'Aim is not to force down house prices'

TREASURY’S plan to scrap mortgage interest tax relief is not designed to lower house prices, its minister has said.

TREASURY’S plan to scrap mortgage interest tax relief is not designed to lower house prices, its minister has said.

Gavin St Pier, pictured, clarified the position after people commenting on the Guernsey Press’s sister website thisisguernsey expressed concerns that phasing out the relief would put them in negative equity.

‘It is not a policy objective to drive house prices down, because that is obviously not a very wise policy.

‘We are not saying property prices will, or should, come down. We are saying the rate of increases will slow if we do not have taxpayers subsidising property purchase,’ he said.

Vale poll-topper Deputy Matt Fallaize has drafted an amendment seeking to defeat Treasury’s proposition, saying the department put the ‘cart before the horse and the States needs to rearrange them’.

Comments for: "'Aim is not to force down house prices'"

Scarlett

We all 'subsidise' many things we don't have use of ourselves over here, Mr St Pier....

all those bloody state of the art States Houses and GHA projects (funded by home owners and renters in the private sector), children's benefits (funded by the childless), unemployment benefit (funded by the employed) and a variety of worthless idiots who run this island's gold plated pensions (funded by everyone)...

yet I don't see you calling those 'unfair' and scrapping those.

I presume you're not looking at the tax breaks property investors and Trust companies receive either, both of which you benefit personally from.

Dave Jones

Scarlett

Just a small correction, the GHA properties are funded in the main by their own funding facility and not from the taxpayer.

It also has to be remembered that all future maintenance of this GHA social housing will not come from the taxpayer either.

Scarlett

thanks, Dave, I stand corrected, Mr St 'Fair's comments have somewhat irritated me.

Is it that the States provide the land for GHA developments? Does the GHA pay for that land?

Dave Jones

Scarlett

The land is part of the grant; however we have a catch all clause in the framework agreement that prevents the GHA from selling any of the properties or using them for anything other than rental or partial ownership.

The final clause is that should the GHA mis-manage the properties or get into significant financial difficulties, then the properties revert back to the ownership of the States and of course that includes all the land.

Eric

Looking at 2013 budget it would appear that the taxpayer funds approx. 45% of the revenue costs associated with the Programme (£6m vs £7.8m in rent). I would be interested to hear who also provided the £55m funding for the capital investment in proprty? The taxpayer? Is repayment of that capital debt included in the ongoing CHP budget? Not that I can see.

Can't help but feel Scarlett's point is valid, the GHA may be a reasonable outsourcing solution but under the skin it's still funded by those that don't directly benefit from it.

Dave Jones

Eric

The 6 million we get back from T&R in in lou of money forgone for rent rebates given to tenants on low incomes. The funding mechanism for the GHA is as follows.

We give a percentage grant towards any development depending on size and cost of the project, the average grant is around 35 percent and that includes the site values on sites owned by the states which are handed over for new development. The rest of the funding comes from the GHA's own borrowing facility.

Some of the smaller developments have had grants as low as 10 percent and others such as Cour du Parc will have no grant from the states at all.

The real benefits from this method of funding social housing projects and the Partial ownership scheme, is that the States get the entire housing projects for a fraction of the cost and no future financial upkeep of the properties.

If all this social housing had to be funded from general revenue half of it would never have been built because the states simply couldn't have afforded it.

I hope this helps.

A Voter

So, trying to unwrap a bit further what the Minister has helpfully explained, it seems that there is capital injected by the States into GHA that is then not available for any other government purpose.

That is a subsidy (indirect) to anyone who enjoys a GHA property which was grant aided.

I am wholly supportive of intelligent use of government money and like Eric I think that this is probably a good solution, cheaper than the alternative - or at least allowing more homes per government pound invested.

So no criticism meant here.

But getting back to the MITR topic (sorry) I think the relevant point is that those living in GHA properties (in the main) are benefiting from this government subsidy. I have limited knowledge in this field, but would hazard a guess (which if wrong can be corrected) that some (many?) tenants of such properties may also be in receipt of other benefits that those on say the median income and above would not receive? If so then such individuals / families are receiving yet more government subsidy.

Again that is fine: we live in a society that redistributes money all over the place out of principles of fairness and equity etc.

