T Y N W A L D C O U R T O F F I C I A L R E P O R T
R E C O R T Y S O I K O I L Q U A I Y L T I N V A A L
P R O C E E D I N G S
D A A L T Y N
HANSARD
Douglas, Tuesday, 18th February 2014
All published Official Reports can be found on the Tynwald website www.tynwald.org.im/Official Papers/Hansards/Please select a year:
Reports, maps and other documents referred to in the course of debates may be consulted on application to the Tynwald Library or the Clerk of Tynwald’s Office. Supplementary material subsequently made available following Questions for Oral Answer is published separately on the Tynwald website, www.tynwald.org.im/Official Papers/Hansards/Hansard Appendix
Volume 131, No. 6
ISSN 1742-2256
Published by the Office of the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW. © High Court of Tynwald, 2014 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
Present:
The President of Tynwald (Hon. C M Christian)
In the Council: The Lord Bishop of Sodor and Man (The Rt Rev. R M E Paterson), The Acting Attorney General (Mr J Quinn), Mr R P Braidwood, Mr D M W Butt, Mr M R Coleman, Mr C G Corkish MBE, Mr E A Crowe, Mr A F Downie OBE, Mr J R Turner and Mr T P Wild with Mr J D C King, Deputy Clerk of Tynwald.
In the Keys: The Speaker (Hon. S C Rodan) (Garff); The Chief Minister (Hon. A R Bell) (Ramsey); Hon. D M Anderson (Glenfaba); Mr L I Singer (Ramsey); Hon. W E Teare (Ayre); Mr A L Cannan (Michael); Hon. T M Crookall (Peel); Mr P Karran, Mr Z Hall and Mr D J Quirk (Onchan); Mr R H Quayle (Middle); Mr J R Houghton and Mr R W Henderson (Douglas North); Hon. D C Cretney and Mrs K J Beecroft (Douglas South); Hon. C R Robertshaw and Mrs B J Cannell (Douglas East); Hon. J P Shimmin and Mr C C Thomas (Douglas West); Mr R A Ronan (Castletown); Hon. G D Cregeen (Malew and Santon); Hon. J P Watterson, Mr L D Skelly and Hon. P A Gawne (Rushen); with Mr R I S Phillips, Clerk of Tynwald.
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Business transacted
Procedural – Supplementary Order Paper agreed to be considered ...... 825 Papers laid before the Court...... 825 Bill for signature – Income Tax (Amendment) Bill 2013 ...... 828 Procedural – Order of business...... 828 Order Paper No. 2 ...... 828 2. Budget for the Year 2014-15 – ‘Working through our difficulties’ – Debate commenced ...... 828 The Court adjourned at 12.57 p.m. and resumed its sitting at 2.30 p.m...... 858 Announcement of Royal Assent – Income Tax (Amendment) Act 2014 ...... 858 2. Budget for the Year 2014-15 – ‘Working through our difficulties’ – Debate continued .. 858 The Court adjourned at 4.59 p.m. and resumed its sitting at 5.25 p.m...... 888 2. Budget for the Year 2014-15 – Debate concluded – Motion carried ...... 888 3. General Revenue and Capital Payments 2014-15 – Expenditure approved ...... 896 4. Investments and Reserves – Transfers approved ...... 898 5. Income Tax Act 1970 – Personal tax allowances approved ...... 902 6. Income Tax Act 1970 – Income Tax (Resident Individuals) (Income Tax Cap) (Temporary Taxation) Order 2014 approved...... 905 7. Income Tax Act 1970 – Income Tax (Disclosure of Information) (Temporary Taxation) Order 2014 approved ...... 906 8. Social Security Administration Act 1992 as that Act of Parliament has effect in the Island – Social Security Legislation (Contributions) (Amendment) Order 2014 approved ...... 907 9. Social Security Contributions and Benefits Act 1992 as that Act of Parliament has effect in the Island – Social Security (Contributions) (Amendment) Regulations 2014 approved ..... 907 Supplementary Order Paper No. 1...... 908 2. Standing Order 2.4(1) suspended to allow further business ...... 908 3. Vision2020 – Report received ...... 912 Procedural ...... 932 Order Paper No. 1 ...... 933 5. Road Transport Licensing Committee – Mr Frederick Peck appointed ...... 933 The Court adjourned at 8.01 p.m...... 934
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Tynwald
The Court met at 10.30 a.m.
[MADAM PRESIDENT in the Chair]
The Deputy Clerk: Hon. Members, please rise for the President of Tynwald.
The President: Moghrey mie, Hon. Members.
5 Members: Moghrey mie, Madam President.
The President: The Lord Bishop will lead us in prayers.
PRAYERS The Lord Bishop
Procedural – Supplementary Order Paper agreed to be considered
The President: Before Papers are laid, Hon. Members, a Supplementary Order Paper has been circulated out of time. It needs the consent of the Court to be considered today. Are you 10 content to consider Supplementary Order Paper No. 1, Hon. Members?
Members: Agreed.
Papers laid before the Court
The President: In that case, I call upon the Clerk to lay papers.
15 The Clerk: Ta mee cur roish y Whaiyl ny pabyryn enmyssit ayns ayrn nane jeh’n Chlaare Obbyr. Ta mee cur roish y Whaiyl ny pabyryn enmyssit ayns ayrn nane jeh’n Chlaare Obbyr Earroo jees. Ta mee cur roish y Whaiyl ny pabyryn enmyssit ayns ayrn nane jeh’n Chlaare Obbyr Arbyllagh. Madam President, I lay before the Court the papers listed at Item 1 of the Order Paper, at 20 Item 1 of Order Paper No. 2 and at Item 1 of the Supplementary Order Paper.
Order Paper Sewerage Act 1999 Sewerage Charge Order 2014 [SD No 2014/0040] Merchant Shipping (Miscellaneous Provisions) Act 1996 Merchant Shipping (Fees) Regulations 2014 [SD No 2014/0005]
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Customs and Excise Act 1993 Export Control (North Korea and Ivory Coast Sanctions and Syria Amendment) Order 2013 (Application) Order 2013 [SD No 0443/13] Income Tax Act 1970 Income Tax (USA) (Amendment) Order 2014 [SD No 2014/0014] Taxes (USA) (Intergovernmental Agreement) Order 2014 [SD No 2014/0015] Law Reform Act 1997 Damages (Personal Injury) Order 2014 [SD No 2014/0022]
Reports Standards and Members’ Interests Committee First Report for the Session 2013-2014: Conduct of Mr Anderson [PP No 2014/0003]
Public Petition Petition of Amy Burns
Note: The following items are not the subject of motions on the Order Paper
Documents subject to negative resolution Immigration Act 1971 (an Act of Parliament as extended to the Isle of Man by the Immigration (Isle of Man) Order 2008 (SI 2008 No 680)) Statement of Changes in Immigration Rules [SD No 2014/0004] Fisheries Act 2012 Sea Fisheries (Experimental Area) (Amendment) Regulations 2014 [SD No 2014/0023] High Court Act 1991 Rules of the High Court of Justice (Amendment) 2014 [SD No 2014/0027]
Documents subject to no procedure Value Added Tax Act 1996 Value Added Tax (Amendment) Regulations 2014 [SD No 2014/0025] Customs and Excise Management Act 1986 Excise Goods (Holding, Movement and Duty Point) (Amendment) Regulations 2014 [SD No 2014/0026] Isle of Man Freeport Free Zone Designation Order 2014 [SD No 2014/0030] European Communities (Isle of Man) Act 1973 [Draft] Community Trade Mark Order 2014 [SD No 2014/xxxx] [Draft] Community Design Order 2014 [SD No 2014/xxxx] [Draft] Patents (Medicinal Products) Order 2014 [SD No 2014/xxxx]
Appointed Day Orders Fair Trading (Amendment) Act 2001 Fair Trading (Amendment) Act 2001 (Appointed Day) (No. 2) Order 2014 [SD No 0441/13] Flood Risk Management Act 2013 Flood Risk Management Act 2013 (Appointed Day) Order 2014 [SD No 2014/0033]
Reports Council of Ministers’ Response to the Economic Policy Review Committee Report on the Government Support for the Sefton Group [GD No 2014/0004] [This item is relevant to the Economic Policy Review Committee Report [PP No 0156/13] which is due to be debated at this sitting as Item 3] Report by the Council of Ministers on the Report of the Select Committee of Tynwald on Immigration [GD No 0066/13] ______826 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
The Superannuation (Officers of Boards) (Isle of Man Electricity Board) Scheme 1960 Public Sector Pensions Authority Annual Report and Accounts for year ending 31st March 2013 [GD No 2014/0008] The Superannuation (Manual Workers) (No. 1) Scheme 1973 Public Sector Pensions Authority Annual Report and Accounts for year ending 31st March 2013 [GD No 2014/0009] The Superannuation (Manual Workers) (No. 2) Scheme 1973 Public Sector Pensions Authority Annual Report and Accounts for year ending 31st March 2013 [GD No 2014/0010] Isle of Man Electricity Board Manual Workers Superannuation Scheme 1976 Public Sector Pensions Authority Annual Report and Accounts for year ending 31st March 2013 [GD No 2014/0011] The Superannuation (Traffic Wardens) Scheme 1989 Public Sector Pensions Authority Annual Report and Accounts for year ending 31st March 2013 [GD No 2014/0012] The Police Pensions Regulations 1991 Public Sector Pensions Authority Annual Report and Accounts for year ending 31st March 2013 [GD No 2014/0013] Judicial Pension Scheme 1992 Public Sector Pensions Authority Annual Report and Accounts for year ending 31st March 2013 [GD No 2014/0014] Judicial Pension Scheme 2004 Public Sector Pensions Authority Annual Report and Accounts for year ending 31st March 2013 [GD No 2014/0015] The Police Pensions Regulations 2010 Pensions Authority Annual Report and Accounts for year ending 31st March 2013 [GD No 2014/0016] Teachers’ Superannuation Order 2011 Pensions Authority Annual Report and Accounts for year ending 31st March 2013 [GD No 2014/0017] Isle of Man Government Unified Scheme 2011 Public Sector Pensions Authority Annual Report and Accounts for year ending 31st March 2013 [GD No 2014/0018] Treasury – Terrorism (Finance) Act 2009; Terrorist Asset-Freezing Etc Act 2010-2013 Report A combined report for the purposes of Section 19 of the Terrorism (Finance) Act 2009 (of Tynwald) and Section 30 of the Terrorist Asset-Freezing Etc Act 2010 (of Parliament) [GD No 2014/0003] Department of Home Affairs – Annual Report of the Surveillance Commission for 2013 [GD No 2014/0006]
Papers laid by Mr Speaker in Relation to Item 4 Letter dated 27th January 2014 from Hon. David Anderson regarding the Committee’s findings Letter dated 27th January 2014 from Hon. David Anderson regarding the possible recall of Mrs Barbara Scott to give evidence Letter dated 30th January 2014 from Mr David Killip
Order Paper No. 2 The Isle of Man Budget 2014-15 [GD No 2014/0001] Income Tax Act 1970 Income Tax (Resident Individuals) (Income Tax Cap) (Temporary Taxation) Order 2014 [SD No 2014/0019] Income Tax Act 1970 Income Tax (Disclosure of Information) (Temporary Taxation) Order 2014 [SD No 2014/0048] Social Security Administration Act 1992 as that Act of Parliament has effect in the Island Social Security Legislation (Contributions) (Amendment) Order 2014 [SD No 2014/0018] Social Security Contributions and Benefits Act 1992 as that Act of Parliament has effect in the Island Social Security (Contributions) (Amendment) Regulations 2014 [SD No 2014/0020]
Supplementary Order Paper No. 1 Vision 2020 [GD No 2014/0019] ______827 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
Bill for signature – Income Tax (Amendment) Bill 2013
The President: Hon. Member Members, I have to announce that the Income Tax (Amendment) Bill 2013 is ready for signature. With the consent of the Court, I shall circulate it 25 for signing while we proceed with business. Is that agreed, Hon. Members?
