Guernsey Press: The States’ key data, including the size of the economy, are years out of date. How frustrating and difficult is that?
Deputy Kazantseva-Miller: It’s deeply frustrating for me, members of the committee, other States members, industry and the media. It is linked to changes at Revenue Services. It’s also affecting other key statistics, such as population data, which is probably even more important to get a sense of what is happening in the economy. The 2024 GDP figures are supposed to be coming shortly. We haven’t been given a deadline, but I’m expecting it to be this side of Christmas, with 2025 figures to follow early next year. In 2023 there was fluctuation in company profits, specifically of a number of banks, which led to a GDP reduction. Those fluctuations are often linked to macroeconomic factors well beyond our control. If you look at the part of the economy which does not fluctuate as much, which is wages, where the best proxy is income tax receipts, they have been quite healthy over the last few years. My sense is that it’s difficult to say what’s going to happen in 2024 because there was still high inflation and high interest rates and we had a lot of disruption in the economy around connectivity, but for 2025 and 2026 I’m optimistic we’re going to see some positive progress.
Your committee is subsidising British Airways’ Guernsey-Heathrow link and Aurigny has blamed that route for about £5m. of its expected loss this year. What are the benefits of effectively spending £6-7m. a year on that development?
It’s dangerous to put out figures like £6-7m. which can suddenly become facts. While I cannot disclose the figures, they’re not at that level. It’s a modest incentive package, especially compared to others such as the subsidy of Aurigny’s Paris route, and pales in comparison in terms of the impact achieved. We’ve had record figures for passenger movements this year: we’re up 3% in the year to September. If you look at net growth of visitors, 81% is driven by British Airways’ Heathrow route. The London market is up, I think by 10% in the year to date, so we have seen extremely strong growth in a market where there was an expectation of higher cannibalization. It’s still early days, we’re only about six months into the British Airways link and we have to see what happens over the winter, but a national airline flying to an international hub is opening new markets for us with visitors who otherwise would not have come. We saw a direct impact on visitors' spending of £7m. in the months after British Airways started until August and the ease of connectivity for businesses is transformational. I would go as far as saying that the introduction of British Airways has been the single most important economic development initiative introduced this year.
The current air policy is going to expire very soon. Are you going to bring a revised air policy to the States?
My intention is that we will start consultation this side of Christmas and have an air policy ready for next year. We haven’t made a formal decision [about a States debate]: it will be down to what we are proposing, the level of intervention, whether we are asking for additional funding to sustain air connectivity in general, etc. In principle, yes, I think this is important enough that it needs a States resolution.
After talking to your Jersey counterpart recently, you both said you were working on options to improve inter-island sea links. When might there be a further announcement about service improvements?
We’ve had two very positive calls and we are hoping to meet soon. We have a joint commitment to improving inter-island connectivity. The difficulty is that the two islands have different operators with larger boats to provide our lifeline services - freight and passengers with the UK and France. We are really trying hard to see whether DFDS would introduce a reciprocal rotation, but we haven’t got any proposals on the table and it looks unlikely, so we need to look for alternative solutions. Islands Unlimited has provided important connectivity between the islands for passengers but what is missing is car passenger connectivity and that’s the kind of solution we need to be looking at. It is a live discussion. We need to look at what we can do to create more sustainable sea connectivity between not just Guernsey and Jersey but also Alderney and potentially Sark and onwards to France with smaller boats.
Two-and-a-half years ago the previous Economic Development Committee announced a review of competition law and regulation. Why is it taking so long?
The review was progressing quite well ahead of the last election. The previous committee decided to leave it to the new committee because there were a couple of outstanding issues. We have progressed the work and it went through another round of consultation. We should be reviewing the near-final draft quite soon. I appreciate it has taken some time. There are different views on what can and should be done. As an international finance centre and a jurisdiction increasingly entering free trade agreements, we need to make sure we’ve got the right, proportionate regulatory environment and competition law. I think what we’re seeing is more an evolution rather than a revolution. We still need regulatory functions and the challenge is always for them to be proportionate on the scale of Guernsey.
You voted for the tax package which includes GST, but do you share the concerns about it among small businesses, including in the retail sector?