In this context, though, I think that is important that before government targets one discrete group for significant subsidy reduction (eg. MITR removal) that there needs to be (a) a clear overarching policy in place (b) all the data available analysed (c) all options properly appraised (d) after due process (consultation etc) published recommendations for a broad spectrum of concrete individual actions, then (e) a vote in the States on these recommendations.

And one of those actions in the future would probably include some changes to MITR, but others might adjust other aspects of the tax and benefits systems and who knows maybe consider regulating the rented sector to get some more fairness in there? We should be looking for innovative solutions - like the GHA funding arrangement is innovative compared to what went before.

But I think we are some way from being at that point, which is why I think lots of people consider that it is premature for the detailed issue of MITR to be put to the States in December 2012.

If the electorate voted for change, for me that would include more, not less, rigour in government decision making. In my view the approach to date that I see on this issue from government has the classic ingredients for leading to a poor government decision.

islander

Dave have you ever thought of investing into the cost of building high story flats the chinese way[two weeks completed]temporary housing licences and the problem solved.No more waiting list for affordable accomnation.

No need to bring property value down.

a win for all

Dave Jones

A voter

The money given in grants to he GHA comes from the Corperate Housing Fund. Not from general revenue. It is a fund that has been built up over the years from the repayment of states loans, from the sale of our incomparable stock, by that I mean individual properties scattered across the island which were expensive to maintain, with the money recouped better spent on new housing development. The remainder of the fund comes from the money paid back to us from T & R in leu of our rebates and of course the rents we collect.

By having this fund it ensures there is MORE money available from general revenue for other government purposes to use your term. This system of funding has allowed the building and refurbishment of more social housing

Than would have been at all possible by relying on capital grants from general revenue.

Once the rebate scheme is handed over to SSD where it should be, we will no longer receive any money from T & R but we will be getting the full value of our rents which will be more than adequate for housing to continue to provide lots of new social housing.

bcb

Well said Scarlett my thoughts exactly.

Neil Forman

Scarlett

Good post! ( again )

Don't knock DJ too much, he's one of the good ones.

Scarlett

oh, no, genuinely not knocking Dave at all, Neil...

after he announced his personal dislike of expensive, imported 'consultants' (and seeing his Dept spends approximately 'nil' on them), I may have just become one of his biggest fans and will love him forever...;)

Just honestly interested to know how the funding for GHA works, as I obviously don't know....

is Eric's post correct?

Neil Forman

Scarlett

I will have a look, I don't know is the honest answer but I will find out.

Dave Jones has answered Eric and seems to make sense. I know Housing came in just under 15% under budget in 2011 so something is working.

Will let you know.

Eric

Thanks to DJ for his response, it's a robust defence of the current funding mechanism.

It doesn't, however, counter your argument that GHA residents are subsidised by those that don't benefit from the scheme's existance, and that that subsidy is as good an example of inequality as MIR.

The GHA still consumes:

1) £6m/yr "in lou of money forgone for rent rebates" - a subsidy

2) An average of 35% of the capital cost of development

3) The loss of capital that could have been recouped through the sale of said properties/land.

4)

As I've suggested above, the scheme seems to work for the moment, although you can't really tell until the majority of the initial capital is spent and the scheme enters steady-state. Regardless, the point here is not the validity of the scheme but the cherry-picking of increases to income streams based upon the perceived ability of the contributors to absorb the pain. It's not strategic and it smacks of lazy budget development decisions made to fill gaps their internal efficiences are supposed to be filling.

bcb

Your right Neil we could do with more like Dave.

Neil Forman

bcb

I agree

Dave Jones

Eric

We get 6 million back from T&R but we don't spend 6 million in grants to the GHA.

As for the sale of land, the land values are included in the grants. Our get out of Jail card is that the land can only ever be used for social housing or Partial ownership homes. and should the GHA cease to trade for any reason the whole lot reverts back to the ownership of the States. it is a really tight deal.

Portlandgrey

What a mess.

If only there was someone that could be employed to explain it all to us without putting their foot in their mouth at every opportunity.

Oh, hang on....

http://www.thisisguernsey.com/news/2012/06/28/need-for-communications-officer-is-defended-after-deputies-challenge-idea/

Ted

The problem with this policy is that forcing people into the private rental sector will drive up rents. The rich landlords will get richer and the poor will get poor. Nice going Gavin, another well thought out policy.

