States Meeting Transcript - 16th September 2014

STATES OF JERSEY OFFICIAL REPORT

TUESDAY, 16th SEPTEMBER 2014

PUBLIC BUSINESS..............................................................................2

1. Vote of No Confidence: Minister for Treasury and Resources (P.148/2014)............2

1.1 Deputy G.P. Southern of St. Helier:......................................................2

1. Senator P.F.C. Ozouf (The Minister for Treasury and Resources):.......................7
2. Senator S.C. Ferguson:.................................................................14
3. Deputy J.A.N. Le Fondré of St. Lawrence : .............................................15
4. Senator P.M. Bailhache : ................................................................18
5. Senator L.J. Farnham ...................................................................18
6. Connétable P.J. Rondel of St. John : ....................................................19
7. Deputy N.B. Le Cornu of St. Helier:....................................................19
8. Deputy M. Tadier of St. Brelade:.......................................................20
9. Deputy S.Y. Mézec of St. Helier:.......................................................22
10. Deputy J.H. Young of St. Helier:....................................................24
11. Deputy A.E. Pryke of Trinity : .......................................................26
12. Deputy S. Power of St. Brelade:.....................................................27
13. Deputy E.J. Noel of St. Lawrence : ..................................................29
14. Senator A. Breckon:.................................................................29
15. Connétable J.M. Refault of St. Peter:................................................32
16. Deputy J.M. Le Bailly of St. Mary : ..................................................32
17. Deputy M.R. Higgins of St. Helier:..................................................33

LUNCHEON ADJOURNMENT PROPOSED..................................................35 LUNCHEON ADJOURNMENT................................................................35

18. Deputy R.G. Le Hérissier:...........................................................35
19. Senator I.J. Gorst : ...................................................................37
20. Deputy A.K.F. Green of St. Helier : ..................................................41
21. Senator A.J.H. Maclean:.............................................................42
22. Senator P.F.C. Ozouf : ...............................................................44
23. Deputy G.P. Southern : ..............................................................55

ARRANGEMENT OF PUBLIC BUSINESS FOR FUTURE MEETINGS ....................59

2. Deputy J.M. Maçon of St. Saviour (Chairman, Privileges and Procedures Committee): 59

ADJOURNMENT................................................................................60

[9:30]

The Roll was called and the Dean led the Assembly in Prayer. PUBLIC BUSINESS

1. Vote of No Confidence: Minister for Treasury and Resources (P.148/2014) The Deputy Bailiff :

Very well, then the remaining matter on the Order Paper is Projet 148, lodged by Deputy Southern - Vote of No Confidence: Minister for Treasury and Resources - and I will ask the Greffier to read the proposition.

The Greffier of the States:

The States are asked to decide whether they are of opinion that they have no confidence in the Minister for Treasury and Resources.

1.1 Deputy G.P. Southern of St. Helier :

May I start by saying that this motion of no confidence I am treating as a serious matter, because a motion of no confidence must be treated as a serious matter. It is not brought lightly, nor indeed maliciously, nor - lest anybody should suspect it - is it a question of personalities. It is a question of policies; policies which have been of some concern to me for a considerable time. In attempting to bring some amendments to this Budget, I began to realise that the whole thing needed serious review. It was almost impossible to break apart, and the end result, with a zero sum in the Consolidated Fund, made it extremely difficult to do anything with it. The concerns I expressed in

my report, P.148, are not about the revenue forecast per se which led up to the 2014 Budget. I make no criticism of those who made them; they were doing their best at the time. My criticisms centre on, are directed at, the treatment that those predictions received at the hands of the Minister for Treasury and Resources. The shortfalls we are now aware of in both the 2014 and the 2015 Budget are significant and serious. There are questions that need to be answered, questions that singularly have failed to be answered in the last session at question time, on Sunday morning on the radio, no answers forthcoming. My suspicions about this Budget were reinforced by this absence of any concrete answers to questions. The questions, as I say in my report, concern 5 aspects of this particular Budget. One is the timing. When was the Minister aware of the impending shortfall and when and how was this information shared with stakeholders, in particular Members of this House? When were the changes to dividend or share arrangements notified to Jersey Post, Jersey Water and Jersey Telecom? Now they have been hurriedly amended at the last minute, and nonetheless those questions still need answering. In turn, this leads to the question of transparency. If such large shortfalls were known about, why did the Minister not alert Members to them? Why has he continued with his eternal optimism in the face of substantial evidence to the contrary? There is also the question of deliverability. Is it possible to deliver a 2 per cent reduction in pay budgets across all departments at a time when school rolls and hospital waiting lists are rising? If a job freeze cannot be delivered, what prospects are there for a further wage freeze? By wage freeze, I mean a below inflation wage award. Now, that again has been amended at the last minute. I understand now we are only talking about a 1 per cent cut across all budgets, nonetheless is it deliverable in every budget? Legality: the Minister has once again raided some supposedly ring- fenced funds. He needs to show that there are legitimate areas into which he can divert these funds. This principle which is occurring more and often of raiding specialist budgets, special budgets to cater for the general revenue spend is, we have seen, worst of all with the Health Insurance Fund, where we have taken 2 lots of £6 million out of it and it is now on its last legs. This principle must be wrong. Reneging: this again suggests that the Minister has chosen to postpone or delay action on a number of important areas where decisions have been recently made by the States, so who is running the show? Is it the States or is it the Minister for Treasury and Resources? My layman's feeling that there was something deeply wrong with this Budget - a gut feeling, if you like - that something was wrong in the States of Jersey unfortunately was reinforced by the experts employed by the Corporate Services Scrutiny Panel, who in far more precise and technical terms expressed exactly the same reservations as I did. Many questions about the processes involved in the production and presentation of the 2014 and 2015 Budgets have been directed at the Minister, not only in Scrutiny, but also in question time, and indeed, last week on the Politics Hour. So far, as we shall see, there have been no answers. These questions will be put to the Minister once more today. I believe this Assembly has the right to hear honest and transparent answers to these questions. Will we get those answers? We shall see in the course of the next few hours. Before we start asking those important questions, let us take a moment to consider the Consolidated Fund. What is it? I like to think of it as the family's current account. Let us call that family the Ecobichons. It is there to ensure that the routine bills for running the household are paid. Mr. Ecobichon's wages go in and the regular bills, electricity, rent and so on, come out, often by direct debit. Mrs. Ecobichon takes out some cash for doing the weekly food shop. They have some savings in a deposit account. In fact, they are so well-off, they have a year's salary in the reserve, but it is only for emergencies and one-off purchases. In the good times, that is fine, the family lives well. The family has a small but adequate float in the bank to draw on to meet its regular bills and some unforeseen contingencies. That is like the Minister for Treasury and Resource's Consolidated Fund. Like the Ecobichons, he also has the Strategic Fund, with a year's income in it. But then suppose the economy worsens, the breadwinner loses all overtime, he then gets put on reduced hours and then on a zero-hours contract. Income goes down below expenditure. Instead of using their deposit account to tide them over, Mr. Ecobichon runs around the house frantically turning out the pockets of every pair of trousers he has worn in the last year, some of which he has not worn for years, and every old handbag he can find. He then empties the kiddies' piggybanks, along with their TSB savings accounts, raids Granny's National Savings, cashes in her I.S.A. (Individual Saving Account) and her Christmas Club, and finally hunts for the odd 50 pence he can find down the cushions on the sofa. Does the 2015 Budget sound principled or do the words of one C.I.P.F.A. (Chartered Institute of Public Finance and Accountancy) adviser sound more accurate? Does it remind you, this tale of the Ecobichons, of the 2015 Budget? Does the Minister's scramble to cover the shortfall in revenues in the 2015 Budget sound principled or do the words of one C.I.P.F.A. adviser sound more accurate when he says: "The need to fund core net spend from specific reserves and funds, together with the apparent speed by which the remedial measures have been put together, does not inspire confidence that the 2015 Budget has been founded on sound principles and good financial management practice." That is a serious accusation, that confidence is not inspired by a professional in judging this particular Budget. The Minister has recently started saying: "What would my critics have done differently?" I say they might have held their hands up and admitted the extent of the shortfall between estimates on which the M.T.F.P. (Medium-Term Financial Plan) was planned and the actual revenue income was serious enough to spend income from the Strategic Reserve to tide us over this critical period. The Minister instead pretends that all is well. He refuses to tailor his spending to match income or to attempt to raise income to balance

