Ministerial Response - Retail in Jersey - 19 February 2019

Findings

Comments

3

There are several groups which exist to develop, improve and regenerate parts of St. Helier . The Parish of St. Helier has the greatest overall understanding of the needs of the Town Centre and in this regard, the Panel has suggested that discussions take place between the Parish and the Department for Infrastructure to determine whether responsibility for some functions, which are currently held within the Department, could be transferred to the Parish.

Minister for Infrastructure

It's  not  clear  how  this  conclusion  has  been reached. In terms of traffic, movement, public realm  design  and  project  management,  the Department for Infrastructure ("DfI") holds the necessary  data  and  provides  the  required professional expertise.  This  specialist expertise does not exist elsewhere in the Island.

To  be  successful,  the  Town  Centre  must  be considered in the context of being a destination from the rest of Island; the Parish does not hold this strategic understanding.

That  the  DfI  /  States  of  Jersey  and  Parish  of St. Helier do not always agree is referred to in the Minister's submission. This occurs because DfI must consider the strategic needs of the rest of the Island, and not just consider the benefits for the local neighbourhood parishioners.

The  rationale  for  this  hierarchy  of  authority reflects  the  Island's  strategic  need  for consistency in roads and traffic regulation and policy. It seeks to co-ordinate the efforts of the parochial authorities with the States, and to avoid a  situation whereby a  change  is  made by one

Findings

Comments

authority  that  is  detrimental  to  the  Island  as whole.

This is an eminently sensible legal arrangement, which  is  reflected  in many other jurisdictions, and I am aware of no imperative for change that I could support. The powers vested by the States in the  office  of  the  Minister  for  Infrastructure cannot be delegated beyond his control.

However, I can confirm that the States of Jersey has  for  many  decades  endeavoured  to  work closely with the Parish, and has delivered many urban  renewal  schemes  for  and  in  partnership with  the  Parish;  for  example,  the  recent improvements  to  Conway  Street  and  Charing Cross,  and larger schemes such as  the  award- winning Millennium Park.

The Growth, Housing and Environment ("GHE") Department has also worked with the Parish to develop other projects, such as those that are set out  within  the  Future   St. Helier  Traffic Management Schemes Appraisal, although these are,  at  present,  yet  to  be  funded.  While  our shared vision for a more walkable and accessible town with improved public realm, making it an attractive  destination  for  visiting,  living  and working,  is  broadly  aligned,  these  types  of schemes are always subject to a tension between local parochial ambitions. An efficient transport system has to be maintained as a strategic need for  the  Island's  economy,  including  Island transport  links  that  run  through  the  Parish  to destinations  beyond  the  town,  which  requires balanced  adjudication;  and  this  is  not  always recognised or given the required weight by the Parish. It is understandable, given the differences in strategic responsibility and constituency of the Minister for Infrastructure and the Connétable .

Additionally, on an Island with a limited pool of specialist resources, such as those required for transport planning and traffic engineering, as are within the GHE Department, the Parish have less capability  to  evaluate  transport  impacts. Economies of scale dictate that while GHE can support  individual   St. Helier  projects,  these professionals are required to support the Island's overall transport networks (traffic, walking and cycling  and  public  transport),  government strategic policy and the planning processes, as well as the needs of the other 11 Parishes.

Findings

Comments

Thus, while I am able to support an ever-closer working  relationship  and  encourage  synergies where they exist, such as the ongoing project to improve co-ordination and align our processes, being pursued by officers, I could not support the divesting of strategic infrastructure to the Parish.

4

The retail sector is one of the biggest industries in Jersey and involves a vast amount of people and businesses in the production, distribution and selling of goods and services. It also has a major impact on the local economy. In 2017, the retail sector generated approximately £38 million in GST and is estimated to deliver almost

£6 million in retail tax in 2019.

Minister for Treasury and Resources

The tax figures are consistent with information provided  to  the  Scrutiny  Panel  by  the  States Treasury  and  Exchequer –  it  is  noted  that  the £38 million GST figure provided strictly relates to "Wholesale and Retail Trade; Repair of Motor Vehicles  and  Motorcycles"  per  the  sectorial analysis  produced  by  Revenue  Jersey  (see  the published  Tax  Statistical  Digest).  It  is  not possible  to  break  this  sector  down  into  its constituent parts.

9

The current de minimis level is not in line with the tax policy principle of fairness and creates a disadvantage for local retailers.

