Thursday, 30 March 2017

Poverty in Jersey and the lies of the Council of Ministers

In November 2015, the States of Jersey Statistics Unit published their Income Distribution Survey, which shed some light on the shocking rates of relative poverty in Jersey.

In the 5 years since the previous survey, income inequality in Jersey shot through the roof and we became a more unequal society than the UK. A third of pensioners, a third of children and over half of single parent families live in relative poverty. The spending power of the poorest 10th of Islanders went down by 36%

These statistics are shameful for a rich Island and drastic action needs to be taken to make Jersey a fairer society where everyone is able to have a decent standard of living.

In the States sitting on the 14th March, Deputy Mike Higgins asked the Chief Minister for an update on inequality since that survey came out.

The Chief Minister said "relative low income is reducing".

In the States sitting on the 28th March, the Chief Minister and his assistant minister (Senator Paul Routier) were subjected to a barrage of questions on how they have reached this conclusion and what statistical evidence they have to back up such a claim.

The video above shows a politician who realises he has dug himself into a hole, and would prefer to keep digging rather than apologise for getting something wrong.

There is of course no tangible evidence whatsoever to back up the claim that relative low income is reducing in Jersey.

No real evidence exists either way (until the next Income Distribution Survey is produced in 2020), however it is clear that many of the government cutbacks to support provided to pensioners, disabled people and single parent families is likely to have exacerbated the current statistics we already have.

Following the false statements made in the States Assembly, Reform Jersey's vice-chairman Deputy Geoff Southern wrote an open letter to the Chief Minister ask him to withdraw that statement and apologise for misleading the States/ public.

After a contribution to the same effect from Deputy Richard Renouf of St Ouen, the Chief Minister responded as follows -

"Dear Geoff and Richard, 
Thank you for your emails. 
Income inequality did reduce when our economy was performing well before the financial crisis, but deteriorated as incomes fell and as low interest rates cut mortgage costs for some but did not benefit everyone. 
Now our economy is improving: average earnings have risen by more than inflation for the last four years; unemployment is at a six-year low and employment is at an all-time high. We saw economic growth of 5% in 2014 and a further 2.2% in 2015, more than double the forecast. The economy is clearly moving in the right direction, however I accept that until we have the next income distribution survey, we cannot be definitive about these complex interacting factors 
The next such survey is due in 2020 but I am working to bring it forward as it seems to me that this is an important piece of work. I hope this statement of intent is an indication of the importance I place on this issue 
Kind regards
Senator Ian Gorst
Chief Minister of Jersey"

You'll note that this response does not go quite as far as to overtly say that the statement "relative low income is reducing" is false, and it certainly isn't an apology for misleading the States/ public. I have responded to the Chief Minister asking for clarification on that specific point and we will see if he will apologise.

But what I find disturbing in this response (and the other responses given in the States) is that he is determined to pursue a narrative on their performance in government which is so flawed that you have to either question their honesty or credibility (or both).

They are attempting to make three claims -

  1. The economy is improving
  2. They have reduced the tax burden on low earners
  3. They are helping the poor by investing in health and education
Each of these can be demonstrated to be fatuous. So let's go through them.

1. The economy is improving

No it is not.

The Council of Minister claim that 5% growth in 2014 and 2.2% growth in 2015 is a sign that the economy is improving.

On the face of it, it appears to be good news, but only if you have no understand of economics and choose not to dig a little deeper into these stats.

In 2014, most of Jersey's industries did not grow, and the over all figure of 5% growth was driven by growth in the finance industry. The government's own Fiscal Policy Panel told them that this growth was not part of a trend of growth, but was due to several large firms in the Island undertaking one-off restructures which changed the numbers on paper and made the productivity figures for the sector look greater than it actually was.

In 2015, many of Jersey's industries did grow, but finance shrank! Basically the opposite of the year before.

There is no positive trend to take out of this and there is no evidence that we are facing sustained periods of growth which can be relied upon to see Islander's standard of living going up.

The government also claim that employment is at a record high.

Well, yes, this is true. We do have a record number of people in work... because we have a record high population!

In actual fact, the absolute number of unemployed in Jersey has only gone down by 140 in this term of office. The vast majority of new jobs have gone to people arriving into the Island. This is a ponzi scheme.

It is also a fact that half of the new jobs created have been zero-hours contracts, which will do little to help those working in those jobs out of poverty.

2. They have reduced the tax burden on low earners

Again, false and here is the evidence -

This is taken from the Oxera report on the changes to Jersey's tax system over the last decade.

For the lowest earners in every household type examined, tax went up.

The report even finally admits that GST is a regressive tax which disproportionately affects the poorest Islanders.

The government also introduced the LTC charge, which is regressive also.

There isn't much more to be said on it. It is just a simple lie to say that low earners have been protected by the Council of Minister's tax policies. They just haven't and the independent report shows it.

3. They are helping the poor by investing in health and education

This is a bit of a bizarre one.

How does a healthy working age adult who lives in relative low income benefit from a better health and education service? They don't. They might if they get sick, but just because you are poor doesn't mean you aren't naturally healthy.

