Charles Parkinson: ‘The ship isn’t sinking, but there are real problems’

Few would argue that the state of our public finances must be front and centre at the upcoming general election because without money it is difficult for any government to achieve its objectives. Indeed, the current Assembly has spent much of the last four years arguing about the best way to increase public revenues.

Last November, the States decided to introduce a goods and services tax, which would impose additional costs on Guernsey residents, although not a penny will be collected before July 2026 at the earliest. No doubt measures would be included in the package to provide some relief to the lowest paid, which just means that the burden would fall most heavily on middle income earners. And many commentators expect the rate of GST to increase over time to around 15%.

No doubt, at the general election, there will be some candidates who support the decision taken by the States, and others who want to reverse it. Voters should ask the latter group what they would do instead of GST. Are they proposing alternative tax-raising measures, or would they cut public spending and, if so, in which areas?

It is well known that I would reform our corporate tax system. Indeed, there will be a group of candidates supporting ‘fair tax’ proposals – not a political party but rather a single-issue pressure group. The financial problems of the States began with the introduction of the zero-10 corporate tax system in 2008, and they will not be solved until we address the root causes of the problem.

Linked with the fiscal policy question is the lack of growth in the Guernsey economy, which has essentially been flat-lining since zero-10 came in. Guernsey’s GDP in 2023 was actually 2% lower in real terms than our GDP in 2022 (the most recent figures available). This has resulted in stagnant real term incomes while costs have risen, so that the island is becoming unaffordable for many people on normal wages and salaries. We need to kick-start growth. So what do the candidates propose to do to achieve this?

The cost of housing is a particular problem because this States, like its predecessors, has failed to increase the supply of affordable housing, and the population has recently begun to grow again. There is now, and for the first time in my lifetime, a significant homeless population in Guernsey.

It is essential that the next States should proactively intervene in the housing market to create a significant number of ‘affordable’ houses. The States is a substantial landowner, and it needs to become a property developer. I am sure that this will be one of the biggest issues at the election.

This is exacerbating our demographic problem, which threatens the long-term stability of our health and social services. Young people are leaving the island because they cannot hope to own a home here, and those who remain are having fewer children because they cannot afford them. Our birth rate is about two-thirds of the replacement rate, so the local population is literally dying out. We must ease the burden on our resident population.

I would summarise the challenges facing Guernsey as follows:

• Rebalancing our tax system so that companies pay their fair share of the cost of our public services;

• Containing, as far as possible, the cost of those services to the individuals living here;

• Dramatically increasing the supply of affordable housing;

• Stimulating economic growth; and

• Diversifying our economy, both to reduce the concentration risks that we currently run and to increase the variety of jobs available to Guernsey residents.

The last point is also crucial because a lot of the administrative jobs in our finance industry could be replaced by artificial intelligence and are therefore at risk. We need more jobs in the creative industries and service industries, jobs which cannot easily be replaced by artificial intelligence.

Guernsey has significant opportunities in renewable energy, potentially powering large-scale data processing centres, and in research, both as an end in itself but also as an economic pole around which a science park can develop. The jobs which our children will do have probably not yet been invented. So I propose that we should establish an international university of Guernsey to place the island at the cutting edge of new technology.

I suggest that voters should concentrate on policy issues rather than personalities. They will inevitably have some views on the character of sitting deputies who are re-standing, but most of the new candidates will be relatively unknown to the public. And all candidates will present themselves as honest, plausible people who just want to serve their community.

Unfortunately, the current States has been plagued by factionalism and has occasionally been described as ‘toxic’. There will be different views as to the cause of this, but it is hard for the voting public to know where the blame lies.

If consensus government is to be made to work under a system of island-wide voting, we will need to return to the collaborative working that has traditionally been ‘the Guernsey way’. The alternative is party politics, and I do not believe that the people of Guernsey want the States to evolve in that direction. My hope is that candidates at the election will align themselves with particular policies, rather than people, and then the voting public can choose who to vote for based on their political views.

Unfortunately, the experience of the last general election, in 2020, has undermined trust in the process. Several candidates stood on manifestos promising, for example, no increases in taxation, and then, once elected, said they ‘changed their minds’ after saying they had ‘discovered the facts’. We now have a large, disenchanted population, many of whom have not even registered to vote.

But my plea to the electorate is this: don’t give up. I understand the cynicism of many potential voters, especially the young who feel betrayed by the States, but unless the public takes an interest in the process there is no hope of meaningful reform. We will be stuck with what Sting called ‘the rhetoric of failure’.

Guernsey has a bright future, if only we can steer the ship in the right direction. There is much about Guernsey that we can all be proud of. We are increasingly a beacon of stability in a chaotic world. We are a decent, caring society, which has preserved much of the best of what it once meant to be British. It is important that we recognise and preserve these fundamental values.

These qualities will make the island ever-more attractive to incomers in the years ahead. And we should welcome the economic contribution and increasing diversity that our new residents bring. But it is only right that we should expect new arrivals, whether people or businesses, to make a fair contribution to our community. That contribution will not be measured simply in money, but also in participation in our community. It is essential that we all care about Guernsey.

So, the ship isn’t sinking. But there are real problems, and they must be solved.

The general election on 18 June is an opportunity for us to install new leadership which will tackle those problems. This opportunity comes along only once every four years, so please do not waste it.