Members: Agreed.
Procedural – Order of business
The President: Given that we have three Order Papers, I, with your agreement, propose to take the Supplementary Order Paper after Order Paper No. 2, and our Question Paper as the 30 first Item of business tomorrow morning, Hon. Members. Are you content?
Members: Agreed.
Order Paper No. 2
2. Budget for the Year 2014-15 – ‘Working through our difficulties’ – Debate commenced
The Minister for the Treasury to move:
That the Budget proposals [GD No 2014/0001] for the year ending 31st March 2015 be received and necessary action be taken to give effect thereto.
The President: We turn now, then, to Order Paper No. 2. I call on the Minister for the Treasury to move Item 2. 35 The Minister for the Treasury (Mr Teare): Thank you, Madam President. There are many themes that run through today’s Budget statement, but linking them all is work. Government needs to work through its fiscal challenges. Our economy needs to grow and provide our community with opportunities to work, especially for the young, and we need to 40 reward work by retaining low and competitive rates of taxation. The last few years have seen those in work having to deal with low or no pay rises, increasing levels of some taxes and charges, reduced benefits and yet household expenses have continued to rise because of inflation. The result has been a real decline in their standard of living. Those not in work have been protected, to a certain extent, from these changes by inflationary 45 increases in pensions and other benefits. These factors have been in my mind as I have worked on the Budget, and I hope to make some positive changes with the limited resources which I have available today. I first wish to update this Hon. Court on our progress in meeting our financial challenges. The news is good.
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50 We achieved a lower deficit in the first year than planned, we are projecting a lower deficit this year and the same deficit next year as a year ago. Overall, we will rebalance the revenue budget using around £3 million less of the Reserve Fund than originally envisaged. We will balance the revenue budget in the 2015-16 financial year. This outcome has not happened by chance, but by hard work, and I need to pay tribute to my 55 Council of Ministers’ colleagues with whom I have gone through many hours, seeking to find new savings while protecting front-line services. The way that we will manage cost savings over the next few years, and which are set out in the Pink Book, may surprise some Hon. Members. For example, we are not used to delivering services such as catering or cleaning from single Departments, but if we are to function 60 effectively as one organisation, and if we are to save money, this approach makes sense. During the last year, the Government reviewed all of its services through the Business Change Steering Group. I am currently Chairman of the Group, ably joined by Mr Ronan, MHK and Mr Wild, MLC. Their support and the work of a small part-time team have been invaluable. Not only have we reviewed all of our activities to discover if there are alternative means of delivery, but 65 the Council of Ministers has also prioritised all £926 million of gross spending, in order that we can deliver savings in those areas that have minimum impact on the public. In managing the change process, we have been careful not to ‘slash and burn’. We have managed our changes so that Government has lost over 600 actual jobs, with just a handful of compulsory redundancies. 70 Government’s employee costs have been held down at £312 million in the current financial year, and it will be lower again in the year ahead. That is a saving of £50 million this year, and £60 million next year, compared with the bill we would have faced if salary rises had followed inflation. Those who claim that Government is not getting smaller simply do not see the facts, and I 75 sometimes wonder whether they want to. Gross Government spending has fallen from 25% to 20% of GDP in the last four years. In the United Kingdom, public expenditure is more than 46% of GDP. The rebalancing of our revenue budget is a critical short-term objective, which we will achieve. I am not assuming that the job will be done at that point. In the longer term, we must 80 achieve truly sustainable public finances. I will develop and present to Tynwald next year a new fiscal strategy which will set us on that path. It will need to deal with the depletion of our internal funds, the rebuilding of our capital fund and how we are to meet the growing costs of pensions, healthcare and social care provision mainly brought on by the ageing population. I believe that we need a national debate about these issues, as they are complex, and the 85 potential solutions will be seen by some as divisive. But we cannot ignore the ever-increasing cost pressures on public services. The Government plays a vital role in the wellbeing of the whole community, but it has limits, and we need to be open in discussing where those limits will be. To assist everyone in understanding how the national finances work, I am today launching a 90 website which allows everyone to see budgets in detail: both for last year and for the current year. As part of our policy of openness, I expect that this Government will make far more information available to the public over the coming years. There is plenty more work to do. The restructuring of Government is primarily about creating organisations that can respond to these key policy challenges. In the future, I expect all 95 Government Departments to be able to demonstrate how they are responding to the three core aims – ‘grow the economy’, ‘balance the budget’ and ‘protect the vulnerable’ – and Treasury will play an active role in all three. So we have changed more than many appreciate. But the work is not done, and major challenges still lie ahead. We are working through our difficulties. 100 Madam President, I will now turn to our economic performance.
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I believe that we are at a turning point for the global economy. There are indications that the financial crisis has worked its way through and that some countries are showing signs of a recovery. Amongst those are the United States and the United Kingdom. The Eurozone remains the main area of concern, with high deficits and unemployment in a number of large countries. 105 The strength of the UK economy will present some challenges to us. Interest rates could rise more quickly than we expect, and a strengthening currency could make it more difficult to export beyond the sterling area. In general, though, we should welcome a recovery in our major trading partner’s economy; as it will bring additional economic activity to our shores and also give a welcome boost to consumer confidence. 110 The Isle of Man is now in its 29th year of unbroken economic growth. We are quoted as being the eighth most wealthy nation on earth in terms of per capita GDP. Our economy is, for the first time ever, the largest of the Crown Dependencies. These are marks of success that we can feel proud of as a nation, but they may not ring true with the average person. Those in work have seen an average 8.5% fall in their incomes in real terms over the last five 115 years. This is not unique to the Island, as earnings in the UK have grown below the rate of inflation too. Savers have seen reduced returns on their investments. Borrowers, however, have had access to low interest rates on mortgages. I expect inflation to track close to the UK rate in general, going forward, at between 2% and 3%. I expect growth to be between 3% and 4% in real terms this year. 120 I wish that there was more we could do to ensure that earnings keep pace with inflation. I certainly expect the two to be much more closely aligned in the years ahead. But when finances are tight, I still feel it is better to retain jobs than make pay awards, and the evidence is that this has been a success. Unemployment has risen, albeit modestly, to a rate of around 2.6% or around 1,200 people. 125 The diverse nature of our economy has protected us from larger increases, especially in financial services, where banks and other institutions have been cutting back on staff globally. We are winning more of these restructuring decisions than we are losing: for example, the scale of job losses and unemployment in Jersey is higher than here, with comparable unemployment figures 50% higher. 130 In the public sector, we have lost 8% of our staff: over 600 actual jobs since 2010. Since 2009, the United Kingdom public sector has also shrunk by 8%. Total employment numbers have remained almost static over this period, so this is a manageable rate of decline, with new private sector jobs replacing lost public sector ones. In steering the Isle of Man economy forward, it may be simplistic, but I believe that creating 135 jobs and maintaining confidence are the key. We need to create jobs, develop new sectors, and also retain a well educated and flexible labour force. The Department of Economic Development’s Vision2020 is a blueprint for the future of our economy, and it is to this that I will now turn. Vision2020 forecasts that our economy can grow by 3% to 4% each year to 2020, with the e- 140 business sector being a key source of growth. This growth will generate substantial additional Government income, which will be instrumental in funding public services while helping to maintain our low levels of taxation. The joint public/private sector work to implement the Vision 2020 plans has commenced. In 2014, the Department of Economic Development will lead efforts to promote Vision2020 in our community and to deliver the planned growth. 145 In 2013, financial and professional services grew and are predicted to continue to do so in 2014. The international life insurance and professional services sectors continue to perform well. At the same time, some areas have seen small reductions in employment over the last year, notably banking and fiduciary sectors. These changes are being driven principally by global economic forces, not factors unique to the Island. Indeed, the Island is faring better than many 150 of our competitors. For example, the UK banks now find it less attractive to raise funds through savings banking in offshore centres due to the availability of cheap funding from the UK Government through ______830 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
‘Funding for Lending’. Also, because of low interest rates, people are holding fewer assets in bank savings as they can achieve a better rate of return on their money in other products. As a 155 result, several savings banks have closed local operations or reduced staff levels, both in the Isle of Man and in other international finance centres. At the same time, we are seeing substantial growth in new areas, including corporate banking. Some small fiduciaries have been acquired as the industry consolidates in the face of rising international regulatory requirements, not least FATCA. 160 These changes were anticipated and were included in the Government’s projections for the year. Indeed, job losses of over 200 were projected for the year across the banking and fiduciary sectors, and the current data indicates the actual levels will be closer to 100 in 2013-14, with similar losses in 2014-15. We have been working particularly hard with the banking sector, the Channel Islands and the 165 UK Treasury in order to protect our interests as the UK moves ahead with its new banking regime: effectively, to split retail and investment banking in line with the recommendations of the Independent Commission on Banking. We expect to know how this will affect us in the next few months. I believe that we have done all that we can reasonably do to help the UK Treasury understand how our banks provide real value to the UK economy. 170 2014 will also be an important year in terms of automatic exchange of information, with FATCA and the related work being implemented in concert with the local industry. The Isle of Man’s registries continue to provide world-class service to their growing global client base and help to generate substantial revenues for our financial and professional services businesses. 175 In 2013, the Ship Registry grew at twice the rate of the world’s fleet – a performance which has elevated the Isle of Man to 14th place in the table of global shipping registers by tonnage, with 40% of the fleet Asian-owned. Just three years ago, the Isle of Man did not even feature among the world’s top 20 registries. The Aircraft Registry was voted the best in its class in the world in 2013 by an association of 180 aircraft lawyers and it continued to grow to ninth place in overall rankings, overtaking the UK and France. The Department of Economic Development is continuing to invest in its registries. For example, it is developing new IT systems to provide more online services for clients. The registries are forecast to continue to grow and so aid further economic growth. 185 As ever, finding new growth is essential. The Government has therefore committed substantial additional funding from the Marketing Initiatives Fund to the Department of Economic Development to promote the Island in key international markets: as identified in partnership with the private sector as part of the Country Strategy. As a result, we show continuing commitment to supporting financial and professional services and have clear plans to 190 support the industry through this period of global change. E-Business is the fastest growing part of economy: it continues to grow at over 10% a year and accounts for around 14% of National Income. It offers great potential to create many new jobs, spending in the local economy and Government revenue. The Department for Economic Development is working closely with the private sector in 195 other areas. Two key points of focus will be skills development to provide the skilled workers required and international marketing to help local businesses win new revenues and to attract further new business to the Island. We have launched a new initiative with the private sector to review the school curriculum, so that our young people can gain the ICT skills they will need to flourish in the future. 200 In terms of marketing, the Government has recently committed an additional £350,000 over the next two years to promote e-business, both helping local businesses to grow, as well as attracting new investors.
