The Challenge

"It's far too early to give detailed proposals. The broad strategy is to cut ruthlessly at waste while leaving essential services intact." 

The word “challenge” and its variant “challenging” were dominant in Ian Gorst’s speech at the Chamber of Commerce. At times, the casual listener could have been mistaken for thinking that he was reading from a “Yes Minister” speech, as it was full of generalities, and it was hard to prize the substance from it. There are challenges ahead in education, health (with an ageing population), finance, tourism.

Part of the substance, we were told, would be revealed in detail next week, and more would come in the Medium Term Financial Plan.

That the States are no longer thinking “for the short term” seems, on paper, a good idea. How well it turns out in practice is another matter. The raid by means of a dividend from Jersey Telecoms to balance the books (according to their MD) was apparently not exactly planned, and may delay the speed of gigabit Jersey. The under the radar flogging off by Property Services of States properties all over the place, done by Ministerial decision – a wonderful way of keeping it out of States debates – does not seem to have been planned either, but helps balance the books.

The problem I have with the Medium Term Plan is that it is an administrative and financial programme. What it is not, except as a consequence, is a legislative programme. In most other jurisdictions, a legislative programme – the Queen’s speech, for example – comes first, and the administrative and financial consequences follow from that, with changes in legislation as well. We don’t have that in Jersey, and if anyone was expecting something of the sort for the Chamber speech, they will have been disappointed.

But there was fire in the question time. Asked about the proposed Jersey International Finance Centre at the Waterfront, Senator Gorst hit back sharply. It was like seeing those cuddly lemurs suddenly bare their teeth. He was strongly in favour of the plan. It would have pre-lets, and not cost the States a penny (although he didn’t mention who was paying for the tarmac on the temporary car park while it began).

The Island did not have enough Grade A Office space. But what is Grade A office space? We hear it often enough. According to Office Broker:

“The most prized and sought-after is Grade A or Class A office space. Typically, office buildings within the Grade A bracket are brand new or have been recently redeveloped, or experienced a thorough refurbishment. The properties are prestigious and usually occupy prime locations within major cities such as Central London, Manchester and Birmingham.”

“Along with the standard of the building itself, Grade A offices will also possess high-quality furnishings, state-of-the-art facilities, and excellent accessibility. The property will be finished in order to compete for premier office users, typically appealing to an international market, and will usually demand rents that are above average for the area.”

“The Urban Land Institute, an organisation committed to commercial land use policy and practice, provides examples of Grade A office space as: ‘the office buildings that you see in the heart of the financial district with lots of brass and glass fixtures and huge, expensive lobbies. These properties are also said to be ‘often occupied by banks, high-priced law firms, investment banking companies, and other high-profile companies with a need to provide the trappings of financial success.’””

You might also consider that Grade A office space is “show-off” office space, posh but often ugly big buildings, some like cubes, some like parts of giant pin-ball machines, that proclaim to the world that the company that is using them is important, like for instance the offshore divisions of the four main banks.

It is rather like the modern equivalent of a Georgian House, a wonderful façade, behind which may or may not be anything of substance. It needs to spell out the message: "we have arrived, we are important". Behind the scenes, of course, as we have seen in the past, there may be casino banking, interest rate fixing, selling dubious financial packages, and goodness knows what else.

It is interesting to note that the architecture of Grade A is the steel and glass style frontage, whereas earlier generations would have seen granite with ornamentation as giving an impression of Victorian solidity, and it shows the change of style which is valued so much in today’s culture.

The esplanade has become the new Financial Centre, so it is it that location that the glass fronted Grade A building must be sited, and it must be sited there because suburban buildings, good office space, but not at the heart of that district, would by definition be designated Grade B. In part, it is a geographical definition. Grade B falls below Grade A in terms of location.

