States of Guernsey : Statement by the President, Committee for the Employment & Social Security

Wednesday 16 June 2021

General Update

Sir,

I'll start and end with good news, with some slightly less good news sandwiched in the middle!

The first bit of good news is that unemployment is continuing to fall quickly following a sharp increase during the second lockdown. The number of claimants during the week ending 29 May was 494, a reduction of 75 people on the previous month's figure of 569. At the end of February 2021, this figure stood at 1,000, so we've seen a tremendous reduction in unemployment in the space of just one quarter - a really positive indicator that our economy is getting back on track after difficult times.

Moving on to the slightly less good news.

My Committee hasn't been immune to the impact of the pandemic and some projects have inevitably been delayed as resources have been stretched to the limit and focus has been diverted elsewhere.

I announced last week that, regrettably, the Committee has had to adjust its implementation plan for the secondary pensions scheme.

Under this legislation, employers will be required to contribute at least minimum levels into a qualifying pension scheme or the new secondary pension scheme following automatic enrolment of their employees.

The aim is to support more people to save for their retirement. I'm passionate about this policy area which, in the long-term, will significantly reduce pensioner poverty amongst a whole swathe of people who are not currently saving enough for their retirement, and also help to control welfare expenditure.

Originally the legislation, currently being drafted, was to come into effect in January 2022. The Committee is very conscious of the need to provide employers and pension providers with adequate lead-in time to prepare, and so we're now targeting January 2023. Although I'm disappointed that the launch date has slipped by 12 months, we think this is the right thing to do and initial feedback from industry is supportive of this move.

Significant engagement will take place with employers and pension providers in the lead up to the launch of secondary pensions to make sure that employers are fully aware of their new obligations.

I'm looking forward to visiting Alderney later this month to consult with States members, the business community and the public over the possibility of this scheme applying there too.

Exactly the same issues exist in Alderney as in Guernsey and so I hope the policy will be given serious consideration.

Moving on to the implementation of phase 1 of the new Discrimination Ordinance. I'm pleased to report that this is progressing well, if a little behind schedule.

Detailed policy proposals for the new Ordinance were approved by the States in July 2020. An Amendment from Deputy Parkinson was also approved directing that two additional grounds of protection - sexual orientation and religion - be included in Phase 1 of the new Ordinance.

The Committee was tasked with returning to the States with proposals for exceptions relating to these two grounds of protection. For those less familiar with discrimination legislation lingo, exceptions describe situations where it would still be lawful to treat people differently on the basis of a protected ground.

We are currently finalising a Policy Letter regarding this matter which I hope will be debated in September.

Good progress is also being made on drafting the new Ordinance and the Committee is currently seeking bids for the provision of the training required in the lead up to the Ordinance coming into force. And a selection process is currently underway to expand the Employment & Discrimination Panel to handle any increase in the number of discrimination complaints when the new Ordinance comes into force.

Turning now to an important cross-Committee project which will provide tangible benefits to families.

Late in the last term of government, the States agreed proposals to make changes to the eligibility criteria for family allowance, moving it from a universal benefit to one with an income cap of £120,000 per annum.

The idea was to free up a chunk of General Revenue to fund the provision of new children's services.

These will include subsidised primary care for under 18s, including at the Emergency Department, a free dental check-up and fluoride varnish annually, dental health education for pre-school and school age children, and cultural enrichment activities in primary schools. The President of the Committee forHealth & Social Care will provide a brief update on the work streams under his Committee's mandate in his statement shortly.

It was intended that all of these changes would come into force in September 2021.

However, the Bailiwick's second lockdown caused a delay, as resources were focused on the immediate response to the pandemic. So, a joint decision was taken to postpone the implementation date by a few months to January 2022.

In the coming months we'll be contacting people about the changes and, where appropriate, asking them to complete an income declaration ahead of the January changes.

I'd also like to touch briefly on the topic of housing. Members will know that there's an acute shortage of housing in Guernsey both to purchase and rent and escalating housing costs. I'd like to make clear that my Committee's specific area of responsibility here relates to the provision of affordable housing. 'Affordable housing' means property that's reserved for certain groups of people who can't afford to rent or buy property on the private market. It comprises 'social housing' such as social rental, key worker, extra care and specialised housing and 'intermediate housing' such as partial ownership.

The waiting lists for both social rental and partial ownership properties are increasing. The States HR Team is also reporting that some key workers who have been recruited have subsequently declined to take up offers of employment because they have been unable to identify any suitable accommodation to either rent or buy.

Similar reports are being received from the private sector. Clearly, there's an urgent and immediate need to take action on key housing issues.

With this in mind, a Housing Action Group has just been established, involving the Presidents of P&R, E&I, ESS and the DPA. The Chief Executive of the Guernsey Housing Association, and senior officers, are also involved. Cross-Committee ownership and engagement with the problem are absolutely vital in identifying and implementing the right solutions.

The first meeting of the Housing Action Group took place last week and it was a very positive meeting. We need to do more work to agree what is in scope but everyone is committed to this approach and I'm in no doubt that they will play their part fully.

Moving on to the important issue of the sustainability of the Guernsey Insurance Fund, which funds pensions and other contributory benefits, and the Long-term care Insurance Fund that pays for residential and nursing care in private sector care homes.

The Tax Review is now well underway and this provides a real opportunity to address the thorny problem of how to fund government services, including essential benefits, through the demographic bulge and into the future.

There are no easy answers. This will no doubt be a bitter pill to swallow. But swallow it we must for the sake of those young people in our community who expect, quite rightly, to receive a pension when they turn 70 and funded residential and nursing care if they need it, because they've diligently paid their social security contributions throughout their working lives. We can't bury our heads in the sand and hope that just shedding some Civil Servants will be the answer to all our prayers.

Given the importance of this matter for all islanders, the Committee is working up a Plan B in case the debate on the Tax Review does not resolve the sustainability issues. Given timing constraints, this plan will be included in our Uprating Report for 2022 which needs to be submitted before the Tax Review has been debated.

Let me be clear - we're not doing this to undermine the Tax Review. Far from it. We support the holistic approach that P&R is taking and hope it will provide the solution that my predecessors have tried in vain to secure.

I promised I'd finish on some good news... and that is that a Reciprocal Agreement on Social Security with the Republic of Latvia came into force on 1st June 2021. This is was a historic moment for Guernsey as it's the first Reciprocal Agreement on Social Security that Guernsey has negotiated with another country under entrustment from the UK. This is particularly significant in the context of Brexit.

The Latvian workforce is incredibly important to Guernsey's economy and are rightly highly regarded by local employers. So, it's great news that Guernsey's Latvian workers can now receive proper value for the social security contributions they pay while they're in Guernsey.