We subsidise states housing tenants and I don't have a problem with that.

This policy will be fine with me if the States double or treble the amount of social housing available and then increase to a sensible level the wages a couple can earn before having to move into the private rental sector.

Get rid of the upper limit for social insurance payments it is unfair to the low and middle income earners to give tax breaks to the wealthy!

Scarlett

i believe Mr St Pier is a landlord so he's probably not too bothered about that, Ted.

tulip

I didn't realise that, what a disgrace.

Scarlett

check out his Declaration of Interests, tulip.

Property investment and his home held in Trust for some reason I can't fathom.

tulip

This is getting embarassing.

So they are taking away MITR in the belief that it will assist first time buyers, but not because house prices will go down?!

I've rarely heard anything quite so illogical.

It's quite obvious then that the rich policitians who have presumably paid off their mortgages, presumably with the benefit of MITR and massive house price increases, no longer wish to subsidise those who haven't.

Please stop digging yourselves into an even deeper hole and just scrap the idea of doing away with the relief altogether!

Realist

Ted - perhaps worth remembering that "rich" Guernsey landlords pay 20% of their rental income back to the States in Income tax.

Privately owned rental accommodation does have its place in society - there are a lot of people who cannot or do not want to buy their own home and who cannot qualify for social housing and private rental is their only real option.

tulip

Realist, "rich" landlords can find ways around the 20% tax quite easily, and the social harm of rampant buy to let far exceeds the benefit.

Cher Eugene

"...find ways around ..." How?

Define "social harm"

Wild, unsubstantiated statements like these do great harm to your case.

tulip

Cher Eugene, I'm sorry that you feel it necessary to be a pedant.

I don't wish to set out the ways around paying 20% income tax on rental income on this forum, however there are many means of reducing the figure.

As for social harm, first time buyers have to compete with buy to letters, driving the price of properties up and up and up preventing many from ever getting onto it, thereby facing a lifetime of renting. I am guessing you are a property owner?

concerned

It is not a policy objective to drive house prices down, because that is obviously not a very wise policy.

Utter, utter b*ll*cks. Not a wise policy for the wealthy, maybe. House prices need to come down other wise you are denying the our children and grand children the chance to own their own houses. This attitude shows complete selfishness and contempt for the future generations.

Zab

What! "It is not policy to drive house prices down because that is obviously not a very wise policy.".

Really, apart from the mortgage providers who is served by this state of affairs? All accomodation costs do here is make the island uncompetative and cause misery for many.

The recent furore was about people not being able to afford to live and still the message does not go in.

The bottom and the middle are and have been for some time below the income levels needed for this over priced rock. Do T&R look to sort it out no, they look to grab more and pretend that making peoples lives worse is going in the right direction. The final icing on the cake is the bleating that we can not afford the Social Policies to fix the problems they and the States as a whole have created.

You have the Income Standards figures, raise the incomes, lower housing costs or accept the Social invoice on homes and benefits.

Zab

Gavin,

Even the overall performance amber traffic light in the background is optomistic.

Dani

He can't argue this redistribution on an equitable basis by increasing personal allowances. Maybe I'm missing something because Gavin is a chartered tax adviser.

If he increased the personal tax allowance by £900 for everyone this would be offset against your income. It will save tax at 20% which is a maximum of only £180 saved.

He said the money should be distributed equitably - I interpret this as it should go to those who need it. If everyone's personal allowance goes up it will not increase for those on lower incomes but those on high incomes who it will be of little value to. £180 to someone on £100,000 for example is barely noticeable and kind of wasted in equitable terms.

At least the MIR is directed at people to help pay for their homes which does specifically help lower to middle income earners. I believe the interest earned on a £350K property annually would be more than £900 given in allowances.

I also take issue with his statement also that if you have a mortgage of £350,000 you are among the wealthiest on the island. That's not correct. You may be doing well for yourself but your not among the wealthiest by a long shot.

You put down a 10% deposit and legal fees (10K) which is the hard bit. Most people have family help to get the deposit together or have them guarantee the whole thing. This is where people could really use with some help.

