States Meeting Transcript - 23rd September 2014

STATES OF JERSEY OFFICIAL REPORT

TUESDAY, 23rd SEPTEMBER 2014

PUBLIC BUSINESS – resumption ...............................................................3

1. Draft Budget Statement 2015 (P.129/2014): sixth amendment (P.129/2014 Amd.(6))..3

1. Senator P.F.C. Ozouf (The Minister for Treasury and Resources):.......................3

1. Deputy J.H. Young of St. Brelade:.......................................................5
2. Deputy J.G. Reed of St. Ouen:...........................................................5
3. Senator A. Breckon: .....................................................................6
4. Connétable P.J. Rondel of St. John : ......................................................6
5. Deputy M.R. Higgins of St. Helier:......................................................6
6. Deputy R.G. Le Hérissier of St. Saviour:................................................6
7. Deputy E.J. Noel of St. Lawrence:.......................................................7
8. Deputy A.K.F. Green of St. Helier:......................................................7
9. Deputy J.A.N. Le Fondré of St. Lawrence : ..............................................7
10. Senator P.F.C. Ozouf : ................................................................8

2. Draft Budget Statement 2015 (P.129/2014) - as amended..............................12

1. The Deputy of St. Ouen:................................................................12
2. Deputy J.A. Hilton of St. Helier:........................................................14
3. Deputy P.J.D. Ryan of St. John:........................................................16
4. Senator S.C. Ferguson:.................................................................19
5. Deputy J.A.N. Le Fondré:..............................................................23
6. Deputy S.G. Luce of St. Martin : ........................................................27
7. The Connétable of St. John:............................................................27

8. Deputy G.P. Southern of St. Helier:....................................................30
9. Deputy J.H. Young:....................................................................32

LUNCHEON ADJOURNMENT PROPOSED..................................................37 LUNCHEON ADJOURNMENT................................................................37

10. Deputy G.C.L. Baudains of St. Clement:............................................37
11. Deputy M. Tadier of St. Brelade:....................................................38
12. Senator F. du H. Le Gresley:........................................................40
13. Deputy R.G. Bryans of St. Helier:...................................................43
14. Senator A. Breckon:.................................................................44
15. Deputy N.B. Le Cornu of St. Helier : ................................................47
16. Deputy A.E. Pryke of Trinity : .......................................................49
17. Senator B.I. Le Marquand:..........................................................52
18. Deputy S.Y. Mézec of St. Helier:....................................................53
19. Deputy R.G. Le Hérissier:...........................................................54
20. Senator P.F. Routier:................................................................56

21. Deputy T.A. Vallois of St. Saviour:..................................................57
22. Deputy M.R.Higgins:...............................................................60
23. Senator I.J. Gorst : ...................................................................62
24. Deputy C.F. Labey of Grouville :....................................................67
25. Senator P.F.C. Ozouf : ...............................................................68

ADJOURNMENT................................................................................80

The Roll was called and the Greffier of the States led the Assembly in Prayer. PUBLIC BUSINESS – resumption 1. Draft Budget Statement 2015 (P.129/2014): sixth amendment (P.129/2014 Amd.(6)) The Bailiff :

I now welcome His Excellency to join us for the second day. [Approbation] Then we return to the debate on the Budget and the next matter is the sixth amendment lodged by the Minister for Treasury and Resources. I will ask the Greffier to read that amendment.

The Greffier of the States:

Page 2, paragraph (a). After the words "as set out in the Budget Statement" insert the words "except that the estimate of income from taxation during 2015 shall be reduced by £250,000 by restricting the application of the proposed higher rates of stamp duty on properties worth more than £1 million to domestic properties only."

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

May I first of all thank Members for accepting this late amendment. Members will be aware that the Budget measures intend a number of measures and particularly measures to help people buy properties at the lower end of the market by reducing the stamp duty payable on mortgages taken out on homes costing up to £400,000. To ensure that overall revenues did not suffer as a result of this measure, the Budget proposed to raise the stamp duty on properties costing more than £1 million and that they should be increased. New duty bands have been created for properties costing more than £3 million. So I will not go into, obviously, the detail of those proposed rates now but suffice it to say that on properties costing more than £3 million the stamp duty charged, and again, to answer Deputy Baudains, the top slice of that consideration would be 7 per cent. So the Finance Law, as originally lodged, proposed that these higher rates would apply to all properties costing more than £1 million. Currently we do not differentiate between commercial and domestic properties in the same way that perhaps the Parish Rates and the Connétable s are familiar with non- domestic and domestic properties. As usual, budget measures are proposed and we welcome feedback and we attempt always to be responsive to representations received. It is fair to say that in dealing with budget measures there is always .. sometimes it is not appropriate to consult widely on some aspects, particularly when dealing with increases in tax rates. It is somewhat of a regret that it was only last Thursday that I received representation from the commercial property interests about concerns that they had about these changes and their representations that the effect of these proposals, if it included commercial properties, could - and I say could - affect Jersey's competitiveness. They asked that they be deferred until we have completed the Property Tax Review. The concerns hinge around the fact that the new higher rates of stamp duty would mean that duty would be payable in Jersey on commercial property at a higher rate than that in the U.K. (United Kingdom), and not just on the percentage but the actual overall burden of stamp duty. Members are aware, and we have touched upon this a number of times during the debate, that there is a Green Paper on the Property Tax Review which was launched alongside the Budget in July. It has been very positive in the sense that we have had a lot of useful feedback from the consultation. I am somewhat frustrated that it has been, in some quarters, misinterpreted and I will deal with that later on in the Budget summing up speech because I just want to scotch some of the concerns that are being put around that there is going to somehow be an increase in tax on people like renters, et cetera. Suffice it to say, it is becoming clear - and this is a very positive outcome of the Property Tax Review, which is for the first time looking at all property taxes across the board and looking at their interrelation and their effect and how they deal with the market - how they have unintended

