‘We’ve already waited too long’

With the States set to relaunch its tax review and consultation about how to meet a looming £85m. annual deficit, Policy & Resources Committee treasury lead Deputy Mark Helyar outlines why the issue just has to be addressed now.

‘IT’S real and it’s coming.’

That is Jennifer Lawrence’s warning to the world in Don’t Look Up, the top viewing pick for many over the Christmas period. And it’s a message I’m tasked with delivering at the moment.

Not for a planet-killing comet, thankfully, but for something that has very big consequences for our island. So right now I have a lot of sympathy for two scientists whose efforts to warn the world of impending disaster are thwarted by political posturing, online conspiracy theories and a media that is more interested in gossip and scandal.

Because right now the Policy & Resources Committee, including me, and Employment & Social Security president Peter Roffey, have the difficult – some might say impossible – task ahead of trying to persuade the community, and then the States Assembly, of a number of things on the topic of tax and the cost of public services. We need to persuade them that our ageing population means we have a serious problem in funding future essential services like health care and pensions.

We have to persuade them that the only plausible options for safeguarding these services must include tax increases or very significant cuts in those and other services.

And finally, we have to persuade them that the best way of raising more tax revenue, to minimise the impact on working islanders and low-income households, is a package of reforms that includes a GST – a goods and services tax.

It is not a message people want to hear. It is a message I would much rather not have to deliver.

In fact, it is a message quite likely to shorten my political career. But that doesn’t change this fact – ‘it’s real and it’s coming’.

We have an ageing population. We’re not alone in that, this is a problem that is being faced from Japan to Jersey. It is not the fault of anyone, it’s a numbers game. And to give you an idea of what the numbers look like, how about this:

The number of working-age islanders fell by 1,500 between 2009 and 2019 – not because people are leaving, but because they are retiring. The number of over-65s rose by 2,500 in that same time frame and is expected to rise by another 5,500 by 2040. Whichever way you slice it, that is a lot more demand on public services, with fewer people contributing towards their funding.

And our forecasts, which are done by some extremely well-qualified people, are warning us we face a shortfall of £85m. per year.

To give you an idea of the scale, that’s more than the entire budget for education, sport and culture – the entirety of all of our early years, primary, secondary schools, post-16 colleges, adult learning and all of our museums and historic sites.

But having a discussion on how we solve this is very hard to do. It is emotive and highly charged, there is sometimes misunderstanding as well as misinformation. And all that means we can never get into the really productive conversations.

We brought this thorny issue to the States last year and one of the directions from the Assembly was for our committee to work harder at engaging with the public – ‘winning

hearts and minds’, as one member described it.

So we have been planning a campaign beginning next month to do that. But there’s a joke which goes, ‘How do you make God laugh? Tell him about your plans’.

While I knew that the upcoming campaign would not be easy, I had hoped we would at least get out of the gates before our first major controversy, which came with the misreported figure of £200,000 as the supposed cost of this campaign.

I thank the Guernsey Press for correcting this and apologising, but unfortunately these things soon take on a life of their own, so let me make clear here, once again, that’s entirely untrue.

We will spend a little bit – maybe a 10th of the wrongly-reported figure – because we must do this properly. We’ll be preparing information for islanders to read in person or online, and most of all we’ll be arranging a series of opportunities for islanders to come and speak with us, ask us questions, challenge us, and give us the chance to challenge back.

We want to talk about this and we want to give our community the information necessary to have a genuinely informed debate.

Let me give you an example of why an ill-informed debate is so counter-productive. There’s been a lot of reaction to the recent news that the States intends to invest several million pounds in a vessel to improve our sea links. Now that would be a one-off investment to support our connectivity and our economy, and would produce a return like any other investment, both financial and social.

But some have drawn together this story and the tax review and said: ‘How dare they raise tax when they’re spending millions on a boat.’

But this overlooks two simple but important points. Firstly, we need to invest in economic enablers, because without a strong economy our revenue shortfall will be even worse. And secondly, that one-off expenditure on a boat will be peanuts compared to the annual shortfall we will face within a few years. Of course, how every penny of taxpayers’ money is spent matters, but when we draw this comparison, it suggests not investing in a boat might make some sort of difference to the shortfall we face in funding public finances.

But it won’t, because that shortfall will be several times whatever is spent on a boat, every single year, year after year after year. The cost of one boat, paid for once, is a drop in the ocean compared to the revenue spending that goes out every 12 months running hospital and health services, nursing and care facilities and pensions.

It isn’t easy to keep the sums in perspective when they’re at this scale, I fully appreciate that, but we need to try because otherwise we move no closer to solving the problem.

We need to put aside the scapegoats, the red herrings, the false equivalents.

We need to put aside the personality politics and self-interest.

If you’ve sifted through the social media memes and media commentary this week, you may have seen the story that the international agency that determines global credit ratings this week downgraded our outlook to ‘negative’.

Guernsey, they say, ‘will remain in structural deficit’ and we still haven’t introduced ‘any new meaningful tax measures’ to address it. They know we’re working to cut spending, but say it would have little impact ‘given the already small share of central government spending relative to GDP’.

That is the view of impartial experts who do these sorts of assessments on countries of all sizes and it is very significant.

Our population is changing, it is already having an impact. We have already waited too long to do something about it. Further delay means an even greater burden on future generations.

We have to take this seriously. Because it’s real and it’s coming.

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