My annual speech to the Institute of Directors is an important event for me. It causes me to reflect on the year just passed, to take stock of major events, issues and achievements and also to look ahead to the year to come.
This is my last annual speech to you as Chief Minister in the current Council of Ministers – and with an election next year, who knows whether it will be me or a new Chief Minister here speaking to you in 12 months’ time.
So in reflecting on the past year, I have also looked further back at my time in office, and forward at a longer time horizon than the year ahead.
But let’s begin with 2017 – the most difficult and important year of my term in office – which saw the long-awaited publication of the Independent Jersey Care Inquiry report into the decades of failures in our children’s services.
The Care Inquiry report – was a shocking indictment of complacency and complicity – across in community – which left the most vulnerable children at the mercy of sexual, physical, mental and emotional abuse and mistreatment.
No-one who read that report can ever feel the same again about the structure and processes of governance in Jersey, which left those whom we were charged with protecting at the mercy of deliberate and negligent mistreatment.
I hope that I have done many things as Chief Minister that have benefited our island. But nothing will be more important than my formal recognition, and apology, on behalf of the government to the victims of this unforgivable child abuse, and my vow to ensure that this can never happen again.
I mention this at the start of my speech for two reasons. First, because this was the most significant governmental and societal failure in our island’s history. We must continually remember how a conspiracy of silence, a culture of deference and an acceptance of “the way things are” allowed and perpetuated child abuse.
The report did not close the book on this social crisis so we can put it away on the shelf and put it behind us; it started a new chapter. Which brings me to my second reason for beginning my speech with this issue: because ensuring that this never happens again means more than reforming our children’s services.
It means modernising our governance and our government, and replacing the old ways that failed us with new ways that will support our current and future generations. And a modern government, with modern ways – one government, working together – is also what will ensure that we serve the public better, with modern, quality, affordable public services and infrastructure; that we support and grow our economy and the businesses on which we rely for our wealth and quality of life and that we will be able to face, withstand and overcome the vicissitudes and challenges of an uncertain future.
And there are significant uncertainties at present.
Future challenges – Brexit
A year ago, the UK had voted to leave the European Union; today it is painfully unpicking 40 years of economic, social and legal interdependence.
We don’t know what the final shape of the agreement will be between the UK and the EU, but it is of critical importance to us that it supports our economic needs, our trade ambitions and our international influence.
Despite this challenge, I’m positive about the future of our Island post-Brexit. I’m positive about our level of engagement with the United Kingdom. And I’m positive – because I’ve discussed this with UK Ministers – that Jersey’s best interests are being taken into account in those negotiations.
Our interests are indivisible from the interests of the 20,000 EU citizens living and working in Jersey, who make a significant positive contribution to Island life. I remain committed to providing certainty on their position at the earliest possible opportunity. And our interests are served by securing our place in the world, punching above our weight as a small island.
I want to ensure that Jersey has the right agreements and relationships to benefit from global opportunities. These priorities will place Jersey in the strongest possible position in an uncertain, post-Brexit world.
Further afield – there is continuing unrest in many areas of the globe; technological disruption is sowing uncertainty among workers; and climate change is affecting some of the poorest in the world.
What happens on the other side of the globe affects us all. As a small island, we are not immune to global economic, political and social forces, so we must be well prepared for their consequences.
Economic challenges
The IMF’s latest assessment of the world economy is that the global upswing in economic activity is strengthening. Although global growth in 2016, at 3.2%, was the weakest since the global financial crisis, it is projected to rise to 3.6% in 2017 and to 3.7% in 2018.
For Jersey – an international finance centre trading with approximately 200 countries worldwide – this must be an opportunity. But the IMF also points out that the medium-term growth outlook is highly uncertain and will depend on how Brexit affects barriers to trade, migration, and cross-border financial activity. And a weakening UK economy and currency is a concern for Jersey with our close trading relationship.
The UK economy is projected to slow to 1.7% in 2017 and 1.5% in 2018. Our own growth is forecast by the Fiscal Policy Panel to be 1% this year, but only 0.5% next year. On a positive note, this will be the first time that we have seen four consecutive years of economic growth since at least 2000.
And employment is at a record high – with 61,660 people in paid work – mostly an increase in full-time employees. But inflation has picked up – as it has in the UK, given the fall in sterling – which poses a threat to the growth in real earnings that we’ve seen in each of the last five years.
And slower predicted growth in the UK and in Jersey, coupled with the uncertainties of Brexit, mean that the financial and budgetary challenges that we have endured since the global crash are still not behind us. Yes, global growth is an opportunity; but slower local growth is a risk about which we must be constantly vigilant.