consequences, how they present, in some case, frictions to the well-functioning of the market. It is very clear, we have reformed stamp duty a number of years ago, and that is taking Deputy Baudains' points yesterday, it has already been improved and is better than in other places. But as always, there is always more to do and it is clear that the Stamp Duty Law is complicated and unfortunately does offer some, still, opportunities for aggressive avoidance or indeed abuse. I have been particularly made aware of an avoidance opportunity in the area of use of long leases instead of the outright sales of property. It is not yet clear how widely this is used but if it were allowed to continue this could undermine the very intention that we are seeking to raise revenue from property transactions. For that reason, and the reason that I think it is important on occasion to listen to industry, I have asked officials to investigate the whole issue of the stamp duty on commercial property to hold - and this is the result of this amendment - the stamp duty rates as they are for commercial properties and to accelerate the introduction, whoever is the post-holder, and indeed the Assistant Minister who will continue in office now for the next few weeks. I will not be dealing with anything in the Treasury as of tomorrow but I will ask the Assistant Minister to be overseeing effectively a fast and speedy look at the opportunities for abuse so that legislation could be presented as soon as possible in dealing with that. Also giving consideration as to whether or not the feedback that has been received on this avoidance issue is widespread and whether or not there is a case to maintain the original intention of bringing in higher rates of stamp duty on commercial properties. I think we all agree that we want to raise the appropriate amount of tax from property, it is something that has been a feature of Corporate Services' reports over a number of years. I am very clear, I think there are opportunities to raise more revenue from commercial property in the Island and I want to deal with the abuses; there have been issues in the past. Members will recall a previous Budget debate where we extended the collection of 20 per cent of income tax on properties that were owned by superannuation funds; all calamity was going to happen. Whenever

we deal with property matters they are always controversial. I recalled with Members on Friday, when we originally proposed the removal of mortgage interest tax relief, there were literally, on a balmy summer evening, people hanging out of the windows at the Town Hall saying that the world would end if we did things. I have completely dismissed, although having giving careful consideration, the representations that we have had that it would not be appropriate to increase the higher rates of duty on residential properties. I have had representations that that was the wrong thing to do and it is going to thwart the market and there is going to be nobody buying higher rate properties, and I have to say that these concerns have been discounted. I had received representations. But I am sufficiently concerned about the issue of this avoidance issue and the issue, which is a piece of new information, about the effect of stamp duty compared to the U.K. that I think that it would be wise in the circumstance effectively to put on hold the proposal to increase the commercial stamp duty. I do need to say that the amendment that we have put forward only deals with transfers of sales of property. The duty rates that are proposed, the higher duty rates, would attract stamp duty on the transfer of any property on the demise of somebody with the registration of a will. In other words, let us be clear, if an estate has a property which is both residential and commercial they will attract the higher rates. This amendment only deals with the sale of property there. This amendment ensures that we do not inadvertently damage the property market; send the wrong signal and inadvertently create more encouragement for potential abuse in relation to this long lease issue. I am grateful for Members giving consideration to this. I do not like bringing late amendments but in the circumstances it is the right thing to do; it is the right thing to listen, hold back, research, do more work and accelerate what may be better proposals. For those reasons I move the amendment.

The Bailiff :

Is the amendment seconded? [Seconded] Does any Member wish to speak on the amendment? Yes, Deputy Young.

1. Deputy J.H. Young of St. Brelade :

Does this amendment not illustrate the double-standards in this Assembly? A Budget comes to us after once a year after months of work and we get 2 proposals in it for stamp duty.

[9:45]

One to increase the tax of first-time buyers and another one to, in a similar amount of money, increase the tax on high value properties. I certainly made it quite clear that the amendment on first-time buyers was going to cost money. Yes, there was a tax relief proposed for stamp duty on borrowings but that is, I think, insignificant compared with the stamp duty on the actual purchases. Anyway, yesterday it was really hard work to debate that. We ended up with a modified procedure in response to my amendment and certainly the objections, which have been well published in the press for many weeks, saying that this would be damaging and distort the market for first-time buyers. How does that now compare to what we have now? Over the weekend emails start suddenly appearing saying: "This is going to distort the top level market." After publication of the running order and preparing the debate we then get an amendment lodged, no notice, relieve Standing Orders, take it away, look at it another day. Now, notwithstanding the merits of looking at it another day, because as the Minister for Treasury and Resources says, I think the Stamp Duty Law is a real confusing mess. It takes a huge amount of effort to work it out and I am not surprised to hear that there are anomalies in it and opportunities for people to avoid, and I think the supply .. I mean, this confusion applies generally to the whole thing. So, yes, there should have been a review. Yes, there should have been a look at it, and so if this had come on its own I would not be making these comments because I would have said that it was the sensible thing to do. But really, I am struggling to understand why, if it is sensible to do this for the higher end properties, it was not sensible to do it for the first-time buyers. Those are obviously more vulnerable, they have less voice and less power in this place and I say that absolutely reflected the way our Government works and its priorities. So, I am going to listen carefully to see if any other Members share my concerns before I decide which way to go. So, on its own it would have been a perfectly fine amendment but in the context of the whole picture I am very uncomfortable with it.

The Bailiff :

Senator Ferguson? No, not Senator Ferguson. Does any other Member wish to speak? Yes, Deputy of St. Ouen .

2. Deputy J.G. Reed of St. Ouen :

I think that this amendment clearly demonstrates that some of the Budget proposals have not necessarily been properly thought through and all the implications considered before being brought to this Assembly. Certainly the Corporate Services Panel that I am on was not aware, or was aware of this proposal, but not, certainly, the changes that are being proposed. I do question whether this is, the amendment that is being proposed, indeed fair and equitable when the Minister for Treasury and Resources is now proposing that commercial property does not have to deal with the impact of the changes and yet the domestic property does. I want the Minister to explain very clearly to us, when he sums up, why there is a need solely to focus on the issue of deterring investors, who I presume would predominantly be non-local individuals and companies, and ignore the impact on the local population and the implications that go with it. There is a comment made here with regards to the U.K. and the rate applied to commercial properties in the U.K. of 4 per cent. There is no mention here of all the other different taxes that are levied on properties when they are sold in the U.K., and I think that the Minister has been perhaps a little bit selective, or maybe it is more important that those arguing the case for not paying this increase on tax on commercial property have been selective, in the arguments that they have put forward. The reality is though that we are going to be, and we are asked to agree, that to reduce income by £250,000, overall income, because there is a last minute view being expressed that this is inappropriate. Well, I say if it is not appropriate for a commercial property then as far as I am concerned it is not appropriate for domestic properties. If the Minister wants to take this time to be selective then I too will be selective and basically vote against this amendment.