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The engineering sector has continued to grow and is projected to generate over 50 additional jobs every year for the foreseeable future. The key challenge is securing the skilled engineers 205 needed. Therefore, I am delighted to inform this Hon. Court that this Budget includes additional revenue and capital funding of nearly £1 million for the Department of Education and Children to turn the Hills Meadow training centre into a dedicated engineering training centre of excellence. This is a vote for opportunities for our young people and growing the economy, and I 210 would hope that all Members of this Hon. Court will support this. (A Member: Hear, hear.) In 2013, the Government and the private sector, in partnership, modernised the two-year training programme and increased student numbers from 12 to 18. This will double to 36 from September 2014. This will give our young people excellent job opportunities in a high-tech industry with a great future. 215 The tourism sector maintained a similar level of performance in 2013 compared with the previous year when we saw good growth in terms of both leisure visitor numbers and economic contribution. The principal success in 2013 was the Classic TT Festival of Motorcycling. The new format attracted many more visitors, showing that such long-standing events can still deliver growth. 220 The Department of Economic Development is keen to explore in 2014 how we can continue to grow the TT and Classic TT. Research in the UK shows that the TT remains the Island’s best known feature, so it remains a vital part of the Island’s brand. Conditions in the domestic economy remained tough in 2013. That said, both Treasury data and industry leaders indicate that the retail sector returned to growth in 2013, as consumer 225 confidence improved. We also saw signs of improvement in the property market, with the number of transactions recorded at the Land Registry in 2013 exceeding those in 2012 by about 15%. Although construction remained depressed for the fifth year in a row, the number of new planning application approvals, including new private residence projects for high-net-worth individuals totalling around £30 million, lead me to expect that activity in this sector will pick up 230 in 2014. Let me now turn to the international environment. Madam President, 2013 was a pivotal year for international tax matters. Tax has been front- page news and was a central theme of the G8 and the G20. This could have been a problem for the Isle of Man but instead we have seen the Island’s reputation enhanced. 235 Multi-national companies are increasingly recognising that their reputation is more important than the amount of tax they pay. This fact is influencing business location decisions and emphasises just how vital it is that the Island protects and enhances its international reputation. The Isle of Man has, since it made its first commitment in 2000, consistently and diligently 240 adhered to international standards on tax transparency and information exchange. It has also recognised and prepared for new standards when they start to emerge. Last year, in my Budget speech, I introduced FATCA as being the latest in a long line of international measures aimed at clamping down on tax evasion. Since then, in October, the Isle of Man became the first jurisdiction to sign a FATCA agreement with the UK. A similar 245 agreement with the US was signed in December. The Orders to give effect to the US agreement are, in fact, on the Order Paper for this sitting of Tynwald. Whilst there have been some comments in the USA that the Republican Party will try to have FATCA repealed, I feel that this is not an immediate prospect, having more to do with the mid- 250 term elections and the influence of the Tea Party. It was my belief then that the FATCA model of automatic exchange of information would become the next international standard. Twelve months on and my belief is becoming a reality. The OECD is now finalising a global model of automatic exchange of information with a new ‘common reporting standard’, based on the FATCA model, published at the end of last week. ______832 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
255 In support of this, the Island was one of more than 30 countries to sign a joint statement backing a move to a single global standard for the automatic exchange of information between tax authorities and calling on others to make the same commitment. I think it is worth repeating again here today the Chief Minister’s statement announcing this move:
‘As the joint statement says, tax evasion is a global problem requiring a global solution. The Isle of Man welcomes the movement towards a single global standard, which will lead to greater tax transparency while minimising compliance costs for business and government.’
FATCA, therefore, continues to grow and much time and effort will be dedicated by the 260 Assessor and her officers in the coming years, to ensure that the Island participates in this initiative. I also recognise the enormous amount of time and effort that local financial sector businesses will need to continue to invest to ensure we can comply with these new rules. Ultimately, it is the actions the Island takes and the way in which it adapts to new standards in practice that 265 influences the way the international community views us. Moving on from FATCA, in November last year, the Island became the first Crown Dependency to join the Convention on Mutual Administrative Assistance in Tax Matters. This multi-lateral Convention provides for exchange of information and will significantly extend the Island’s network of bilateral tax agreements. The inclusion of the Island in the Convention was 270 first recognised at a ceremony held in Jakarta during the sixth meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes. During the same meeting, the Isle of Man was also awarded the top ‘compliant’ rating by the OECD Global Forum. Of the 50 countries reviewed to date, we are one of only 18 to receive the top rating in tax transparency. This is a significant achievement and, to put it into perspective, 275 this rating is higher than that awarded to either the UK or the US and, again, we are also the first Crown Dependency to receive this rating. Madam President, it is the Island’s positive response to tax transparency that led, in September, to the UK Prime Minister, David Cameron, recognising in the House of Commons that the Isle of Man is not a tax haven. 280 In addition, following the British-Irish Council Summit in November, the then Minister of State for Justice, Lord McNally, wrote to the Chief Minister to reaffirm his support for developing the Island’s partnership with the Ministry of Justice and other key UK Departments. Lord McNally said:
‘The relationship between the UK and the Isle of Man is a positive and mutually beneficial one and it is vital that we continue to be good neighbours to one another…’
Madam President, Tynwald has unfailingly adhered to its policy on compliance with 285 international standards. Officers and the local business community have together ensured this policy has been implemented effectively. It is this behaviour that counts when it comes to reputation and recognition. The recognition achieved in 2013, together with the Global Forum’s award of the top international rating for tax transparency, have helped to make it a truly monumental and ground 290 breaking year for the Island, and will ensure that the Isle of Man continues to be recognised as one of the world’s leading international business centres. I will now turn to our financial performance. As I said a few minutes ago, we are on course to deliver a balanced revenue budget next year. Our expected deficit in 2013-14 will be £26 million, but we will draw down the £31 million 295 stated in my Budget last year, and use the surplus of £5 million to augment a number of internal funds. The lower deficit has been the result of additional tax revenues of around £2 million and reduced spending of around £3 million. The funds which I will top up are:
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The Legal Costs Reserve continues to be called upon as a result of uncontrolled Legal Aid and 300 other costs associated with large, complex court and tribunal cases. I have to say that I do not believe that the current arrangements strike the right balance between justice and cost. It is the public who are paying for these cases to come to court, and whilst I have no desire to interfere in the process of justice, I do think it is time to look seriously at ways of reducing the bill to the taxpayer. I will therefore begin a process of consultation with the Attorney General’s Chambers. 305 The Agricultural Development Fund will be renamed the Agriculture and Forestry Fund and will be topped up with £1.7 million. There are two exceptional events that have necessitated this. Firstly, the exceptional snow of last spring resulted in the Department of Environment Food and Agriculture paying in excess of £500,000 in compensation for lost livestock. Secondly, our forests have been badly affected by Phytophthora ramorum, otherwise known as sudden oak 310 death, a dangerous disease that will require large scale tree felling. I have set aside £1.1 million in 2014-15 to ensure that the majority of this happens next year. The Insurance Fund pays our annual premium. The Fund needs to be bolstered in order to be able to pay the 2014-15 premium. This expenditure, around £2 million per annum, will be brought back into Treasury revenue expenditure in 2016. 315 Finally, Madam President, I propose, subject to Tynwald approval, the creation of a new Health Inspection Fund. This fund is being proposed as we are aware that the quality review currently underway at Noble’s Hospital may result in recommendations to bolster resources in some areas. Having said this, the Council of Ministers wants to ensure that any increases in health 320 budgets are targeted and that all possible efficiencies are found, prior to giving additional funds. An Internal fund is a better way to deal with this issue than simply increasing the vote of the Department. The resources are set aside, but will only be used if necessary. I will carry forward around £32 million in our operating balance to next year. In 2014-15, we will reduce both the net and gross spending of Government. The deficit will be £11 million, the 325 same as expected a year ago. The changes to next year’s Budget are both organisational and driven by the need to save money. For the first time, the Council of Ministers considered all £926 million of gross spending, not by Department but by outcome. Council rightly determined that it was the cost of running Government – the administration – 330 that needed to be reduced before we made changes elsewhere. I was on record a year ago in stating that I wished to take £10 million a year from the overheads of Government. In 2014-15, we will be up to £7 million and by 2015-16 we will have achieved this objective. Saving money on the support functions means that we have to deliver them differently. So we have centralised budgets in areas such as payroll, HR and Information Technology. We have 335 extended centralisation further in areas such as estates and vehicle fleet management. But we have gone further and looked at catering and caretaking services. I do not pretend that these changes are easy, or that they do not cause uncertainty or disquiet in certain quarters. What I can say categorically is that your Council of Ministers, faced with the financial challenge to deliver rebalancing and find additional resources for front-line 340 services did what was right, and found savings in a way that minimised the impact on the public. These new savings, totalling £4 million in 2014-15 are of similar size financially as the combined impact of the sewerage charge and the means testing of child benefit. So I will not accept that the burden of the rebalancing has been met solely by the population: we are reducing the size and cost of Government itself. 345 We now employ around 600 less people than we did in 2010. That is an 8% drop. When you consider that two thirds of our staff work in front-line services – for example, Health and Social Care – that is a significant fall in the rest. We are rising to the challenge of reducing the size of Government, whilst protecting front-line services. We will rebalance the revenue budget in 2015, but that will not mark the end of the journey.
