"It is not in anyone’s interest to turn the development tap off"

Friday 10 November 2017

Jersey's Planning Minister has promised that developers profits will be protected amid controversy over plans to bring in a new tax on developments.

The Minister behind the proposals, Deputy Steve Luce, was grilled on the subject of the controversial Jersey Infrastructure Levy (JIL) during a Scrutiny hearing yesterday.

Under his proposal, the levy would allocate a percentage of the profit from land development to improve the quality of island neighbourhoods affected by new development. If agreed by the States, developers would be asked to contribute around £80 per square metre for all new developments, with a set percentage going to the parish where building is taking place

Deputy Luce said the impact of the levy will be marginal, adding that landowners refusing to sell as a result of it was a "moot point." He explained that his department had done a lot of research to establish in which areas the levy could be viable and that only three specific markets - residential, office and retail - were targeted as a result. "It is not everybody and anything. There will be no levy on social housing, or on tourism, it is quite specific," he said.

While the Chamber of Commerce President Eliot Lincoln expressed concerns that the levy would "slow the industry down" earlier this week, Deputy Luce assured the Panel that he would keep reviewing the levy as things move along to avoid any adverse effects. He added that the levy will never be so high that it will prevent developers from achieving profits of 20%. He said: "If we get through the inspection and find at any point that the numbers are not stacking up, we will not move forward. If we can't get those 20% plus profit margins for developers, we will stop it."

Pictured: Deputy Steve Luce has asked the States Assembly to agree with the Infrastructure Levy in principle.

Deputy Luce explained that this would be the case both during the inspection phase, as well as further down the line. If building costs were to increase as a result of Brexit, for example, the Department would review the levy's percentage to maintain the 20% mark.

Deputy Luce told Express: "What we don't want to do is find ourselves in a situation where developers only make 15% profit because then banks won't be on board and it will affect the industry. The levy is not set in stone. As we move forward we will keep reviewing the situation and if we find that the 20% profit is not attained, we will tweak it. Even when it is running we will be reviewing it maybe every year or two years."

Kevin Pilley, Director for Policy and Projects, also committed that the Minister wouldn't "seek to pursue something that will prevent the delivery of the Island Plan."

"He is mindful to ensure that anything he does does not adversely affect the delivery of its objectives," he said.

Pictured: Deputy Luce said that his department would continue to review the charge to ensure that developers don't see their profits fall below 20%.

Andy Scate, Chief Executive Officer, added: "It is not in anyone's interest to turn the development tap off."

While the States Assembly still has to agree "in principle" with the JIL, Deputy Luce says it could be highly beneficial. He explained it will help fund works to make St Helier even better by building more green spaces, children's playgrounds and other projects.

"Our intention is that any money raised will go into a pot for a use. We will have a shopping list where people will be able to see how much a tree costs, how much a bench costs. And we will be able to tell them, we are going to use your money for a tree and to make this area better. There would be a direct tangible between the money that comes in and the work carried out," he commented.

If agreed, the levy won’t be introduced until after April 2019 at the earliest, to allow developers who have acquired, or are in the process of acquiring land, to secure planning permission for development schemes.