expenditure. He chose instead to ignore the warning signs and plough straight ahead with his out- of-date M.T.F.P. Could he have turned to the Rainy Day' fund? I believe he could. If we look at page 109 of the Budget, it suggests at 2.1.1: "The Strategic Reserve Fund was established by the States with an initial capital injection of £10 million to provide the Island with some level of insulation from external shocks."

[9:45]

Are we suffering from external shocks? We certainly are. Then in 2.1.4 he starts talking about: "The capital value is only to be used in exceptional circumstances to insulate the Island's economy from severe structural decline." The question is raised at this early stage: have we got a structural deficit? That is a serious question to ask, because if it is structural, it almost automatically dictates that something must be done about it. If it is structural, either your spend has to come down or your taxes have to go up and yet that is not what we have been told and led to believe from this plan. The crucial question that requires an answer is when did the Minister learn of the potential shortfall of some £30 million in 2014 or prior to 2014? For this, we have to start back at 2012 and questions asked by several Members. Deputy Power asked: "Could the Minister clarify how the assumptions on economic growth, as outlined in the Medium-Term Financial Plan, were calculated? I am referring to page 42 of the Plan, which asserts that States income will grow from £613 million in 2012 to £681 million by 2014, which is over 10 per cent" to which the answer was: "As far as 2013 and 2014 is concerned, the approach is exactly the same of the U.K. (United Kingdom) Office for Budget Responsibility and other forecasting agencies. That is that the economy will return in Jersey, as in the U.K., to average performance in that period, reflecting long-term trends and recent experience. I personally reviewed all of the assumptions when I returned from my own summer break and was pleased that after having looked at them, I maintain the conclusion that the assumptions were absolutely robust." They were not, as we now see, to our cost. Deputy Power again doggedly went on: "Most economies in the West, including the U.K. and U.S. (United States) are forecasting growth rates of less than or equal to 1 per cent in the next 12 months and not much more than that after that. Would the Minister agree that Jersey seems to be out of sync, and would he not agree that projecting growth that may not be achievable factors in increased States spending at the same rate? My question to the Minister really is is this prudent?" Then I ask: "Is it not the case that the Office for Budget Responsibility has been downgrading the U.K. forecast, so that now in 2012, it has confirmed that it is in double-dip recession, and that despite the Minister's optimism, our own figures should equally be downgraded as well?" To which Senator Ozouf says: "They may in this year be downgraded in terms of economic growth somewhat, but this has not changed the income tax forecast that the Deputy quite rightly said was the most important thing." In short, according to the Minister, while economic growth forecasts may be downgraded, income tax forecasts should not be, despite the obvious link between economic activity and tax revenues, the product of that activity. So here is the gap in understanding what is going on. We had something like 5 years of negative economic growth, minus 3 per cent, minus 5 per cent, minus 2 per cent, minus 4 per cent, and yet the Minister in charge says: "That is not going to affect the income returns." Not in any economic book that I have read: that inevitably, sooner or later, you are going to see income tax and other tax revenues come down. It is bound to happen; it must happen. So there it is: total faith in the economic growth forecast but no link with the tax returns produced. Who is responsible? The Minister, in his answers last week, did give one answer. He said: "The Minister takes complete responsibility for looking at forecasts." Where does the buck stop? With the Minister, complete responsibility. Now, Professor Oliver, advising the Scrutiny Panel, said: "It is very difficult to comprehend why the Treasury did not use the May 2013 forecasts for the 2014 Budget and to persist with forecasts that were outdated even at the time of publication of the Medium-Term Financial Plan in 2012." Again, advice from a very thorough professional, who says: "Difficult to comprehend why the Treasury did not use the May 2013 forecasts for the 2014 Budget." He continues to describe it thus: "In turn, this raises some very important questions. Did the Treasurer provide advice to the Minister for Treasury and Resources which was based on more optimistic scenarios, rather than those which were prudent, and if so,

why? When were the Council of Ministers informed of the deterioration in the income forecast? Did they express their disquiet about the forecast? Were the 2013 forecasts not published in the 2014 Budget?" Note, not published because policy-makers were concerned that this would have called into question the wisdom of the marginal rate tax cut and drawn attention to the potentially deteriorating fiscal position in Jersey, when the authorities were seeking to obtain a favourable review from the credit rating agency, Standard and Poor's. So when were stakeholders informed?

We still do not have that answer, but last week we had an answer of sorts. When asked by Deputy Le Fondré about the revised forecast and why it had not been used, the Minister said the following: "What we have done is we have updated Members of the latest information and I was quite clear in last year's Budget, and that is why Members had a full copy of the full report which had not been published, because it contains a lot of granular detail of our income. All Members had a copy of the income tax forecasting conclusions last year and I will be doing that again this year, by giving Members the full details of the Income Tax Forecasting Group conclusions." When did we finally see that advice, that paper? Deputy Young pointed out last week that we saw it. In fact, it was lodged on 3rd December as we were going into the Budget debate. No time to study it, no time to analyse it, no time to question it or to use on the Budget. Everybody had their amendments and their reactions ready without that critical piece of knowledge that we were going into deficit. We passed the 2014 Budget, fine, and only come February in the following year did questions start to rise up about this deficit and its size. The Budget had already been passed, passed in ignorance, because we had not had the information until the very day we were debating the Budget, no time to do anything about it. It is fairly common practice in the U.K. to hide, to bury bad news at 4.45 p.m. on a Friday evening when you have got a Bank Holiday coming up. Is that what happened in this case? "We will give them the information but we will do it on Budget day so no one can use it. We will get our Budget through without telling them, without fully understanding that we are into deficit budgeting." I have one other bit of information. I remember seeing on that particular day - I do not know if it came in an email or if it came with the full document - but there is some blue line, red line and the black line showing something in absolutely tiny scale, it looks about less than a millimetre drop. It represents something like £30 million plus shortfall of tax revenues. A tiny piece of information, not really explored. Returning to the question of when were stakeholders informed, again, last week the Minister dodged the question raised by the experts, where I asked: "The key question is, I think, was the information contained in the 2014 Budget about the shortfall between predicted forecast revenues and what was coming in shared with the people making the decision over the loan, or was it a much larger shortfall between the predicted and actual or pre- forecast in the 2015 Budget? Were those 2 pieces of information, £45 million 2014 and £75 million plus 2015, shared with the assessors?" Here is the answer: "The fact is that we have seen a shortfall in revenue in 2013, fully disclosed, and we explained it, where it came from." Then later on he says: "All information was given and the track record of beating estimates was also something that we explored." Is that the presentation: "We had a deficit in 2013, but it was covered by a one-off payment from one company, more or less"? Did we talk honestly and frankly about what was predicted, £45 million shortfall, £75 million shortfall later on? We are told we have seen a shortfall in revenue in 2013, fully disclosed that. Does not say. Did we disclose or did we not disclose the people coming around to assess us for that fund? No answer, except to suggest information was given and we pointed to the track report of being prudent and under-estimating, usually, our income revenues. We return in fact to the endlessly optimistic position adopted by the Minister in the face of much evidence to the contrary. In his presentation at the 2014 Budget, the Minister spoke for 45 minutes. There was not one mention of the potential shortfall in revenues. Instead, endless optimism: "Since we lodged the Budget and I made my initial statement, there have been a number of positive developments. The global economy, according to the O.E. C.D . (Organisation for Economic Co-operation and Development) continues to expand at a moderate rate of 2 per cent this year. Whilst growth is uneven, it is expected to accelerate to 3.9 per cent in 2015, while the risks of Europe have receded.." et cetera. Further on: "Economic conditions locally are slowly improving. I am pleased to see that the latest results from the Business Tendency Survey show that most of the indicators have improved on the last year. In particular, business optimism is at the most optimistic period at any point since the survey began in 2009. Local business volumes were beginning to replicate the upturn in business confidence reported in the city and this was encouraging news." Endless optimism; no mention of any shortfall anywhere. Earnings going up, inflation staying low: "The Fiscal Policy Panel recognised in their annual report a moderate improvement in the economy too and they revised upwards their forecast for 2013."