Absolutely. Whenever you increase the administrative burden, it puts pressure on small businesses, and it will put pressure on businesses which do not have more modern bookkeeping and accounting systems. A fund has been allocated to support those businesses, we hear their concerns, and we hear the concerns of retailers who think online retail will potentially benefit. But we must look at the bigger picture. It is fundamental to reform our tax system away from taxing labour and onto taxing consumption, and hopefully this can be a real game changer. I think that having GST on the horizon may allow us to be less aggressive on other taxes and duties.
Your counterpart in Jersey said recently that the minimum wage was too high and was detrimental to some sectors of the economy. Is that also the case in Guernsey?
One of the difficulties is that we haven’t got any data about how many people are on the minimum wage and which sectors are most influenced, and so it’s difficult to make an informed decision. The cost of labour is very high, but the cost of living is also very high. We continue to have extremely low unemployment, but we don’t want to see opportunities affected, especially for young people, because of a high minimum wage. The moment we see young people’s opportunities being affected, I think we must have serious discussions.
When Deputy Haley Camp resigned as a member of Economic Development, she criticised your style of leadership as dictatorial. Has that encouraged you to change your style or was she just plain wrong?
The committee has gone through two changes of membership. We were sad to see Deputy Andrew Niles go and I think he’s doing well at Policy & Resources. I think any change is an opportunity to reflect, but to me it has always been about having a robust debate in which everyone is heard, but once a vote is taken at the committee that is a majority vote. That’s the committee system. That’s how a committee system works. The best thing is to ask other members of my committee and they have come forward with their impressions. We have a good committee at political level and civil service level. I’m proud of the pace we have set. I’m always very open to scrutiny and ultimately being judged on delivery against our committee work plan and results for the island.
The island’s population policy is being reviewed. Are you in favour of stricter controls to protect housing for local people or would you like to see a more liberal approach which would be welcomed by many businesses?
Previously more local market properties were reserved for the local population and we may need to look again at some of those levers. I’m a proponent of a population policy which meets the demands of our economy. We have an ageing population and declining birth rate and we are already a small, sub-scale jurisdiction, so I think it would be very dangerous for our population to decline. I certainly favour a policy for a gradual increase and keeping our working population figures intact as a minimum. Overall, we are probably striking just about the right balance. But over the past 20 years we have failed to keep the level of housebuilding constant. That’s the biggest failure. We are finally seeing the level of housebuilding pick up and we must maintain that.
There are now more than 400 homes under construction, a 10-year high. You successfully proposed the creation of a new Housing Committee last year, but do you accept that in reality the increase in housebuilding is a success of the previous States?
Some of the foundations were laid in previous years, although how much impact the States had is another question. The work that previous committees and this committee has done, working directly with landowners and developers on development sites that had stalled, has made progress on several sites. It has partly been the new Housing Committee but partly also the Development & Planning Authority, and the DPA president Deputy Neil Inder should get credit, because there are several planning applications which have progressed because of work done in this political term. We are in the early stages of the States’ new approach to housing development, and we need a fundamental shift to be more involved in the delivery side of things. One of the continuing frustrations I have with the set-up is that the Housing Committee lacks some of the levers necessary without more control over the States Property Unit. The committee still doesn’t have ownership and authority to drive development on some States sites. The Countanchez Campus is one. It’s a key part of a wider housing site and a development framework exists, but our committee has had minimal input into what is going on at that site. That site will be vacated from September 2027 and is critical to unlock wider development in that area. I think the Braye du Valle should be driven by Housing rather through a matrix of political oversight groups. Committees are powerful if they’re given the mandate to run with what needs to be done.
What does success look like for the Housing Committee by the end of this States term?
The key thing we will be judged on is the delivery of home building, especially affordable housing as currently defined [social and specialist housing]. Our delivery plan includes progressing about 250 of those homes. What will be key is securing the funding to progress those developments and also what are the delivery mechanisms: is it going to be through joint ventures and partnerships with private developers, is it by potentially allocating projects for development by the Guernsey Development Agency, or other means? We are about to recruit to the position of development manager to make sure that we have the intelligent client skills within the States. That doesn’t mean we are the actual developer putting spades in the ground, but we have the right skills and expertise to progress development with partners in the industry. We also must have a pipeline of housing for the next political term. It is also important to say that we need a functioning and healthy private sector market and do anything we can to help unlock private house building.