Month: October 2022

 

Quick overview

Guernsey’s Budget for 2023 was published on 4 October and was debated at a special Budget States meeting starting on Tuesday 1 November.

There was no ‘glossy’ version for public consumption so here are some suggested steps to help you get your head around it:

Step 1 –

Read the foreward to the document, where P&R set out the overall economic picture for Guernsey, including how much we are raiding our savings.

Step 2 –

Read this Bailiwick Express article which runs through the increases in States committee budgets and the tax changes we are likely to notice in our everyday lives.

Step 3 –

Budget measures can be used to address specific issues and this year, not surprisingly, there’s a focus on Housing. Read about the housing initiatives included in the Budget by P&R in this Bailiwick Express article.

Step 4 – Check out the Amendments section below, where individual Deputies raised additional ideas for debate, both successfully and unsuccessfully.

 

Amendments

Budget debates are an opportunity for Deputies to introduce new ideas for Guernsey’s tax system for debate, hence starting the meeting on a Tuesday, rather than a Wednesday.

Click the voting result eg LOST 2-31 to see who voted which way.

Amendment 1 (De Lisle/McKenna) – proposes a flat rate increase in TRP of 8% instead of 0% for properties with TRP ratings of less than 200, rising to 20% for TRP ratings over 500. LOST 2-31.
States throw out bid to spread TRP increase across all homes.

Amendment 2 (Inder/Helyar) – proposes reducing the tax rate for the cannabis industry from 20% to 0% for five years to support a fledgling industry. LOST 8-25.
Deputies vote to maintain cannabis tax rate.

Amendment 3 (Inder/Le Tocq) – instructs all committees to work with Jersey to identify revenue savings and P&R to include any opportunities in the Government Work Plan. CARRIED 28-5.
Bailiwick Express pre-debate analysis

Amendment 4 (St Pier/Helyar) – directs P&R to help first time buyers by investigating giving tax incentives to developers for houses sold below the average market price. CARRIED 20-14.
Bailiwick Express pre-debate analysis (1st half).

Amendment 5 (St Pier/Helyar) – directs P&R to consider charging income tax on profits from the sale of second homes. LOST 6-28.
Bailiwick Express pre-debate analysis (2nd half)

Amendment 6 (Soulsby/St Pier) – directs P&R to consider tax incentives for renting a room in your house, particularly to a key worker. CARRIED 36-0.
Bailiwick Express pre-debate analysis.
States to investigate spare room tax breaks.

Amendment 7 (Kazantseva-Miller/St Pier) – directs P&R to consider restricting ownership of local market houses to people qualified to occupy them. RULE 24.6 BEYOND THE PROPOSITION, NOT DEBATED.
Bailiwick Express pre-debate analysis.
Local market protection attempt scrapped on a technicality.

Matt Fallaize’s Bailiwick Express analysis of all amendments.

 

Media articles about the Budget (in date order)

1. 2023 Budget proposals out today (3 Oct, Bailiwick Express)
2. P&R: ‘Financial position is becoming precarious’ (4 Oct, Guernsey Press)
3. Comment: Budget – The worst is yet to come (4 Oct, Guernsey Press)
4. States’ spending set to increase by nearly £50m next year (4 Oct, Bailiwick Express)
5. Toughest situation for “donkeys’ years” (4 Oct, Bailiwick Express) (cf Jersey)
6. Cost of living measures included in Guernsey’s 2023 budget (4 Oct, BBC Guernsey)
7. States’ above-inflation budget increase ‘concerning’ says IoD (7 Oct, Guernsey Press)
8. Housing plans to alleviate crisis (8 Oct, Bailiwick Express)
9. Tax breaks for renting out spare rooms could attract key staff (25 Oct, Bailiwick Express)
10. States may protect local market homes for local residents (25 Oct, Bailiwick Express)
11. Tax breaks could encourage more affordable first-time homes (25 Oct, Bailiwick Express)
12. Cannabis taxes could be reduced to 0% for five years (26 Oct, Bailiwick Express)
13. Fresh attempt to get Guernsey and Jersey collaborating (31 Oct, Bailiwick Express)
14. Analysis: At least our treasury lead should avoid crashing the economy… (31 Oct, Bailiwick Express)
15. States’ spending in 2023 could go above £48m budget increase (1 Nov, Bailiwick Express)
16. States throw out bid to spread TRP increase across all homes (1 Nov, Bailiwick Express)
17. This Budget is the last of its kind, says Helyar (2 Nov, Guernsey Press)
18. Deputies vote to maintain cannabis tax rate (2 Nov, Bailiwick Express)
19. States to investigate spare room tax breaks (2 Nov, Bailiwick Express)
20. Local market protection attempt scrapped on a technicality (2 Nov, Bailiwick Express)
21. ‘So many ways we could fail it keeps me awake’ (3 Nov, Guernsey Press)
22. St Pier: What happened in the States last week? (7 Nov, Bailiwick Express)