[10:00]

Is this backed up by the experts? Professor Osborne: "Like its predecessor a year ago, the foreword to the Budget is strong on rhetoric but weak on recognising reality, and elsewhere, the significance of the Fiscal Policy Panel's comment that the medium-term outlook, while uncertain, suggests there are significant challenges in even maintaining a balanced Budget, that should not be underplayed." Can we have confidence in the Minister's handling and the content of the Budget in 2014 and 2015? Let us turn to the expert quotes that we found in the admirable recent Scrutiny report. Professor Oliver: "It is very difficult [I remind you] to comprehend why the Treasury did not use the May 2013 forecast for the 2014 Budget and to persist with forecasts which were outdated even at the time of the publication of the M.T.F.P. in July 2012." Now he has taken some belated action in the 2015 Budget, does that inspire a return of confidence? Sadly, I do not think it does. Let us hear some more quotes from C.I.P.F.A.: "The fact is that a further 1 per cent cut in the marginal rate of income tax was in completion when income tax forecasts produced by the I.T.F.G. (Income Tax Forecasting Group) showed significant downturn further suggests a lack of clear direction in setting the financial strategy." Lack of clear direction in setting the financial strategy. Who sets that strategy? Why, it is the Minister. Then a further one: "The need to fund net core spend from specific reserves, together with the apparent speed by which the remedial measures have been put together, does not inspire confidence that the 2015 Budget has been founded on sound principles and good financial management practice." Serious and heavyweight criticisms of what the Minister has been doing: "It is clear that the proposed remedial measures lack maturity, and in some examples clearly contradict what was thought to be a settled strategy." The experts, the people who know, reinforcing my questions at the beginning of my no confidence motion, they lack maturity and contradict what was thought to be settled strategy. So we made decisions, and come this Budget they got changed, they got postponed, they got delayed, they got changed. Lacking maturity: what have we seen? The share issue changed at the last minute because it was not thought through properly. We go on. The very phrase of: "The measures, if required" which occurred in the 2015 Budget, the first version we saw: "Other measures, if required' suggests an inherent lack of certainty and confidence in the financial modelling, even by those involved in promulgating such proposals." The Minister suggests an inherent lack of certainty and confidence: "We will do what is needed to be .." "It would be our considered view that the timing and character of the remedial measures, as now presented, seriously undermines the confidence attached to the robustness of the States financial strategy." Not me saying this, but professional analyst people looking at the state of this Budget: "It would be our considered view that the timing and the character of the remedial measures" this list, this scrabble around to find things to do to prop up revenue funding: "as now presented seriously undermines the confidence attached to the robustness of the States financial strategy." No confidence there. Finally, from Professor Oliver: "The constraint of the M.T.F.P. has been breached, and because of this alone, it is difficult not to come to the conclusion that States expenditure is out of control." States expenditure is out of control. So we come to the ultimate question which still has to be answered: do we have a structural deficit? If we do, and certainly .. I appear to have lost that particular quote. I think I know. Representatives from the public sector have been told we do, so they should accept below inflation pay awards. The Fiscal Policy Panel increasingly think that we do, and this was this year, at the last report. I think it was said: "I am more convinced than I ever have been that we have a structural deficit." Do we have a structural deficit, and if so, why is that important? Because if we

do, then the Minister must act to address it. We should not be scrabbling around to produce a zero balance on 1st January next year. Have a think about what that particular fund level has been over the past few years. It has ranged from something like £8 million to £19 million, and yet we are

going to start next year with .. okay, it has been moved. It was zero - I am almost finished - it has been moved to some 3 point something million, a tiny little reserve for if things go wrong next year. Where is the contingency? Nowhere. Dead easy to spend that without even blinking. He should be announcing either some form of tax rise or further cuts to budgets. Why is he not? After all, he is the Minister who can take tough decisions. Why not? Where is the tough decision? Is it because this is an election year and he is desperate to get beyond 15th October, before the reality dawns? The fact is that tax receipts have finally caught up with years of negative economic growth. It cannot come as any surprise to him or to us or to experts that that is the case, certainly not the professionals who served on the Scrutiny Panel. This is not an economic budget, but a political budget, one not based on sound economic and financial principles. The Minister for Treasury and Resources has produced a tax cut in a year when he has discovered a massive hole in his revenues. When asked about the black hole on social media, his immediate response was: "Black hole? What black hole?" Complete denial. Something like a total of £100 million shortfall in our revenues with the Medium-Term Financial Plan, and yet we have, by and large, ignored it. He has balanced the Budget solely from a series of transfers from special funds to the general revenue account. He leaves the current account empty, and as for 2016 and beyond, he says: "The preparation of the next Medium-Term Financial Plan will be the responsibility of a new Council of Ministers." One has to ask if he behaves like the outgoing Labour Treasury assistant, who left a note on the table saying: "There is no money left" because that is the reality. Can we have confidence in such a Minister? I believe we cannot. I urge Members to express this lack of confidence in their votes.

The Deputy Bailiff :

Is the proposition seconded? [Seconded] Minister, do you wish to speak at this stage?

1. Senator P.F.C. Ozouf (The Minister for Treasury and Resources):

Just to clarify, I am entitled, I think, under Standing Orders to make observations now and at the end of the debate.

The Deputy Bailiff :

Yes, indeed. Under Standing Orders you have the opportunity to speak just before the summing- up.