But in any event, poverty is not measured by your access to public services. It is measured by the money you have to live off. A better funded education or health service does not put more money in your pocket.

In fact, in Jersey's case the opposite is true. because of how the government has chosen to fund it's "investment" (in inverted commas because it doesn't really exist, but I'll let that one slide for this blog!).

The government is funding extra spending in those areas by cutting the Social Security budget by £10m.

They have chosen to cut the Income Support disregards for disability benefits and pension income, as well as abolishing the Single Parent component of Income Support.

I have met people who already live in poverty who have seen their incomes drop by £600 per year as a result of these cuts.

The Single Parent component was £40 a week, so that cut will see some families (56% of whom already live in relative low income) £2,080 a year worse off.

The policies of the Council of Minister quite clearly are going to have the inevitable impact of pushing more people into poverty and making inequality in Jersey even worse.

Despite all their bluster and slogans, the fact is that the government has chosen this week to lie to the public to hide the disgraceful impact their policies are having on the poorest people in Jersey.

The public deserve so much better than this.

Monday, 13 March 2017

The Jersey Aircraft Registry - a Soaring Success from the Jersey Government

I'm not going to lie, today was pretty irritating!

Myself and someone I know had been doing a bit of digging lately, trying to uncover what we thought might be a political scandal. We were on the verge of being ready to go public and, lo and behold, the media somehow managed to beat us to it!

I am of course talking about the story today that the States has spent £860k on setting up and running the Jersey Aircraft Registry, and only two aircraft have actually signed up to it.

Just a few hours after this story hits the headlines, my written question for the States sitting tomorrow was published, so I've missed the chance to get involved. Oh well! -

There will be more documentation being published at our initiative soon to reveal a few more details.

The Isle of Man Aircraft Registry has almost 1,000 aircraft registered to it, and Guernsey's paradoxically named "Channel Islands Aircraft Registry" has 160 registered. We have two. That's £430k per aircraft, with only £11k in registration fees made to offset that. Pretty embarrassing, by all accounts.

I think that most Islanders will rightly feel aggrieved that, once again, a venture headed by the Economic Development Department has led to a huge amount of taxpayers money being squandered.

Whether it is the business class golf jollies around the world, the failed Innovation Fund or now the failed Aircraft Registry, there is a legacy of embarrassment haunting this department.

Whenever questions are raised about what the department are doing and the legitimacy of any of their activities, we get normally a rebuttal from the minister, Senator Farnham, which usually is missing any actual answer but instead contains a bit of hot air about how "this government is a success because the economy is growing and you lot just hate success".

This is incredibly worrying that Farnham thinks this is acceptable answer and, in my view, shows that he either doesn't really understand how economics works, or that he does but is just awful at bluster to hide his failures.

In a nutshell -

Jersey has had some economic growth over the last two years, but it has been erratic and doesn't reflect a positive trend. In one year growth was driven by the finance industry where several large firms undertook one-off restructuring, but all other industries shrank. The next year, finance shrank and growth was driven by the other industries. Nobody can really take anything genuinely positive out of that, especially when a large proportion of that growth was driven by the fact our population is massively increasing every year (which is ultimately a Ponzi scheme).

So, having noted some of this bluster and been unable to find any evidence that government policies were having any positive tangible effect on our economy, I thought I'd just ask a simple written question asking the minister to list everything he has done which he thinks has helped develop the economy.

Here is his answer -

To sum it up in one word, this list is - pathetic.

The first one on the list is the regulations to extend pub opening hours for the Queen's birthday (which by the way was actually my idea! But anyway...), as if this is a true success story for our economy. Unbelievable.

Others include the raising of various fees charged by the States. As if increasing the cost of business helps grow the economy.

But, most amusingly, a whole seven items on this list are to do with the Aircraft Registry!

In a parliamentary question to a States Member about measures which have had a tangible effect on economic growth, Senator Farnham chose to boast about a scheme which has seen a deficit in States finances of £849k.

You could not make this stuff up.

If his department had any proof that their actions had actually done anything to help businesses in the Island, cut unnecessary red tape or improve the regulatory framework for those busy employers in the Island, then I'm sure they would be shouting them from the rooftop. But instead we get pub opening hours on one weekend and the Aircraft Registry.

When I stood for election last year, I was asked at one hustings what I would do to create jobs in the Island. I said a combination of three things -

1) Cut Social Security Contributions for the self-employed (ironically the opposite of what the "pro-business" Tories in the UK are now doing), so they have more security in their lives, can afford to invest more and employ more people. 
2) Form a joint review group of employers and trade unions to work together at finding the laws and regulations which no longer suit the needs of either workers or bosses and consolidate, update and simplify those laws. 
3) Push forward with the eGovernment programme to cut down on bureaucracy and red tape that businesses have to contend with when dealing government.

I think these policies aren't too bad for a left-winger. Yet instead, the pinnacle of our government's creativity is the creation of an Aircraft Registry.

Lord help us!

So, is Senator Farnham our most useless Minister? It's a tough one. Leave your thoughts in the comment box below!