THE problem: Jersey’s economy is failing on many different measures.
- Despite a huge increase in population since 2007, the economy is still 10% smaller than it was ten years ago (UK +10%)
- The average standard of living for Jersey residents has declined even more – down by almost 20% in the same period (UK +3%).
- Worse still, productivity has fallen by more than 20% (UK 0%).
These are shocking figures. The only redeeming feature is that wealth per head of population remains much higher than in most countries.
The Council of Ministers believe in a failed policy of increasing population to stimulate growth. It has got them almost nowhere. But it’s not just the shrinking economy that is a problem. Jersey effectively has two economies.
- A high-value, high-pay, high-wealth economy, centred around finance.
- A low-value, low-pay, economy centred on tourism and farming.
In an island of such overall wealth, it is a matter of shame that up to one third of the population are struggling to make ends meet. Neither is this just about morality: desperation is a poor way to get the best out of people.
Jersey needs a new deal that will set the economy on a better, more productive course, end the scandal of poverty in a wealthy island, and ensure that every Islander has the chance to contribute their best.
- The only sustainable way Jersey can reverse the decline of the last few years is to increase productivity. Rising productivity will increase the competitiveness of the Island’s economy, increase tax revenue to pay for vital services, and increase personal wealth.
- To help achieve this we will increase spending on education and training (discussed later in this manifesto).
- We will steadily increase the minimum wage until it reaches the level of the living wage. As well as directly reducing poverty, this will act as a stimulus for businesses to invest in technology to increase productivity.
- A second priority is to diversify the economy. Although its implementation was botched, the idea behind the Innovation Fund was a good one, and we would like to expand it into an Innovation Board. This would add expertise and mentoring from significant figures in the business community to the financial support currently offered.
- Digital Jersey has successfully championed the rapidly growing digital sector, and similar support should be considered for other emerging sectors such as renewable energy and sustainable farming technologies. Jersey’s small size should be an advantage when it comes to innovation; we can be nimble and quick to develop new ideas.
- For the foreseeable future finance is likely to remain the bedrock of the island’s economy. Jersey Together acknowledges that good work has been done to position the island’s finance industry as class-leading in terms of compliance, and this work should be continued.
THE economy is the beating heart of our island. Yet in recent years that heartbeat has become irregular. This is something that should worry all of us, whether we work in the private, public or third sector, whether we’re rich or poor, old or young.
Anaemic growth rates aren’t all our fault. Our number one industry, banking and finance, has been through a torrid time – not just in Jersey but worldwide. Yet the response of recent governments has been spasmodic and sometimes chaotic.
Our economic policy is simple: deregulation where this can be done without harming the interests of consumers or employees; privatisation of all States-run businesses; greater accountability (and clearer terms of reference) for quangos like Digital Jersey where public money is at stake; and stronger support and encouragement for start-ups and other entrepreneurial initiatives.
Diversification has been glacial. Worthwhile initiatives like Digital Jersey have delivered little for want of proper planning, scoping and oversight. Public money has been squandered in half-baked film financing and the ill-fated Jersey Innovation Fund. The aircraft registry is a costly embarrassment. Notwithstanding the unceasing efforts of Jersey Finance, the crucial finance sector has too often been left to fight its own battles. Competition regulation is an important consumer safeguard but the regulator has grown far too big for its boots. Well-meaning intervention in the employment market has probably done more harm than good, making it harder for small and struggling firms to remain viable.
Ill-planned new business taxes haven’t helped either, especially in the hard-pressed retail sector, already battling GST, rising costs and intense competition from web-based UK merchants.
Government intervention is often maladroit. Construction is a case in point. At the beginning of the decade the industry suffered a sharp decline in orders, resulting from the recession.
The States made matters worse by cancelling or postponing projects of its own. Now that activity has picked up, heavy-handed States investment in housing and office development (not to mention the proposed new hospital) is creating the opposite problems of bottlenecks and wage inflation. Brilliant.
Meanwhile, the States can’t or won’t let go of commercial enterprises that in virtually all major western countries have long since been devolved to the private sector. Our government owns and controls a telecoms business, electrical generation and distribution, water supply, the postal service, the airport and harbours, commercial property development. Why? All these activities absorb public capital and large amounts of ministerial time, as well as creating financial risk for the Treasury.
Visit Jersey shows what can be done when the tentacles of States control-freakery are loosened or removed. We need to disengage government from commercial entanglements that achieve little or even make matters worse, while moving towards a more diversified and deregulated economy: one where finance remains in pole position but is complemented by a range of other low-footprint activities including tourism, digital businesses and creative activities such as advertising, graphic and fashion design, film-making and the arts.
WE make no apology for putting the economy at the heart of our manifesto because every aspect of our way of life, that is so precious to us, depends on it.
The present government has failed to grasp that the finance industry is no longer providing huge surpluses and it has gone on spending as if it believes we’re experiencing a minor blip and normal service will be resumed. Circumstances have changed – for ever. We must come to terms with that change. Government is not the same as business, but it should be more business-like in its approach. A business with a good product and an established customer base, as Jersey has, can be a victim of changing circumstances, but in tough times good businesses review their strengths and weaknesses, examine opportunities and threats.
We have a finance industry of high quality; it’s smaller and earning less, but it’s well led, well managed and has proved highly adaptable. Advance Jersey will continue to support and encourage the industry’s attempts to grow and further develop. Tourism is at the beginning of a period of long-term, sustainable revival. Before finance it was our principal source of income and with proper support and encouragement can become a strong second string to our fiscal bow. The Advance Jersey government will treat tourism with the support and encouragement that previous governments have shown only to finance. The good news is that the two industries are not only compatible, but complementary, and with equal consideration can grow together.