Senator P.F.C. Ozouf :

There are 2 things that Ministers - whether they be Jersey Ministers or Ministers serving any parliament around the world - know. Firstly, political life: this Assembly requires hard work, commitment, and moreover, discharging those responsibilities with honesty and integrity. Just as with all jobs and relationships, there are ups and downs, there are good days and bad days. There are the exhilarating times and there are the frustrating times. At the end of the day, one thing that it is certain is that all Ministers and this Minister regards it as an enormous honour and privilege to be able to serve this Assembly and try and make things happen for the common good. Most Members, I think, agree that we are here to try and raise the standard of living of the people that have elected us and put us here. The difficulty is that some of us, quite legitimately, have different policy choices on how to get there, but the implication of a suggestion of dishonesty, of a lack of transparency, that is particularly difficult to deal with. There is a pleasure in serving this Assembly and I certainly have always taken my responsibilities extremely seriously. Deputy Southern speaks of notes being left at the end of a term of office. My aim would always be to leave a note to my successor that says: "This department is in good shape and in better shape than when I arrived." The second thing that Ministers know is that they can only continue to discharge their functions with the continuing confidence of the Assembly that elects them, and also, if I may say now that we do have a leader of Government, I think it is important that they can only continue or should only continue with the confidence of the Chief Minister. A vote of no confidence, Sir, as Deputy Southern has rightly said, is the most serious motion a politician and a Minister can face. Under normal circumstances, the very suggestion in other places of a vote of no confidence leads to observers genuinely believing that there must be a problem; there is no smoke without fire. It is for that reason I am genuinely saddened that the day that we are now going to be hopefully, some of us, nominated for Senatorial positions and at a time when we should be working in preparing our last debates, the Assembly is being reconvened to deal with yet another vote of no confidence and yet another vote of no confidence in me. I cannot help but feeling that every Member sitting here does not really want to be here, but wants to be out and about talking to people and understanding what the real issues are that are concerning Jersey's future. I have lost count of the amounts of votes of censure, no confidence and certainly those that perhaps never even got here, but those that were widely talked about, tabled or withdrawn in my case. I can remember similar propositions being put to others and I would say to Deputy Southern this: that policy differences are part of political life, but questions of honesty and integrity are really difficult, I find them difficult and I need to respond to them properly and completely. I hope Deputy Southern realises, and the other Members I saw tweet last night, this is a proposition brought, as I understand it, with the full support of Reform Jersey, our only new political party. I understand, but I hope that Senator Breckon and members of Reform Jersey genuinely do understand, sometimes the anguish, the stress that it takes to deal with some of these issues. I am not asking for any special treatment. I have developed a fairly thick skin, but people around me, and certainly the people that serve the Treasury, take these suggestions extremely to their hearts. I would like to thank all Members and the members of the public. I have never had so many messages sent to me in the last couple of days, who have said: "Stick to your principles, Senator, carry on serving and carry on doing the best that you can. We do not always agree with you, but carry on and argue politely, robustly against this vote of no

confidence." [10:15]

Let me be very clear: the Budget 2015 is a balanced budget. The report that has been presented on advice - and I only ever make a Ministerial decision upon advice - clearly sets out measures that will be put in place to ensure that there is no problem with the unallocated amount on the Consolidated Fund. I did not use the word "deficit" because I think that there is quite a lot of misinformation about exactly the current account. Deputy Southern speaks of the similarity between the current account, the Consolidated Fund, and a fictitious Mr. and Mrs. Ecobichon. We are not Mr. and Mrs. Ecobichon and we should remember that we have a Public Finances Law which is not like the current account of Mr. and Mrs. Ecobichons, but at any one time has around £100 million in it because of the way we account for capital projects. It is the strictures that are within our Public Finances Law that does present - when income falls and we want to carry on spending and building our way out of a recession - challenges. I have not misled this Assembly, I have not misled the media and I have not misled the public of Jersey. We have arranged briefings every time throughout the last 3 years for Members on the emerging, changing financial position of the States. I have kept Members up-to-date with economic developments, with financial forecasts. Deputy Noel and I committed at the start of our term of office, with the full support, the encouragement of the Chief Minister, that we should be more transparent as a government, we should provide more information on a more timely basis. Members should see the granular underpinning statistics and assumptions in a way that they never have seen before. There has been much loose talk both in Deputy Southern 's remarks, if I may say, and also in the whole lead-up to this debate about what exactly forecasts are. I have to say that for the avoidance of any doubt, Deputy Noel or our predecessors and I do not sit in the Treasury with a pencil and simply inscribe some numbers in a forward plan to meet Ministers' spending objectives. Our forecasts are professional and independently carried out. They are carried out by a highly-regarded group of

very senior officials. Many Members will know these individuals: the Comptroller of Taxes, the Chief Economic Adviser, the Director of Financial Services, the Treasurer of the States, eminent individuals like the International Adviser to the Chief Minister, who has more than 40 years of ups and downs of political life. Income tax forecasts should not be political footballs. They are not political instruments to throw around like confetti in a pre-election time. They are serious and they should be taken account of. When distributed - to those Members who want to see them - they should be read, and if questions arise, there should be questions. I am quite clear that all of the income tax forecasting information has been provided to not only Members but to the 2 important overseers of our public finances and Treasury decisions, Council of Ministers' decisions, and that is the Fiscal Policy Panel and Corporate Services. They have had all of the granular information ahead of time to consider their reports. It has been made very clear that forecasts will change and they do change. In this year's Budget, I have gone to great lengths to ensure that Members did have and that the Budget was based upon the latest and more accurate, prudent forecasts that the Income Tax Forecasting Group made. It is worth saying that all groups at panels, whether or not it is the M.P.C. (Monetary Policy Committee), when they make their decisions about future interest rates in the U.K., their minutes are published, and Members can recall, I think very clearly, lots of opportunities and times when different eminent economists have sat together with the Governor of the Bank of England and taken a different view, and such is of course the nature of all good professional teams. I do not think it is a secret, I do not think it is a criticism that the Income Tax Forecasting Group has had different and competing views about exactly the evolution of our public finances in recent years. My job has been to ensure that the consensus view, the majority view, has been included as a basis for the policies in this Budget. Questions have been raised about just when did Senator Ozouf and the Treasury know about a change in terms of the forecasts. I do not want to have to repeat what I have already said. I am very clear. I became aware of a fall in income around the end of May. I was aware that there was a very healthy dialogue and that members of the Income Tax Forecasting Group asked for more information to be done on the granular assumptions that had been made, questions about the forward projection of interest rates, which by the way is the principal reason of the fall in Jersey G.D.P. (Gross Domestic Product), not some sort of underlying serious economic problem. That final decision of the Income Tax Forecasting Group was made at a meeting of 30th June, when I - because I recognised the fact that there was dissenting and divergent views on that group - asked the Chief Executive of the States to sit with the full forecasting group in order to come to the majority consensus view, just in time in order to complete the budget measures and to propose the Budget. But I was aware, of course everybody has been aware, of an ongoing crisis in the world. The thing that is perhaps confusing to some Members, and I understand this, is the forecasts have been beaten. That 2012 forecast on which we discussed at length in this Assembly, the Medium-Term Financial Plan, when we knew the out-turn of 2011, popped out being wrong. We had an extra £27 million worth of receipts for housing. I said housing because I was looking at Deputy Power. Immediately that we had that additional