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350 There are other issues that many Hon. Members are aware of and concerned about. For example, we need to rebuild our capital fund and our internal funds, which have been reduced dramatically over the last few years. We need to move from rebalancing to sustainability in the public finances, and that requires consideration of the longer-term challenges, such as an aging population, pension costs or environmental change. All difficult decisions, but ones which 355 cannot be avoided if we are to leave a positive lasting legacy. We also need to reform our benefits system, to be fair to taxpayers and to those whom we support. I am concerned that some people abuse the generous level of benefits we provide, and so I will be considering altering eligibility criteria for those convicted of benefit fraud. I am also concerned about the growing numbers of people on income support who are of working age, 360 and may indeed be able to work. By way of illustration, the number receiving Income Support has risen by 64% in the last 10 years, three times the rate of increase in claimants of other benefits. If our claims experience had been the same as the UK over the last decade, the annual amount paid would now be £14 million less. 365 So I will produce a new Fiscal Strategy next year. The reason I am not doing so today is that in order to plan with certainty, we need to conclude our discussions with the UK about the new revenue-sharing arrangements under the Customs and Excise Agreement. By way of an update, I can report that the data collection work, which covers both household and business surveys, is progressing well. I would like to take this opportunity to thank all those 370 individuals and businesses who have helped the Treasury. We are now starting to analyse and understand the huge amount of information that has been submitted. I expect to be able to discuss our findings with the UK Government this year, and to have agreed the details of the new arrangements by the time of my next Budget. We have reviewed and updated the Capital Programme for 2014-15. In particular, we have 375 sought to focus the Budget on construction activity, such that I am able to announce a 14% rise in the overall value of construction activity in the programme next year, a rise of £6 million from £44 million to £50 million. The largest scheme for next year is the IRIS programme, with some £9 million spend planned. That is over £100 for every person on the Island, and double this year’s household sewerage 380 charge. IRIS is a key system for protecting and enhancing our environment. We do not want to go back to pumping raw sewerage into the sea, close to our beaches. I am pleased to report that capital costs have fallen substantially below previous estimates, which will help to alleviate the burden on rate and taxpayers 385 This also seems an opportune time to mention the Manx Electricity Authority. The merger with the Water and Sewerage Authority will bring synergy benefits, in administration, billing and equipment, to name but three. Treasury believes that the MEA has now reached its peak debt in terms of the amount owed back to the Capital Fund. We should remember that the Capital Fund is, in effect, internal to Government, with external debts being the two bonds for the utilities, 390 totalling £260 million. In the years ahead, it will, as part of the Utilities Authority, be repaying to the Capital Fund more than it borrows each year, and this will finance a growing proportion of our future capital programme. I have heard comment to the effect that the public are paying for the MEA debt. If we did not have a plan for the repayment of capital funds, the public would indeed be paying, in terms of a 395 lack of new school buildings, roads or even sewerage treatment works. The plan outlined protects all these and deserves support. It deals with a problem that has been unresolved for the last decade. Madam President, I will now mention our investments briefly. Under the able stewardship of my colleague, Mr Braidwood, MLC, our invested funds have grown strongly in value in the last 400 year, such that they remain at roughly the same level now as they did a year ago, despite the need to withdraw over £90 million from the Reserve Fund. Despite this, we cannot rely on stock ______835 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
market growth to protect us from the need to balance the Budget. The good news is that the Reserve Fund should now still be in a healthy position, once this is complete. Another piece of good news was released yesterday. Pinewood has announced that it has 405 signed an agreement with the Welsh Government to advise it on its new £30 million television and film investment fund. They now join us as part of the growing regional film and TV media investment portal. I will now turn to Taxation and National Insurance. Our system of taxation remains attractive, easy to administer and fair. It continues to be my 410 aim to keep it this way and, as I have said previously, I will not raise additional income simply as a means of balancing the books. Our taxation strategy is clear and continues to put in place the agreed principles for a regime which, so far as possible: is fair; supports economic development; is easy to understand and comply with; is simple to administer; and continues to build the Isle of Man’s international 415 reputation. The Income Tax (Amendment) Bill 2013 completed its legislative passage prior to Christmas and I am pleased to note that Royal Assent is to be announced imminently. This Bill includes legislation to stop the use of personal service companies for tax and National Insurance avoidance purposes. The new law will be effective for the 2014-15 income tax year and I hope 420 Hon. Members will agree that this will stop a practice which goes against the fundamental principle of fairness and is therefore unacceptable. With such low rates of income tax, we cannot afford to allow blatant abuses such as this, and I will continue to clamp down wherever I see avoidance taking place. There is a paradox, in that some people expect services such as education and healthcare to 425 be available, but try and avoid their obligation to contribute towards the cost. (Mr Henderson and another Member: Hear, hear.) We have now gone for three years without an increase in personal allowances. I am not concerned that the increase in the United Kingdom personal allowance to £10,000 will affect our competitive position because our overall system remains highly favourable. However, I am 430 conscious of the continual income squeeze on our working population. Therefore, the measures that I am proposing today are aimed at ensuring that this section of our community, which we rely upon to grow our economy, is not adversely impacted. The time is right for an increase in personal allowances. I will increase the personal allowance by 2% from £9,300 to £9,500 for a resident individual; and to £19,000 for jointly assessed 435 married couples or civil partners. This increase will remove over 250 people from paying income tax and save a jointly assessed couple up to £80 per year. There will be no changes in the rates of personal income tax or what is known as the 10% band, and therefore 10% will be paid on the next £10,500 and 20% tax will be paid on income above the level of £20,000. These amounts are doubled for jointly assessed married couples or 440 civil partners. In January 2012, the Department of Social Care introduced a new benefit called Employed Person’s Allowance (EPA) which replaced two existing benefits, Family Income Supplement and Disability Working Allowance. The EPA is currently taxable and this results in increased amounts of benefits actually being paid simply to meet the additional tax liability arising from it, which in 445 turn results in increased administration costs. This is, in my view, madness and I therefore intend to make this benefit exempt from income tax. Unfortunately I cannot do this within today’s Budget, as the Income Tax (Amendment) Bill 2013 will amend the section of the income tax legislation dealing with the taxation of benefits from 6th April 2014. I will, however, be bringing an Order before this Hon. Court in the near future. 450 Whilst individuals in employment have continually been asked to pay more tax with reduced tax relief for certain allowable deductions at a time of static salaries, those in our community who have retired have enjoyed regular annual increases in their pensions. During the five years to 2012, there was a 22% overall increase in the State Retirement Pension and Manx Pension ______836 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
Supplement, compared to only a 10.8% increase in average full time earnings. I therefore feel 455 that it is right to reduce the age allowance for those aged 65 or over from £2,020 to £1,000. My aim is to reward those people in employment and therefore I can see no reason to have more beneficial income tax allowances to those in retirement. I have decided this year to maintain the Personal Allowance Credit at £500 for individuals and £1,000 for married couples or civil partners. Over 9,500 people in receipt of low levels of income 460 continue to benefit from this payment; over one third of which are pensioners. My final word on personal taxation concerns the Tax Cap. This policy was introduced in 2006 with the aim of attracting wealthy entrepreneurs to the Island. Whilst there has been much discussion in this Hon. Court and elsewhere regarding this measure, I was particularly pleased to received Members’ unanimous endorsement of the Tax Cap policy in supporting the Taxation 465 Strategy presented to this Court in January 2013. I remain convinced that in order to succeed in balancing our Budget, we need to maintain an attractive tax regime which includes a Tax Cap aimed at encouraging high-net-worth individuals to take up residence and support business development on the Island. Reviews have been carried out to provide details of the economic benefit that our Tax Cap 470 policy brings to the Island. The companies that can be identified employ in the region of 360 staff and for the 2012-13 tax year paid in excess of £27.5 million in remuneration and remitted more than £2.25 million in ITIP and £4.4 million in National Insurance contributions which, coupled with the tax paid by those subject to the Tax Cap, brings a total direct benefit of £15.8 million to the exchequer. The total economic benefit will be much greater, in that additional jobs 475 will be created and supported elsewhere in the wider economy. These are jobs and revenue that may have gone elsewhere without this policy. Treasury would be delighted to give Hon. Members more background information upon the competitive pressures that we face in this area. One point that our entrepreneurs have repeated since 2006 is that they need certainty and 480 stability. This is also the message we need to send out in order to attract more wealthy people to the Island. Therefore, to this end, I intend to introduce a specific statute to put in place a five- year election for the Tax Cap. Once an individual elects for the cap, they will pay the set amount for five continuous years, even if their income decreases. Only in very rare circumstances and at the Assessor’s discretion will they be allowed to opt out of the cap. The Assessor of Income Tax 485 will publish a Practice Note setting out further details today. This achieves my aim of maintaining certainty for those that will elect for the Tax Cap and it also ensures stability in Treasury revenue receipts from these taxpayers. I hope that Hon. Members will agree with me that this is a positive move and a necessary updating of the Tax Cap. 490 In 2012, I introduced the National Insurance Holiday Scheme to encourage the creating of new jobs on the Island. In the first year, there were 585 new jobs to which the holiday applied, from 272 different employers. This year the figures have been just as impressive, with 549 new jobs from 222 different employers. That is more than 1,100 new jobs that have been created over the past two years. Last year, I announced that this holiday will continue for another year 495 until April 2015 and I confirm that this will be the case. National Insurance contributions are intrinsically linked to the payment of benefits and pay a proportion of Health Service expenditure. As Hon. Members are aware, there is a review of benefits and National Insurance currently being undertaken by a team of external consultants, with the support of officers from both Treasury and the Department of Social Care. This review 500 will assist the Council of Ministers in the development of future policies to ensure that benefits are properly targeted and financed in a way that ensures the long-term viability of our benefits system. We must remove disincentives to participating in the workforce, whilst maintaining our focus on the most vulnerable in our society.
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505 I therefore do not propose to make many changes in the area of National Insurance until I see the conclusions of the review. Last year, I asked the Assessor to review the charging of National Insurance Contributions on benefits in kind. However, I have also asked that further consideration of this matter be put on hold until the main review is concluded. We can then move forward with our planned strategy. 510 The rates of Class 1 National Insurance Contributions in the Isle of Man for 2014-15 will remain at the current levels of 11% for employees and 12.8% for employers, and the employees’ additional rate will remain at 1%; the rates in the UK are 1% higher. The Lower Earnings Limit will increase from £109 per week to £111 per week from April 2014, in line with the increase announced in the UK. This is the point at which an individual starts to 515 build up rights to such benefits as Jobseeker’s Allowance and Basic State Pension. The employee threshold will remain at £120 per week and the employer threshold will remain at £117 per week. The Upper Earnings Limit will remain at the current level of £784 per week. Finally, the Class 3 weekly contributions will be increased to £13.90 per week. 520 Madam President, I would now like to turn to company taxation. The Zero-10 regime of taxation for companies is, in my view, the cornerstone of our economy and it is vital that it continues. Continued growth in taxation receipts provides irrefutable evidence that our strategy is working well. Over 1,100 new jobs have been created in the past two years, with an anticipated increase in ITIP of £6 million. I have no doubt that our 0% 525 company rate is one of the main catalysts in attracting new business to the Island; it assists the expansion of existing businesses, and contributes to our uninterrupted economic growth. For this reason, I will not change any aspect of taxation for companies. However, if we are to continue to reduce the cost of government, we must be constantly seeking to streamline those administrative processes which are labour intensive, and in some 530 instances contribute little or nothing in the way of revenue receipts. I am convinced that the growing use of online services can assist us in achieving this goal, whilst also providing greater flexibility as to when people transact their business with Government. The range of Online Tax Services has continued to expand, as has their use. One in five individuals now use this service to file their annual tax return, and I previously introduced 535 legislation making it compulsory for employers to use the online service, which is working very well. Whilst contributing significantly to our economy as employers, due to our zero rate, the majority of companies on the Island pay little or no income tax. Over 50% of companies are now submitting their annual tax return online and therefore I feel that the time is right to ask the 540 Assessor of Income Tax to introduce a compulsory online filing requirement for companies from April 2015. Madam President, my message this year is clear: it is only through increased productivity and job creation that our economy will continue to grow. This in turn will help us in our budget rebalancing process and beyond, and it is our responsibility to foster an environment in which 545 this can happen. Madam President, when considering my speech and thinking about my summing up, the first thing that strikes me is that I have not conveyed adequately either the huge change programme which we have embarked on, or the pace of change which we have generated within Government. A budget is after all just a snapshot in time. 550 This administration has been accused of not changing fast enough, of putting off difficult decisions and of not steering the right course. Nothing could be further from the truth. My experience is that the Council of Ministers has spent more time on the big issues and on the strategic policy-making than ever before in the last year, and it started with a realisation that we needed to reform ourselves.