Jersey has a long history of adapting to change, of innovating and encouraging entrepreneurship. Our strong public finances and our relative agility put us in a strong position to weather storms and to seize emerging opportunities. This Council of Ministers has relentlessly focused on growing a sustainable and resilient economy.
This is built on our prudent and responsible approach to public finances, our continued investment in long-term infrastructure, and our nurturing of innovative and cutting-edge sectors, like digital and fintech, alongside the powerhouse of financial services.
Our finance industry has more jobs today than the pre-crisis levels. Because of the combined efforts of Jersey Finance and the Jersey Financial Services Commission, this industry is providing jobs for islanders and revenue for government through income tax.
The outlook for future business activity and employment is positive. The housing market remains healthy. And average earnings were up 2.6% in the year to June.
Of course, as the Jersey Opinion Lifestyle Survey report showed this week, our wealth distribution is still uneven – so not everyone has a fair share in Jersey’s prosperity. That’s why I support the Caritas living wage and will be agreeing to sign the States of Jersey up to this initiative.
But our national prosperity hasn’t happened by chance. It’s the result of the creative, innovative spirit that has driven Jersey’s success for centuries. And it’s the result of our sound economic policies and our prudent control of public finances.
Sometimes, that means taking difficult and unpopular decisions that previous governments shied away from – because we know that only a strong economy can deliver the revenue we need to fund the services and infrastructure that islanders need. And a strong economy and productivity growth are critical to providing a sustainable financial footing to address the economic and social challenges of an ageing population.
Last week, we agreed a Budget that performed a finely-judged balancing act: both keeping a sharp focus on immediate financial imperatives, while also protecting the future interests of the generations to come. It’s a Budget that keeps taxes low, broad, simple and fair, and also raises funds that we need to look after islanders.
A Budget that raised tax-free allowances for lower and middle earners, but asked some businesses and future High Value Residents to contribute a little more.
A Budget that pledges to fund the university education of our young people, to develop the skills that our businesses and public services need to grow.
A Budget that ensures investment in the health and social care we will need as our society ages, and funds improvements to schools, so all our children can develop the skills they will need to achieve fulfilling careers.
And it’s a Budget for innovation, investing more than £0.5 million in an Internet of Things Lab – a contribution to Jersey’s digital future. This exciting new concept will help both start-ups and our thriving telecoms industry to develop new products and services – to solve problems, export abroad and attract investment into Jersey as a technology testbed.
Because Jersey cannot and must not stand still. Nor, as we depend so much on it for our prosperity, can we be complacent about our financial services industry.
Financial Services
Jersey’s reputation as a well-regulated and transparent jurisdiction, which supports the development and implementation of international standards in financial services, is critical to our global standing. But we don’t maintain that through passivity.
We maintain it, and strengthen it, through vigilance and action, to ensure that we continue to meet the highest standards of compliance and transparency. So I’m pleased that our responsible and firm approach is recognised internationally.
Last month, Jersey was given the highest possible rating by the OECD for complying with global standards on tax transparency and information exchange. We’ve been rated as compliant in all ten of the areas reviewed, placing us in an elite of countries who have completed both phases of the OECD review process – a higher rating than that of several major G20 economies, including the UK.
This assessment makes it even more evident that Jersey is not a safe harbour for rogue operators.
I’ve travelled the world saying the same thing, as clearly and as loudly as I can: we don’t want and we don’t need abusive tax avoidance schemes operating in the island.
We’re a professional, well-regulated international finance centre, which expects companies using our services to pay the tax that’s due in the jurisdictions where it’s owed.
We expect financial services providers to abide by our voluntary code and not take on abusive tax avoidance business.
If we discover wrongdoing, we’ll act to close it down.
If we need to strengthen our laws, we’ll pass the necessary legislation.
If new risks and practices emerge in cross-border finance, we’ll work with the UK, the EU and the OECD to address these.
That’s what we are currently doing, in partnership with the EU Code of Conduct Group, to provide confidence that businesses and entities that operate in Jersey have sufficient economic substance.
And having returned only last week from yet another trip to Brussels to discuss our compliance and transparency record with the EU, I know how critical it is that we are demonstrably in the vanguard of countries, and not trailing in the wake. Fast followers!
It’s because of our vigilance, cooperation and commitment to continued reform that the EU didn’t include Jersey on its blacklist of uncooperative jurisdictions this week. Though there is absolutely no room for complacency.
Population
Our long-term economic health is critically dependent on financial services. But it’s also dependent on our approach to migration, an issue that we’ve committed to address and which is of interest to everyone in the island. Tomorrow, we’ll publish our new draft migration policy.
We want to reduce the long-term impact that migration has on Jersey’s public services, housing and infrastructure by being more selective about who can settle permanently in the Island.
We propose to strengthen Jersey’s controls by introducing a new work permit regime for lower-paid migrants, and criminal record checks for everyone moving here for the first time.