Minister for Treasury and Resources

As acknowledged in the 2019 Budget Statement:

"Since GST was introduced in 2008, it has been recognised that there is a level below which it is neither practical nor cost-effective to  seek  to  collect  the  tax  on  postal/packet importations  for  personal  (non-business) purposes. The current "De Minimis" level is £240  of  goods  by  value  (including  any customs-and-excise duties), which equates to £12 in forgone tax.

The government recognises that the existence of  this  exemption  level  conflicts  with Jersey's  tax-policy  principles  that  taxation must be low, broad, simple and fair, because it creates an "unlevel playing field" between domestic  and  off-Island  retailers.  The exemption exists solely to avoid the position where the States would be paying more in administrative  costs  to  collect  the  tax  than that tax would yield."

10

Before the retail tax was introduced, there was a lack of consultation with retailers and other key stakeholders, creating a lack of fairness in its implementation.

Minister for Treasury and Resources

Details of the engagement undertaken with the retail sector in advance of the retail tax being lodged  in  the  States  Assembly  have  been provided  in  the  response  to  a  Freedom  of

Information request.

Findings

Comments

11

The retail tax only applies to companies if 60% of their trading turnover is from retail sales. Therefore there are some larger companies who supply goods wholesale as well as retail but who are not liable to pay the tax because 60% of their turnover is not from retail sales.

Minister for Treasury and Resources

In December 2016 the States Assembly adopted an amendment to the 2017 Budget by 35 votes to 3. Under this amendment the then Minister for Treasury  and  Resources  was  instructed  to develop  a  tax  on  the  profits  of  large  retail businesses  operating  in  Jersey,  and  to  bring forward the necessary legislative changes as part of the 2018 Budget.

The States Treasury and Exchequer considered the large corporate retailer taxes introduced in the  Isle  of  Man  (2013)  and  Guernsey  (2016), including discussions with tax officials in those jurisdictions, as part of the research undertaken into the structure of the legislative changes that would  be  introduced  in  Jersey.  Furthermore, consideration was given to the existing corporate tax  regime  in Jersey,  in particular  the  general approach of taxing all the profits of a company at a  particular  tax  rate,  rather  than  seeking  to "stream profits" and then apply different tax rates to those different streams of profits.

Following this research, it was determined that the best approach in Jersey would be to create a definition of a "large corporate retailer" – if a company falls outside this definition it continues to be subject to tax at the standard rate of 0% on all of its profits; if a company falls within this definition, the level of profits determines the tax rate, and all of the company's profits are subject to that tax rate, irrespective of what activity those profits arose from.

Under  the  definition  ultimately  introduced, companies which do not generate 60% or more of their turnover from retail sales are not "large corporate  retailers",  irrespective  of  the  size  of their turnover or profits.

12

The Sustainable Transport Policy 2010 recommended that the amount of short stay (shopper) parking was increased. Since the policy was approved, however, the amount of parking spaces has decreased rather than increased, with the removal of 390 public and 230 private parking spaces at

Gas Place to enable construction of the Millennium Town Park in 2011.

Minister for Infrastructure

The statement " it may have added to people having to "hunt" for available spaces" appears to be  assertion  of  opinion,  rather  one  with  an evidential basis. The evidence shows that town shopper car parks generally have spare capacity and we aim to operate, as a rule of thumb, on an approximately  70%  occupancy  rate.  Minden Place is the exception to this.

Findings

Comments

Although this has not resulted in increased usage of other town car parks, it may have added to people having to "hunt" for available spaces.

The  vacant  capacity  is  important,  because customers seeking short-term parking must have a  reasonable  level  of  confidence  that  their demand  will  be  served.  The  management arrangements put into shopper car parks, such as escalating tariffs and time limits, are designed to support this  tenet (this  rule  does not apply to commuter  parking,  which  is  operated differently).

The exception is peak periods, such as the lead- up to Christmas, and wet days at the end of the school summer holidays. However, to design a service  to  accommodate  peak  demand  is  not economically rational or sustainable.

13

The Sustainable Transport Policy 2010 aimed to persuade people out of their cars, reducing the demand for both public and private parking spaces. The Panel questions whether the policy has been successful as 70% of respondents to the consumer survey use their own cars whilst shopping in Jersey.