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555 So we have restructured the political centre, have created a Cabinet Office to drive change at the centre of Government and have restructured our budgets to centralise and save money in those areas not directly affecting the public. In summary, we are working through our problems, and finding solutions, whether they are political, organisational or financial. This Government brings solutions whilst some only bring 560 criticisms. What are their solutions? When you change things, you inevitably upset some people. Politicians are good at listening and sometimes act on these complaints. But consider the whole not the part. Do you believe that we are heading in the right direction, even if you cannot agree with every action? I am convinced that we are, and that we are emerging a stronger, more focused and more 565 corporate organisation as a result. I have not tried to be radical this year, more of a steady Eddie. This is a deliberate approach, as I feel that we are making good progress and there is no need to make change for change’s sake. But there are new concerns that are emerging, as we put to bed the problems of the past. 570 Foremost amongst those is to spend less time on managing the short-term challenges of rebalancing the budget, to spend more time on building long-term sustainable public finances. To do this needs all of us in this Hon. Court of Tynwald to work together. It feels to me as if Government as a provider of all things to all people in a one-size-fits-all approach cannot continue into the future. Our citizens demand more complex and individual responses to their 575 problems, which places increasing demands on our resources and our professionalism in response. In essence it is a challenge to the public service to be excellent, and one to which we must aspire. So today I will lay out the big issues we need to address. Government must spend less than it receives, so that our public sector and the services 580 which it provides are sustainable into the future. We need to reform our welfare system and to look again at our employees’ pensions. We need to remodel our Health Service, as it cannot at present provide all things to all people, and is even less likely to be able to do so in the future. We need ensure that public services are there for people when they need them, and tailored 585 to their individual needs and means. I do not have all the answers to these questions, but I do know they need to be found. We must have the courage to be able to discuss calmly with our community the challenges we face, and then the wisdom to find solutions. The three core aims of this Government – to grow the economy, balance the budget and 590 protect the vulnerable – can sometimes seem to contradict each other. But at their heart they do not. We need growth, we need financial security and we need a society that protects the weakest. I have tested my Budget for 2014 to see if it meets these three objectives and it does. Madam President, I commend this Budget to this Hon. Court.
595 Several Members: Hear, hear.
The President: Hon. Member, Mr Henderson, for Douglas North.
Mr Henderson: Gura mie eu, Eaghtyrane. Thank you. 600 I am quite happy to second the Budget. I have no problem with the framework of it. However, as we move into this most important debate in our legislative year – a parliamentary examination of the Government’s financial status and plan for the forthcoming 12 months – it is a tough, hard Budget with the only departmental increase going ostensibly to Health and Social Care – decreases elsewhere. 605 But we can see some light at the end of the austerity furrow, which this plan is attempting to plough towards, and we can see some really positive outcomes, such as rebalancing on target ______839 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
for 2015-16; use of reserves under estimate; a general deficit slightly smaller than anticipated; we see a 2% increase in Health and Social Care, pension increases and benefit increases; a modest increase in the personal allowance, giving something back. Giving something back is so 610 important in the current climate of public disquiet set against increasing Government charges, means testing and pegged or frozen pay agreements. I have to say also we have done well – excellently well – on the international front, reaching the Tax Information Exchange Agreements that we have and the OECD awards. That is a tremendous achievement for the Isle of Man, considering the position we were in even when I 615 was elected and the international view of us. Now that has to completely and utterly change. Nonetheless, the next few Budgets will have to be in the same vein to keep the rebalancing strategy on track and to cope with future financial pressures – some already on the horizon and heading straight for the middle of our radar, as the Treasury Minister has already indicated – the predicted rise in school numbers, for instance, and facing the growing demands of an increasing 620 population and increasing older population to highlight but three developing and known strategic issues. These challenges are real, serious and require us to ensure there is an action plan in place now, or the foundations of one at the very least, to deal with and manage these major up-and-coming problems. Yet we must commend Treasury and Government, in that their rebalancing plan is working in 625 the main. As hard as it is, we can begin to see results. That has to go out from here as one of the strongest messages generated by everyone’s effort so far: we are on track and we will be able to rebalance our finances. We need to give out a strong positive signal: resilience, strength, stability and an ability to make good positive progress in the face of challenging and austere times, laying the foundations 630 to grow and improve our economy. Resilience, ironically, was one of the criteria used by the UK not that long ago when they had one of their regular reviews of the Crown Dependencies, and we can certainly show we have that. In the end, we have to thank our community, business and industry for taking some of the strain of this and for all their hard work, and continuing work, that by their endeavours, one way 635 or another – including putting up with pay freezes or small pay increases and price hikes – have helped feed the Treasury and produce this result. The Budget has to be the way it is, or at least the framework, as we have to cope with the dangerously shrunken national income. How the Budget is to be delivered and in what manner and style, however, will be the political football and will be open for debate and criticism in 640 areas such as increasing Government charges on seemingly everything and the advent of means testing. Yes, there are more difficult decisions and changes to be made. We will have to push the Government Business Change Steering Group accelerator harder as we go along. The easy pickings, in my view – the win-wins – have been, or are about to be, achieved in terms of 645 savings, efficiencies and all of that. The BCSG will have to do more, and force Departments, if necessary, to change. They should also open a Government suggestion box with initiatives to all staff, or incentives to all staff, to come up with efficiency and savings ideas. It worked well in the old DHSS, with many savings-generating ideas produced. This is Government’s climate change dilemma: something that it and our community are 650 going to have to work within, become accustomed to and acclimatise to. We are going to have to educate and support the public and be fair in that administration. It does not matter who stands in this place: the job still has to be undertaken, finances managed and deficits reduced as best we can. I note benefits have a boost of £6 million. That is quite extraordinary, given the current 655 financial climate. A good, positive moral signal in one sense, but how can we afford that? Minister Robertshaw has told us publicly that the current system is unsustainable; we can no longer afford this growing and very generous aid system in the generality it has evolved into.
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Means testing is going to have to become a reality of life, unfortunately, and an element to assist if we want a sustainable economy. All benefits will have to be ultimately re-examined in 660 the cold light of the financial day: what benefits, including the tax credits as we have heard mentioned; how benefits are paid and in what manner and to whom; and who is the most vulnerable and how best we can help them will all have to be analysed. However, means testing has to be carefully and fairly applied. Current observations indicate that the new means-testing system introduced by Minister Robertshaw is a very blunt 665 instrument and it will need refining, in my view, especially if we link other benefits in the future or health benefits to it. We may also need to take into account a better way of including what should be allowed to offset the gross amount of income which is currently taken for means- testing purposes – certain expenditures, for example. These types of changes will have to be brought in sensitively and avoid the unwanted side 670 effect of certain sections of our community being demonised and used as an excuse for some of our financial difficulties. It is a social prejudice we can well do without. Now I turn to the Department of Economic Development and to Minister Shimmin – and as far as I can see, he is going to have to deliver a steady business industry growth factor of mitigation. We hear all about what his Department is doing, we hear all about where he and the 675 staff have been in promoting the Isle of Man, and we hear of the Vision2020; yet he has a colossal task on his hands and we want to see regular published results. As far as I am concerned, there should be something in this Budget and in future Budgets tying the Department of Economic Development down by way of performance indicators, and even to the point of estimated achievements fed into predicted budget figures, say over three to 680 five years – and that is being lenient. This Department has to deliver over and above the ordinary and the anticipated. What I see is large amounts of hard work, but much is the day-to-day process work. What chief executives’ doors have we been through recently to hard-sell the Isle of Man plc as a corporate headquarters, for instance? What recent hard-sell pitch have we made to a corporate 685 player? What package of incentives are we offering that is new and innovative – and I am being deliberately provocative, Eaghtyrane – such as tax breaks, giving of the land, a land package, infrastructure package? What are we doing? Sometimes I feel we are just repackaging the same old carton, maybe slightly better. That just will not work. We need to be far better placed to grow business and attract further business in more 690 proactive and innovative ways. What really special thing has this Department done lately that has caught business attention and what ground-breaking bold new package is on offer to tempt that attention to relocate or do business with IOM plc? The game standards need to be raised dramatically in that area. Eaghtyrane, that may seem a little unfair, given what the Treasury Minister has just been 695 reporting to us. No one is decrying the work that has gone on, and certainly the initiatives measuring against what the education curriculum should be is excellent and something I have been saying for a long time – that our young people need to be educated to the standards required by the industry… and the apprentice moves and so on. All the things that we do normally – growing, nurturing a localised growth, if you like – that is good. 700 I would caution this Government, however. However we make savings, efficiencies, restructure Government and ways in which public services will be delivered and what type, it has to be fair, it has to be as equitable as possible and transparent. The public need to know exactly what is going on, why and the reasoning: clear, unequivocal dialogue, engagement and communication. Difficult decisions will have to be made – we know that – but they must be 705 done as fairly as possible, with understanding, common sense and compassion. We know savings and efficiencies have to be made, but it is how it is to be achieved that will be a real challenge. Applying austerity measures that will have the effect of placing most of the pressure on the middle income earners, lower income earners and those with moderate fixed incomes, including ______841 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