So £350,000 - £35,000 = £315,000. Between a couple assuming 5 times their salary that's £31,500 each. The median is £28,340 in 2011. It may have gone up ever so slightly since then. So just above the average couple can get a mortgage of this value. I'd also like to point out it is less than a States Deputy's salary! I know they voted again on them so may have been revised but the salaries are all below:

http://www.bbc.co.uk/news/world-europe-guernsey-16768467

I'd also like to point out people save for a long time to get their deposits because they know they want to best that they can get within their means as they are going to be in their property a long time and will have to be suitable for what they need. They don't want to fork out another £10K just to upgrade slightly.

I take note that this is slightly higher than the median, and the salaries are a lot higher than for some people.. (and these are the people who should be helped) but this is Guernsey . The wealthiest on this island are on salaries much higher! No doubt about it! We have a very high proportion of legal and finance professionals. I'm not buying it for one second someone on £31,500 is among the wealthiest on this island. No way.

Dani

Sorry. Meant to say the allowance increase will not only go up for those on lower incomes but for higher earners too.

Spartacus

Dani

Regarding your observations about personal allowances I had the same thoughts.

I agree with your interpretation re need based benefits. I don't see the point in taking tax from people with one hand and giving it back with the other. Social security is different as that is insurance.

Regarding those with mortgages over £350K the household income would need to be at least £70,000. The £315,000 mortgage in your example will still qualify for relief. Many households are on one income bringing in under £28,340 for the total household income.

His assertion that these people are the highest earners/mortgagees is justified because they earn above the median i.e. in the top 50%. He wasn't talking about the top quartile or top 10% earners. £70,000 household income is wealthy by any standards but some don't appreciate it.

I don't understand the justification for helping people with deposits.

DanI

I'm not sure you do agree with me. I dont see the pointbof the redistribution. It's less equitable and therefore not what he wants to achieve.

DanI

Also most people on mortgages do have two salaries. Otherwise no-one can afford them. Especially with the cost of childcare. So the median salary needed is £31,500. Maybe when people got them on one in the past but is not realistic now.

This is slightly above median. Just because it is a smidge above the median it does not make them among the wealthiest on the island. Doing well for themselves yes but not among the wealthiest. I don't really think anyone is in the position to judge whether they appreciate it or not. And among the wealthiest does mean among the very wealthy when applying that statement to our economy and it is what that complies.

The funny thing about statistics is they can be manipulated. If we took the average wage in Guernsey it would be higher than the median which is something to bear in mind. This is because of the high number of high earners we have proportionally to other jurisdictions drags it up. These high earners are those that are are the wealthiest in society.

Looking for the average salary I get £36,480 from average salary survey. The states do not publish in the book of statistics. Other figure was £27, 037 but that was in 2003 10 years ago!! Inflation would have increased it. That latter figure is a states figure. So if you take average salary you are not in the top 50%. And you must remember in Guernsey there is a big ceiling which does stretch the ceiling on who is wealthy.

I mentioned deposits because they are part and parcel of getting a mortgage and people struggle to get them together. As house prices have increased you need more. Unless you have parents willing to put their own homes down as collateral or help with the lump sum it makes things very hard. I remember reading not that long ago that only a very small percentage get a deposit without help anymore. If you get a property at the lower end of the market that is £250, 000 you need about £35k incl legal fees. People on low income have to get that together whilst renting. People tend to stay at home or its not possible. If they receive more help to get a mortgage they would be in a better position. I think people can pay more in rent than they would for a mortgage on a monthly basis (needs verifying and dependent on circumstance) and don't have anything to show for it. Maybe if the state's offered low interest loans to get deposits for first time buyers or something similar I think they could really help a lot of people out.

Spartacus

I'm sure I do agree with you about redistribution but we can disagree to agree if you like :-)

I have checked the Facts, Figures and Statistics (FFS)

median earnings 2010 £27,430 p15

http://www.gov.gg/CHttpHandler.ashx?id=2305&p=0

Median earnings includes part time workers whereas I gather the estimated average only includes full time pay. Your point about some who are on extremely high wages must mean there are a lot more who are on very lower wages dragging the average back down.

£31,500, or household income of £63,000 according to your 5 times salary would only get you to £315,000 mortgage which is not in the category that Gavin St Pier was referring to as the wealthiest which are those who can afford mortgages over £350K.