Minister for Infrastructure

This  appears  to  be  a  fundamental misunderstanding  of  the  States'  Sustainable Transport  Policy,  which  seeks  to  reduce  peak hour commuter traffic by providing sustainable travel choices that reduce reliance on the private car,  while  supporting  community  and environmental wellbeing.

The  States'  policy  explicitly  recognises  that convenient  and  adequate  shopper  parking  is essential to support the town's retail activities.

GHE's on-street' surveys of shoppers actually using King Street and Queen Street show that typically on weekdays 45% of shoppers travelled by car, and 60% on Saturdays. This information was included in the data submitted by GHE to Scrutiny.

16

Rating assessments were fixed in 2003, based on rental values at that time. Therefore, it is highly likely that the retail sector is currently paying a higher proportion of the rates burden than they would if there were a revaluation process.

Minister for Treasury and Resources

Rateable  values  for  properties  in  Jersey  were fixed  in  2003.  The  underlying  basis  for  those rateable values were broadly the market rents for those  properties  in  2002.  The  Rates  Working Group ("RWG") is currently undertaking work to estimate how the burden of property rates would be redistributed if rateable values were to be set by reference to current market rents. The findings and  recommendations  of the  RWG are  due in summer 2019.

Findings

Comments

22

Events such as the Christmas lights switch-on, Sunday markets and street theatre play an important role in animating the town centre. Such events are highly anticipated by Islanders and are vital for supporting retailers.

Minister for Infrastructure

It is agreed that events play an important role in animating and supporting the town centre. GHE supports  such  events,  and  is  investing considerable  expertise  and  resource  into facilitating  events  in   St. Helier  and  across  the Island,  to  support  the  product  offering  that  is Jersey', to benefit of the town and the Island's economy.

Recommendations

To

Accept/

Comments

Target date of action/ completion

1

Although certain functions, particularly regarding roads, are the legislative responsibility of the Minister for Infrastructure, potential benefits could be realised by transferring some responsibilities to the Parish of St. Helier . The Panel recommends that the Parish and the Department work together to determine whether there is any advantage to be had through the delegation or transfer of certain responsibilities to the Parish. This work should be undertaken in 2019 and any outcomes should be reported to the Panel.

astructure Infr

ister for Min

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ia Part

While the Minister is able to support an ever  closer  working  relationship  and encourage synergies where they exist, such as  the  ongoing  project  to  improve  co- ordination and align our processes being pursued by officers, he could not support the  divesting  of  control  of  strategic infrastructure  with   Island-wide responsibilities to the Parish.

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Ongoing

2

The concept of consumer tourism should feature in the new Retail Development Strategy. The Department should consult with experts in this field in order to explore ways to incentivise the mass market and increase the selection of luxury brands in Jersey.

,

ultur

evelopmenCt D

and

port S

conomic  ,

E for

ouris T

ister Min

e

ccep A

The  intention  is  to  develop  the  Jersey Retail  proposition  as  part  of  the deliverables  of  the  Retail  Development Strategy.

A  stakeholder  meeting  will  be  held  in Q1 2019  as  part  of  the  ongoing consultation with the industry.

The market will inevitably take account of the  differing  demand  patterns  of  Island residents and visitors, as highlighted in the results of the consumer survey undertaken in the latter part of 2018.

Q1/2019

Recommendations

To

Accept/

Comments

Target date of action/ completion

3

The Treasury Department should consider levelling the playing field to ensure that the Retail Tax is fair and introduce these measures in the Budget 2020.

and Reso

Treasury

ister for Min

u

As  noted  under  Finding 11,  the  States Treasury and Exchequer considers that the Large Corporate Retailers' tax fulfils the decision  of  the  States  Assembly  in December 2016 to introduce a tax on the profits of large retail businesses operating in  Jersey.  The  States  Treasury  and Exchequer have confirmed that they will keep the measure under review, and will bring  forward  changes  which  would improve the measure where necessary – for the avoidance of doubt, material changes will  not  be  brought  forward  in  the Government  Plan  2020–23,  as  large corporate  retailers  are  unlikely  to  have submitted  their  first  tax  return  reflecting the measure (due date for the relevant tax returns being 31st December 2019).

–

4

The Department for Infrastructure should investigate new measures for improving the convenience and cost of short- term parking in town. These could include revisiting free parking pilot schemes for limited periods and increasing the availability of on street parking. These should be undertaken before the end of the second quarter of 2019.