excess of income over the estimate, over the forecast, even in that short period of time, what did we do? We reacted and I brought a proposition straight to this Assembly and asked for all of that surplus to be directed straight to the Minister for Housing's building programme. I have to say that it was with delight, with pride, that I passed on Sunday some of the latest building schemes that are being built with those resources at Lesquende. We have reacted, we have adapted and we have responded to a changing situation. The Budget 2015 does not go back on previous undertakings and decisions of this Assembly. Deputy Southern 's report says that there is a problem with the new Freedom of Information Law. No. The new Freedom of Information Law will be implemented enthusiastically and properly on 1st January, earlier than the date originally proposed. The repayment of the pre-1987 P.E.C.R.S. (Public Employees Contributory Retirement Scheme) is still being accelerated. The Long-Term Care Scheme has been introduced on time. Eligible Islanders are already receiving the benefit, and it is worth reminding Members that one of the reasons why we have been so constrained on the unallocated balance on the Consolidated Fund is that we have used - carefully, in a planned, proper way - underspends for departments to ease Islanders' purses and incomes by using the splendid underspends from Social Security as a result of the Back to Work initiatives, as a result of all of the excellent work of Social Security, to pay for the long-term care introduction so that salary earners, wage earners and earners do not face the charge of the long-term care until the early part of next year. We did not want to take more money out of people's pockets, so when we saw an underspend we reacted, and we have given all those senior citizens of Jersey the thing that they had been asking for for years, which is the certainty of being able to keep their home and stay in their home and be looked after at the sometimes difficult twilight of life and with no cost to them from their pockets. That is examples of reacting and changing and does show that we have certainly used every single resource available to us in order to assist Island residents and the community and business. I make no apology for listening to the advice of the F.P.P. (Fiscal Policy Panel). They were clear 2 years ago and last year: "Make no deviation from a course of getting economic recovery. Leave no stone unturned. Do not be constrained by the balance of the Consolidated Fund. Invest, get the economy going" and that is exactly what we have been doing. That is exactly what this Budget is attempting to do on which I am now being faced with a vote of no confidence, because apparently I have lost that prudent approach that Deputy Southern - quite kindly, if I may say - says that I previously had. At the heart of this vote of no confidence is a question: that if growth was falling, if growth continued to fall, should gross spending have been maintained? As I have said, yes, absolutely yes, and I say yes again. I am not clear why Deputy Southern has singled out an exchange from September 2012 as being informative to a vote of no confidence at this stage. In early 2012 it was very clear, when that forecast by the independent forecasters was done, the world was changing and changing very quickly and changing to a frightening extent. We saw the second order of terrible tragedies in Greece, we saw the contagion in Spain, in Portugal, we saw downgrades of virtually all worldwide economies. The Minister for Treasury and Resources of Jersey was not at the I.M.F. (International Monetary Fund) asking for a loan, having a problem with a spiral of debt. No, this Minister for Treasury and Resources, with the full support of the Council of Ministers, was able to use the resources available to help, to support and invest. It is important, I think, that there is no doubt about how this issue of forecasts have and will continue to evolve. In 2011 and 2012, which is apparently at the heart of the criticism, that we got the forecast wrong in 2012, therefore we should not have done the Medium-Term Financial Plan, or at least we should have been deviated by a different course, there was a huge amount of change. Since they did their forecast, which was based not on their own pencil, even though they are eminent people, they were not with their innocent pencils out, they were taking the assumptions taken from global institutions like the I.M.F., the Office of Budget Responsibility, the European Central Bank. At the time those forecasts were being done it was said, and I have a quote here from the European Central Bank: "It looks as though the immediate tensions in the euro area of financial markets have eased." There

was a view, if Members think back to that time, that after this second order crisis, things were going better. Forecasts, economic numbers rise as well as fall and we saw in the preceding months a contagion that carried out. But the Income Tax Forecasting Group should not be criticised for this. What they should be is complimented in maintaining up-to-date information and changing their forecasts and trying to understand why we had this extraordinary position, where despite their warnings, income continued to exceed the levels that had been forecast. Underlying this apparent disconnect from the gravity of the economic worldwide position, we still needed to understand the systemic underlying performance of the Jersey economy.

[10:30]

What are the facts about the income forecasts? Personal income tax growth has been revised down; £25 million in 2014 and £30 million in 2015. The number, as was made very clear with the post- fact analysis, the annual accounts, and made clear by the Treasurer and me and all in the documentation in the States accounts, that this was being offset by extraordinarily high corporate taxes. The forecast in March 2014 had economic assumptions updated, and updated further information on personal and corporate tax, and the result was that, at the end of 2014, income was lower by £20 million in 2014 and £25 million lower in 2015 than the March 2013 forecast. It is very difficult to talk about these numbers because they are quite confusing, and I hope Members have seen the quite clear setting out of exactly what happened in the various documents that Members have had in preparation for this debate. At the end of the day, the combined effect of the 2013 and 2014 forecasts was to reduce income by £30 million in 2014 and £50 million in 2015. Frankly, given the seismic global changes and the decisions of this Assembly over this period, and given the fact that other forecasting bodies had similar issues in relation to the uncharted waters of the global economic situation, it should be of no surprise, frankly, that Jersey's forecasts have changed. There has been a lot of emotive language-use about this issue of forecasts. I have seen the  J.E.P. (Jersey Evening Post) suggest that the fact that this Budget proposes a 2 per cent efficiency saving as a scandalous new piece of news. I hope that Members will recall the slightly demonic picture that was portrayed of the Minister for Treasury and Resources in January when I said very clearly then that I believed that £50 million to £70 million of savings were going to be required in order to continue to balance the books and to pay for the absolutely justified and necessary and defendable increases in health care. There has been much loose talk. It is almost as though the Treasury is being like that Ecobichon family, and I mean no disrespect to any Ecobichons because I know some and they are prudent Jerseymen and women, so it is unfair to be pejorative, but there are always the less prudent ones in the family, so perhaps there is a less prudent Ecobichon out there; I doubt it. But has been portrayed that somehow, almost like out of the pages of temps passé or the pages of Helier Clement that there is a biscuit-tin problem in the Treasury. Jersey, it is suggested, is somehow broke, that there is a problem, that somehow we have been emptying all the pockets, almost likening us to an imprudent family that has not planned our Budgets and planned for inevitable expenditure. I am proud that throughout my term of office I have found all the biscuit tins that have been around the States and we have put those biscuit tins in the context and the contents of the biscuit tin in the Consolidated Fund and the Common Investment Fund. One of the reasons why our income forecasts have defied gravity is because the results and the returns of those previously uninvested biscuit tins have been providing handsome returns to offset some of the difficulties in the financial crisis. I should not be criticised, I say to Deputy Southern , for the use of biscuit tins; I should be complimented, together with the Treasury, who have made huge and significant efforts to improve the investment performance of our taxpayers' funds that we should be so proud of. Over the last 3 years, and I think that I cannot really add anything else on the issue of forecast, just to simply restate, and so I came with a trolley to the States Assembly today and I brought a copy of the Medium-Term Financial Plan, I brought a copy of the Budget. I know there is a debate about when exactly Members got the full granular income tax forecasting numbers, which have not been published, which are there for Members' privileged use, all of the assumptions set out. I do not know whether or not it was the day before Budget day or on the Budget day, I do not know that, but certainly Members had them. More importantly, Members had the top-line information already given to them. Those Members who bothered to turn up to some of the Treasury briefings  [Approbation] of which I have a record; I am not quite Deputy Maçon's milk monitor reporter [Laughter] but I know that my excellent Treasury staff are very enthusiastic in making sure that each Member is given the opportunity of being reminded when briefings are given. It is easy, is it not, when the media are here, when people are listening for performances for great big statements that the public can hear in an election time. Much of the work, Sir, with no disrespect to you or this Assembly, much of the granular