3. Senator A. Breckon:

I share some of the concerns that Deputy Young made and I will not repeat them but I think there is a worrying issue here that there is a lobby. Now, if we are talking about some of these properties, there could be people from anywhere buying commercial properties, there could be insurance companies or pension funds or whatever else, but then if this really is an issue then they might go somewhere else and it might help prices to flatten out a little bit. We heard yesterday about the first-time buyers and the graduation of stamp duty but then if the Minister was so minded he could have proposed something similar here and put steps in above certain levels and done that rather than just saying: "Well, we will have a look at it." The other thing that worries me is, and it is in the documentation, there is a device that means that some with appropriate advice can get round paying the stamp duty and that worries me because I would like to think that we had people in the public sector who were equally armed, if you like, to challenge the devices that come forward and block the loopholes because if this has been happening over a considerable period then we have lost money by - "we" being the States - collecting revenue. Somebody has found this device and, as the Minister has pointed out, it will be looked at and closed but then if that is closed does something else open? For those reasons I am uncomfortable with that, especially where we cleared things up for first-time buyers because to them it is a substantial investment buying a house up to £450,000. We are not talking about peanuts, it is a significant long-term investment, and it is right that some help should be given with that. But again we have tiered that, we have moved away from something and put something in place, and for those reasons I am minded not to support this. Thank you.

4. Connétable P.J. Rondel of St. John :

Given that this was only placed on our desks yesterday and we said we would take it, it did not give time for Members to put in any amendments. That said, I am concerned that, like in paragraph 6, I wonder if this somewhat is a bit of a knee-jerk. It says: "A potential avoidance practice on stamp duty has been flagged-up and officers have been instructed to investigate this opportunity as a matter of urgency and, if required, to fast-track legislation." But if we are only currently investigating this particular area, surely are we not jumping the gun, Minister? I am pretty unhappy with the way of doing this at the 11th hour and 59th minute and I want to hear the arguments from across the Chamber on this. Little is being said and we really need more information. I will decide how I vote once I have heard the Minister sums-up.

5. Deputy M.R. Higgins of St. Helier :

I am just going to join in this small chorus of concern. There are 2 issues here. One is the issue that we would be uncompetitive by adopting a 7 per cent rate instead of 4 per cent, and then there is the other issue of the idea of possible tax avoidance. They are not the same issue. If they are going to research possible tax avoidance they should be doing that as a matter of course, we should not delay it. If, on the other hand, they are saying we are uncompetitive, make that your argument. Do not try and confuse it by throwing in 2 or 3 separate arguments. I think we should reject this and carry on with the proposal for the increase and investigate and close any loopholes as and when they are discovered. Thank you.

6. Deputy R.G. Le Hérissier of St. Saviour :

Another one joining the chorus set in train by Deputy Higgins or others. The point that strikes me is that the Minister is arguing on 2 possible contradictory fronts. On the one hand he is saying he has had representations from the industry and it looks very much as if this is a cave-in. It looks very unfortunate, particularly in the light of Deputy Young's comments about individuals versus commercial interests, and yet at the same time he is saying he has discovered some loopholes, and therefore in a way we are allowing these to continue. I mean, what is the priority? Surely the priority is to keep the system going, plug the loopholes and then undertake the fundamental review which he is also calling for. Thank you.

7. Deputy E.J. Noel of St. Lawrence :

Much has already been said so far this morning that, until yesterday morning, I agreed with. When we had this information come through late last week, I was reluctant to agree with the advice that we were being given to change this tack. But to be honest, the potential for avoiding the stamp duty becomes more attractive to those bodies entering into property transactions because of the change of rates. We need to do both pieces of work. We do need to close that loophole but we do not want to encourage people to exploit that loophole in the meantime, which is really why we are deferring this and we are going to be shoring-up those loopholes to make sure that .. because at the moment there is no .. we understand that most transactions do not use the loophole but by increasing the rate without that loophole being closed, then we are told that there is some transactions coming through where they will use that loophole. So we are not saying not to do this, we are saying let us defer this; let us close the loopholes that are currently in our legislation and bring it back in. I hope that is helpful.

8. Deputy A.K.F. Green of St. Helier :

I would just like to concentrate and remind Members that we are just poised to come out of the biggest worldwide recession that we have ever seen, and the advice that we have received, or the Minister for Treasury and Resources has received, that this particular stamp duty increase would make us uncompetitive. Do we really want to send a signal out to people considering investing in Jersey that we are too expensive, they should not invest here and that perhaps they should invest in our sister Island or other places? This is the wrong time to be sending that - if ever there is a right time - to be sending that sort of message out. I think the Minister for Treasury and Resources is absolutely right. The industry has very clearly indicated that this is wrong and the reasons that it is wrong. It may be that we need to come back with a revised version when the Minister has had a chance to look at it but it is wrong to do it at this time when we are just emerging from this depression or - sorry, I cannot think of the other word now - recession. But just emerging from that and we want people to know that Jersey is very much open for business.

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

I am happy to support the amendment. I think it does make sense that if it will ensure we do not discourage investment with the Island that is a good thing. The 2 comments I would make are that it does not look good that it is literally a last minute amendment and that does not give credence again to the sort of long-term thought process that has been going, particularly in the context of the Property Review. The other comment I would like to seek clarification from the Minister, is he has made reference a number of times to that the letter came in, I think it was Thursday last week. That is true and I have certainly had sight of a letter and it had a very long list of law firms and property people who I presume, on the basis they are on that list, were expressing concerns. Unfortunately, the query I would like to raise that I have been informed by email, is that the first concern was raised at the beginning of August. So the point I suppose is that it is not as last minute as it would appear, but on the other hand if that was just one representative, is that what skewed the balance? Is it the first time or is it just one person kicking-off, for want of a better expression, and now there has been a bit of credence given to it? But then I kind of wonder what has happened in that time period. Please emphasise I did not see the original letter so I do not know the contents. It has just

been confirmed to me somebody did get in contact with Treasury and the Minister for Treasury and Resources at the beginning of August raising issues about this issue on stamp duty and the commercial impact on property. The only reason I am mentioning it is so it does not take the merit out of the amendment, it is about this thought process that has been going through, how we got to his decision. But I am very happy to support the amendment, I think it is the right thing to do on the basis of the concerns being raised. Thank you.

[10:00]

The Bailiff :

Does any other Member wish to speak? No? Then I call upon the Minister to reply.