Maybe what you are trying to say is that £70K household income is relative wealth not actual wealth? In which case surely the point is that if anyone needs help it is those in relative poverty not those in relative wealth.

Guernsey Housing Association seems to be the current solution for first time buyers, so assistance is already there.

GM

Dani

You are correct about the huge challenge of raising a deposit. For many it's impossible without family help.

The problem is that if the States were to step in and provide (say) a 10% deposit, then it's simply extra debt which has to be serviced and repaid by the borrower. What exactly does that achieve? Maybe we need a shared equity scheme where the States would become the 10% owner of such properties and simply charge a "rent" based on that 10% share, and also participate pro-rata in the equity of the property.

Perhaps the whole scheme could be part-funded by imposing a 1% duty on sales of Guernsey property over £750k.

Dani

Yes I know my figure for median earnings is correct. I was showing the average earnings figure. There is a difference between average and median earnings.

Your assumption about part time work is incorrect. They would use it in the average salary calculation because it is still a salary.

What I'm saying is that the median is £27,430 but it is an arbitrary figure. It is possible that no-one is earning that exact amount. You must look at the structure of Guernsey population. 50% maybe be earning up to £27,340. This is a range of £27,340. The other 50% however can earn up to any amount. In Guernsey there a a high degree of people on £100,000+ due to the type industry on the island. That's a range of £70,000 at a minimum.

Someone on £60K on this island is not in the top 10%. However this is twice the median. they have twice the salary. It is not unusual. The gap is much bigger.

Someone a smidge over an arbitrary figure is in the middle. Someone who is among the wealthiest in Guernsey are those on at least 60K plus because of how wealth is dispersed among the population.

Yes first time buyers do need help getting on the property ladder. The GHA do not fill the gap. There is not always one solution for every problem.

Spartacus

Dani

Page 15 says "Median annual earnings represent the annual earnings of the individual in the middle if the annual earnings of all employed and self-employed people were ranked in ascending order"

Not arbitrary at all.

I wasn't making an assumption about part time employees:

Yvonne Burford tweeted that "average full time wage, no longer calculated, estimated at £35K".

Who are you saying would use part time salaries in the average salary calculation?

If £27,340 is the median wage then 50% of wage earners earn less than this and 50% earn more. So it stands to reason that substantially more than 50% of Guernsey earners earn above £35K. The figure doesn't include those on pensions and benefits who would not come into median wage calculations at all.

Please let me know where you are getting your information from about the person on £60K not being in the top 10%. You could be right but I suppose you are just speculating?

GSA is the only current solution for those who cannot otherwise afford a full mortgage but want to get into the property market. If there is any other way you know of lets hear it. The other solution on the table is to slow down the rate of rising property values by scrapping MIR which would allow wages to catch up to the market over time.

Whether targeted help for first time buyers is more important than giving help to the poor is subjective and you seem to have a very right wing stance on the matter.

It was interesting to hear the CM on the radio reiterating that the states as a whole seem to agree with Gavin St Pier's stance on wanting a fair and equitable structure.

Dani

Yes that is the median. But it does not mean anyone does actually earn that EXACT figure. Perhaps arbitrary was the wrong word to make that point. I'm trying to show it is the middle and it must be assessed as such to show comparison with the whole range. It must be looked at with perspective. The big picture.

So the average wage £35K is above the mortgage requirement of £31,500. So on this basis people are in the lower 50%. How about that? Still not among the most wealthy of our society though.

Why wouldn't people include part time salaries? It is the average salary per person. It does not matter how many hours people work. You take the salary of everyone in the economy and divide it by the number of people working. There may be some finer tweaks but that is how it is. I cannot see how it is calculated with any proof though so it is open to interpretation.

As I said in Guernsey there are a high proportion on industries with high paid staff. Advocates are on high incomes. I've been told there are more advocates here proportionally than there are in America. Finance staff of which make up a huge section of our economy get paid high incomes when they rise to a certain level. Top civil servants. Doctors and pharmacists (albeit in small number). People at the GFSC. Consultants if there are any local ones! I know those running restaurants doing well can take home a fair pay packet. People running tradesman businesses with several employees. There is no limit so those on very high salaries stretch the top 10% further. We are a wealthy island. I would not mind seeing the figures though. I could be wrong but I can only base what I know on what I know at the moment. I say knowing the figures is more important than me being right. Correct information always leads better analysis. I can only do the best with the knowledge I have and put it out there. Feel free to add more information or challenge my assumptions.

