27 September 2006
Treasury and Resources Department |
27 September 2006 |
|
Minister for Treasury and Resources, Senator Terry Le Sueur is up-beat about the first real term growth in the Island's economy for 5 years. A report, compiled by the States Statistics Unit, has revealed that the local economy, as measured by Gross Value Added (GVA), grew by 3% in real terms between 2004 and 2005 to reach £3.4bn.
Senator Le Sueur commented: “I am very pleased with these results as they make the commitment we made in the Strategic Plan of 2% per year, real term growth for five years, an achievable target. At a time when we are looking for real economic growth, a change of this magnitude in GVA is a very encouraging sign”
He continued:”This demonstrates that the business community feels increasingly confident now that the States has delivered coordinated and forward looking policies which will create a framework for the future. We hoped that creating such a framework would provide the conditions for economic growth and this figure shows this is the case.”
The context in which these figures should be considered is the Fiscal Strategy for the Island. Broadly speaking the Strategy is made up of three parts: 1) Tax reform, 2) Reduced States Expenditure and 3) Economic growth.
1) Tax reform
The States have approved tax reform and committed to a number of new policies. ITIS has been in place for nearly a year now and we're confident that we’re on track with the projected figures of £3m of additional tax revenue. The States has also approved ‘20 means 20’ which, it is expected, will bring £10m in taxation over a period of five years. Other parts to the reform include 0/10 and the Goods and Services Tax (GST). Public consultations on both 0/10% and GST have now concluded and feedback will be published over the next couple of weeks, with legislation to be presented to the States by the end of the year.
2) Efficiency savings – Work is ongoing to achieve a more efficient and cost-effective States of Jersey. The States has agreed that by 2009, the total savings target for the whole organisation in all areas of work is £20m per annum. The States has just approved the Annual Business Plan which confirmed the expenditure allocations for 2007, and these now include £14 million p.a of the £20 million target.
Significant progress has been made in the transformation of States support services, and these are now largely complete in the areas of financial services, ICT and HR. Substantial savings are also being made in procurement and property holdings with support services contributing over £10m p.a. to the overall targets.
Further States-wide initiatives, including the Customer Support Centre, are supplementing this programme which is on track to deliver at least £20 million p.a. by 2009. It should be emphasised that these savings are not just a one-off; these will represent permanent reductions in States spending of £20 million in each and every year.
3) Growing the economy – Today’s report shows that economic growth has been achieved in 2005 and is within our grasp in coming years. The economy, when measured by GVA grew by 5% but in real terms (i.e. adjusting for inflation) it increased by almost 3%. This figure highlights the importance of the combination of the three factors of the fiscal strategy. When efficiency savings within the States of Jersey are made and economic growth is achieved, changes in taxation are minimised. It is therefore expected that the predicted levels of taxation will be sufficient.
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Notes to editors:
For further information please contact Terry Le Sueur on 863994 or t.lesueur1@gov.je
- Gross Value Added (GVA): shows the value of economic activity taking place within Jersey and permits a breakdown by each sector of the economy.
- A copy of the report is available from the States website, www.gov.je or by contacting Duncan Gibaut from the Statistics Unit on: d.gibaut@gov.je
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