10. Senator P.F.C. Ozouf :

Sometimes I stand here and think that I can never win but I will remain optimistic and positive. To Deputy Le Fondré, I will go backwards. That was not a pun. The concern was first raised in August by one, I think, to property .. the German word is makler. The trade .. surveyors, people who buy and sell the commercial equivalent of commercial estate agents. I received a number of representations on issues, and to address the Deputy of St. Ouen, I had lots of estate agents saying: "Do not do this; we are going to prevent people from coming to Jersey." So, I looked at the U.K. rates and the comparative .. because the issue here is that, and I have to accept that we had not given as close attention as we might have done because of the Green Paper on the issue that there is a cap on commercial properties' stamp duty transactions in the U.K. at 4 per cent. Our main attention had been focused on the residential side and I discounted the representations that people had said, that they said: "Do not put this increase in stamp duty through because you are going to stop people from coming to Jersey." Now, we looked at the residential rates and even without doing the motivation as I have explained - and this is going to be a feature of the Budget debate later on - is there is always a consequence to a decision. Now, we are cutting the tax on stamp duty on mortgages. So I hope that we have been shown to be a responsible Treasury in funding something that we are doing. More than that, we are always looking for ways of maximising revenue in order to fund our spending decisions and the spending decisions of this Assembly. So I absolutely stand by and I have discounted the representations on the residential property market. We all know there are now .. and it is fantastic, good news for Jersey that we are seeing some very high value properties coming through on the sale in service. We have seen one of £12 million. We have seen others of £7 million, £8 million and £9 million, and frankly, when we looked at the stamp duty rates on residential they were not, I do not think, collecting enough for public revenues. The situation was different for commercial. Now, I have to accept and I agree that, and I think it was Deputy .. I think it was probably Senator Breckon, it might have been. Certainly one measure was made very clear, that commercial property tax is lower in Jersey; it is much lower, and I know I have tweaked the tails of the Constables in a way because we are proposing that the issue of commercial property tax of which the Island-wide rate - which we are very grateful that the Connétable s collect for us and they share in some of that - is extraordinarily low in Jersey. If you are a ratepayer in the U.K. on a property, say an office with £100,000 of rent, in Jersey, I think my research at the weekend indicated that you pay about between £4,000 and £7,000 of rates which is split between the Island-wide rates and the Parishes, the majority is taken by the Island-wide rate. That was the settlement for the public taking responsibility of the income support system. In Jersey you pay between £4,000 and £7,000. So I just ask Members to reflect and just to guess what the number may be in the U.K.; what business rates may be in the U.K. I cannot ask Members to give me any indication but I will just ask them to think of a number and then I will tell then what it is. It is about £40,000 to £50,000. It represents 40 to 50 per cent of the rent roll. Now, that is a much higher occupation and ownership cost of owning property. It is much lower in Jersey to own commercial property. Now, I have tweaked the tails of the Constables and I have said also there

are issues that we need to resolve in terms of unfairnesses; rates of shops have gone down, offices have gone up, values of hotels have gone down, and the whole system of the collection of commercial rates is now unfair. Residential shops are being discriminated against. So what we are trying to do is do exactly what the criticisms of, if I may say, Deputy Le Hérissier, Deputy Le Fondré, Deputy Reed and Deputy Young, who accuse me of double-standards. I really hope that this is not going to be a feature of this debate because I am standing here trying to do the best for Jersey and I am trying to do the best interests of collecting revenue to fund social programmes in a fair and equitable way, but also listening. So I am listening. I want, and I am sending a very clear signal - which was the original intention of this Budget - that we want to collect more stamp duty and tax from commercial property, and we do not think that doing that is going to make Jersey uncompetitive. But you must do so with all of the taxation measures, looking at them as a package. That is what the Green Paper is about, and so what the industry have said, and to answer Deputy Le Fondré's question, the representations that I have had from industry, and we always listen, we always .. there is a stream, constantly, of representations that we have on any Budget proposal that we have. We have people who say - we do not often get people saying it is the right thing to do but we certainly get the people when they think it is the wrong thing to do, and I have had, frankly, a bit of a confused message from the commercial sector. I had an email from a representative - I will not mention any names - but I had effectively an email as late as Thursday at 4.30 p.m. sent on behalf of a number of people that had effectively 10 of the major property law firms and major property commercial entities in Jersey. They were not even clear in their email that they were focusing on commercial property. I sent them back an email to say: "Can you please explain to me, I do not understand why you are talking about this. I do not understand." So they then responded back. I have asked them for some evidence. I am concerned, and I am sorry I do not accept that I am doing double-standards or speaking in 2 things. I am concerned that it has been brought to my attention that the increase in stamp duty, which may well be justified but I want to make sure that it does not have an unintended consequence in terms of competitiveness, also does not have unintended consequences of encouraging people to use an abuse. Now, to be criticised for taking these 2 perfectly rational representations together and responding, that is what you do; when the facts change I change my mind. That is what I do, and that is what I have done. So I say to all the critics that have stood up and said, you know, wrong, do not do it, criticism, double-standards, all the rest of it, I say: "What would you do in that position?" What would those Members do? Would they simply go ahead and move and cause us a problem? No. What we are doing .. and I say to these people who have made these representations: "Please be careful. Please be careful in making representations. Be careful what you pray for." Not in a biblical sense. Be careful what you pray for because what we might be coming back to do is something that is going to raise more revenue while of course being alert to the wise words of Deputy Green in relation to the competitiveness of the market, because he is absolutely right. We do not want to do that. But I do not want to send a

headline number out and have something else that is avoided. I want to do a complete package, and I urge Members, those Members who are still in this Assembly, please read the Green Paper on property taxes. It is a great piece of work and that work is precisely now delivering the kind of revenue raising opportunities that are competitive, that are going to be able to fund the social programmes of health and education for the next Assembly, and we are working now in order to do that. So, this is a stay. It is a pull-back, reflect and maybe come back with something that is even stronger. That is my message to the commercial property agents. This does really deal with ..

Deputy R.G. Le Hérissier:

On a point of clarification, the Minister has made much play of this email but I do not think we heard, once he understood it, what was in the email. What was the essence of their objection to what he was proposing?

