Policy on the economy has to begin from the current position. The following table shows the breakdown of economic activity, measured by gross value added (GVA), in 2019 at 2020 values (the 2020 figures are distorted by the impact of Covid.)
Jersey, Gross Value Added by sector, 2019
|Sector||Gross value added
|Other business activities||585||11.5|
|Hotels, restaurants and bars||224||4.4|
|Rental income of private households
Electricity, gas and water
Wholesale and retail
Transport, storage and communication
Source: Statistics Jersey.
The table shows that financial services dominate the economy, accounting for 39.5% of gross value added. It is also the case that finance centre activity is responsible for around 70% of tax revenue, largely in the form of income tax from people working in the sector. Agriculture, one of Jersey’s traditional industries, accounted for 1.2% of GVA.
Hotels, bars and restaurants accounted for 4.4%. Part of this represents the tourist industry, which 50 years ago accounted for around half of the economy, but much of it reflects consumption by residents. Rental income of private households needs some explanation.
It is a theoretical concept and is basically what homeowners would pay themselves to rent their property. No actual payments are made. The concept enables meaningful international comparisons to be made.
The prosperity of the people of Jersey depends on its economy, and given the very small size of Jersey in practice, this means producing goods and services that are sold in other jurisdictions the proceeds being used to import goods and services consumed in the Island.
Other the centuries Jersey has been highly successful in exporting its produce – stockings and cider in the 17th and 18th centuries, fishing and shipping in the 19th century, potatoes since the 1850s, tourism for much of the 20th century and more recently financial services. The success of these industries has enabled Jersey people to enjoy a high standard of living, including the provision of public services paid for by taxation.
The Alliance has set out its vision for Jersey –
This is in line with what Jersey has been in the past. The task of government is to help ensure that there is the right business environment to ensure that the economy does continually adapt.
In the foreseeable future finance centre activities will continue to provide a large proportion of the employment, and the tax revenue, on which the Island depends. But the continued success of this industry cannot be taken for granted. The industry needs to adapt to changing circumstances, and also the Island needs to develop other industries so as to diversify the economy.
The Alliance’s vision is in line with the excellent report New Perspectives, by the independent members of Jersey’s Economic Council, published in December 2020. The Alliance does not believe in reinventing the wheel and enthusiastically adopts the recommendations in this report as the basis for its policy on the economy. The Alliance endorses the five interrelated strategic themes which the report identifies as the most significant drivers to future economic prosperity –
The Economic Council’s paper includes messages for Government, which again the Alliance endorses and which it will seek to act on in Government –
First class education and skills are vital to the future prosperity of the Island – and Jersey owes it to its young people to ensure that they are equipped to compete in an increasingly competitive marketplace in which ability to use the latest technology will be vital.
This means that children and young people must be educated for the working world they will enter, one aligned with the Island’s economic strategy. The culture of lifelong learning must also be firmly embedded – within government, companies and the education system.
The Independent Review of Education Funding showed that Jersey has some catching up to do in respect of education. In particular, the percentage of pupils who go on to Level 3 study is ten percentage points lower than the UK figure.
Jersey already has a good higher education offering through a combination of Highlands, JICAS, Digital Jersey and the Institute of Law Jersey but is capable of doing much more using hybrid and in-person learning. The concept of a higher education campus in Jersey, preferably embracing the faculty of an UK university, is, at first sight, attractive and merits detailed analysis.
In considering education it is tempting always to consider revising the curriculum. While this must be done it is more important in the short term to raise the level of attainment and to embrace technology in every subject rather than teaching it as a stand-alone subject.
More generally, the role of Government should be to facilitate an environment in which entrepreneurship and innovation flourish and then to let the private sector and the arm’s length bodies get on with it. The Economic Council has a crucial role to play here by ensuring that the Government has top quality advice on the priorities, whether they be in respect of education, population policy, planning, regulation or taxation.
Government by its nature is not entrepreneurial, but it alone controls the policies which determine whether a nation prospers or declines.
This policy paper sets out a framework for the Jersey economy and does not attempt to set out detailed policies for specific industries. However, some general observations are appropriate –
Jersey Electricity, JT, Jersey Water, Jersey Heritage, Andium Homes and the Jersey Development Company all play a vital role in providing services to the Island, and Digital Jersey, Visit Jersey and Jersey Finance each have a significant promotional role. Generally, these bodies have been very effective, and each is capable of doing much more to benefit the Island if given the scope to do so.
The Alliance’s machinery of government policy paper will set out a proposed new framework under which the States Assembly would be responsible for the legislation on the Government-owned bodies, appointments to boards would be made in accordance with the requirements of the Jersey Appointments Commission, formal approval resting with the relevant minister, major decisions and annual plans would be signed off by the relevant minister but otherwise all operational matters should be the responsibility of relevant boards.
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