Minister f

Part

The  evidence  submitted  to  the  Panel demonstrates that the cost of parking is not a  barrier  to  retail  in   St. Helier ;  neither lowering prices nor providing free parking would  abstract  spend  from  the  Internet. This  has  been  previously  examined  and trialled in practice.

The  purpose  of  the  car  park  trading

account is not to provide grants to retail

through revenue forgone. As stated in the

evidence, if it was considered desirable for

the States of Jersey to grant money to the

retail sector for any use, it would properly

be the role of the Minister for Economic

Development, Tourism, Sport and Culture

("EDTSC"), where the overall benefit of

the  investment  could  be  correctly iallyaccounted  for.  To  this  end,  the  Town

Retail  Group  were  provided  by  EDTSC

with a fund of circa £300,000 to support

the sector in 2013/14. Tellingly, none of

the funding was invested in free parking,

which was on offer at the time.

GHE constantly takes every opportunity to improve the shopper parking offer, both in the long and short term, as evidenced by the  expansion  of  shopper parking  in  the temporary Esplanade and Ann Court sites, among others.

Recommendations

To

Accept/

Comments

Target date of action/ completion

Within  a  mature  and  geometrically constrained  road  infrastructure,  there  is little or no capacity for expanding supply, without  removing  important  pedestrian amenities or commercial loading sites.

Given  this,  the  remaining  option  for improving  the  availability  of  kerbside parking  is  to  increase  the  turnover  of spaces,  to  provide  more  drivers  an opportunity to park. This can be achieved by  reducing  parking  time  limits  and increasing  enforcement,  or  increasing charges to encourage churn. However, it should be noted that this will encourage an increase  in  traffic,  with  additional congestion  and  pollution,  as  drivers circulate to hunt' for spaces, reducing the attractiveness of town as place to visit and dwell.  Because  of  this,  a  balance  is required to control traffic levels in urban centres, to ensure a quality of environment for all users.

GHE will undertake a parking review by the end of the third quarter 2019.

N.B.  The  benchmarking  information supplied to the Panel showed St. Helier 's parking  charges  are  around  20%  lower than towns of similar size in the UK. In relation  to  the  charges  made  in  similar- sized UK seaside towns, the benchmarking showed  that  on-street  parking  was  on average 40% cheaper in Jersey.

5

The Economic Development Department should collect the data necessary to monitor rent levels on a quarterly basis.

,

ourism conomic

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for ister

evelopme D

Min

Acc n

The  Minister  is  mindful  that  significant market information is already available to stakeholders.

The  Minister  will  consult  with  various parties  within  and  potentially  outside  of Government  in  order  to  establish  the viability  and  proportionality  of implementing this recommendation.

ep

Q2 2019

Recommendations

To

Accept/

Comments

Target date of action/ completion

6

The Economic Development Department should explore whether the current practice of increase-only rent reviews is appropriate.

,

ourism conomic

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for ister

evelopme D

Min

Pen

n

The  Minister  would  be  grateful  for  the opportunity  to  meet  with  the  Panel  to discuss  the  evidence  base  for  this recommendation,  and  how  the  Panel considers that it might be acted upon.

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Q1 2019

7

In order to balance the rates system, the Minister for Treasury and Resources and the Comité des Connétable s should commission a Rates Assessor to undertake a revaluation. Such revaluations should then be undertaken every 10 years to ensure fairness in the rates system.

Minister f

*

Acc

*However, awaiting the findings of the RWG before determining way forward.

Under  its  term  of  reference,  the  Rates Working Group ("RWG") has to evaluate the  merits/demerits  of  undertaking  a revaluation of rateable quarters, and then report jointly to the Minister for Treasury and  Resources  and  the  Comité  des Connétable s.  Hence,  the  Minister  for Treasury  and  Resources  will  await  the findings  and  recommendations  of  the RWG  before  considering  making  any proposals regarding the valuations used for rates purposes.

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The RWG is seeking to report its findings and recommend -ations in summer 2019.

8

The Economic Development Department, Treasury and External Relations must work together in order to seek clarity around Brexit negotiations and the impact it could have on shoppers, retailers and most importantly the security of food supplies. This should be incorporated into the new Retail Development Strategy with input from both the Treasury and External Relations Ministers.

and

Treasury

ters for Economic

Minis

Tourism,

Acc

Dev

The  Growth,  Housing  and  Environment Department,  the  Treasury,  and  External Relations  are  working  very  closely together  as  part  of  the  Government's extensive Brexit Programme.

ep

Ongoing

Recommendations

To

Accept/

Comments

Target date of action/ completion

9

Statistics Jersey previously undertook a Retail Sales survey which sampled businesses (including food and non-food) operating in the retail trade in Jersey. Statistics Jersey had to stop collecting data in 2015 because of a lack of funding. The Minister for Economic Development should work with Statistics Jersey to restart the collection of retail data. This work should be completed and funding identified before the end of June 2019.