Senator P.F.C. Ozouf :

Happy to answer that. Basically - I do not want to read it all because it will take too long - but effectively, the representations are that .. effectively the original email basically says: "I refer to the recently proposed Budget and proposition in relation to increased stamp duty." This was on Thursday. "On behalf of a group of property advisers/owners/investors, we propose that the increase in stamp duty for property transactions" - it did not even say if it was commercial or residential - "is deferred until the Green Paper on property taxation is completed. I am aware that you and colleague x [somebody that wrote to me earlier] exchanged some correspondence at the beginning of August, however since then I have been speaking with other members of the industry and we have sought various opinions as to the issues that could occur should the States proceed with implementing the proposition. When the changes on taxation on superannuation funds for owning local property were introduced a number of years ago, we saw an impact with less investment in Jersey, et cetera." I disagree with that statement. It was wrong; it was because of the local downturn and I believe it was right to collect more tax. So there is a representation that I disagreed with. But they are saying that the proposal could create a distortion of the market. That was the signal for me to think there is an avoidance issue. I sent an email back, upon advice, saying: "Please give me evidence of some of this. Give me some of the evidence of transactions." I had a further email back with the comparisons which we knew about then, about Guernsey and the U.K., and that gave me sufficient evidence to say: "Okay, hold back." So that is the reality of it. I do not really want to publish the email because it has got the names of individuals who, I am sure, do not want to be put in the public domain. This is perfectly sensible, perfectly reasonable. A Treasury, an Assembly that listens, that moves, that is trying to boost economic recovery, maximise revenues and do the right thing. I think I have answered all the questions. If I say to the Connétable of St. John, I really want to try and convince him to vote for some of these Budget proposals because they are the right things to do right at the last minute in his last day in the States, get some support. [Laughter] This is not jumping the gun, this is listening, responding and as a .. I know this is no commercial this is no he understands commercial property. We do not want to do something with an unintended consequence. This is listening and responding and doing the right thing for Jersey. I say to Senator Breckon, I do not need to be told and I do not need to tell the Treasury about avoidance. We are on the case. We have invested £600,000 in protecting revenues and that is one of the reasons why our forecasts have been beaten because we have been dealing with revenue avoidance. So we are on the case when we find them, and a low, broad and simple tax system means you do not have opportunities to withdraw. So I hope he will support this. Deputy Higgins - could he not support anything that I bring forward? Can he not support [Laughter] something that is in the right and best interests and with good advice? Is it just simply because it is me proposing it? This is the right thing to do. It is sensible, it maintains revenue, it does not distort the market and it means that we can come back with something that is better. So I ask Deputy Higgins, please, put personalities aside and please vote in favour of something that is absolutely sensible and shows that we are listening, which is something that he says that we do not do. I say to Deputy Young, not double-standards. If we are successful in raising more money from property and commercial property and dealing with this U.K. issue of U.K. companies not paying tax, which is one of the other solutions to raising revenue; 80 per cent of commercial property in the Island is in St. Helier, 80 per cent of it is in offices, raising tax on this issue is going to raise more revenue and we can do some of the things that he wants to do in terms of alleviating the pressure on first-time buyers. That is why we want to do it. We want to de-friction the market. So I ask Deputy Young, please, this is not double-standards it is the right thing to do. So I move the

amendment.

Deputy M.R. Higgins:

Can I get a point of clarification from the Minister? I am not going to answer his charge or anything. Basically, he said that they wrote to him, they had concerns and everything else. I personally - unless I switched off momentarily - did not hear what the evidence that they came up with to support his change. What was the evidence? Please repeat it.

The Bailiff :

I do not think that is a point of clarification. The Minister has made his speech. Senator P.F.C. Ozouf :

It is just simply this, is that Jersey commercial stamp duty would be on properties of a much higher level, and this is mainly office blocks, over £1 million, £2 million, £3 million, up to £10 million, £20 million would be at a much higher stamp duty in terms of their sale than the U.K. and that might prevent investment. I want to look at the whole property tax issue not the narrow issue and that is the evidence. I have got that evidence, plus the avoidance, means stop, hold, pull back, research, improve, come back with something better, and it will be quick because the Assistant Minister is on the case. I hope the Member votes in favour.

The Bailiff :

Very well. The appel is called for in relation to the amendment lodged by the Minister for Treasury and Resources. I invite Members to return to their seats and the Greffier will open the voting.

The Bailiff :

Before we move on, Members will recall that at lunchtime today there is a reception in honour of Mr. Jean-François Le Grand, the President of the Conseil Générale de La Manche and I hope very much to see all Members there at that reception. But President Le Grand has just entered the Chamber, together with a delegation. We are delighted to see him here and we much look forward to the reception later. [Approbation] Very well. Sorry, Deputy Le Fondré.

Deputy J.A.N. Le Fondré:

Sorry, I was just trying to find an appropriate moment. I have to give notice that from about 2.15 p.m. I shall not be in the Assembly because I have got a Parish funeral to attend.

2. Draft Budget Statement 2015 (P.129/2014) - as amended The Bailiff :

Very well. So that completes all the amendments proposed so we now return to the debate upon projet 129 as amended. So I invite Members to speak. Does anyone wish to speak? Deputy of St. Ouen.

1. The Deputy of St. Ouen :

I will start. The first thing that I would like to do is to acknowledge the efforts, not only of the Minister for Treasury and Resources, but the Council of Ministers over the last 3 years in trying to get to grips with some of the financial pressures and challenges we face especially with regards to dealing with some of the underfunding in the past, especially with regards to capital projects. I think the one thing that I still have concerns over is the control of expenditure and the challenges that lie ahead. This is an issue that we picked up at the Corporate Services Panel in our Budget reports and I am not going to spend large amounts of time highlighting some of the findings and the recommendations that were contained within it. But I think, and I would respectfully suggest, that all States Members and indeed new States Members take the time to read the report because I do believe it does highlight some of the issues that lie ahead, and contrary to what the Minister for Treasury and Resources has suggested in the past about individuals or panels bringing amendments, I believe it suggests an appropriate way forward. It is all very well and I think it is right to be positive about our future but sometimes it is also important to be honest, and I do not mean to suggest that anyone is dishonest. But I think that you need to tell the story as it is rather than how, perhaps, you would like it to be. Members of the public have got significant concerns about the future. They have been faced with a large amount of changes within the  last 6 or 7 years. Beginning with G.S.T. (Goods and Services Tax), the introduction of G.S.T., dealing with the economic crisis, dealing with the introduction of other charges like long-term care charges about to start next year. Dealing with 20 means 20' and the reduction in the allowances, and equally dealing with trying to maintain and retain a job and not having and benefiting from the pay increases that many of us and others have got used to in the past. I believe that more needs to be done to reassure the public that we, the States as a whole, and indeed and more importantly, the Council of Ministers who we look to for leadership, that these issues are dealt with. The public's concerns around increases in expenditure and how we fund it are going to and must be discussed with them. It is great to pronounce we are having new hospitals, whether it is £297 million, £400 million or whatever. It is great to say that we are going to have improved health services but the public equally know that the public of this Island, the residents of this Island, the taxpayers of this