research, of course, happens outside of this Assembly in preparation for these debates. I think there can be no Member that has turned up to an early croissant and coffee morning session with the Treasurer and myself and the Assistant Minister over the last 3 years, that has attended the numerous briefings that we have had for States Members: going through, showing detailed confidential information about our concerns, what is going right and what is going wrong.. No Member could be surprised, and the evidence is there. No Treasury has ever given Members such detailed information, not hidden. There is a tab that gives the Income Tax Forecasting report; it is a tab, it is not difficult to read. It is there. Of course, I always stand ready to answer any Members' questions, but it is not only Members that have had this but the principal Scrutiny people that give this Assembly the independent reassurance that the Treasury is not somehow taking leave of its senses or moving on an imprudent path. I am proud, with Deputy Noel, of the level of transparency, the level of detail that Members now have to inform the decisions that they make in this Assembly. I also have to take exception with the whole concept that it is wrong to use all of those additional resources that we do have in funds and not to deploy them for the benefit of our people and to the benefit of the economy. It is absolutely the right thing to do to put a Budget forward based upon a prudent forecast which is balanced and which does mean that we do not have to defer, put off, delay or let people down in some of the spending decisions that we have made. No turning back from the jobs work by Social Security, no turning back from the investments in the hospital: whether or not it is the cancer ward, whether or not it is new operating theatres, whether or not it is the urgent rebuilding of mental health facilities. No turning back from the Minister for Education, Sport and Culture's new schools and extension of schools facilities. No turning back from the Innovation Fund and other investments, no turning back from eGovernment. Last night I was privileged to be representing Jersey, in my role as Assistant Chief Minister for Financial Services, to address 2 big conferences in London on the future of FinTech; I was absolutely astonished at what is going on in building London as a tech city of the future and I warmly congratulate the work of Digital Jersey and particularly the Executive Director [Approbation] who I met yesterday. This is a joint venture between, effectively, Economic Development and Financial Services. We have such a fantastic opportunity to develop new and innovative services, so no turning back from Jersey Telecom's fibre roll-out, no turning back from a determination to put Jersey as one of the leading jurisdictions in terms of infrastructure. Yes, that can be dealt with by asking Jersey Telecom to fund some of their capital in a slightly different way. They are well capitalised and we do want them to invest that infrastructure that will build our digital economy, and they can provide when we need it, because they are so well-capitalised, some additional dividends. We have been discussing rightly, and Members would expect me to talk to those institutions when we have to deal with the stricture of the Consolidated Fund and an unallocated amount. I have signalled that it is perhaps the right time, without in any way throwing caution to the wind, to look at this issue of the bizarre situation whereby a medium-term financial plan has to be put forward and we have to fund the capital up-front before you could even pay for it. It is, in fact, the rules that we have partly created, and perhaps not amended over a period of a financial plan, that have caused this whole issue, this whole loose talk, this inaccurate talk, sending the wrong message out that somehow there is a problem with our public finances. The people that I saw in London last night where I spoke about our beautiful beaches, our tourism industry, our agriculture industry, our financial services industry .. I had a stream of people saying: "Goodness me, that sounds like a place I want to come and live in" and jolly good. We should continue to invest all of our energies in order to send the message out that Jersey is back and Jersey is growing and we welcome strong, diversified, reputable business to our shores. But we must invest in order to achieve it, and that is exactly what this Budget is trying to do. The criticism against me is to somehow do something alternative. What is the alternative that Deputy Southern wants to do? I know that he has opposed every single measure virtually in my political office; it almost feels sometimes that I have been hounded by the measures that I have taken. I remind Deputy Southern , respectfully when he speaks of a deficit, and now apparently the suggestion that I deserve a vote of no confidence because I am now a prophet of optimism instead of a prophet of doom, that this is

the Minister for Treasury and Resources that had to tell this Assembly and the people of Jersey that there would have been £100 million deficit in 2013 if we had not taken corrective action. So it feels as though I cannot win: either I face a vote of no confidence for being too gloomy, or I face a vote of no confidence for being too optimistic. If I am halfway in between, that is probably the right course of action. I certainly believe that knee-jerk reactions are not those of a responsible Assembly and a responsible Minister for Treasury and Resources. We are not borrowing, I have to say to Deputy Southern ; we are matching all of the expenditure lines with income, and that is what is set out in the schedule. We have borrowed for housing. When I told the audience last night the fact that we had 52 basis points over 40-year gilts, many people, who were some of the leading FinTech wizards of London, were seriously impressed. We are not borrowing for revenue expenditure and we are not drawing-down imprudently from savings, we are using unspent balances, like the Dwelling Houses Loan Fund and other funds; properly, prudently, legally to maintain our course, which is to design and secure the best economic recovery for Jersey. Keeping the spending plans that we had is the right thing to do, and that has been endorsed by the Fiscal Policy Panel. I have heard in the Deputy 's opening remarks that the alternative course of action, because I have been asking for one .. I want to know why I have to be faced with a vote of no confidence and deserve one because, if I do deserve one, what is the alternative? Deputy Southern has, I think, now said he thinks that we should use the Rainy Day' fund; that means the Strategic Reserve. I say to the Deputy , I think he is falling now foul of his own criticism; he is using ring- fenced funds which are before this Assembly for further tightening and improvement, and he is using his own arguments against me in terms of his own alternative plan. I say to Deputy Southern : how many times has he brought a proposition to spend money from the Strategic Reserve? Had I gone with all of the proposals to spend the Strategic Reserve, there would have been nothing left; there would certainly have been nothing left [Approbation] to put and invest.

[10:45]

There is no free hospital but there certainly is a free-of-cost-to-taxpayers hospital, which is the very grands projet that my friend .. about which the Connétable of St. Mary has always rightly said: "When will there be a reward for this prudence, for these difficult decisions?" If we had taken the path that Deputy Southern is using in this vote of no confidence against me, of using the Strategic Reserve earlier, it would have been gone. You cannot spend money twice, there is no Mary Poppins bag, there is no money tree, you can only have money once, but what you can do is invest it, and that is what we have done. If Deputy Southern wanted a proposal to withdraw money from the Strategic Reserve for revenue expenditure, for not doing a savings plan, for putting more into the wage pot next year, then he could have discussed that and brought a proposition, and he has not done so. There are obviously a lot of schools of thought from economists, this Assembly has appointed on a statutory basis some of the U.K.'s leading economists to our F.P.P. and, with the greatest of respect, I listen to them and their advice. They are saying our path is correct: "Put money into the economy, benefit local businesses, put more money into Islanders' pockets by the marginal rate of tax cut. Support employment, spend on capital, keep firms busy." This issue of a structural deficit is, I think, seriously loose talk. There will be a structural deficit if the next Assembly does not tackle, as is set out in the long-term revenue plan, the issues that are there for all Members to see, and there again, there is no surprise. There will be a structural deficit if Health get their deserved and necessary £50 million by 2019 extra revenue expenditure, and no measures are taken to deal with it. There is a political debate to be had about how that is dealt with. Can it be dealt with by economic growth? Can it be dealt with by savings or does it need to be dealt with by a combination of charges that are appropriate? More charges, perhaps, like Senator Maclean did when he recovered the cost of running gambling shops. Why should the public be running and subsidising the cost of gambling shops? He was right; a charge was introduced and I think there is more opportunity to recover from businesses who make profits, charges that are currently subsidised by Government. It is for the next Assembly to deal with any issues of a structural deficit, and the F.P.P. have made it quite clear that we do not know if there is a structural deficit, and we should not be criticised for that; there is still an unknown charting of an economic course. Certainly, my position is that we should match income with expenditure over the cycle, and certainly over the next 2 M.T.F.P.s if I am not here - or if I am here - I believe that there should be a rebuilding of the Stabilisation Fund as a clear underlying principle. I stand by my record: there has been no scandal, there has been no concealment of figures, no underplaying of forecasts. There has not been, if I may say, any business in the backdoors, apparently, of the corridors of power. At the start of 2014, I made it clear that savings were going to be required. It is difficult to see how now this could be regarded, or the suggestion of asking for an efficiency saving for departments could be regarded, as concealment. We have been transparent about the challenges we face. We have had big debates about health care. The Minister for Health and Social Services' proposition has been very clear about the fact that there is Phase 1, which we have paid for, £27 million more for the Health and Social Services Department, with the promise of a free hospital from the Strategic Reserve, and the fact that there was going to be a further challenge going forward. There is no news about this, there is no news about the need to invest and to consider education. I hope that nothing in the long-term revenue plan is a surprise to Members. The last 3 years, indeed the last 6, have been characterised by an extraordinary period in economic history-book writing. Jersey finances are, notwithstanding that contagion, unlike most other small jurisdictions, incredibly strong. I feel a little bruised, if I may say so, by some of the things that have been said, but I believe that a little bruising, a little discomfort, a little challenge - as I said repeatedly to the Constable of St. Mary - would result in a dividend in the longer term: a stronger economy, a robust jobs market, an infrastructure which has been improved and invested in, and averting future capital spending and keeping people in work to such a significantly greater extent than anybody ever would have believed. I believe that the Budget is the right budget for Jersey. I know this is going to be difficult because we are going to have, effectively, a mini Budget debate now and we are coming back next week. I think that all of the independent, credible, professional experts agree with the course that has been taken. We have a Budget debate next week and I look forward to having a proper debate, and even right up to the Budget debate next week, should there be any Member in any doubt of anything in terms of numbers that they do not understand, please come, as a number of Members regularly and always do, to understand what the figures mean, from not only me but from the professionals and the dedicated staff within the Treasury. I care about my job and I believe that I have discharged it to the best of my ability. I take it very deeply and with quite a degree of sadness that integrity and honesty has been questioned. I do not know whether that contravenes Standing Orders but certainly a Minister has to have the confidence of this Assembly in terms of honesty and integrity, and this vote of no confidence, quite apart from the political