Spor

for Economic ter

Minis

Acc

t a

Dev

Focused market information will feature as one of the key deliverables of the Strategy. Work  is  still  required  on  defining  the package  of  consumer  and  business information required, and what it will be used for. Initial positive discussions have already  been  had  with  both  Statistics Jersey and the States of Jersey Economics Unit  about  the  collation  and  analysis  of retail  sales  information.  Possible  sources include GST takings and working with a number  of  credit  card  companies.  Other avenues will also be explored as part of the delivery of the Strategy.

ep

Q2 2019

10

In order to gain a true understanding of consumer behaviour, the Minister for Economic Development should invest in more footfall cameras in St. Helier . Additional footfall cameras should be installed before the second quarter

of 2019.

for Economic ter

Minis

Develop

ccep A

m

The  need  for  more  detailed  but anonymised  footfall  data  is  accepted. Funding options for additional cameras are being investigated.

Q2 2019

11

The future of the Jersey Retail Association should not remain uncertain and a long-term funding strategy should be identified in the new Retail Development Strategy.

for Economic ter

Minis

Develop

ccep A

m

The Jersey Retail Association is to move its  operational  activity  within  Jersey Business Limited. The initial membership funding  model  for  the  Association  has been  reviewed  and  is  no  longer  deemed viable.  There  are  clear  benefits  and synergies  from  incorporating  the Association's  services  into  Jersey Business.

Q3 2019

12

The Economic Development Department should work with the Parish of St. Helier and the Town Centre Manager to ensure funding is available for the provision of a year-round schedule of events. This should feature in the new Retail Development Strategy.

for Economic ter

Minis

Develop

prin

Acc

m

The importance of event-led retail will be reflected  in  the  Retail  Development Strategy.

The  question  of  government  funding  to cip support such a programme will need to be

considered during the development of the

new Government Plan.

ep

Ongoing

Recommendations

To

Accept/

Comments

Target date of action/ completion

13

In order to guarantee a minimum level of customer service throughout the Island's retail sector, the Minister for Economic Development should work with the Jersey Retail Association to create and deliver a customer service course that is required as part of the training of new members of staff. This should be rolled out before the end of 2019.

Cult

for Economic ter

Minis

u

Acc

Dev

The  intention  of  this  recommendation  is accepted, though the delivery mechanism being employed differs slightly from that which is recommended by the Panel.

A key outcome of the Retail Development Strategy will be that The Retail sector has access to the skills and talent it needs'.

Skills  Jersey,  in  conjunction  with  key stakeholders,  including  the  Jersey  Retail Association,  Population  Office  and training providers, are already developing a retail skills action plan. Part of this plan, which has already commenced roll-out, is offering  a  2-day  training  programme  on customer service excellence to new staff entering  the  sector,  funded  through  the Business Licensing Skills Fund.

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The above parties will continue roll-out of this action plan and monitor effectiveness.

Ongoing

14

When the Minister for Economic Development brings forward proposals to deregulate Sunday trading, appropriate protections for staff in terms of religious beliefs and adequate days in lieu should be included. The effects on out of town convenience stores, should also be monitored.

for Economic ter

Tour

Minis

Dev Acc

The Minister intends to continue working with the Minister for Social Security, and the  Council  of  Ministers  as  a  whole,  to ensure  that  employment  legislation provides  all  Island  workers  with appropriate  religious,  working  hours  and rest day protections.

The  Minister  would  be  grateful  for  the

opportunity  to  meet  with  the  Panel  to ep discuss any specific additional legislative

reforms that the Panel would wish to see

implemented in the short term.

Ongoing

15

The Department for Economic Development should repeat the consumer survey every

two years.

for Economic ter

Minis

Develop

Acc

m

Further  consumer  surveys  will  be undertaken in the future.

A joint public/private sector Board will be charged  with  overseeing  delivery  of  the Retail Development Strategy. The current intention is that the Board will commission additional surveys on a regular basis.

ep

Ongoing