Island will be looked to to contribute to these extra services. Things have changed somewhat from the past and here we have had the Minister for Treasury and Resources demonstrating that we are still chasing and trying to chase after and support commercial and businesses on this Island who are not contributing very much at all in relation to the whole tax take with regards to now where we have switched and moved towards more personal taxation. But we must not forget about the people that are paying and living on this Island and trying to not only earn a living but keep a roof over their heads, and pay for all the other matters that individuals face in their day-to-day life. One of the major recommendations that we made in our report is that a proper and appropriate debate needs to be had, not just in this Assembly in isolation from the public, but a debate with the public to help them understand some of the implications and the challenges in providing services both now and in the future. If we do that I think we do stand a better chance, not only of increasing public trust and confidence in this Assembly, but arriving at solutions to the situation that everybody will generally support. We have had to deal with deficits in the past but it is quite recent, and I think that what I am very concerned about is that given the signs, and I know the Minister for Treasury and Resources will argue: "Oh, well, they are only signs." But they are real signs that have been flagged-up, not only by the panel but by the Fiscal Policy Panel and others, is that we are facing the need to fill a gap again, in a relatively short space of time. Now, I know issues outside of .. that we are unable to address have had an influence on that. But - and it is a big but - we have got to learn to be more prudent in our approach when managing taxpayers' money. Just because we happen to get a windfall amount or an income over and above what we anticipated, does not mean that we spend it. However, that has been what has happened. The other concern is that in the past we have been advised to help fund appropriate services, I cannot argue with that, that we utilise funds from the Health Insurance Fund. We were told: "It is all right, there is plenty of money there and there is a need. So let us use it." More recently, the Minister for Social Security tells us: "Oh, hang on, guys. Because of the changes it is more likely that we are going to have to look at increasing contributions to be able to top-up the Health Insurance Fund to a more appropriate level in the future." So a short-term decision has a longer-term consequence, and my concern is, and the concern of the panel, when we have looked at this Budget, is there are .. and the Minister will

argue justifiable decisions to take some short-term action but they will and do have consequences. One of them is using money from, I think it is the Dwelling Houses Loan Fund. This Assembly was persuaded to introduce a new scheme called the Deposit Loan Scheme, not that long ago, and the idea was to help people on to the housing ladder. We were told: "We have got money available in the Dwelling Houses Loan Fund and we are going to do a pilot scheme and we are going to use £3 million of it to help a number of individuals get on the housing ladder." Again, the Corporate Services Panel reviewed that particular proposal, raised a number of issues, but basically we were told: "Do not worry it will be okay." We said it should be monitored and we said it should be reported back to this Assembly how good it was, appropriate, what impact and effect it might have. Instead, you redo it, and according to the Minister for Treasury and Resources, and indeed, I think, the Minister for Housing, they raised it, praised it as a very successful scheme. So what is happening now? Are we continuing with that scheme? No. No, we are going to be taking money out of the pot that could be used to continue the scheme for some other purpose, to balance the books. Is that really the sort of action that we want to be taking? Where is this realistic approach? Where is the forward-looking actions, demonstration of actions that the public are desperately looking for from this Assembly? When we seem to leap from one matter to another and disregard previous decisions, previous issues just to deal with a short-term problem, which may not be a short-term problem. Corporate Services did consider, and went as far as seeking advice, about whether this Budget could be amended. The advice came back that it was very difficult, and that is why we have come up and we have developed our recommendations which are contained in the report. Because we thought: "Well, although we disagree with some of the elements and have significant concerns about this Budget, that we could influence where we go from here." One of

the matters that we really have not touched on and have not really had a chance, even, I am sure, many States Members have not even had a chance to look at, is the long-term revenue plan, or review now, it is called. Again, I direct States Members and others - members of the public - to look and read that document because I do think it does flag-up some of the challenges that lie ahead. But what annoys me, and I hope, moving forward, that Scrutiny is given more opportunity to be provided with all of the evidence because one of the issues that we had, at the Corporate Services Panel, was we were told that there was going to be a long-term revenue plan. We kept asking: "Where is it? Where is it? What are you doing?" We were told it was coming, then it was not, then it is a framework not a plan. We were told all sorts of things and hence the reason for one of the findings in the recommendations that States Members need to consider this as part of the overall picture. But what worries me is that in a separate debate last week or the week before, the Minister for Social Security I think we were debating P.136, and in the report it said that well, all the growth bids have been considered by this current Council of Ministers and are already included in the next Medium-Term Financial Plan.

[10:30]

So this idea that the Ministers, this current Council of Ministers, do not really know what is coming round the corner I find really odd when it is confirmed by other Ministers that all the issues and the growth bids have already been discussed, decided upon and included in the draft next Medium- Term Financial Plan. Where is the genuine openness and transparency that we all seek? Why is it that the Minister for Treasury and Resources and the Council of Ministers I am not just picking out the Minister for Treasury and Resources, because I think that is part of the problem. We have a Chief Minister that talks about collective responsibility and yet too often they hide behind a Minister or individuals, and I think that there have been significant issues and changes over the last 3 years that have increased the power of the Minister for Treasury and Resources over and above the Chief Minister and the Council of Ministers, and I think that in the next 3 years I suggest that the States Members who are in this Assembly review that. If we are going to have collective responsibility, if we are going to have a cohesive executive government, if we are going to have a Council of Ministers that we can trust and rely upon, their signature and responsibility needs to rest on more of the fundamental matters including finance because ultimately the Minister for Treasury and Resources is the guy with the chequebook. He is not the determining factor. It is the Council of Ministers and ultimately this Assembly. The better information that can be provided, not only to the public but to this Assembly, regardless of whether you are an executive or non-executive, is of significance because then you will see improved decision-making. Not looking at the short-term but equally looking at the future prosperity that we all seek to achieve. Thank you.

