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The first day of the Government Plan debate was marked by two defeats for ministers followed by a victory...over one of their own colleagues.
Scrutiny amendments to bring in a new rate of stamp duty for buy-to-let and holiday properties were successful, while an attempt to limit borrowing by External Relations Minister Senator Ian Gorst failed.
Covering 2022 to 2025, the Government Plan proposes running a deficit until 2024/25, taking out £1.7bn-worth of debt and spending £210m in 2022 on various capital and infrastructure projects.
Before States Members vote on the full plan, States Members are debating 13 amendments to it.
Originally, 26 were proposed, but ministers have accepted half of them, or suggested their own tweaks which the proposer of the amendment has accepted.
The first battle came on Tuesday morning over Stamp Duty, which Scrutiny won.
Then in the afternoon came a challenge to the Government's planned rise in alcohol duty.
The Government Plan put forward by the Council of Ministers included an alcohol duty freeze on all strengths of beer and cider, whilst increasing the duty on all wines and spirits by 5%.
But the group of politicians on the Corporate Services Scrutiny Panel instead suggested cutting the Government's proposed increase on alcohol duty for wines and spirits from 5% to 2.5%.
Presenting the amendment on behalf of the Panel, Deputy Steve Ahier referred to the concerns raised by the Jersey Hospitality Association, which he said the panel was sympathetic to, and argued the amendment aimed to support the industry by “keeping taxes low, broad simple and fair”.
He said that the Council of Ministers was trying to make the “worse solution appear the better resolution”, adding there was no proof that increasing duty would lead to less consumption and that addiction to alcohol should be dealt with “on an individual level."
Instead, he said the increase would impact selling and consuming and that targeting wine and spirit drinkers was “fundamentally unfair”. He concluded the amendment was the right balance between “revenue raising, public health and economic impact”.
The Constable of St. John, Andy Jehan, supported this view. He described the amendment as a “sensible compromise” that showed coherence and consistency for the industry. Senator Steve Pallett argued the amendment was “balanced” and would not hurt an industry that has been badly hit during the pandemic.
St. Helier's Constable Simon Crowcroft and Deputy Mary Le Hegarat called for support for the hospitality industry, with the former arguing that rejecting the amendment would send the message that the Assembly did not listen to the hospitality industry, while the latter said she wanted to support the restaurants that have recently opened in St. Helier.
Several States Members questioned why beer and cider had been excluded from the increase, with Deputy Kirsten Morel suggesting it would penalise women, as they are more likely to consume wine than beer and cider. “There is underlying sexism in the proposition,” he said.
Meanwhile, Ministers spoke against the amendment. Treasury Minister Deputy Susie Pinel voiced concerns about the level of alcohol consumption in Jersey, particularly among younger people.
She argued that lower volumes of beers and cider were consumed and that wine was most likely to be consumed in a “hazardous and harmful way”.
The Health Minister, Deputy Richard Renouf, also refused to support the amendment, saying the Government sought to “prioritise the most vulnerable and the health and wellbeing of islanders” through its proposals.
Chief Minister Senator John Le Fondré said the money would be taken out of the budget for Economic Development as the amendment sought could be seen as support to the hospitality industry. The Minister responsible for the department, Senator Lyndon Farnham, eventually supported the amendment.
Deputy Rob Ward, meanwhile, suggested the proposals may have been put forward as a “genius move in terms of taxation” ahead of the World Cup next year, during which he said large amount of beers were likely to be consumed.
The amendment was adopted with 29 votes 'pour' and 16 'contre'.
JHA CEO Claire Boscq said the group was "delighted that so many States Members gave their support to hospitality businesses who have struggled during the pandemic and continue to feel the pressure from cancelled events and staffing issues."
She added: "Our sector has needed support and we are grateful to the Government for providing that during the pandemic, but our industry is not one that relies on handouts. Our members and their staff work incredibly hard to ensure the island continues to have vibrant hospitality businesses. After the last twenty months, it is heartening to know that the majority ofpoliticians understand the difficulties we are facing, and we are looking forward to workingwith the Government and all States Members in bringing hospitality to the forefront of the economic recovery.”
Next was a failed bid by the External Relations Minister to stop the Government borrowing £345m to re-finance liabilities for a civil service pension scheme that was closed to new members in 1987.
Senator Ian Gorst argued that the proposed £1.7bn of borrowing in the Government Plan was too much because it would prevent future governments from borrowing for any emergency of their epoch.
This is because the Government was using the £1bn Strategic Reserve as a guarantee to lenders, meaning it would be unavailable for future use.
However, the Senator was defeated by 20 votes to 27, an outcome which looked likely after the Reform Party, which has five sitting States Members, sided with the Government, arguing that taking the loan was simply repurposing existing debt while money was cheap.
Senator Gorst said: “Members need to recognise that, in accepting the Government’s plan, it will not be able borrow up to the maximum when there are other issues that need to be addressed.
“Is this now absolutely the right time to do this? The only credible reason I can think of is that money is cheap. But that has never been a sensible reason to borrow.
“This amendment gives Members the opportunity to consider the detail and better understand the implications of Covid on the economy before we move all flexibility to borrow for anything else, and all flexibility about the use of the Strategic Reserve.”
Opposing this view, Chief Minister John Le Fondré said: “This is not a new liability; it has been with us for a long time. If we don’t act now that long-term liability will get more expensive.”
He said that taking out a loan to pay off the pension debt would save about £300m, or £260m in cash terms, by 2053.
Ministers did, however, accept a part of Senator Gorst’s amendment, which committed the Government to pay off its £209m covid debt within five years.
The Chief Minister said this would be paid off by the £340m that will be generated by islanders moving from paying tax on prior-year basis to a current-year basis.
The Government Plan debate continues on Wednesday with an amendment from Deputy Geoff Southern, who is seeking to protect and enhance the Health Insurance Fund.
Today's debate will shortly be available to watch in full HERE.
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AMENDMENTS: The 26 spending battles being fought this week
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