Agriculture, nowadays largely Jersey Royals and dairy farming, is much more important than the one percent of GVA that it provides. The industry plays a vital role in maintaining our precious non-urban areas – more than half of Jersey is under cultivation – and thus helps maintain the quality of life we enjoy and which visitors find so attractive. Other notable contributors, retail and construction, are to a large degree dependent on other economic activity. Shops sell more goods when there are more visitors and the construction industry relies on growth in other sectors to make its living.
As for new economic activity, little progress has been made on diversity; some attempts like the Jersey Innovation Fund have been badly bungled. The £60 million Gigabit Jersey project, which led to Digital Jersey, has to date produced no quantifiable return on the investment, but that does not mean the money has been wasted. Digital industries may yet prove to be a valuable contributor and Advance Jersey will look closely at progress to date and consider how best to facilitate further growth. Importantly, every sector which enjoys financial support from government will be expected to demonstrate a satisfactory return on investment.
So, we have existing strengths and at least one new opportunity; among threats and weaknesses are the present government’s continuing policy of trying to run commercial enterprises. Advance Jersey will systematically withdraw from those activities that are best run by the private sector. A huge and continuing threat to a thriving economy is heavy-handed negative government interference, most commonly referred to as red tape. As an immediate step we will require every proposed new legislative measure to be assessed for its economic impact. Those plans seen to be clearly damaging will be sent back until another way can be found to achieve the desired effect while allowing business to get on with creating wealth for the whole community.
‘It’s the economy, stupid’, a phrase coined during Bill Clinton’s 1992 presidential campaign, may appear offensive and is not the language of Advance Jersey, but it contains the fundamental truth that without a flourishing economy nothing can be achieved.
TO contradict and paraphrase the famous Clinton campaign slogan: it’s NOT (just) the economy, stupid.
Jersey’s identity must not be defined by the offshore finance industry which has dominated the economy, and the priorities of senior politicians, for long enough. It is time to get serious about a more balanced economy, built on the resurgent strengths of Jersey’s more naturally fitting industries of tourism and agriculture, each of which will require the systematic investment of public funds in both infrastructure and intensive career training opportunities.
A statutory living wage should be introduced to underpin these developments.
Jersey is blessed with an abundance of home-grown talent and creativity among its young people. As well making traditional careers more appealing to them in general, Big Plough will propose the establishment of low-rental enterprise zones for Jersey-based start-ups, with the emphasis on tourism, the arts, digital development, sustainability and social support initiatives Following the reintroduction of corporation tax, short-to-medium-term exemptions will be agreed for such enterprises.
The finance industry has generally benefited Jersey in its 50 years of development but cannot be relied upon to do so in 50 years’ time. As it evolves, new ways to take advantage of the excellent legal, accountancy and other services it has generated will be encouraged, such as the development of a world centre of excellence for the growing international philanthropy movement.
Political responsibility for financial services will return to the Economic Development Minister, whose Locate Jersey division will cease to provide concierge services for the super-rich, something which should be left to the private sector. Plans by the new States CEO to rename Economic Development the ‘Growth’ Department will be rejected as presumptious and politically motivated. Some or all of the States grant to Jersey Finance will be redirected to agencies of tourism revival such as Jersey Heritage, who will be invited to take over the management of Fort Regent in partnership with private enterprise.
VOTING… FOR A BETTER LIFE
THE Jersey economy is dominated by the provision of financial services. This sector has grown up since the 1960s and the government has consistently worked to maintain and enhance Jersey’s ability to attract financial-services business. However, the local government cannot control the external environment within which these services are provided and great uncertainty currently exists in respect of the impact of Brexit on financial services provided through the UK and Jersey.
However, there are other important sectors where the government can actively shape the future. Agriculture and tourism have traditionally been dominant sectors in the Island’s economy. While they are now financially less important, they continue to play an important role. Both areas can contribute to creating a range of good-quality careers for local youngsters to pursue, as well as helping to maintain a sustainable natural environment.
Visit Jersey has an ambitious target of attracting one million visitors a year. It has developed a good programme of sporting events but there is still a long way to go before the Island can boast a different festival for each week of the year. Our maritime heritage should be prominent amongst these activities. Boat-building, fishing, diving, sailing and cruising should be promoted. Holidays could be based around taster sessions across a range of activities or a more concentrated tuition course to acquire new in-depth skills.
Countryside activities and rural crafts also provide potential activities. In each case there is an opportunity for local people to acquire specialist skills and to run a small business or co-operative providing services to both tourists and residents.
In future, there should be less emphasis on the use of cheap migrant labour and much more attention paid to creating high-quality jobs and providing appropriate training for local people to fill these positions.
Supermarket shelves are full of cheap fresh produce from around the world and it is becoming increasingly difficult for Jersey farmers to compete in this international market. The traditional model of importing farm labourers who will work for minimum-wage rates is also breaking down, with recent suggestions that labour would soon need to be recruited from Africa. Farmers are also under pressure to restrict their use of agricultural chemicals, which are now routinely contaminating fresh-water supplies.
The government should undertake a major review of agricultural policy. The export market for Jersey Royals should be scaled down and land released for more sustainable and environmentally friendly activities.
This would improve our level of food security by increasing the proportion of fresh food produced in Jersey. Some of this production would be based on a community farm model, with residents from an area helping with daily tasks. Other land could be managed on a much less formal basis, providing wildlife habitats. Appropriate sites could also be developed as botanic or formal gardens allied to a new agricultural and horticultural study centre.
This diversification would increase the number of career paths for local people and widen the range of tourist attractions.