2. Deputy J.A. Hilton of St. Helier :

I just wanted to touch on a capital project which is the hospital. As Members will be aware, the Scrutiny Panel completed a report recently and we were given the response from the Minister for Health and Social Services and the Council of Ministers to that report and also a response to a peer review of reform of health and social services which the Council of Ministers set up themselves to get some answers from some experts in the U.K. to basically peer review the proposals on the dual site option. The panel do have deep concerns about the proposal of the dual site option and I think it is only right that I should say something about that today because I am very concerned that as a result of the expenditure of £297 million, if this option goes ahead, that it may turn out to be a compromise and it is something that we absolutely have to get right. It must be the States of Jersey's biggest capital project. It is vital for Islanders that we do get it right and that we spend what money we do have wisely. I just wanted to refer to one of the concerns in the peer review and I will read it to Members: "A new build on a single site, which is unencumbered as far as possible, is always the preference. This would enable a quick build, consistency in current service and a

much easier move from existing buildings." They also went on to say that: "The 10-year phased programme over 2 sites is too long. Every effort must be made to see whether it is possible to reduce the timeline. The potential disruption for current services should not be understated and must be addressed as a major risk and mitigated." They also went on to say: "We are aware of the considerable debate on the capital monies available to fund the scheme. We would only say that this is probably the one big opportunity to resource health services in Jersey in one critical aspect and the gains by getting it right and future-proofing are highly significant. There are too many examples of health projects which have failed to realise their full potential. The cost of getting it wrong is huge." Those are the words of the experts employed from the U.K. to advise the Council of Ministers. One of our concerns was that originally the site at Overdale was earmarked for the development of a mental health facility and Members are probably well aware that great investment is needed in this area. So this was of concern to the panel that if the dual site option went ahead, what was going to happen to our new mental health facility? Was this going to be a question of it remaining where it is, the facilities available continuing to be under-resourced for a long period of time and for States Members ultimately to be letting down Islanders? Which is what we have been doing and we need to address this urgently. So that was of great concern to us. The other concern to us is that under the proposals, only 44 per cent of the dual site option is new build across the 2 sites. That is 44 per cent and we are talking about a sum of money of £297 million. Thirty per cent of that money will be refurbished and 26 per cent of the existing buildings will remain as they are. As I said before, we have deep concerns that this money .. that the sum of money being provided or what is being proposed is not good value for money. Whatever happens in the future, more capital money will need to be expended on the refurbished and existing buildings that will come out of this new project, so that might be in 20 or 30 years' time. So we are spending approximately £300 million now to potentially, in 20 or 30 years' time, to have to revisit it again and at the same time compromising any new mental health facility we were hoping to provide for the people in Jersey. Members need to be well aware of these facts before any decision is made. We are aware that when the funding has been worked up for the various options, that not always has it been compared like for like, apples for apples, which has produced distortions which we did point out. So we were not getting an absolutely clear picture of what we were getting for our money across the different sites. We are told, well, the States Assembly agreed last year that the investment returns on the Strategic Fund would be used to fund the hospital over 10 years. We have already been told by the experts 10 years is too long. We have to deliver a new hospital facility as soon as possible. We had great difficulty in understanding where the figure came from because initially the figure talked about in a report a couple of years ago was around the £400 million mark and I suppose there would have been an assumption that Atkins, who carried out the feasibility study on all the sites, might have been working along that figure. So when we were told that the figure is just £250 million with an additional £47 million to cover the cancer care centre and £25 million for interim works, we really struggled to understand how that figure was arrived at, and in fact we still do. The point I wanted to make about funding, having agreed to use the investment returns from the Strategic Fund and knowing that the Strategic Fund returned last year £91 million and I take my hat off to the Minister for Treasury and Resources, the Treasury Department and the managers who were handling that money because it is a fabulous sum of money to return on a fund, £91 million in one year. I am told that the return on the Strategic Fund, although maybe not as great this year, will still make quite a substantial return. So the point I am getting at is it may well be in the space of 2 years that the investment returns may total somewhere between £160 million and £170 million. On the basis that we have had such fabulous returns, and maybe the Council of Ministers were being very prudent in their approach last year - because obviously there are big concerns about how we are going to finance all our health requirements - I would just like an assurance from the Council of Ministers that they are going to go back and look at the funding envelope. I also want an assurance from the Council of Ministers because it is my understanding

the business plan for the dual-site option will come back to the States Assembly next year for approval. My concern is if States Members throw that option out, are we back to square one without the Council of Ministers bringing forward another option for us to consider? I would like to know from the Minister for Treasury and Resources whether there has been any discussions around costing-up an alternative model than the one already proposed that will deliver a hospital that Jersey can be proud of and that meets the requirements of Islanders. I believe that Jersey as a small jurisdiction can be a beacon in the medical provision it provides, and we should be. I want to be absolutely certain that the Council of Ministers are making the correct decision, so I would appreciate an answer to those questions. I think I will leave it there.

3. Deputy P.J.D. Ryan of St. John :

This will be my last speech in this Assembly. [Approbation] I am well aware of the potentially controversial nature of a Minister speaking against a Budget and this will be the first time that this Minister has found it necessary in the public interest to do just that. I ask all Members from all sides of this Assembly to forget the political fun to be had at the expense of the Council of Ministers and to focus purely on the detail and on the messages that I believe are serious enough to warrant my speaking out. I will limit myself, though, to focus purely on those matters that involve education. On page 56 of the main Budget booklet lies section 11, the proposed measures to manage the Consolidated Fund. Members by now will be well aware of the details proposed and I rise, therefore, to inform both current Members and potentially any new Members from November that might be listening of the implications for education of those proposals. My comments apply specifically to the proposed cuts to department budgets of 2 per cent as well as the £5 million overall reduction in departmental carry-forwards from 2014 into 2015.

[10:45]