But it’s not a closed door policy. We need to continue to attract highly-skilled workers to business in Jersey to maintain a strong economy. We need to attract front-line professional public servants, such as doctors and nurses, to provide the services that Islanders need to thrive.
And we also need to ensure that our hospitality sector has the workers it needs to support tourism, and indeed our own lifestyles. Yes, too much immigration places a strain on our infrastructure, our health, education and social security services.
But too little immigration will damage our economy, and make it difficult to provide the public services we need – especially as our population ages and our local workforce shrinks. So our proposed policy is about striking a realistic balance.
Given the uncertain future I described earlier, we can’t know for sure what our future needs will be.
Certainly, until we know the final arrangements after Brexit, it would be premature and counterproductive to try to carve a limit in stone. So our proposed policy aims to give us greater control coupled with pragmatic flexibility. I believe that this is the right approach – a modern approach for a modern Jersey.
Reform
I mentioned modernisation earlier. During my period as Chief Minister, I’ve sought to bring reform to the administration of government through a programme of public sector reform.
This was partly driven by the economic necessity of doing more with less, to create efficiencies to save money. And hard-working taxpayers are certainly not shy of telling us that they want their taxes to be well spent.
But the Independent Jersey Care Inquiry made clear that much deeper governance and cultural reform is needed in our island. And let’s be honest, we were told this in 2000 in the Clothier report and in 2010 in the Carswell report too.
I’m not going to point a finger of blame for the failure fully to address the recommendations of those earlier reports. But I can say, as the Chief Minister who received the Care Inquiry report, that I will not rest until I have addressed all of the recommendations in that report – cultural, structural, procedural and governance.
Because public sector reform is not just about cost-cutting – it must also be about how we do things. It’s about better public services, designed around customer needs, not around our administrative convenience. It’s about innovation.
It’s about clearer transparency, greater accountability and greater responsiveness by government and the public service to our citizens.
It’s about getting things right, first time – every time.
It’s about taking responsibility, not passing the buck.
Taking decisions, not kicking them down the road.
And it’s about breaking down barriers – between departments, between services, and between government and the people we serve.
It’s about creating one government, serving our island, in the interests of all of the people – young and old, rich and poor, local and new arrivals.
That’s why, shortly after the Care Inquiry report, I appointed a new Chief Executive, who joins us next month, to drive and accelerate the pace of that reform so that we can have a single, joined-up and modern public sector, working together as that one government.
And I don’t intend to give up on the important goal of bringing our anachronistic structures into the modern world, however difficult it might be.
Future
I’m used to dealing with difficulty. Last summer, I faced a vote of no confidence. I am pleased to have won that vote so overwhelmingly. Because, as I said at the time – and I still say now – I have been privileged to serve as Chief Minister since 2011, and there are still many issues I would like to see through to a successful conclusion.
Fully implementing all the recommendations of the Jersey Care Inquiry.
Modernising government.
Investing in our young people and in our long-term infrastructure – like our £466 million new hospital.
Ensuring that we have the sound finances to sustainably fund our public services and the economic strength to prosper and to survive future shocks and challenges.
Navigating through Brexit.
Doing the things – big and small – that make people’s lives better.
I’m proud of what we’ve achieved as a government.
In a scorecard, I imagine and I hope that a fair assessment of my term in office would be “a lot done – a lot still to do”.
Because the job isn’t done, and of course, the work of government is never done. But the things we’ve done have improved the lives of the people of our island; and they’ve supported our businesses, our environment and our international standing.
We’ve set in train a myriad of improvements that will deliver over a longer timeframe than the few short years that a Council of Ministers is elected to serve. And we’ve sought to address the issues of real and live concern to islanders today.
We know that people are concerned about housing – about being able to buy a home, and whether their children will be able to buy a home. We’ve put mechanisms in place to help them, and we’ve invested in building new homes and renovating existing housing through Andium Homes.
We know that people are concerned about making ends meet, and the value of the pound in their pockets, so we’ve increased tax-free allowances. We know that people are concerned about their health and wellbeing in old age, so we’re investing in health and social security for the long term.
I am confident about Jersey’s future.
We’ve come a long way from the fears that followed the global financial crash. It’s not been an easy ride, but it has been a journey of hope.
Hope that’s based on experience and sound judgement – not on blind optimism.
Hope that’s anchored in our determination to do what’s right for the islanders of today and tomorrow, however difficult the decisions might be – not in what’s expedient for politicians.
Hope that comes from demanding the best of people – not expecting the worst.
Hope that’s rooted in this beautiful island of ours; this economic miracle; this blend of ancient and modern; of Jersey and English, French, Polish and Portuguese; of farming and fishing and of finance.
This Jersey. Our Jersey. Our future.
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