MINISTERS have defended proposals contained in a mini-budget designed to tackle the cost-of-living crisis – amid criticism from pressure groups and a trade union that more support could be offered.
During a Scrutiny hearing yesterday, Treasury Minister Ian Gorst and Social Security Minister Elaine Millar were questioned about whether the proposals were targeted enough towards lower earners and whether further support would be needed to help Islanders facing spiralling prices.
They refused to rule out the introduction of further measures, stating that the end-of-year Government Plan and the upcoming Common Strategic Policy would allow for further discussions about the ‘rapidly moving’ crisis.
Upon her election as Chief Minister, Deputy Kristina Moore promised to deliver a mini-budget within the first 100 days of her premiership.
The £56.5 million package of proposals, which were announced at the start of August, include benefit increases, cuts to social security contributions and higher tax breaks, which Deputy Gorst said would put more money back into Islanders’ pockets.
Following the launch of a review by the Corporate Services Scrutiny Panel, several organisations submitted evidence welcoming the intention behind the mini-budget, but claiming it does not go far enough.
The Jersey Trades Union Council argued in favour of 18-month rent freezes, covering social-security contributions for the rest of the year and axing, or at least reducing, GST on food – a call which was echoed by the Jersey Consumer Council.
The council also suggested a temporary removal of fuel duty and a one-off Christmas bonus for those on income support and States pensions. Meanwhile, the Student Loan Support Group questioned why young people studying away from Jersey were not due to receive additional support.
The most recent Retail Prices Index report, which measures the change in the price of goods and services purchased by an average household, marked the annual rate of inflation at 7.9% – the largest 12-month jump since September 1991. In June last year inflation stood at 3.5%.
The UK rate of inflation grew to a 40-year high of 10.1%, with fears that it could continue to rise, which Deputy Gorst, during the hearing, admitted could be mirrored in Jersey.
However, he added that ‘flexibility’ had been built into the mini-budget proposals to deal with further inflation hikes.
Following questioning from panel chair Deputy Sam Mézec, Deputy Gorst said that the decision was taken not to remove or cut GST on food as the ‘administrative timeline’ of making such a change would be too long and therefore not be ‘timely for the benefit of Islanders’.
Deputy Gorst added: ‘What this budget is seeking to do is provide benefit to low-income families. It is not seeking to deal with broader issues. It is seeking to focus benefit through the threshold increases, through social security contribution reductions, through benefit increase to deliver benefit to low-income families.’
Defending some of the other proposals, Deputy Millar said the timescale for lodging the mini-budget to ensure it could be debated during the first sitting after the States summer recess meant that ministers could only use amendments to ‘existing mechanisms’ rather than bringing major new legislative changes.
She said: ‘What we have done with this mini-budget is to look at steps we could take quickly to help people. If we get to winter and if we think these measures are not going to do the job, then we will think again.’
She added that ministers were unable to create ‘new benefits out of thin air very quickly’ when asked about the potential for further inflationary rises.
The Social Security Minister also revealed that consideration had been given to handing out one-off cash payments – similar to the Spend Local scheme which saw all Islanders given £100 during the pandemic to help prop up the local economy – but explained that the time needed to roll out the scheme once more was too great, as it was felt too many people would have lost their cards or thrown them away.
One criticism that has been levelled at the mini-budget is that it does not contain definitive measures to tackle high rent increases, with ministers instead committing to liaising with landlords and attempting to persuade them to keep rental hikes down.
The Landlords’ Association said it was ‘acutely aware’ of the cost-of-living pressures faced by Jersey households, and claimed its members were being ‘restrained’ when it came to rents in a recent statement.
Deputy Gorst said: ‘I think that the statement does show a change and a commitment to understanding that Islanders are suffering the cost-of-living crisis.’