 

Industry reaction

BDO: Guernsey Budget response (4 Oct)
IoD: Statement on States of Guernsey 2023 budget (5 Oct)
GPEG: Guernsey Taxation – the way forward (9 Nov, mailing)

 

The Budget in detail

If you can, read the policy letter in full.

You may also be interested in comparing the cost of living measures in Guernsey’s Budget with Jersey’s £56.5m emergency mini-budget, agreed in September.

 

Introduction

As a small island with limited resources, policy decisions that influence the size and make-up of our population are fundamental.

This review of Guernsey’s population and immigration policy was presented to the States for debate on 19 October by the Committee for Home Affairs. But it was developed by a steering group made up of members of P&R, Home Affairs, Economic Development, Education and Environment and Infrastructure. All propositions, as amended, were voted through on 21 October. Full voting records are HERE.

The key proposal related to net migration – the difference between the number of people who leave Guernsey and the number who come to live in Guernsey each year. For the purposes of planning the island’s housing needs, services, benefits etc the Review said we should assume net migration of up to 300 people each year for the next thirty years as this is what’s needed to maintain our working population. That would take our total population up to about 68,000 by 2051.

The Review recommends that Guernsey should widen its recruitment pool so that people can be recruited from across the world, not just Britain, Ireland and the EU. Guernsey has already negotiated to be able to allow a wider list of permitted roles than the UK.

In return, Guernsey needs to alter its population management regime so as not to become a ‘back door’ to the Common Travel Area, now that the UK has moved to a points-based immigration system with indefinite leave to remain after five years. A short-term one-year licence (STEP) will only be able to be renewed three times rather than five. Medium-term 5 year licences (MTEP) will be withdrawn and more long-term 8 year licences (LTEP), which are a route to remaining indefinitely, will be issued instead.

The Steering Group acknowledged that the emotive issue of ‘birth-right privilege‘ is potentially discriminatory and proposes a specific review of the routes to becoming a permanent resident, with recommendations by the end of the States term.

 

Quick overview

There’s no public-friendly version of this policy paper so the best ‘summary’ is the list of propositions and the executive summary at the beginning of the policy letter.

The main resistance to the proposals in the Review came from those who want to see the States take active steps to increase participation in the workforce by our current population (see media articles 6-9 in the list below).

 

Articles

Media:

