Richard Digard: What’s our biggest problem? Immigration...

Take even a casual glance at the UK media and, apart from Angela Rayner’s relaxed but ultimately costly attitude to minimising her tax liabilities, there’s only one thing bothering Mr and Mrs Briton – immigration. Yet what’s not generally appreciated is that Guernsey’s own issues with people coming here to live is, if anything, more acute.

And that’s for a wholly different and rather complicated set of reasons that, unchecked, could leave this island as an impoverished backwater unable to pay its bills.

To get there, let’s start with some basic facts. Most of what government spends (apart from its own wages) is on health and community services (say £262m., or 33% of total public expenditure), the OAP States pension (£154.2m., 20% of total) and social welfare benefits (£106.4m., 14% of total). At £522.6m. that’s nearly 70% of the available cake.

What pays for all this? You and I as taxpayers but, especially, as employees. Social security contributions bring in £229m., individual tax £335m. and from companies, £92m., or £656m. in total.

But forget the figures (from the latest States’ Facts and Figures booklet since you ask), the point is the island is totally dependent on its workforce to keep Guernsey plc afloat. Obvious, really, but not something that gets much attention despite something odd happening beneath the surface.

Back in 2001, the last time the island’s population was under 60,000, there were 32,293 people in jobs. Today, despite there being around 4,800 more people in the island, the number in work has actually fallen to 31,784. And that’s a bit of a problem.

Fewer workers equals less tax while (a broad brush statement, but go with it) more people not in jobs equals more States spending on benefits and/or health care. So costs rise just as worker numbers fall.

That, too, isn’t good. But the difficulties actually compound. Guernsey’s population policy is to use immigration to maintain its workforce at the same time as islanders are ageing and fewer children are being born.

To illustrate this, there have been 14 quarters of more deaths than births, with a natural decrease of 146 for 2023 alone, which was balanced out by immigration of 886. The result? The population increased by 740 but the workforce didn’t. It was less than half that.

This tells you a number of things. The first is the island’s employment permits system is a blunt tool for controlling both the population and the number of people working here, so we’re attracting too many non-workers. The second is Horace Camp’s old favourite – Guernsey is getting less Guernsey.

By the States’ own figures, 61% of those here in 2015 were born here. Proper Guerns. By 2023 that had fallen to 59%. The downward trend is well established while at the same time those born in the rest of the world (i.e., not in the UK or Europe) has jumped from 3.5% to 7%.

This doesn’t trouble me particularly, although I know it does others. Throughout history, especially from the 1800s onwards, Guernsey’s position as an international entrepot in the English Channel has seen its population dominated by immigration – people coming here to work and make money.

It was one reason why English was made an official language of the States in 1926 (when the population was around 38,000) while French wasn’t dropped until 1948, although apparently all deeds for the sale and purchase of real estate were written in French until 1971.

In other words, Guernsey has been adaptable over the years and recognised the need for people to make a living and adapted its culture accordingly.

Where the latest data is troubling, however, is what it says about the island’s ability to manage its finances. Unlike Jersey, for instance, which has used population growth to increase tax take – workforce up by 3,410 in the five years to 2024 – Guernsey seems unable to do so. Give or take, irrespective of how many are living here, the number in work doesn’t really change.

So at best, the same number in work funding constantly increasing government expenditure and a stagnating economy. It’s one reason why Lindsay de Sausmarez and her colleagues on Policy & Resources will be demanding we all cough up more via GST.

Without trying to complicate this too much, that tax squeeze will be felt more painfully because the number of well-paid (and taxed) jobs in finance are shrinking, the number of jobs in the States is growing (with RPI-linked salaries and pensions) which the rest have to pay for, while real earnings for everyone else have fallen in eight of the last nine quarters.

But what’s really disturbing is that government itself expects this situation to get worse.

Its own population forecasting says that with even agreed levels of immigration our population levels have just about peaked and will fall from 2028 onwards. So in just 13 years’ time, we’ll be back below 60,000 (where we were in 2001). What does this mean?

That ‘the workers’ (those between compulsory school age and States OAP age) decline by half a percent a year – call that 150 per annum. There will be ‘a significant’ increase in the number above state pension age and the over-85s are likely to more than double. Under all government’s projection scenarios, the number of children of compulsory school age or below is expected to continue to decline.

Again, this is important as it directly affects something called the dependency ratio – basically those in work supporting those who aren’t, the kids and pensioners. Currently, that ratio is 0.54, which means every 100 in work are supporting 54 nippers or OAPs. But by the time your grandchildren are grandparents themselves, that will have expanded (under UN definitions) to every 100 workers supporting 84 dependants.

The implications of that are huge, not least the tax burden on the remaining wage slaves. Why come to work in the God’s waiting room that Guernsey has become when there’s a globally competitive market for labour?

Hang on, though, our decline will be far, far quicker without the immigration on which we’re so dependent and which, pro rata, is higher than the UK’s. But we’ve already priced out EU staff and are turning to Africa and the Caribbean for labour, massively increasing the cost of doing business here.

So you can see that we’re in a bit of a pickle. But worse, rather than controlling costs, growing the economy and boosting productivity, government spending is increasing, it’s actively recruiting from a finite labour pool and generally carrying on like there’s no tomorrow.

And from its own calculations, there soon won’t be.