710 pensioners with small investment incomes or occupational pensions, should not be the only way forward here. Reducing the age-related relief on the tax is a prime example here of that. Who is actually taking the real hit? We need to be careful how we move this forward. These are the folk who are really feeling the pinch and are more likely to do so if we keep this pace and direction. The financial stress needs to be spread in a way that fairly targets the entire community and 715 those who can better accommodate it. The sewerage charge is a classic example. It could easily be linked to a new modernised water and property rating system. Water meters are inexpensive to fit and methods for fairness can be worked out looking at how other jurisdictions are organising this for themselves – water being used in the treatment of effluent. I have to say why we are at this point seems to be becoming lost in the ether of time, albeit 720 for a short time span. In the main due to the unilateral measures by the UK in reducing our VAT share, nearly a third of our national income was wiped out. Also, the credit crunch of 2008 and the general downturn of the global economy, as we have heard, have all had their own serious and compounded impacts upon our economy and national investment interest earned: KSF Bank collapse, MEA. The global economy is still affecting us in a negative fashion. Banking deposits are 725 down by 9%, is but one example. However, I am very pleased to hear the Treasury Minister’s most recent financial update on that and reserve investment performance, which clearly shows that there may well be a corner being turned here, both locally and internationally, and I hope his optimism is correct on that. Why raise all this again? Just to confirm that these dangerous negative and unstoppable 730 forces were outside of our control or knowledge when they occurred and forced themselves upon us in the main. We need to remember that and ensure our community understands it. What the community can and should expect though, is a fair, balanced, entrepreneurial, practical and level-headed way to manage ourselves out of this – and for that course of action, or non-action, they can hold everyone here accountable for achieving or not achieving that goal. 735 That means CoMin has to make directives, pushed through in the national interest. Departments need to be told, ‘And that’s it.’ National priorities need to be set. You do not need a Cabinet Minister to do that. CoMin need to do their job fully. That is what has been lacking, in my view. I do not want to hear any more whingeing from Ministers, complaining about having to take it out of their budget – ‘the Department can’t cope.’ Departments have to be told, ‘CoMin 740 need to set national priorities and that is the end of it.’ If Ministers do not like that, then it is time for them to walk. Imperialism has gone. This is why I am so pleased to hear the Treasury Minister, in his briefing to us and today, say that CoMin have started to make inroads into this area and have been determining priorities for this Budget. About time too, and more of it: leadership and direction from the centre. With 745 CoMin directives, we should be seeing other core principles actioned and all staff working towards them, driven if appropriate by the Business Change Steering Group. Eaghtyrane, I have been calling for a very long time in here for a full audit of every Department and Government service and related Government service from top to bottom, the full hit. We need to have a strategic change plan in place for every part of Government and it is a 750 first principle that has not yet been done. Having a Business Change Steering Group is fine – able to focus on overview issues and make changes at selected items – but this will not take care completely of the big figures coming our way via future health and social care needs, care of the growing older population and other stresses. What I have been calling for – and it is basic management – is to assess the productivity of an 755 area, the efficiency of an area, wastage, staff absences, energy usage, equipment and resources, staffing numbers and appropriateness of posts. Are they all required? Do we need the amount and size of vehicles, for instance? Do we need the amount of… [Inaudible] that many staff have at their disposal? Is it needed, or could it be shared? In other words, a close and detailed look at the operation and how it works, and is there 760 anything that can be done to improve it, make it more efficient, less wasteful? Can they do
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things differently? Can it be amalgamated, improve value for money and drive costs down? What savings can be made? No one has done that to any depth of degree, and it is urgently needed. If you want to save money and on a continuing basis, this is what you have to do. Again, not decrying the work that 765 has gone on with the changes; but that is more overview stuff, as far as I am concerned. A philosophy of zero waste and energy efficiency throughout Government has to be embraced, working towards reducing on an ongoing basis Government’s carbon footprint. It will help to reduce costs. My motion to Tynwald some time ago called for that and it was supported. What are we doing? Where are those savings? 770 That brings me to the fundamental and primary services of this Island: health, social services, education and community safety. Health and Social Care, as it will be, is the only Department of Government to receive an effective increase – the core Department of our public services portfolio. Wrapped around health should be social services, education and community safety. Using that framework then we should be able to measure our national strategic priorities, 775 budgets, and set to the same. The framework has to include economic growth and address a sound business plan that Government, and in particular the current Department of Economic Development, can work to and aspire to. The health argument that we have heard so often will have to be carefully considered by members, because if we want healthcare to the breadth we want and to the standards we want, 780 then that all comes at a cost and it will all have to be carefully considered as we go along. (A Member: Hear, hear.) As far as I am concerned, Departments have a new role and that is to support the core services and elements delivering those services. This may mean giving up some budget or capital programme or further downsizing. This is where strong CoMin leadership is required and 785 leadership directives. Coming to my conclusions, Eaghtyrane, we look at capital projects and I see IRIS has been given centre stage on this – and that is fair do’s to an extent, as it does require to be finished and we have got an infrastructure issue there. However, we do have another infrastructure issue, and that is the crumbling Island roads. This needs to be prioritised better than it has been 790 and may need the direction of CoMin to ensure that other Departments support DoI in this crusade, because it is surely is… and previous administrations have been negligent, in my view, in deliberately – in my view again – overlooking this national strategic issue for so long. So important for business, tourism and our community alike. If we are going to grow, be sustainable and attract business and visitors here, let alone our own community and inherent 795 business, we need a good road infrastructure with longevity built into it. Full marks, Minister Cretney, on Peel Road and the promenade – excellent. This needs to continue on an ongoing basis. We also need to work in partnership with local authorities, and in particular Douglas Corporation, to get rid of the eyesores – unsightly street furniture and other embellishments – 800 from around our capital. It will not cost much but the win-win benefits will far outweigh that. We have to promote a vibrant, positive atmosphere, an urban environment for our capital to complement what has already been done, which includes the excellent street works taking place in the town centre at the minute. Even to the point, Eaghtyrane… I draw an example of the ugly prison railings around Greensills Corner at Harris Promenade. It is unsightly and we could do so 805 much more with just a little thought and not much cost. We will have to face up to our growing population, our growing ageing population and their Health and Social Care needs – linked to state pensions, as we have heard, Government final salary schemes and residential nursing home fees all waiting in the wings. Direct action has to be planned in now, Mr Treasury Minister. Very difficult and hard 810 decisions will have to be made with regard to how we are going to manage these huge unwieldy demographic and health issues. We need to be setting the underpinnings now to achieve this and educating our community that, in order to manage this, there may have to be more change ______843 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
– further changes as to how services are to be delivered. There may be further costs. There may have to be a lesser expectation of some of the services in their current form. I suspect it will 815 have to be a mixture of all these elements in order to cope with workable practical solutions. Final salary pensions will have to become a thing of the past. Capping will have to be brought in. New entrants to any Government scheme will have to be ultimately managed differently. What I want to see is a public that is fully aware, fully educated as to what the problems are, the huge costs involved and where Government is able to help. Then we need to look at the 820 deficit and how that gap is to be closed. It does not matter a jot who is elected or not. Tynwald could be closed down tomorrow, but these huge social issues will still remain to be managed. Finally, Eaghtyrane, I see this as a pragmatic Budget, better than expected, and it shows hard work, tenacity and perseverance in its preparation and delivery. We can see the changes and rationalisations already being made that are helping in the rebalancing. However, it is ultimately, 825 as I think, down to our community too and businesses in all their forms – their perseverance and patience, which at times has been wearing pretty thin. Treasury Minister, the public realise our financial situation. They know we need to make difficult and unpopular decisions. I am calling on you to make sure that those decisions are fair, equitable, practical, balanced and do not marginalise sections of our community. 830 Gura mie eu, Eaghtyrane.
The President: The Hon. Member for Middle, Mr Quayle.
Mr Quayle: Thank you, Madam President. 835 This is my third Budget speech. However, it could be compared to another Groundhog Day, where you are forced to live a certain event over and over again: the main emphasis of my speech remains the same as my first and second Budget speeches. I feel the major problem has not and is not being addressed by the Council of Ministers, and I will expand on this later. May I commend the Treasury Minister for allowing Members to examine the Budget for the 840 last two weeks. This, on the whole, is a steady-as-you-go Budget, with slight changes – and you will be glad to know I am not going to go through the minutiae, but will concentrate on what I see as the key points. The creation of the super-Department of Health and Social Care, with an increase in budget 845 of £3.91 million – a 2% increase from £190.83 million to £194.74 million – has meant we have a Department spending 35.8% of Government’s total budget. Yet, as I exposed during the previous year, the Department of Health still does not carry out benchmarking. This is business suicide. In the coming financial year, this Hon. Court will be asked to vote on a spend of £2.5 million for an update of the Noble’s Hospital IT system – a system that has had over £7 million spent on 850 it over the last few years and still it cannot provide essential information for benchmarking such as the cost of a hip replacement. We are still paying more than 18 members of staff to trolley medical records around the Hospital. From an IT perspective, we are in the Stone Age, but have wasted a fortune: the usual Rolls-Royce prices for a rickshaw service. On the Island, we can expect spending on health to dramatically increase on helping our 855 ageing population over the next 20 years. Pennies do not fall from heaven, they have to be earned on Earth, and on the Isle of Man we are not collecting enough income from taxes to pay for the services we currently provide. We are therefore faced with real challenges for Government, our community as a whole, and for individuals. The Island needs a national debate on how we can fund health services in the future. 860 At the moment, we charge 1% less National Insurance contribution than the United Kingdom for those earning over £40,000, which is the equivalent of a weekly income of £784 – this was mentioned in the Treasury Minister’s speech – and I have estimated that this is costing Treasury approximately £2.3 million. As our service costs more to provide on the Island, due to the economies of scale, but is attracting less income to fund it, maybe the Treasury Minister and his ______844 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
865 team could consider increasing the rate of National Insurance contribution by 1% for our highest earners to offset these losses. Another area which needs closer scrutiny and action is the level of outstanding debts of over six months of age to Government, which, excluding Treasury, stand at over £7 million. Surely this is unacceptable. It may well be the case that an individual or company has multiple debts 870 throughout Government, and if a central Government debt-collecting agency was established, this would help Government cashflow. At a rate of 2% lost interest on £7 million a year of outstanding debt, it is costing Government £140,000 per annum, and that is excluding write-offs. On a more positive note, the MEA debt and the WASA debt are being dramatically reduced with a joint 20-year plan, and I congratulate the officers and board members of those utilities for 875 drawing up a restructuring plan which will significantly reduce the level of debt and is based on a realistic 0.6% domestic growth rate for the MEA, as opposed to the 2005 plan, which was based on a 3% growth rate. Whilst 20 years may well be a long time, at least now there is light at the end of the tunnel in relation to these huge debts. Madam President, I would ask the Treasury Minister to confirm that, subsequent to the 880 renaming of the Agricultural Development Fund to the Agriculture and Forestry Fund, the existing moneys earmarked for agricultural development remain ring-fenced for that sole purpose and are not hived off to make up any further shortfalls within Forestry, and in particular the attempted control of phytophthora ramorum. This is especially essential, bearing in mind the unanimous support for the recent Tynwald motion to increase the GDP of the agriculture and 885 food sector, which will need to be underpinned by development support. In the Treasury Minister’s conclusion on page 17 of the Budget, he states:
‘We must all work together to grow the economy and create good employment opportunities.’
