Tom Moore: ‘We sink if we stand still’

We are in danger of being left behind and forgotten. If we are, the lifestyles and luxuries we currently enjoy, which are heavily imports-based, will be a thing for the wealthy alone. It would be an absolute travesty for an island wedged between England and France to have connectivity similar to that of a Pacific island and a similar subsistence-based economy.

Some reading this will nod their heads and welcome it and hark back to the good old days of before they were born. Before even their great-great-great-grandparents (yes, I know Guernsey history) were born. Times were harsh and we were vulnerable. Be careful what you wish for.

For those who think I am being alarmist, I implore you to keep reading.

All of our past principal industries are now niche ones. They haven’t died, but opportunities to restore them to their heyday heights are moot. I am, of course, talking about fishing, farming, craftsmanship, quarrying, mercantilism, roses, tomatoes and tourism. Finance is currently the only big game in town, employing more than 5,800 islanders as of last year. The only sector to come close is the civil service, also with just over 5,800 as of last year. Finance has enabled infrastructure projects and social mobility across the island. Originally, the posher houses outside Town were owned by the fiefs and aristocrats. The other dwellings were those of tenant farmers and fishermen, people who lived a humble and hard existence. Now you can see houses of a middle tier all over the island – a sign of economic prosperity.

But finance hasn’t only been an economic enabler – it has been the source of stoking economic division too. The median wage is considered to be £42,000 per annum now. People earning less than double that cannot afford a mortgage, so are stuck living with their parents, renting, forced to move off-island for more affordable accommodation or waiting for inheritance. Anyone not in finance, running a successful business, highly qualified in a scientific profession or receiving a six-figure salary from the civil service is locked out of this economic prosperity.

I’m sure many of you remember why growing ceased to be a major export. Look no further back than Dutch subsidies and 1973, when the UK joined the EEC, thus signing up to the trade treaty which meant they had to treat Dutch produce the same as Guernsey produce. We got out-produced and out-priced overnight, confining our growing to a cottage industry. It can’t even feed us.

The same happened with tourism. Why would a family in the UK come here when, for the same money or cheaper, they can fly to the Mediterranean for a sunny holiday? Our tourism industry still exists but it is a shadow of its former self. It still brings visitors but it won’t save us.

The same almost happened to our finance industry. Zero-10 was introduced to maintain our competitiveness with other equivalent jurisdictions such as the other Crown Dependencies, resulting in Guernsey avoiding a painful recession in 2009. Unfortunately, that meant the tax burden fell more on the island’s residents than industry. In hindsight, we gave away too much. We weakened our own tax base to compete. It’s clear that this approach is no longer sustainable.

Our finance industry has been protected by a combination of regulation and a sympathetic government in Westminster. The latter era is over and now a considerable amount of payroll goes to compliance. If you were made manager of a football team, would you focus on defenders or strikers? Surely you need both and your team wouldn’t comprise disproportionately of defenders, would it? Many banks and investment houses, once key to the island’s prosperity, are now offering only one thing in each island or consolidating all their offshore activity in one jurisdiction. While some, like Butterfield Bank, gobbled up others and grew, and some, like Kleinwort Benson and SG Hambros, merged, many, like RBC, decided to close their Guernsey operations altogether, with no clear successor on-island. It’s already happening. When you then look at moves towards a global tax regime and oil-rich countries like Norway and Saudi Arabia looking to transition from oil to financial services, competition increases and the islands don’t look so attractive. If you put yourself in the head of a wealthy English person, and your money was no longer tax-efficient in Guernsey, would you still keep it here? If you’re a retiring Sunni Muslim oil baron, would you want to continue keeping your money in what you may see as a far-flung Occidental backwater, or would you want to move it closer to home, in a regime supportive of your religion and world view?

Some say the upcoming offshore wind farm is the answer. It will bring in millions, they say. Firstly, it won’t start making money for another 10 years. At this moment, I must point out that, in projections produced a couple of years ago, we are due to use up all our reserves by 2032. That was before tariffs imposed by Donald Trump and Xi Jinping wiped out all the gains many funds had. I don’t know what our sovereign fund invested in, but at the time it would have been foolish not to invest in US tech and Chinese manufacturing. Secondly, home-growing surplus energy is a great move but it can’t be a replacement breadwinner for the island all by itself.

Offshore wind will help but we need more. Guernsey needs to carve out a new global role, one that leverages our strengths and location. That’s why I believe we should become an AI research centre and look into producing even more energy for GB Energy by installing rooftop solar panels and make living cheaper by insulating homes and installing heat pumps. The Labour government sees the island as filled with pounds that should be in the UK Treasury instead. However, that opinion could change if we helped them out with their deficit in energy sourcing, as they seek to move away from oil and gas. They’ll bite our hands off. ‘What about France?’ I hear many of you shout.

France does not look upon us with friendly eyes at all. They see us as rebel breakaways, going back nearly a thousand years, holding territorial waters they consider their own. Their fishermen want our waters for their own economic prosperity. EDF, owned by the French government and the Chinese, have us by the short-and-curlies. Don’t be surprised if our bills go up dramatically next time our contract is renewed. They don’t need our power. And have you heard that they have now found a new source of hydrogen within France proper?

Guerns have always laughed off challenges and been highly sceptical of change, but when our backs have been against the wall we have innovated and thrived with that innate resilience we can be proud of. We need to do the same again. If we don’t, we will become forgotten and regress.

Let’s ride the waves together with vision and purpose by backing locally-produced energy, investing in innovation and diversifying before it’s too late. Because we sink if we stand still.