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Information and public services for the Island of Jersey

L'înformâtion et les sèrvices publyis pouor I'Île dé Jèrri

Chief Minister's speech to the Institute of Directors 2016

2016 has been a momentous year of change. Most were not expecting the EU referendum to go the way it did, and that decision will have economic and social implications for people across Europe. Few would have expected a world superpower to elect a political outsider as US President, and  who would have expected the recession to be causing continued economic turmoil around the world?

Budget 2017

What happens on the other side of the globe affects us all. This week we have been debating Budget 2017 – a budget for stability, strength and certainty. A budget that keeps taxes low, broad, simple and fair, that reduces taxes on income, helps working parents with the cost of child care and encourages investment, growth and job opportunities for our young people.

Jersey has a long, proud history of embracing change, of innovating and encouraging entrepreneurship. Our Budget puts us in the right position to make the most of any emerging opportunities. We have set a clear plan to navigate these uncertain times, building on the robust foundations of our predecessors.

  • we plan ahead
  • we lay the foundations to capture the economic opportunities of the future
  • we take the difficult, sometimes unpopular, decisions that other governments put off
  • we know that only a strong economy can deliver the revenue we need to secure sustainable public finances

Jersey’s position

There has been much hand-wringing in certain quarters about the state of Jersey’s public finances, the performance of this government and the economy. I would like to put the record straight.

Before the UK referendum result Jersey’s economy was performing much better than expected. We saw 5% growth in 2014 - higher than anywhere else in Europe – and our economy grew in 2015 by 2.2%, more than double the forecast.

The Fiscal Policy Panel said that the impact of BREXIT is still very uncertain and is likely to remain so, at least until negotiations are complete. The sterling exchange rate index at the beginning of December was nearly 20% below its value a year earlier. While this is good for exporters, if it continues we are likely to see higher prices for goods and ultimately services.

While it is positive that the Jersey economy has been relatively buoyant in the first half of 2016, the Panel advises a prudent downgrade of GVA growth figures as a result of BREXIT. The Income Forecasting Group’s latest estimates indicate that income tax receipts will be £4 million higher in 2016, £6m lower in 2017, 18 & 19 and they suggest they could fall to £9 million lower by 2020.

We are doing all we can to mitigate these projections: by supporting a strong economy, getting islanders working and continuing our drive to expand fintech initiatives. Our finance industry has more jobs today than at the peak of the 2007 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 associated revenue through taxing their salaries.

We are now focusing on the challenge of productivity. Non-finance sectors saw productivity increase by 3%. Sectors like Tourism, Sport and Culture have the potential to become even more productive in the future. We are improving productivity by:

  • creating jobs in the technology sector
  • developing strategies for enterprise, innovation and skills
  • securing targeted migration that delivers the greatest economic and social gain

We are being supported in these aims by Jersey Business, Digital Jersey and Locate Jersey
and we have allocated £13.5 million to our Economic and Productivity Growth Fund. This fund is already being used for a number of important initiatives focused on improving productivity.

Senator Ozouf’s focus on Fintech is bearing fruit, and I am looking forward to the publication of an ambitious Digital Policy Framework and a new Competition Framework. We should all welcome efforts to promote a more competitive economy.

Economy

This year has seen many statistics that demonstrate how we are maintaining the underlying strength of our economy:

  • last month 80 fewer people were out of work than the previous month
  • 180 fewer people were out of work than a year ago

The Social Security Minister and her department are to be commended for getting people into work.

  • 186 people started Back to Work supported jobs in November
  • 67% of the jobseekers who started work through JobsFest in October have been kept on by their employer
  • just under half have been offered a permanent contract

These people are having their lives turned around by employment and the schemes we have put in place are helping more islanders into work.

Our anti-discrimination legislation now protects islanders against discrimination on the basis of age, sex, and race. The Environment Minister is taking responsible action to make agriculture and fisheries both sustainable and more productive. Deputy Luce has also changed the planning law to allow people to do more to their homes without permission.