– a statement which I wholeheartedly agree with. However, by not increasing the Department of Economic Development budget, and with rising salary costs, it would appear to have placed a blanket on our chances. Our competitors are doing significantly more on economic 890 development, and whilst we are seeing great results, the opportunities in other areas – such as e-business and biomed, to name but a few – are massive and need further investment. In other words, you have to speculate to accumulate. In response to the previous speaker… The Hon. Member for Douglas North comments on what has Economic Development done. Well, what haven’t we done? I would like to point out 895 that we have achieved the following, just in some of the areas: doubling of manufacturing apprenticeships; the 14th biggest Ship Registry in the world, knocking Germany, a superpower, off 14th place; the ninth biggest Aircraft Registry in the world and the fastest-growing Aircraft Registry in the world; a full pipeline for e-gaming business; creation of over 80 jobs in that sector in the last year and with further growth of a similar level, if not more, projected for the future. I 900 expect other Members of Economic Development will be pointing out the growth areas that they are responsible for and will leave that to them. Here we come to the nub of the problem: yes, I agree with the Treasury Minister’s conclusion that we are on the way to delivering our commitment to rebalance the public finances, but my question is are we making the cuts in the right places. We are proposing to cut spending in 905 Education by 2.1%, Environment, Food and Agriculture by 5.6%, Home Affairs by 2.6%, Infrastructure by 10.9%, and Treasury by 1.2% – all of these cuts to increase spending in Health and Social Care by 2%, and a total saving of £4 million. Madam President, we have cut some Government Departments to the bone to save a further £4 million, and yet we have had to take £13 million out of revenue and £24 million out of our 910 diminishing reserves to balance the public sector pension schemes’ deficit. In my opinion, we are ignoring the elephant in the room that is crippling us now and will be worse next year. Some of the Manx public are up in arms over a £50 per household sewerage charge, and what I am pointing out is that each household has paid £1,000 per annum, this year, to make up
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the shortfall of the public sector pension scheme, and this is going to increase. (A Member: 915 Hear, hear.) Are the cuts we are making now delivering the best value for money? I acknowledge cuts need to be made, but I do have some severe misgivings about some of the potential costs we could be incurring for the sake of relatively minor savings. For example, if we consider cuts of 10.9% at the Department of Infrastructure on top of previous cuts, we are faced with a 920 Department which has been forced to do less maintenance of basic infrastructure. For example, weeds in our roads and pavements are not being sprayed so often. The roots then grow deeper and deeper, the water runs down the roots; then there is a hard frost, the water freezes and the road surface cracks, causing a huge repair bill. In other words, we are saving £1 today to possibly lose £100 tomorrow. 925 The public sector pension scheme is costing annually at least 10 times the amount we are saving on this Budget. Surely, if we can reduce the deficit by just one third, Treasury would not have to introduce the cuts that do not necessarily deliver genuine cost savings in the long run. I am extremely grateful that Members of this Hon. Court backed my amended motion of January Tynwald to look at ways of reducing the public sector pensions deficit, and I will take 930 this opportunity to urge Members to take immediate action when we receive this report with its recommendations and reduce the long-term liability in order to provide an affordable, sustainable and fair pension scheme. The public sector pension black hole stood at £2 billion in 2012, which I referred to in my Budget speech at the time. It is now estimated to be around £2.35 billion by the end of next 935 month – an increase of £350 million. To put this in context, this increase in one year equates to the market value of the entire reserve fund at 31st December 2013. I cannot emphasise enough that it is imperative we take action to reduce this crippling burden to our economy. We would have to raise the standard rate of Income Tax by 7.4% to fund the current known shortfall of the public sector pension liability for the nine months of this 940 financial year. Unless we can address this massive drain on our economy, further cuts will have to happen. I predict that this deficit will be around £50 million by the end of this financial year, compared with the deficit of £35 million in 2012-13. Should we put in place changes to reduce the long- term liability, we would then be able to free up revenue to balance the books in a more 945 economically effective way, which would not impact so majorly on each and every one of those. Madam President, in conclusion, I will be supporting the Treasury Minister’s Budget today, but I am concerned that we are not addressing the single major issue which is threatening our economy and expectations; and I would urge the Treasury Minister and his team to address the concerns that I have highlighted again today. 950 However, it would be remiss of me, when highlighting some concerns, not to recognise some tremendous achievements and commitment from many different sectors within our diverse business community in helping to grow – to continue to grow – for the 29th continuous year, our economy by a further 3% to 4%. I would also like to take this opportunity to thank the many public sector staff who have 955 played their part in both facilitating this continued growth and providing us with the wide range of services on which we all rely on a day-to-day basis.
The President: The Hon. Member for Douglas East, Mr Robertshaw.
960 The Minister for Social Care (Mr Robertshaw): Thank you, Madam President. Madam President, at first, I thought my contribution to the Budget debate should simply be a litany of all the projects and initiatives the various sections of my Department have completed, are currently progressing or will be carrying out in the future – but then I decided it was pointless, without first trying to explain why we are doing what we are doing.
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965 Then I thought I might simply list the changes and adjustments to our pensions and benefits provision – but that would be asking the audience to consider them in cold isolation and out of context. It was not until last Tuesday night that I finally knew what I had to say today. Tim Crookall, Hon. Member for Peel, Alf Cannan, Hon. Member for Michael and I attended a 970 requisition meeting that night. It happened to be in Peel. It could have been any constituency. It could have been any Hon. Member. It just happened to be us. It was a cold windy and pretty miserable night, but over 100 people turned out to tell us what they thought of us. The meeting was about the sewerage charge, of course, and there was a great deal of 975 comment on that subject; but there was also a deeper undercurrent that had surfaced, as a consequence of this latest charge. People have had a pretty difficult time in recent years. Household expenditure has been going up, but wages and salaries have not, as the Treasury Minister indicated. Now we are piling new charges on top that do not seem fair, and there was a sense of anxiety and uncertainty at 980 the meeting that expressed itself, in part at least, in anger. What I think that people were really saying was that what they wanted from Government is a belief that we know where we are going and why and to what end; that they can see their place in that vision for the future; and that they would able to play their part in building that vision. Ultimately, it is possible to capture that vision in just three parts: the economy, the place we 985 live and the quality and delivery of our health and welfare policies. That this vision is only now beginning to emerge, halfway through this administration, is for good reason and as the Treasury Minister’s Budget speech clearly shows today, there is light at the end of the tunnel. This, then, should be the turning point. The first half of this administration has been about dealing with an extraordinary and 990 unprecedented series of challenges, both internally within Government, and externally in the wider world. Little wonder we have appeared to be preoccupied. No surprise, then, that the audience in Peel last Tuesday felt disconnected and uneasy, but as I said, this Budget marks the turning point. During the second half of this administration, we will of course continue to slim Government 995 down – the job is not yet complete. But it will also be about communicating a vision for the future and engagement with the public in its development. That is why the Minister for DED recently unveiled Vision2020 for the Island’s economy. That is why last year it was announced that 2014 would see a national debate on health and social policy emerging, and that is why the Treasury Minister repeated that message again today in his 1000 speech. Make no mistake, the challenge to ensure a high quality delivery of services within the sphere of health and social policy, yet within the constraints that bind us will be a monumental task. You have heard today from the Treasury Minister that Government spending is moving towards 20% of our GDP, whilst in the UK it stands at 46%, on the same measure. And even at that level, 1005 they are having real difficulty in delivering. We will have to do something really special if we are going to deliver within our constraints, and that begs a question: the Government’s three priorities are all intrinsically linked, but can we truly protect the vulnerable whilst at the same time grow the economy and balance the books? That is the question. My belief is that we can, but with a significant caveat: only if Government fundamentally 1010 changes the way it thinks, acts and works; only if it changes its relationship with those it serves. We need to personalise service delivery to meet the needs and means of the individual. Let me offer a rather unusual analogy to try to explain what I mean. For those of us old enough to remember that far back, when television first came out, they were little boxes with one channel and then a couple more came later. We the audience 1015 watched what we were given when we were given it and we were grateful.
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Then there were more channels and then there was Sky TV and more and more channels. By then, we had remotes and we started watching what we wanted to watch, when we wanted to watch it– including skipping the stuff that annoyed us. Now, we are moving to systems that know what we as individuals like to watch and it collects 1020 it for us. This has turned the world completely upside down. Banks are taking a similar journey in developing KYC – know your customer – and many other businesses have embarked on a similar journey. This is the personalisation of service and Government must take the same path if it is to protect the vulnerable. We will have to learn to provide an individual, focused service. 1025 Government, in many respects, is still like TV in its earlier manifestation, with clunky rules and basic categories, and woe betide you, if you do not fit into one of those simple categories. Some claimants also find their way into basic categories and are thereafter, totally unintentionally, ignored and almost forgotten. We have to change all that. We have to recognise the paramount importance of responding 1030 to individual need. It is only at the level of the individual that we can truly recognise vulnerability when we see it. It is not part of some old fashioned clunky categorisation process. Continue with that mind-set and we will fail. Universality and clunky categorisation must give way to personalised and targeted care and support, with outcomes carefully measured. That is also the only way the social policy escalator 1035 we all debated in 2012 will work. This is no simple task and it will take longer than this House has left to achieve it, but we are making a solid start and it will be for others to carry on this crucial, important work later. That is why we have moved the social security system to the Treasury. That is why we have embarked on a joint strategic needs assessment. That is why we are refining the public sector 1040 housing rent system to one based on means testing, and why developing greater specialisation in housing for the elderly is so important. That is why those on substantial salaries will no longer receive child benefit. That is why, with others, we are piloting the team around the school project. That is why re-enablement issues are so high on our agenda. 1045 That is why we will be establishing a safeguarding adult board. That is why we have introduced a new strategy for those with learning difficulties. That is why we introduced the Regulation of Care Act and why the Landlord and Tenant Bill will soon be before you. That is why we will continue with personal capability assessments. That is why we will increase our focus on those in the unhappy predicament of being in long-term unemployment. 1050 That is why the number of children’s homes is being reduced and funding redirected to greater support for fostering. That is why Treasury and my Department have embarked on a huge piece of work identifying a sustainable future for our benefits and pension provision. That is why adult and elderly care and health services must be brought much closer together. That is why we have introduced fair access and charging regime for certain services. 1055 And yet all of this is but the first few steps in the journey ahead, if we are to successfully protect the vulnerable and provide excellent health and welfare services, whilst moving towards a smaller, smarter Government in the future. This cannot start to be delivered unless, in the second half of this administration, we are able to engage people more in the process of change, and it is our determination that we should do 1060 so. In the meantime, it is unfortunate that we have had to apply charging in certain areas, with only clumsy outdated mechanisms available to us in the short term. I wish it had been possible to introduce means testing to public sector rents, before applying the increases in recent years. It was not. 1065 I am sure we all of us wish that the rates review process could have been completed before introducing a charging regime for sewerage. It could not.