choices that could have been made, are striking at the very heart and at the core of that. I hope that I will win this vote of no confidence. I hope that Members will see this vote of no confidence for the inaccurate omnibus of criticism that it is, that it is not justified, that is not fair and we can deal with this vote of no confidence quickly and that we can get to back where we should be, which is listening and serving the people of Jersey, as I have tried to do, with honesty and integrity and to the best of my ability. [Approbation]

2. Senator S.C. Ferguson:

A bravura performance; I congratulate the Minister for Treasury and Resources, but is this the time to bring a vote of no confidence, a month before a general election? Is this, in fact, the correct vote of no confidence? Yes, the income forecasts are questionable and the remedial measures to balance the consolidated reserve are symptomatic both of panic and a sharply-deteriorating financial position. The problem is that these are just fiddling at the edges; in fact, what we need is not a single vote, but a collective one. I put it to the Assembly: should the Budget be passed next week?

Should the next Assembly, which will have to deal with the current financial position and the structural deficit, not be the Assembly which commits to the Budget for 2015? In fact, should we not give the new Assembly the authority as well as the responsibility? The Minister for Treasury and Resources on 9th September, in a written answer, has already said that the Budget deals with 2015. It will be for the new Council of Ministers to propose appropriate tax and spending measures to deliver a sustainable Medium-Term Finance Plan for 2016 to 2019. It would be inappropriate for the current Minister for Treasury and Resources to set out future expenditure of the States. Well, given the fact that the income receipts for 2014 are deteriorating, the sooner the new Assembly gets to grips with the deficits the better. The crucial part of the Budget activities is Projet 141 - Draft Finance (2015 Budget) (Jersey) Law 201-. It is my understanding that Article 1 - the Article which sets the tax rate of 20 per cent - is the essential Article. If the Budget is not passed then the subsequent Articles fall away and the allowances, et cetera, remain as for 2014 but, by passing Article 1, the States can continue to collect income tax, G.S.T. all the other taxes as we go along, and then a new Budget can come with the new Minister for Treasury and Resources and the new Assembly. Currently, we are in the position of having a Budget which is based on a Medium-Term Finance Plan which is not fit for purpose. In fact, as our adviser said: "Failure to adjust projections in line with the latest intelligence could mean that Members could be voting on a Budget that senior officers know is unlikely to be achieved." What a banana republic. Our advisers were, in fact, appalled that our last year's report was based on what appear now to be incorrect figures. If we account for our financial position as most people account for their household expenses, in 2014 we are going to have a deficit of £103 million, in 2015, £190 million, in 2016, £200 million and in 2017, £130 million. That is the basic in/out position. We have lost the link between income and expenditure. It was there for the original Medium-Term Finance Plan; now it is not fit-for-purpose, income is going down expenditure is going up. We are in a position to deal with this but we need to deal with it now, not to put it off and say: "Well, this is deficit spending and the economy is going to start growing again." We need to have a plan. When you go and get a loan from a bank, if you just turn up there with a piece of paper and say: "Well, yes, it is going to be in deficit but, it is

all right, we are going to win, we are going to get things together" and there are just a few numbers scrawled on the back of an envelope, your bank manager will say: "Well, yes, but that does not exactly give me confidence." You are going there with a plan, all nicely laid out: "This is what is happening, this is our structural deficit but we are going to deal with it by doing X, Y, and Z" and: "Brilliant, no problems, you can go ahead." At the moment, we have only got an envelope with a bit of scrawling on it. Removing the Minister for Treasury and Resources at this stage does not enable us to challenge him in the full context of the Budget. I consider that the questions we need to have answered are far more fundamental than those being asked for in the vote of no confidence. At the moment, we have got a single episode of personality politics rather than a full-blooded howl of protest against our financial position. I shall, in effect, be circulating a paper analysing our particular economic and financial position later today. We can recover from this but not if we do it in the current manner. The issues to be addressed are far broader - our whole economic and fiscal strategy is much broader and more important - than those listed in the report to the proposition, and are the principles underlying the Budget. We are talking of the whole handling of the economy. The Minister must supply the latest up-to-date estimates of the deficit and stand accountable for his handling of the economy at the Budget debate. Frankly, we have the need to stop, take breath, and reassess our financial position. This is why we need a full Budget debate when the Minister for Treasury and Resources can justify his position, and the real vote of no confidence is at the ballot box. The public should remember that their vote is their voice and they should use it. I shall be abstaining from this.

3. Deputy J.A.N. Le Fondré of St. Lawrence :

I am very pleased to follow the last speaker, because I too am not prepared either to support or to reject this proposition; I too will be abstaining.

