Debt will tax us all

The second announcement came, later on the same day. Deputies rejected the States Assembly and Constitutional Committee’s proposal to move the election to October with a review in July. Instead they voted, by 22 votes to 15, to delay this year’s election until 16 June 2021 with no option to bring it forward if circumstances change.

Whilst many reasons have been put forward to justify a delay, only one of them is valid, and that is that we are in the midst of a global pandemic. I think that the deputies were right to delay the election, but not by a year.

Why does this matter?

You can look at the current crisis through two lenses – public health and politics/economics. From a public health perspective, most people would agree that Guernsey’s response to the pandemic has been pretty good. From the beginning, Nicola Brink, Gavin St Pier and Heidi Soulsby have been honest with islanders. They have provided regular updates and have been open about their strategy, which appears to be working.

For that, they should be applauded. As a result, whilst no one likes being confined for weeks on end, people will continue to listen to the key messages and stay at home.

Time will tell how long it takes for life to return to normal, but many countries, including Guernsey, are now lifting or planning to lift some of the restrictions currently in place. Again, Nicola, Gavin and Heidi have been open and honest about the island’s exit strategy. For example, on Friday, it was announced that schools will remain closed for a further five weeks but that this timeline will be reviewed. In other words, if the conditions are right, schools might open sooner. Why can the same approach not be taken with the election?

From a political/economic perspective, whilst the island’s economy has already suffered significant damage, the political/economic shockwaves of Covid-19 will continue to be felt long after the fight against the virus has been won. The longer the lockdown continues, the worse the economic consequences will be as companies run out of cash reserves and ultimately fail, leading to increased unemployment. In addition, the longer the lockdown continues the more money the States will need to pay out in financial support.

On Monday, the States announced that it will need to find £170-190m. to cover unexpected drains on the island’s finances in 2020. In addition, the States will look to borrow an additional £500m. to help with ongoing Covid-19-related support measures.

Let’s consider this for a moment. These are eye-watering sums of money, so you would be right to ask a few questions. How were these numbers calculated and what evidence is there to suggest that they add up to the right amount? How is the money going to be spent? Who is going to pay for it? Why is this so important? Because, on its own, the proposed £500m. loan is equal to circa £8,000 per islander (every man, woman and child). If you take out dependants and split the £500m. across people in employment, the number rises to circa £16,000 per person.

For these reasons, economically at least, the island needs to move to phase three of the States' exit strategy as soon as possible (most businesses open but overseas travel still restricted). The States also need to quickly develop a strategy to manage the island’s economic recovery in the same way that it did for managing the pandemic. The States has already come in for some criticism on this front, with the self-employed and sole traders feeling left out and some businesses complaining that they were unable to access emergency funds.

So, in summary, good progress is being made from a public health perspective, but a great deal more needs to be done to support the economy. Having voted to delay the election, deputies need to demonstrate that they did so purely to steer the island through this period of uncertainty. That means putting aside differences and ditching projects/plans that the public do not need or want. The focus must be on cutting States spending unless it is specifically used in ways that will boost the economy. Given that there are a limited number of deputies with business/economic experience, it would also be sensible to appoint someone with a strong business/economics background to advise the States. Key message to that person should be that Guernsey has worked hard to build a reputation as a stable and low tax economy. How do we fix the economy without damaging that reputation?

As I have said previously, it is not just the deputies who need to think about Guernsey’s future success. When things do return to normality, perhaps we can all use ‘Guernsey Together’ to help local businesses by buying goods locally rather than over the internet. If we don’t, more businesses will disappear and our choices will become more and more limited. I don’t mind sometimes paying a bit more for something if it keeps local businesses trading and local people in jobs. Of course, retailers and landlords need to play their part as well, but it’s shoppers like you and me who decide where to shop.

Guernsey Together?

NICK MOAKES

Unlock Guernsey’s Potential.