Now I never said there was another way to help them besides the GHA. I want more solutions as I specified. First you say they fill the gap. I say they don't and people need more help. Then you start saying well tell me if there are other ways currently? I've already said I don't know of any and want them. We should be looking into it to help those on lower to middle incomes.

It's also random you telling me I'm right wing here - yet on another thread about the same subject saying there is not enough money to help out - times are tough. I want to help those on lower to middle incomes. How on earth is that right wing? And if I was your suggesting it's a bad thing - then this becomes about ego's and not viewpoints and I won't have that. Considering everyone's view does not mean I am less caring. This is supposed to be about what is equitable and I'm entitled to my opinion on that.

As I have said before equity is in the eye of the beholder. I very much doubt the States as a whole agree otherwise Matt Fallaize would not be trying to bring an amendment. I've already shown elsewhere that redistributing the MIR as personal allowance is less equitable. They cannot even say what they are doing is more equitable because they don't even know what they are going to do with the money yet!!! Nor have they seemed to consider so many questions and issues I and other posters have raised about the issue.

Dani

GM

I am never a fan of adding and increasing taxes but I see the logic in what you are saying. It does seem equitable.

I always figured when they offered the deposit it would be at lower than market rate with longer to pay it off.

I like your idea. The states would make a gain if the home was ever sold based on the assumption house prices do continue to rise so would get something back to reduce the impact of the lower rents along with the increase in duty for expensive homes. What would happen if they paid back more in rent than the deposit originally was? Would they stop having to pay rent? Or pay a bit longer to make it more commercial? I guess it all depends on the rent and the money that could be raised through duty increase.

The low rents work because those renting I think do pay more out as rent than they would on a mortgage so the individual would not notice.

You should keep putting it out there. Maybe eventually it wont fall on deaf ears!

Spartacus

Dani

I interpreted the median earnings to mean exactly what it said ie. the individual in the middle. Why would it not be EXACT? They must have the exact earnings of that person (probably more than one), why would they then pick another number to represent that individual's salary? I'm being pedantic, sorry.

The average salary I guess is used as an indicator of what is a typical full time Guernsey salary and could be used for example to estimate hourly rates whereas including part time salaries which vary in hours per week would make it impossible to tell.

I'm still disagreeing with your figure of £31,500 as this would be a joint income of £63K which would only get you a mortgage of £315,000 based on your 5 times multiple, which is well below the proposed new £350K threshold. It might get you a house worth £350K when you add on your deposit but the MORTGAGE will still be below £350K and therefore would remain eligible for MIR.

So, Gavin St Pier's comment that those earning over £70K are amongst the wealthiest is a fair point. This will include some single people, couples with single incomes and some couples with one part time and one full time income. I'm sure some on the edge of this level do not feel wealthy but surely that will be due to lifestyle choices such as having a large family?

If there are around 32,000 workers how many are advocates? How many highest level finance workers are there? 1 in 30? 1 in 50? There are 7,000 finance workers. How many top civil servants? 1 in 500? There are over 5,000 public sector workers.

Dani petal, I have no doubt that you are extremely caring and exceptionally passionate, but I have read enough about you to make a reasonable guess that your politics are right wing. I hold my hand up to being a lefty. We are naturally in opposition, which is what makes our debates valuable. That's not an insult.

Matt Fallaize who I admire greatly, was getting criticised left right and centre for bailing out of his scrutiny role just before the budget was released, now suddenly he's everyone's hero. Am I being cynical or is he starting to learn how to play the game?

I reckon the review of tax and benefits will easily answer the question of where the money should go. Make sure everyone is on a minimum income standard, make sure the obligation of fulfilling individuals' rights to health equity is established and then start looking at who else can be helped and how, in the best interests of the island as a whole.

A voter

Spartacus

Saw your comment: "Make sure everyone is on a minimum income standard, make sure the obligation of fulfilling individuals’ rights to health equity is established" which is quite interesting.

It is sufficiently broad to cover a range of approaches.