[11:00]

Roughly 4 weeks before election day, 7 or 8 weeks until the new Council of Ministers is appointed, on nomination day itself, but that is outside of the Assembly, and on the day before nomination day for the rest of us, is not the time to be seeking to remove any Minister. [Approbation] That is probably the first applause I have had for a while, but I do not know if that will continue. But there is the opportunity to bring out the relevant points for the public to draw their own conclusions in time for the election, and that will be the right place for such matters at this time. As Senator Ferguson has already alluded to, there is also the issue of the Budget debate. That is where I intend to make my main comments and my main protest. The Minister for Treasury and Resources was absolutely right to talk with pride about the quality of our beaches, about the joys of living here, about the good reputation of the finance industry, and obviously the hopes and aspirations of things to come. That is absolutely true but that is about the economy. This is about the finances of the States of Jersey, and there is a difference. What I want to reiterate is my sheer anger at how I feel this Assembly has been treated in terms of information flow, and it is all about timing. Just in case Members get lost, there was an initial income shortfall of £70 million; that has morphed into £95 million at the time of this Budget. It looks like that may have shifted further to £100 million, particularly if you read the latest forecast included in the Corporate Scrutiny report, which is very much worthwhile reading, particularly the advisers' sections. It is absolute fact that the Treasury Department produced figures based on data from April 2013 that showed a £70 million fall in the income forecast; that is well over a year ago, probably a year and a half ago. It is absolute fact that that information is included in a report dated September 2013. The Minister stated in his comments that Members were provided with a full Income Tax Forecasting Group paper in December 2013. That was in his response that was sent round to us, I believe, last night. What is also true is that the Minister did issue a report, P.149/2013, to Members. The hard copy, as far as I could see, was presented to Members on 3rd December, the day the Budget debate commenced and, broadly speaking, that was that report. That is at least 2 months, in relation to the date we are talking about, that that data had been produced. There may have been an electronic version fractionally before but, broadly speaking, the data in here is September 2013 at the latest, could have been earlier, and we were given it in December, on the day or just before the Budget debate started. In this particular section, and I am just going to read 2 quotes, it says: "Although these forecasts show a slightly lower forecast for States revenues in 2013 and 2015 .." and it carries on. Well, my definition of "slightly lower" is not a £70 million shortfall. The second point, it says: "While a detailed and updated report has been prepared by the Income Tax Forecasting Group [that would be the I.T.F.G. for future reference] this can be included in the update to the M.T.F.P. annex in 2014" so we had not had it at this point: "We do not want to row back on our positive choice to have freer M.T.F.P. forecasts and to work with within them." That is the thrust of what was in that report. The other thing that particularly annoyed me is that correlates, broadly speaking, with 3 pages that the Senator referred to in here dates-wise. This is R.8/2014, the clue is in the year. It was given to us at the end of January of this year, it was not given to us before the Budget debate, for obvious reasons. So the detailed information in here was not available, as far as I can see, before the Budget debate. The 3 pages in the report that we did get correlates roughly to part of the information that Senator Ozouf related to. It correlates broadly speaking to pages 1, 2 and 3, it does not include pages 4, 5 and 6, and what I am holding up is page 4. I do not get excited about granular detail because I do not really care about all this stuff. I do care about the 6 figures at the bottom, which are totals by year:

one for the M.T.F.P. forecast, which was what was in the Budget, and one that says: "Initial long- term revenue plan forecast, April 2013." If you do one minus the other, you get the £70 million, so we did not get, as far as I can see - I am very happy to be corrected - numeric data in that format

before the Budget. We certainly did not get the full I.T.F.G. report because the full I.T.F.G. report, the supplementary had 6 pages and I think there is an appendix, at the second tab, which is 50 pages. As I said, in my view, that is not providing us with correct and timely information in a transparent manner. There is no question we did get the information, but it was after the Budget. I would also point out that at the very front of this is the updated figures for the 2014 Budget. Those are based on the optimistic forecast, not the long-term revenue plan forecast. Senator Ozouf has also quoted, and I was not going to bother with this but he referred to it again today, and the significance of all this, about the timing, is about the justification for the reduction in the marginal rate of income tax, which cost about £8 million. This is the quote directly from the F.P.P., which Senator Ozouf quoted as saying they supported it. Well, the only quote I found quickly on their 2014 report is the following: "Perhaps the most significant measure in the draft Budget 2014 is the proposed reduction in the marginal rate of income tax. This is a structural change in taxation policy that will reduce revenue in future years by nearly £8 million a year on a recurring basis. As a fiscal stimulus measure, it does not score well as it is neither timely [it will impact largely in 2015] nor temporary." That does not sound like a raving amount of enthusiasm for that decision. They do state, to be fair: "To ensure such a decision can be afforded, careful consideration of the structural position of States finances is required, although it is not clear from the Budget 2014 report that this has been undertaken." Then it says it is a matter for States Members. So to quote that the F.P.P. were fully behind the reduction in the marginal rate of income tax, to me, from my interpretation of those phrases, is not necessarily accurate. What I would also say, which I  found somewhat interesting, and I am afraid it was the reason why my speech got slightly longer - not hugely, I hasten to add - is that earlier this year the Council of Ministers lodged an amendment to the M.T.F.P. in respect of the Housing Transformation Programme. It was debated on 4th June of this year. The Council of Ministers was informed of the 14th May revision in the income figures, that is, the £95 million, on 11th June. The figures on this report, page 6, show revised surpluses for the M.T.F.P. in 2014, this year, and 2015, next year, revised £4.6 million and £20.2 million. Seven days later, on the basis of the data that went, we were told that the Council of Ministers considered

it on 11th June. Those figures are now £31 million deficit and £36 million deficit; 7 days later. That completely ignores the fact that in September 2013, if not earlier, Treasury had identified the original shortfall of £70 million. So what happened to the prudent Minister for Treasury and Resources taking action as the forecast changed? They changed last year, they did not change significantly 3 months ago. £70 million is a lot more significant, and a further £25 million. It would have shown that the reduction in the marginal rate of tax was unaffordable. In my view, States Members should not have to read the small print when it receives information from the executive. With that in mind, I await the Council of Ministers adopting the recommendation on Corporate Scrutiny Panel for this Budget concerning the updating of the Budget for the most recent income forecast. We have something that came round on Friday, which was the I.T.F.G. stuff. That is based, I think, on February to April. In the Corporate Scrutiny report there are income tax updates for May and June. I understand they had sight of July. The difference between May and June is a further downgrade of £5 million, if I have read those figures correctly, but I am just trying to explore that at the moment. That is why I said I think we have shifted from £70 million to £95 million to £100 million. The significance of that, if you take £5 million off the balance of the Consolidated Fund, you go negative on the basis of the figures in the Corporate Scrutiny report. It is a moving feast at the moment, that is why the C.I.P.F.A. advisers .. now, do not forget, that is a national institute of accountancy, they are as objective as you can possibly get, are saying that States Members should have the most up-to-date figures for the Budget debate. In fact, they have suggested, and I do not know whether it is realistic to get August, but we should certainly have July to make sure that what we are approving is not in reality a problem. I would be delighted, by the way, if it is not. I am working on the basis of data I have at this point. This is not about personalities, it is about communication, it is about facts, it is how the present regime is perceived to be treating the public at large within Jersey. Those matters are so fundamental and so serious to the Island, we need to put those personalities aside and deal with the facts, and now is not the right time for this, and that I why I am abstaining. I want to conclude as follows: the Corporate Scrutiny report has just been issued and is definitely a recommended read, particularly the advisers' sections. I think it was repeated earlier, but there is one quote I definitely want to repeat from C.I.P.F.A, it is not from the politicians: "It would be our considered view that the timing and the character of the remedial measures as now presented seriously undermines the confidence attached to the robustness of the States financial strategy." That is pretty strong stuff. It is probably the strongest comment I have ever seen in any adviser's report that has come out of Scrutiny. They are not words that inspire confidence in a prudent Minister for Treasury and Resources, I am afraid. To paraphrase the words of one adviser, which is in the report: "There is a fiscal storm coming. If that is the case, one needs a safe pair of hands on the tiller." From where I am sitting, I am afraid, they are not there at the moment. That is a matter for the electorate, it is nomination night tonight and it is not a matter for us at this time. Those comments can be tracked down to the advisers' reports at the back of the Corporate Scrutiny report, he talks about the calm before the storm.