Senator Routier and his HAWAG colleagues have the difficult  task of deciding on access to housing and work. In recent years Jersey has experienced record employment growth. Total employment in June was 60,320 – the highest on record and 2.1% higher than a year ago.

We had 420 more people working in financial services in 2015, 320 more in construction - building new offices and homes, and 560 more in private sector health and educational services - providing care and related services.

We agreed in the MTFP to employ more teachers and health workers. This is positive news that many places around the world would envy, however migration in 2015 was higher than is acceptable in the long term.

We welcome newcomers who bring the skills that Jersey needs, but we must focus migration on businesses and organisations that deliver the highest economic and social value. So we are  introducing new measures to reduce the number of permissions for businesses to employ new migrants.  Last year we refused half of the applications for permanent registered staff, and only granted new permissions where needed – in areas like construction, financial services, private education and health care.

We also want to allocate permissions more fairly across businesses. So we are expanding a pilot scheme we have been running to target companies with a higher proportion of licences for registered staff than other, similar businesses. Over the next twelve months large businesses who employ more “registered” workers than other businesses in the same sector will have their requirements assessed by the Population Office.

The Council of Ministers wants to see more productive businesses making more profits and paying higher wages, with migration delivering the greatest benefit for Islanders. The Population Office will work closely with businesses to achieve this. 

Challenges

When I spoke to you last year I listed some of our challenges for 2016:

  • making progress on reform
  • funding a central administration building
  • developing a long term plan
  • confirming a site for Jersey’s new Hospital

Reform

We have been reducing costs, redesigning services and focusing spending on priority services. Since November 2011 £85 million has been taken out of department budgets, £39 million of that in 2016.

While private sector employment was up 3.1% in June this year, public sector employment dropped by 3.8%. This was the second consecutive annual fall in public sector employment.

Since February this year, staffing numbers in the States of Jersey have been reduced by 5.6% - a reduction of 353 full time posts. We’ve done this with active vacancy management and the voluntary release programme, which remains open. 181 applications for voluntary release have been approved since the programme opened in in June 2015.

Now the pace and scale of this reform must accelerate. That’s why I appointed an assistant minister for e-government. Deputy Wickenden is working alongside the Treasury Minister and the Assistant Chief Minister for digital matters to push forward our technological transformation.

2016 saw our first States of Jersey App – Love Jersey. I hope 2017 will see its use broaden.

Central administration building

We have agreed that Philip Le Feuvre House is the right place to establish a central administration building. We will work on a funding solution in 2017, and in the meantime will continue to move departments and sections together into our existing buildings, improving efficiency and teamwork.

Long term plan

We all know that to manage a successful future you need strategic direction. Ministers are adopting a new approach to long-term planning that reflects international best practice. This year we gathered views from more than 4,000 islanders – you may have contributed to the My Jersey survey yourselves. We found that Islanders care most about community safety and our environment – keeping Jersey a special and beautiful place to live.

They also care about our health service, giving children the best start in life, and are concerned about the cost of living, especially housing. We are using these insights to inform a long-term vision for Jersey.

Jersey is a great place to live. We have to more to make sure it stays that way, and be honest about the things that can make life hard.

Health

We now have agreement on a site for a new hospital. This is a significant step forward and once we have settled on a firm funding strategy we can move ahead with providing 21st century hospital care for our population into the future.

We are continuing to fund the transformation of or health and social care. We are already seeing more ‘out of hospital’ services, avoiding unnecessary admissions and enabling faster patient discharge. Health is recruiting more staff to run the new services, many are locally trained, home-grown nurses.