Ultimately whatever we do has to be affordable and sustainable in the long run for the whole island.

I am not in any way against benefits and support going to those that cannot take care of their own basis needs.

I think though we have to be careful to ensure that we (re)design the system, that it drives the right behaviours. One of those behaviours I think should include a presumption along the lines that everyone who can reasonably work or contribute economically (directly or indirectly) should in most cases do so.

Receipt of certain benefits should be seen as a last resort and temporary for as many people as possible.

We need to minimise the risk of a benefits dependency culture being created amongst a core group in the community. I do not know if we have that problem yet, but it is a big issue in other western economies who have similar systems to ours.

An example is where several generations of the same family who have pretty much never worked and each successive generation is supported pretty much 100% by various benefits. If a child's parents and grandparents never worked I can see how that child might gravitate towards the same lifestyle. That is in my view not good for that child but it is also a problem for the wider community.

So going back to your comment, if what you were saying is that we as an island guarantee a minimum income to everyone and free access to all our essential health etc needs, I think we should guard against inadvertently creating such a benefits culture amongst a group in our community. I understand that that leads to all sorts of potential problems aside from being potentially unaffordable if the numbers get too significant.

The other thing we must never lose sight of is that State benefits are principally taxpayers contributions. If there is only so much contributed then that is how much there is to spend - on all public services. So it absolutely has to be affordable. That might mean tough decisions. A bit like NICE in the UK that has to decide which drugs will be available on the NHS - not everything that everyone would like or might need can always be provided by the state.

We cannot say that we are all entitled to a certain standard and then find that there is not enough money to pay for it. And there are risks associated with making any minimum standard too high - some people will be comfortable enough sticking with the benefit (may be supporting themselves with some undeclared income as a top-up?) and are thereby discouraged from getting back to work and contributing to the system that supported. That is a major problem when the numbers start to increase putting more and more burden on those in work.

And let us not forget all the increasing numbers of the elderly who may become an increasing cost on those taxpayers still in work over the years ahead.

It is crucial, whilst applying principles of equity and fairness, that we ensure that there is long term sustainability and affordability of any system of benefits and tax.

And the ultimate driver of the jobs that leads to the taxes and contributions that pay for all the public services and benefits etc is a vibrant sustainable economy. So actually priority number one for public services and benefits being maintained into the future is the economy.

Whilst it is easy to bash this person or that deputy or this department or that company or this or that group in society etc about being incompetent, greedy, mean or whatever, where we might more usefully focus all our collective resources and energy is into keeping our economy strong - including keeping the businesses here that sustain our economy and attract new ones that are desirable.

Like it or not, it is a simple fact that the principal source of money in our economy is derived from finance sector activity and those who criticise it could well be trying to cut the ground from under their own feet.

Dani

Your incredibly arrogant for thinking for have a better idea of my viewpoints than I do.

I have taken great care to discuss my ideas on several threads looking at the issue from all peoples views without bias from wherever they stand in society so I take offence to you saying I come from a certain stand point.

I said above that if you started calling making this about left and right I would not continue to respond to your comments.

Spartacus

A voter

I agree with a lot of what you say.

It is my unshakeable belief that the solution to all the problems starts with improved equality and sound social policy. This is why I am so encouraged to hear the likes of the CM and Gavin St Pier referring to equality. This is really promising and will hopefully lead to a coherent Sates which can make reforms and positive changes like we have never known in Guernsey.

I just wish they would hurry up and get on with it.

Neil Forman

Dani

Very good posts, totally agree!

Ray

A voter

In short what you're saying is what everyone with their eyes open should be able to see,and that is ... The looney left ALWAYS run out of other people's money

Borrower

By proposing the drop to £350K, is T&R following current policy set by the States of Deliberation in 2006 / 8 (described in its press release of yesterday)?

Reading that it seems that current government policy (at least since 2006) requires it to support purchasing a house of "modest value" and the £400k limit was set by the States to implement that policy in 2008.

Is the only issue they can consider, then, the following - has the "modest value" / cost of buying a house gone up, down or stayed the same in the past few years?

Only if there was compelling evidence that costs of buying a house had fallen in the period would you expect to see a proposal to reduce the limit - otherwise it seems that this proposal risks falling foul of current policy set by the States of Deliberation.