But back to the talk itself,. Ian Gorst noted that a large business had nearly not come to the Island because of this, but by a States department moving, the business had been secured for a location in Jersey. He did not say which one. Now that is important. We do not want to turn business away. We depend on our finance industry. And despite what I have just said about banks, the regulatory framework is ensuring better and tighter controls on finance sector businesses, especially where tax evasion, aggressive tax avoidance, and money laundering are concerned. And as we heard from the regulator on BBC Radio this morning, the new EU assessment does not just look at the framework, but tests how well it works.

Regarding Grade A space, the Council of Ministers is in a quandary. If it admits there is not enough office space in the prestigious location of the esplanade, business may not relocate to Jersey, on the other hand, if that is kept quiet, the Waterfront scheme looks more like a gamble. The notion of pre-lets is a safeguard, but the absence of solid figures on the value of the pre-lets so that the public can see it is financially viable (and not, for instance, discounted in some fashion) is deemed to be commercially sensitive.

The message is more or less: trust us, but past records show that the public is more often right not to trust government to deliver as stated, rather than to change goal posts so it gives an appearance of success. By not giving a clear breakdown of how viable the scheme is in terms of projected return and cash flow, it is hard to gauge whether or not it will be a success. Expect, however, funding to be channelled in some ways to the Jersey Development Company, from that remarkable economical magicians hat called contingency funding.

Ian Gorst also stated that the Island needed the population to grow in a controlled fashion in order to grow the economy, while at the same time, talking of reducing public sector costs. The standard economic solution is to implement more stealth taxes, and threaten to reduce front line services, hence protecting administrative sinecures. I suspect we will see both of those as the demands of an increasing population threaten an infrastructure in education and health that is already creaking at the seams.

My own question was about the policy on agriculture and food security, neither of which had been addressed. Senator Gort’s reply was that they would be implementing the Rural Strategy policy, and in particular, look to target funding where it is needed rather than to large conglomerates.

Was this a reference to the fact that two of the largest agricultural businesses have recently been taken over by UK companies, and pay no profits locally? Should we still be subsidising them rather than individual growers, and locally based, and locally taxed growers? It was not spelt out in detail, but perhaps that is what was meant, that funds would not be given to non-tax paying businesses but to local tax paying growers where it is most needed. I certainly hope so.

And as to the States becoming more efficient, and the notion that reducing public spending will be the key to healthcare reform,  I leave you with this gem, which is probably not a million miles from the truth in Jersey...

Interviewer: I just wanted to confirm that you are now this country's chief bureaucrat.

Hacker: That's nonsense. This government believes in reducing bureaucracy.

Interviewer: Figures I have here say that your department's staff has risen by 10%.

Hacker: Certainly not.

Hacker: Interviewer: What figure do you have?

Hacker: I believe the figure is much more like 9.97.

Interviewer: Well, it has been suggested that your department is less interested in reducing bureaucracy than in increasing it.

Hacker: Well, yes, but that's because we've had to take on more staff in order to reduce staff.

Interviewer: I beg your pardon?

Hacker: It's common sense. We need more doctors to cure more patients, more firemen to extinguish more fires.

Interviewer: How will you extinguish local government bureaucracy?

Hacker: It's a challenge I'm looking forward to.

Interviewer: Would you agree there's even more bureaucratic waste there than in Whitehall?

Hacker: Yes, that's what makes it a challenge.

Interviewer: How will you meet the challenge?

Hacker: It's far too early to give detailed proposals. The broad strategy is to cut ruthlessly at waste while leaving essential services intact.

Interviewer: That's what your predecessor said. Did he fail?

Hacker: Let me finish. Because we must be absolutely clear and I'm going to be quite frank with you. The fact is that, at the end of the day, it is the right, the duty, of the elected government in the House of Commons to ensure government policy, the policies on which we were elected and for which we have a mandate, the policies for which the people voted, are the policies which, finally, when the national cake has been divided up... And may I remind you we, as a nation, don't have unlimited wealth? We can't pay ourselves more than we earn. ...are the policies... I'm sorry, what was the question again?

Interviewer: I was just asking you whether you would agree that your predecessor had failed.

Hacker: Certainly not. On the contrary. It's just that this job is an enormous...

Interviewer: Challenge?

Hacker: Exactly!