1. Home Affairs plan for more immigration to boost workforce (14 Sept, Bailiwick Express)
2. 3,000+ new housing units needed if deputies back population growth (15 Sept, Bailiwick Express)
3. P&R has “no agreed position” on key population growth plan (15 Sept, Bailiwick Express)
4. New population policy a ‘game-changer’ for firms (20 Sept, Guernsey Press)
5. Prow: ‘We need to develop the working population’ (21 Sept, Guernsey Press)
6. Population growth plan faces challenge in States next week (11 Oct, Bailiwick Express)
7. De Sausmarez: Let’s maximise the talent we have (12 Oct, Guernsey Press)
8. Less need for population growth if more local residents worked (12 Oct, Bailiwick Express)
9. 300 more workers in each year is ‘a Ponzi scheme’ (13 Oct, Guernsey Press)
10. Fallaize: States tackle questions on migration and population (18 Oct, Bailiwick Express)
11. Kazantseva-Miller: Does it go far enough? (18 Oct, Bailiwick Express. Similar article published in Guernsey Press.)
12. Population policy amendments ‘potentially dangerous’ says Home (19 Oct, Guernsey Press)
13. Comment: A plan for a future many don’t want (19 0ct, Guernsey Press)
14. Amendment could risk our Common Travel Area (19 Oct, Bailiwick Express)
15. Population policy amendments ‘potentially dangerous’ says Home (19 Oct, Guernsey Press)
16. “Discriminatory” amendment rejected – but Procurer says it wouldn’t have been unlawful (20 Oct, Bailiwick Express)
17. Infrastructure WILL be considered as population grows (20 Oct, Bailiwick Express)
18. Access to childcare could be improved to boost productivity (21 Oct, Guernsey Press)
19. Move to favour CTA residents with work permits is voted out (21 Oct, Guernsey Press)
20. Additional roles won’t be added to employment list (21 Oct, Bailiwick Express)
21. Increased population could demand compulsory health insurance (22 Oct, Bailiwick Express)
22. Population increase of 300 a year will guide States planning (22 Oct, Guernsey Press)
23. Comment: The plan that’s not really a plan (24 Oct, Guernsey Press)
24. Prow: Sustaining the island’s workforce (25 Oct, Guernsey Press)

Home Affairs response:

1. Committee for Home Affairs to oppose three out of six amendments to the Population & Immigration Policy Review (18 Oct, gov.gg media release)
2. Replacement of medium term employment permits will support business recruitment and retention (18 Oct, gov.gg media release)

Industry response:

1. IoD responds to Population and Immigration Policy Review (27 Sept)
2. IoD responds to Population and Immigration Policy Review (updated version, 17 Oct)
3. Guernsey International Business Association (GIBA) joins the IoD in population policy letter response (18 Oct)
4. IoD statement following latest quarterly population, employment and earnings statistics (31 Oct)

 

Amendments

There were six amendments lodged prior to the debate. See ‘Propositions and Policy Letters’ HERE.

Topline results of the votes are shown below. Full voting records are HERE.

Amendment 1 (De Saus & Haskins) – proposed that work is undertaken to better assess the resources that will likely be required to enable the States to effectively plan for the strategic population objective, and to resource that work accordingly. CARRIED 22-10.

Amendment 2 (KMiller & Soulsby) – proposed to note that the Human Capital Development Plan will include workstreams to improve economic and social participation of islanders through a variety of policy levers and that this work may reduce the requirement for the net migration level identified. LOST 14-15.

Amendment 3 (KMiller & Soulsby) – sought to give a policy direction the Committee for Home Affairs to explore any options to treat CTA (common travel area) residents differently because they are not bound by the same immigration restrictions. LOST 10-22.

Amendment 4 (KMiller & Soulsby) – directed the Committee for Home Affairs to explore ways under which it could have further flexibility to expand the LTEP (long term employment permit) list when required to address labour shortages. LOST 8-23.

Amendment 5 (Roffey & De Saus) – replaced strategic policy objective of “up to 300+ net migration with “+200”. LOST 11-22.

Amendment 6 (Roffey & De Saus) – proposed that P&R coordinate an investigation into measures to optimise the economic participation of Guernsey’s resident population and to increase, wherever possible, the productivity of the island’s workforce. CARRIED 19-8.

The Committee for Home Affairs objected to amendments 3, 4 and 5, see media release HERE.

 

A further two amendments were lodged during the debate:

Amendment 7 (Brouard/Ferbrache) – directed P&R and HSC to examine a commercially provided healthcare scheme. CARRIED 30-3.

Amendment 8 (Gollop/Blin) – proposed changing the three year maximum terms for short-term licences to four years. LOST 5-23.

 

The review in detail

If you can, read the policy letter in full – it’s an interesting introduction into how managing the population works in the island.

If reading the whole thing is too much, focus on:

• Strategic population objectives (sections 5&6, pages 10-25)
• Employment permit policy (section 7, pages 25-31)

‘Birth-right privilege’ is explained in Appendix 4 on page 51.