  • our new tobacco strategy aims to move Jersey towards a smoke-free generation
  • we launched a new Mental Health Strategy for Jersey
  • in the past year the States Assembly has approved new laws on Capacity and Self-Determination, and Mental Health
  • our latest health profile found we have a high life expectancy
  • higher life satisfaction scores than most countries
  • low stillbirth and infant mortality rates 
  • decreasing numbers of deaths from heart disease
  • very low teenage conception rates
  • high coverage for childhood immunisations

Education

A successful economy needs a highly skilled workforce. We have increased by £2 million the £10 million of means tested funding for Higher Education. We know we need to do more to support our students, so the Treasury Minister is working with the Education Minister and his department to explore a range of affordable options.

  • we are raising standards
  • we have established a new curriculum that gives the French language renewed importance
  • we are liaising more closely with families and providing more autonomy for schools 
  • links with China continue to develop, opening up international opportunities for our teachers and young people

Housing

We published a new Housing Strategy in March. It sets out the Minister’s vision for all islanders to be living in affordable, good standard, secure housing.

Our social housing providers are building more homes. Andium built forty-four new homes at Lesquende and has a major refurbishment of Caesarea Court underway. Planning applications have been approved for La Collette Low Rise, Le Squez and Summerland site transfer.  Andium plans to have built a thousand new affordable homes by 2020 and achieve the Decent Homes Standard on all properties by the same time, four years earlier than planned.

We are also working with other social housing providers to cater for the diverse of needs of an ageing society. The new office space in the International Finance Centre is a great opportunity for private developers to build homes elsewhere in town, and we are now revising the Waterfront Masterplan, setting a clear direction for the remainder of the site.

It’s not just about more homes, it’s about better homes. The Rent Safe landlord accreditation was launched in July 2015, supporting professional landlords and good quality housing.

Transport and Infrastructure

Transport and Technical Services continues its transformation. Reviews of the Parks, Gardens and Cleaning Service were completed earlier this year and a new organisational structure has been put in place. All these services have been redesigned and there are approximately 100 fewer full time posts. The private sector is now contracted to do some of the work - at less cost to the public.

We have been working on the new sewage treatment plant, the new Police Station will provide a much needed facility while also releasing land at Summerland for affordable housing. Jersey Property Holdings has been providing project management expertise and working with the Health and Treasury teams to bring forward the now approved proposals for the new hospital.

Phase 1 of St Peter’s Valley Path opened in October, the next phase is underway and the new path is due to open by the end of next year. More than 300 people have taken advantage of the grants for e-bikes. Feedback says these are replacing car journeys and riders are reporting a positive effect on their wellbeing. We have seen an 18% increase in bus passengers since Liberty Bus took over the contract two years ago. 

The number of services has grown by approximately 36%. That’s £1.4 million worth of additional services over the previous contract at no additional cost to the public purse.

The department has been pressing on with improvements to our primary schools. Work has been completed at Springfield, d’Auvergne, Bel Royal and Plat Douet. Work has started at Trinity School and is due to finish early next year.

We will also assess the risks posed by climate change and develop a costed programme of action to protect our essential infrastructure. This is critical both for our own population and to underpin our status as an economic centre that attracts long-term inward investment and talent.

Public Safety

Ensuring public safety is vitally important, so it’s encouraging that recorded crime fell by 2% in the last year and by 23% in the last five years. This is testament to the investment in our excellent police force and their hard work and dedication in fighting and deterring crime.

And it seems islanders agree that the police are doing a great job. In the recently published Jersey Opinions and Lifestyle Survey 82% of adults agreed that our Police do a good job of policing, and nine out of ten of the adults that had contact with the Police agreed the officer was either helpful, polite or listened to what they had to say.

Corporate tax

Jersey knows the value of a healthy business sector and we will continue to maintain a tax structure which encourages investment, growth and job opportunities, particularly for our young people. Now is not the time to be creating uncertainty for our business community and I remain committed to zero-ten.

This tax regime was introduced in 2008 across all the Crown Dependencies to protect our economies. It has not always been popular or fully understood, but zero-ten has protected the 13,000 jobs in the finance industry and the income we receive by taxing the salaries of those employees.

it has maintained the strong economy that ultimately pays for our public services. Without its introduction Jersey, Guernsey and the Isle of Man would have seen their economies, communities and ways of life devastated.