Also, although not strictly part of this Budget, we already know that 2 per cent cuts and carry- forward clawbacks are in prospect for each of the next 4 years after 2015. If implemented across the board to all departments, as the 2015 cuts currently are, this will spell utter and complete disaster for education. But back to 2015, the total E.S.C. (Education, Sport and Culture) contribution to the 2015 savings, including carry-forward clawbacks, are proposed to be in the region of £3.5 million to £3.85 million. The exact figure is unclear because some departments are overspent and will not, therefore, have carry-forwards themselves, so other departments are vulnerable and may be asked to make up the difference. Into this mix we must include the previously accepted special circumstances for Education of the last 2011 C.S.R. (Comprehensive Spending Review) process, and the agreed extended timeframe for E.S.C. to make cuts into 2014, 2015 and 2016. Other departments' cuts ended last year. So for E.S.C. one must add the old residual 2015 C.S.R. cuts of about £600,000, making a total of between £4 million and £4.5 million cut to base budget for Education in 2015. Let us talk about carry-forwards and clawbacks. The nature of E.S.C.'s carry-forwards means that much of it is committed to schools. There are timing differences between the school year and the calendar year. Any excess income generated in the fee-paying sector by fees received in the colleges is seen as belonging to parents and not the States and is earmarked, therefore, often for investment in future improvements to the colleges' infrastructure. Finally, there will be a number of small amounts carefully accumulated by each of the non fee-paying schools under delegated financial management and already committed to be spent in those schools in the early part of next year. Traditionally, and in recognition of these circumstances, E.S.C. has been able to keep the carry-forwards and manage overall budgets year on year. The loss of carry-forwards will impact seriously on those schools and their ability to function, so Education cannot realistically withhold them. We have 2 other special items for 2015 affecting the normal carry-forward picture, one good and one bad. First, the good news: university fee increases. There was a previously successful growth bid agreed in the 2012 M.T.F.P. to cover university tuition fee increases expected to come for students starting in September 2013 and continuing in the year starting September 2014 and 2015. Fee increases in 2013 and 2014 did not happen and, although not final yet, it looks like any increases in 2015 will be minimal. As a result of this, we can expect a total accumulated carry-forward for 2014-2015 to increase above the normal amount by about £1.2 million. Now the bad news. There is a large 2015 unfunded item over which E.S.C. has no control: pupil numbers in schools. All school budgets and grants are driven by a formula based on the number of children in the school at any one time. In 2011, during the old C.S.R. process, it appeared that there would be a small dip in secondary school numbers from September 2014 to 2016 before rising again after that. Some Members will remember this. This meant that E.S.C. could include a C.S.R. cut for 2015 of £300,000. In fact, this amount is half of the old C.S.R. residual £600,000 for 2015 that E.S.C. has to make and I have already mentioned. The problem for E.S.C. lies in what we now know in September 2014 that we did not know in 2011. The number of children that will be in the system for the 2014-2015 academic year just started is now known to us. The predicted reduction in school numbers has failed to materialise. In fact, the opposite has happened. There is an increase over predicted numbers right across the whole system. That is from nursery right through the whole education system to those attending university: a birth rate increase, the downturn in the economy and availability of job-starts for 16 to 19 year olds, and this has driven the need for better vocational qualifications. More students at A- level in schools, more young people realising that for the better jobs employers are looking for degree-level qualifications, et cetera. Let us be absolutely clear. Overall, this is good news for the economy in the long run, and to see why Members should have a good look at the excellently detailed Skills for Success skills strategy report published in May this year. That is R.61/2014. If any Member really cares about education and the future success of our economy, or anyone else for that matter, this is essential reading. The significance of these demographic trends in terms of the 2015 Budget is that the department has an unfunded, completely out of its control spending pressure amounting to £1.565 million, some £250,000 more than the saving as a result of the good news from the September 2013 freeze on university fees. Normally, the demographic spending pressure would be a prime example for central contingency funding. Unfortunately, however, the central contingency fund is now empty. In addition to all of this, late last year and as this year has unfolded the department has been planning to manage its budget in 2015 to continue with 2 crucially important work streams. They are so crucially important that as Minister for Education, Sport and Culture, I have felt compelled to object in the strongest possible terms within the Council of Ministers when it became clear this summer that the proposed E.S.C. cuts next year would mean that these 2 projects would have to be put on ice. They are the continued development of the Trackers apprenticeship programme to include financial services and digital industries; budget £550,000. The second one: the continued development of the school improvement and standards programme; budget £998,000. First, Trackers. At a current total participant rate of 187 apprentices, Trackers is a victim of its own success, having already exceeded in 2014 the end of its 2015 target of 180, and all with near zero dropout rate and 99 per cent of all young apprentices in stable, permanent jobs. Apprenticeship programmes for both financial services and digital

industries are the planned additions to Trackers in 2015 using internal E.S.C. diverted funding. However, if we do not have these funds, we will have to cap Trackers at its current level and put further development on ice for a year at least. In the last week, and following some more tense discussion at officer level, it appears that a proposal may be in the offing that includes diverting some funds from E.S.C.'s partners on the Skills Executive that might enable the success story that is Trackers to continue its development next year as planned. Nothing can be guaranteed, however, because who knows what the attitude of the next Ministers for Social Security and Economic Development will be or whether the next Minister for Education, Sport and Culture will be strong enough to fight for the money. I also believe you lose the respect of the electorate when you do deals behind closed doors. Second, the standards agenda. This is the other piece of crucially

important work, perhaps even more important than Trackers in the longer term. It is the school improvement programme. It is not flashy and it is long term in its scope. There is already a quiet revolution in Education that started some 5 or 6 years ago: improvements in teaching; in school leadership standards; fully moderated teacher assessments of all pupils to ensure consistency; knowing through accurate data capture exactly which students are doing well and which ones need more intervention; then having the resources to accurately tailor and apply that extra support when required; professional partners in each school to advise and peer review head teachers and monitor school performance. All this is crucial stuff. The resulting pupil achievements at year 6 and at G.C.S.E. (General Certificate of Secondary Education) this year, judging by those most recent statistics, are both very encouraging, but we need and must do more to continue and urgently develop the programme. In 2012-2013 we carried out a review of maths teaching and have implemented those findings across the system last academic year. We must complete the current teaching review of modern foreign languages and apply its recommendations. We must launch a new review of English literacy teaching next year as well and then sciences the year after. There is a 2016 growth bid of £2 million partly for this purpose and partly to fund vital one-to-one teaching intervention for the children that will benefit most from it, and also to focus on helping those families under the most pressure. But if we wait until 2016, this means that realistically it will be the September 2016 academic year before the programme development can be effective. We had planned to find about £1 million of funds from the windfall carry-forward increase from the higher education budget freeze and to bring forward the standards work as a one-off into early 2015 so that we could have staff trained and new professional partners in place ready to commence a year earlier in the September 2015 academic year. I believe that starting to have an effect on the life chances of our children a year earlier is absolutely paramount and particularly so in today's - and very likely the future's as well - economic and job climate. In conclusion then, the timing is as wrong as ever for any kind of cut in the Education budget. I know and this Assembly has already accepted that the Education Department runs a tight ship. It manages its budget very well. It needs more funding, not less. Head teachers in non-fee-paying schools have been struggling to balance their books for years, always looking for ways to save money, yet at the same time improve outcomes for children and then getting frustrated because they have known that the money they really need would not be there. Education is the cornerstone of our future economic stability and success and it is essential to support it. This is a Budget debate and many times over the last days and weeks the words "fiscal stimulus" and not being short-termist in our decision making have been spoken by politicians. I ask the question: are the efforts and measures to balance the Consolidated Fund this year contained in this Budget Statement not as short-termist as it is possible to get? When is the point reached that spending cuts in something like education are more damaging than either