By Colin Lever
AUSTERITY does not put food on your table. Budget cuts do not make housing more affordable. Cutting civil service jobs does not reduce the cost of childcare and utility bills.
Agreed, the Island must balance the books, but what is being peddled will not even do that (that’s an article for another time).
The latest government comment in respect of growing concerns regarding the Island’s worrying rise in the cost of living – “we’re monitoring the situation” – does little to alleviate the Jersey public’s concern.
We are told that the cost of living is beyond our control, but this is not quite the case.
The largest contributors to a rising cost of living are:
- The price of food.
- Housing costs.
- Energy bills.
- Childcare expenses.
Food
Our government is complicit in maintaining the prohibitive cost of living. Removing 5% GST on food, and waiving the 5% charge on all food imports by the Ports of Jersey, would give a 10% discount on food, at a swipe.
Growing more produce on-Island would also eat into retail costs. In 1993, Jersey spent around 4.6% on agriculture and fishing. By 2022, that had dropped to 0.25%.
It is now investing around £7 million a year through its Rural Support Scheme but, to get back to 1993 levels, it would have to invest over £44 million.
Jersey imports 90% of its food but, from field to table, the produce changes hands around eight times, with all add-ons going to UK companies.
At the time of writing, using the Consumer Council’s website, a survey of 16 essential food items reveals that, on average, the cheapest on-island supermarket is Waitrose. This, in my view, tells its own story of how on-Island supermarkets profit at the expense of the consumer. Cut out the middlemen, you say! Easier said than done.
There has been speculation among some retailers about buying their own freighter. I did a quick scan using AI. It suggested that, for the cost of refurbishing Fort Regent, we could buy two small freighters (around £15 million each) and leave money spare for wages and maintenance.
Then, of course, there are other logistical costs. One company holds a virtual monopoly in this respect. If the government is serious about food security, it needs to bring logistics under state control.
Housing
We are told that the only way to reduce housing costs is to build more, but, as Gary Stephenson (economist), said: “No matter how many houses you build, if they are not affordable then it won’t solve the housing problem.”
Why? Because the whole business of house sales is biased towards those with deep pockets.
Internationally, embarking on large, open market, housebuilding programmes has had minimal impact in lowering house prices. Germany (0.2%), New Zealand (4.1%) U.S (6%) (source Bloomberg).
More “social housing” would take the heat out of housing. There are moves in many countries to re-introduce state-owned properties to provide more “affordable” housing for residents. From Saudi Arabia to Singapore, and from the United Arab Emirates to Vienna, Austria, all are stepping up the creation of state-owned properties. Their apparent philanthropy is pragmatic. It is an economic investment, creating a stable, contented, workforce.
Our government insists that Andium returns £28 million per annum. Why? This could be used to lower residents’ rents. On-island banking sets its mortgage rates at 1% above that in the UK. Why?
“Critics argue that institutional investments underscore the UK’s housing crisis, where families are increasingly locked out of home ownership and exposed to rising rents.” (source: Elite Agent)
There is growing concern that leverage buyout is taking increasing control of the housing market. With a finance industry built on enhancing private equity, there is good reason to assume the same is happening here.
Serious property investors tend to have a significant portfolio of five-plus properties. This indicates that over 30% of Jersey properties are owned for commercial purposes, most demanding premium returns.
Statistics Jersey revealed that eight “concerns” owned 50-plus properties each in the Island.
The recent vote to remove tax relief on buy-to-let mortgages was defeated in the States – yet another example of how our present government is complicit in contributing to our inflated cost of living.
Energy
“Passivhaus” is a concept whose aim is to reduce energy demand in a building by up to 90%.
It achieves this by combing elevated levels of insulation with efficient heat, recovery ventilation. The last Island heat check was carried out in 2011 and there is no record of EPC scores. A simple drone survey could resolve this. The most cost-effective method of saving energy in a house is simply having items such as curtains, carpets and draught excluders.
The cost of electricity in Jersey is less than that in the UK, principally because the UK has locked electricity costs to gas and oil, which is dictated by global prices. As with water, the States are majority shareholders in Island energy, so they should be able to control the price of electricity beyond what they pay for from France. Not so. The Companies Act 2006, section 994, prevents this.
Although dividends from Jersey Electricity are hardly eye-watering, minority shareholders have a right to a premium, meaning that paying shareholders comes before the Island’s needs.
Here, once again, the States is complicit in adding to the cost of Island living. Taking full ownership of our utilities would allow the government to reduce prices. And then there is the question of renewables (but this is another article for another time).
Childcare
It is time for the finance sector and other anchor institutions to step up to the plate and provide free – or subsidised – childcare for its employees, thereby taking the heat out of the nursery market.
Improving resilience is the best way to guard against global market fluctuations. Jersey’s present economic thinkers offer Islanders little protection.
Community Wealth Building would satisfy that need.
If you go to the hustings, ask the candidates one question: “How do they intend to reduce the cost of living?” It is doable.
Colin Lever is a retired teacher and education specialist, SEND consultant, and commentator on educational and community issues. He also contributes musically to Repair Cafés and charity events and is currently writing and producing a comedy sitcom podcast.