Is it not right that if T&R in fact want to change the policy that this should be done overtly following a proper process, such as by the yet-to-take-place full tax / benefits review next year?

Just a thought.

honestly..

Spartacus

where on earth did you get this from ??? "Regarding those with mortgages over £350K the household income would need to be at least £70,000."

complete nonesense!

Spartacus

Based on lending criteria 5 times salary as Dani explained.

Dani

http://www.thisisguernsey.com/latest/2003/11/03/27k-is-average-pay/

References figure that is nearly ten years out of date link mentioned above. Average salary £27,037 in 2003. If I had read the article it would have said it was nearly two years out of date then! Maybe the less reliable figure of £36,480 for today has some grounds behind it based on the application of inflation.

http://www.averagesalarysurvey.com/article/average-salary-in-guernsey/20112234.aspx

Ah statistics.

bcb

Something just occurred to me regarding all things being fair.

If an elderly person who may need housing in a care home owns a property do they get the same subsidy as someone who is in social housing or in a rental? or do they have to sell their house to fund their care?.

Its ok i already know the answer but was just wondering what those in rental (not all i must add) think about this while complaining about the tax break home owners get on mortgage interest.

Tax man

Tax avoidance for shelf companies but nothing for the locals!

Dani

http://www.gov.gg/CHttpHandler.ashx?id=77705&p=0

This is this latest figures where I get the 2011 figures/not 2010 as has been posted above.

Tim C

"A call for a Prime Minister in Guernsey"!

I firmly believe that at this stage in Guernsey’s history that Guernsey needs a person who can press necessary and urgent legislative decisions…

Just over a week ago on a trip back to Guernsey I was in Gatwick airport travelling on the transit bus from the gate to the plane. For some reason our bus driver took a long route and as passengers we travelled together for about 15 minutes.

I was travelling on my own and got caught standing up between two loud separate conversations of 4 suited men that I believe were specifically, English 'Fund Managers'.

In front of me were two men in their late 30's to early 40's. What annoyed me (as a Guernsey born) was that they were boasting about their recent acquisitions of Guernsey properties and one of the men said I'm looking at pick up another 'Local Market' farm house. These two men had no concern about who was listening or how offensive their smug attitudes were being received by others, particularly Guernsey locals.

The other loud conversation behind me was almost identical regarding the acquisition of Guernsey properties.

I came away with a strong impression that Guernsey has become a naive target to all manner of overseas opportunist fund managers with billions of pounds to play with. It would seem that the Guernsey property market has become a sure thing to these Fund Managers, especially as there is hardly any risk compared to the current precarious stock market.

It would seem appropriate that States of Guernsey need to move on this fast and regulate hard the "Local Market" property sector as this type of opportunist exploitation effects every 1st home buyer as well as detrimentally impacting the rental property sector putting pressure on the Social Security Office of Guernsey regarding rental assistance..

The response from local people has been that something has to be done to regulate the opportunist 'Fund Managers' and the feedback has been unanimous that the current Guernsey Micromanagement system is not working to protect the long term interest of Guernsey local people. I have spoken about the thought of having a Prime Minister to implement decisions on behalf of Guernsey locals and this thought has been received with great interest.

I believe that now is the time for Guernsey to break away from the Micro-Management system of Government to a system that works throughout all Commonwealth nations. A system where a passionate, Guernsey born and honourable person is elected by the Guernsey people to stand up, represent and to serve the varying needs of our people and in particular the poor of our society as well as those who are yet to come behind us.

Thank you for reading this article.

Matt Fallaize

Tim,

I read your post with interest. You put forward an interesting idea and immediately I can think of some possible benefits and risks.

The States Review Committee is currently undertaking a comprehensive review of Guernsey's government and legislative functions and in due course will be consulting widely, including with the public of course. I hope that you will consider making a submission to the Committee.

At the web page below there is more information about the Committee and its work and an e-mail address to contact the Committee.

http://www.gov.gg/statesreview

Bloggs

Matt Fallaize

I cannot believe that you have bothered to reply to such a bizarre post!

SaintsBay

Bloggs

I suspect that Dep Fallaize posted was because he cares.

He stood and was elected - twice.

Why dont you make a considered submission along with your contributions here.

You might suprise yourself - or maybe not.