However, no system is perfect and we are reviewing the way zero-ten works. We are asking companies taxed at 0% to provide more information to the Comptroller of Taxes. Businesses in the financial services sector taxed at 10% contribute around £70 million in corporate tax and £10 million in ISE fees to the Treasury.  We want to see whether we can adjust the scope of the 10% and 20% corporate tax rates, to bring more companies into those bands.

Like Guernsey and the Isle of Man, we need a zero rate to maintain tax neutrality and the competitiveness of our finance industry. If we want to trade in EU markets this rate must apply equally to locally and non-locally owned companies. The information we collect will inform future discussions about our corporate tax system.  

Brexit

As we enter a period of increased uncertainty as a result of the UK’s decision to leave the EU we must remember that while Brexit will bring challenges, it also brings opportunities. Jersey is well prepared -  thanks to extensive contingency planning.

A Brexit triumvirate has been established consisting of Senators Bailhache, Ozouf and myself. The Ministry of External Relations has been reorganised and £3.7 million has been allocated to support Brexit work from 2016-2019. A Brexit planning unit is now at the heart of Government, responsible for coordinating all required policy analysis, communication and engagement. As part of this work the unit will be coordinating meetings with government departments, related agencies and public bodies.

Jersey has been trading with Europe from outside the EU for many years. This will be new to the United Kingdom and we have offered to share our experience with the new department that is dealing with the UK’s exit from the EU.

The recent reports on ‘Jersey’s ‘Value to Britain’ and ‘Value to Europe’ underscore the positive economic benefit that Jersey generates for our neighbours. The reports estimate that the Island adds a net £14 billion to the UK economy, supporting an estimated 250,000 jobs. And Jersey has attracted accumulated investment to other EU countries from non-EU sources of €188 billion
That’s 4% of the EU’s total stock of liabilities. We look forward to continuing to play an important role in stimulating tax receipts, jobs and economic growth in these markets into the future.

Future challenges

Over the next twenty years our community will face unprecedented opportunities and challenges.
We are reviewing our Social Security system to establish how it needs to change to support the growing number of pensioners. We will embrace the technological innovation that is changing the way we live and work. As old jobs disappear, new opportunities will open up for digitally trained school leavers.

This government has a number of tasks to compete before the end of 2017:

  • we will enhance the protection of our community through legislation on the regulation of care and sexual offences
  • by completing work on our disability strategy
  • by maintaining our focus on improving the life chances of all children and their families
  • by continuing to improve the quality and supply of affordable housing
  • we will make better progress on improvements to our town
  • we will present a new population policy
  • we will return with firm proposals for funding Higher and Nursery Education
  • we will have a funding model agreed for our new hospital
  • and – most importantly - we will work closely with the UK and EU to protect Jersey’s interests as the UK moves towards triggering Article 50

Jersey approaches these challenges with many advantages: our business friendly climate, our skilled workforce, and a world-renowned financial services sector that contributes 42% of GVA to Jersey’s economy. This sector also feeds into our other important sectors, like tourism, hospitality, construction and retail.

We will encourage inward investment and innovation so we can sustain a healthy job market, low unemployment, high quality public services and strong public finances. We have little debt and significant reserves. Even if we borrow up to £400 million to build a new hospital our debt to GDP ratio will be no more than 16%. That compares to the UK’s 88% the US 104% and Germany 71%.

Our Strategic Plan focuses on improving health, education and infrastructure, boosting economic growth and maintaining sustainable public finances. Our Medium Term Financial Plan provides funding for essential services and re-prioritises existing expenditure.

As I said at the start – 2016 has been a momentous year of change and I expect 2017 to be no different.

We have strong economic and community foundations. We must fight to preserve and build upon them.

Jersey is a great place to live and work. This government is committed to making the right long term decisions to keep it that way.

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