do that you should become a sovereign state and there are limits to the amount of rope we can give you.'"