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All I can say here is that I believe this administration is now doing as much as it can, as quickly as it can, and that fairness remains very high on our agenda. We will get there. I hope that those who attended the meeting in Peel last Tuesday, and those of a similar mind 1070 around the Island, might be willing to recognise this and give us the benefit of the doubt for a while longer yet. In closing, Madam President, I would like to make one final point I am sure it is self-evident to all Hon. Members that many other jurisdictions are also currently struggling, as they seek to find ways to achieve long-term sustainability in provision of 1075 their respective health and welfare services, but we have a particular interest in that which happens in the UK, as we have a number of very long-standing reciprocal agreements with them. As we work towards our solutions and they work towards theirs, there is the possibility that there might be, quite inadvertently, a growing disparity in one quarter or another between the two systems, such that the concept of reciprocity is questioned. This not an intentional act by 1080 either party, but rather a totally unintended consequence of a policy decision taken by one or the other in a period of enormous change for both jurisdictions. With that concern in mind, and in order to try to avoid such an outcome, I recently visited London and had meetings with senior members of both the coalition Government and opposition leaders, a chair of a select committee, an influential backbencher majoring in social 1085 policy and a CEO of a senior think-tank that advises all parties on health and social policy matters – in an effort to start building up an understanding and dialogue between us. I mention this visit here, because I wish to say something to Hon. Members about the reception I received, which I found particularly warm and something I had not anticipated. At one point, I queried why this might be so and it was explained to me that making the 1090 necessary major changes in a very large jurisdiction is extremely difficult, but that it was being noted that, where small jurisdictions and local authorities were up against an absolute requirement to balance their books in quite short periods of time – not quite the lot of larger jurisdictions – there was a growing body of evidence to show original and innovative thinking taking place as a consequence, and that this was being taken into account as they faced their 1095 changes in the UK. We are only 84,500 people with our own parliament. We should be able to personalise health and welfare in a way that others might wish to emulate, but would find incredibly difficult so to do. We could be a shining example of how things should be done in caring for the vulnerable, but we must first let go of a traditional mind-set born out of a thinking first formed in 1948 and 1100 which has ultimately led us to an unsustainable model. Sometimes to retain that which we truly cherish, we must first change it. With a 2020 Vision for the economy on the one hand and a vision for the personalised delivery of health and welfare on the other, it brings us towards long-term sustainability, to a balanced Budget and I trust that Hon. Members will continue to be supportive of this 1105 endeavour. We take another step in that direction today, in supporting the Treasury Minister in the presentation of his Budget. Thank you, Madam President.
1110 The President: The Hon. Member for Michael, Mr Cannan.
Mr Cannan: Madam President, this is the Government’s third Budget, and I think a defining one, in the sense that it clarifies and sets out the Government’s plans for the remainder of its term in office. 1115 It certainly sets out and provides clarification of this Government’s mantra, when it comes to dealing with the loss of revenue brought about the VAT-sharing agreement, and that mantra is clearly to seek the savings it requires, predominantly through efficiencies, through indirect taxation and through increased service delivery charges. ______849 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
In other words, Madam President, the taxpayer or rather the public are bearing the brunt of 1120 the losses to a much greater degree than I and others were led to believe. Gone, it would seem, is the apprehension that certain services were going to be delivered in a fundamentally different way. Gone, it would seem, is the threat of privatisation or corporatisation and gone is the notion that central Government’s expenditure was going to be addressed in a manner that was seen as both necessary and fair. 1125 When we started out on this short journey, almost precisely two and a half years ago, it was the Scope of Government Report and its sibling review that were heralded as the drivers of the new-look Government; that and the three much-heralded mantras of balancing the budget, growing the economy and protecting the vulnerable. However, Madam President, both the Scope and Vision of Government lacked real detail and 1130 at the time, I called on the Government to lay out its full-term agenda for dealing with the loss of revenue – a call that was rebutted as being impractical. But I do not believe, Madam President, that it was impractical. Instead, such an early and comprehensive plan would have made the transitions we are undertaking so much easier. In bringing forward such a plan, the Government would have set out a more detailed agenda, with headline figures that would have allowed the 1135 public and Tynwald into a fuller overview of the required changes and sacrifices that were needed to adapt to new financial circumstances. It would also perhaps have encouraged the backbenchers to take a more active role in joining and forcing the Government and Council of Ministers into taking the leadership actions that were necessary to instil the public confidence that reforms were being driven through fairly and 1140 in a balanced manner. The actions I am talking about, Madam President, were the actions to address the savings that Tynwald itself was going to make to set the example. The Chief Minister should have clearly set out an agenda that included reform of the Legislative Council, alongside the other impositions that have already been made, such as the removal of fuel allowances and pension increases. This is not, as was recently insinuated, a 1145 minor requirement in the overall scheme of things, but rather a required example that would have instilled confidence in the public. Instead, such items such as reforming the Legislative Council, removing fuel allowances, increasing pension contributions and reforming Members’ pay have been allowed to wallow or been left to backbenchers or had been drip-fed through in such a manner so as to have been 1150 meaningless to the public. And that is why, or partially why, I would suggest that public confidence in Tynwald is low and why I believe the way forward is going to be a difficult one. I say that because like the Budget before it, I would term this the ‘hidden budget’ – the kind of budget that lulls you into a false sense of security, a kind of ‘all’s well that ends well’ budget. 1155 I say that, because this is a finely balanced ship, an ongoing budgetary process that allows no margin for error, a budget that is probably keeping the cost and charge increases well away from prying eyes, and that will slowly drip-feed in the charges to the hard-pressed service users and ratepayers. And I also say this because this Budget, like others before it, masks the problems of the public 1160 sector workers’ pension schemes – schemes in which costs are rising so fast that they are in danger of causing fundamental problems to the delivery of front-line services. Is it right that these costs continue to grow, in these times of austerity, by as much as 35% per annum? I am reminded of Newton’s Law: to every action, there is an equal and opposite reaction. And sooner or later, Madam President, unless this cash-flow burn is brought under control, 1165 something will go bang. Is there any wonder that, against this back drop, there appears to be a rising tide of anti- Government sentiment, which is perhaps reflected in today's petition on the toilet tax – a petition brought about by, I suspect, a sense of unfairness and the frustrations of rising costs, low wage growth, increased charges, rent increase and a perceived feathering of one’s own 1170 nest. You have to understand that away from these figures, away from the Government ______850 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
canteen, away from the ivory tower of Government offices, life is tough and getting tougher for many people. I do not need the Pink Book, the Blue Book or the Treasury Minister’s little black book, to tell me what is really happening. Two or three weeks ago, Madam President, I was chatting to a village store keeper – the kind of country village store keeper who really can see 1175 what is happening at grassroots level – and he told me it was as bad as he has known it – and believe me, he has been around a long time. So I am concerned about the hidden surprises that may be in this Budget, and how the Departments intend to address cuts and increase revenues. I am very concerned about the impact of further charges and I am concerned about this dreaded toilet tax – not because of the 1180 £50 this year, but because of the £100 next year and the increases planned thereafter. To a certain extent, this particular tax is doomed now, particularly since the Chief Minister has himself declared it to be unfair. This is a classic example to me of where and how this Government is letting itself down, and where it clearly demonstrates a complete lack of political awareness. How on earth do you expect the public to have confidence in the political system 1185 when the system itself lacks confidence in itself? ‘It is unfair, but we will see how it goes and deal with it’ are not reassuring words, and quite frankly, demonstrate a lack of foresight and planning. Is there any wonder that 6,000 people have signed the petition? Is there any wonder that there was a public meeting? Is there any wonder that people regard this as a panic tax, with no consultation and no planning? 1190 Another recent innovation, if that is the right word, that has not been thought through is the procurement arrangements for schools, in which responsibility for the catering budget has been removed from headmasters and given instead to a centralised service under the Health Department. The problem is, as Ramsey Commissioners so eloquently pointed out in their letter to the Chief Minister and copied to Members of Tynwald, local suppliers – and by that I mean 1195 local town and village suppliers – are now potentially cut out of the loop. (A Member: Hear, hear.) It appears that it is the cheapest option or nothing, even if that means buying bread and milk from the UK. Well, I am sorry, but that is just daft! As a Manxman, I want to see local industry succeed; as a worker, I want to see jobs; as a resident, I want to see my local towns thriving; and as a parent, I want to know my children are 1200 eating locally grown, healthy foods. (Two Members: Hear, hear.) This particular procurement policy is wrong and must be changed back. (A Member: Hear, hear.) Talking about policies that are wrong, it was interesting to hear the Treasury Minister on the radio recently bemoaning the fact that no-one else had any better ideas to grow the economy than investing in Pinewood Studios. (Interjections) Well, here is my challenge to you, Treasury 1205 Minister: give me £25 million and I will grow and develop the sports tourism industry over the next 20 years, investing up to £1 million per annum in the way of grants and support to grow and develop sporting tournaments across the four major sports of rugby, hockey, cricket athletics and the creation of a major cycling event. These events will aim to provide an additional 2,000 bed nights per year, provide business opportunities for travel agents, the Steam 1210 Packet, our airlines, our pubs and clubs, our hotels, and provide our sporting-mad Island with increased and broader sporting competition. This £1 million investment per year will return direct expenditure in the region of £½ million to £¾ million per annum, which using the multiplier effect should see GDP increase by around £1.8 million to £2 million per annum. 1215 Putting aside the monetary figures, the social return on this investment will be excellent – far greater than the film industry and is likely to help increase general leisure tourism. There, Treasury Minster: an alternative for you. (Mrs Cannell: Well said.) Madam President, returning more specifically to the subject matter, perhaps my view of the hidden figures in this Budget is somewhat scarred by the transfer last year of £6 million to the 1220 Land and Property Acquisition Reserve on the basis that there were, in the Treasury Minister’s words, a number of locations under discussion at present. What he forgot to conveniently add were the words, ‘including the Middlemarch site which we might simply use as security as part ______851 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
of a £5 million loan deal to bail out the Sefton Group.’ Not a very satisfactory move, but more of that later in the Tynwald sitting. I trust there will be no similar surprises this year. 1225 I turn now to the Capital Fund and related expenditure and note the £72 million outlay this year. I also note the structure of the funding, with about half the required amounts coming from Department’s budgets. I still remain very concerned about how our capital commitments intend to be funded beyond 2016 without further detriment to departmental budgets. Looking at the use of reserves, I can see that overall our reserves have declined by about 1230 £144 million in the period 2011 to 2015, which averages out at around £36 million per year. The problem that I see is that taking into account the capital spending requirements, we are still likely to have a £35 million shortfall for the years beyond 2016 – that is without some real and fundamental changes to the departmental budgets, which will be a fundamental detriment to the public. 1235 Not only that, but I can see future budgets where the combined total for pay, pensions and capital expenditure – three items alone – account for over £400 million of expenditure, and I ask is this really sustainable? Hence why I also ask myself whether we have really gone about the rebalancing in the right way, and why probably we should have cut faster, harder and deeper at the beginning of the 1240 two-year term on the basis that we had the capacity in the reserves to deal with the fallout, and also on the basis that had we gone too far, we could have begun a rebuilding process. The Chief Minister and Treasury Minister have called it slash and burn, but that is the language beloved of the socialist press when fighting government cuts. Surely it would have been better to have gone for a more radical downsizing and privatisation programme, even if it 1245 did cause substantial pain in the short term. It is better to then have the opportunity to rebuild if necessary, rather than endure the endless drip, dip, drip of cuts, charges and warnings of pain that are slowly driving most of us mad. I look across the water to Ireland for inspiration here: a country that had to cut hard and fast, create significant unemployment, de-value house prices. But look now: top-class technology 1250 businesses, unemployment falling, confidence returning, and unfortunately a pretty decent rugby side. I am not saying that we are anything like Ireland, but we could be if we do not get this right. I am afraid that, to a certain extent, the next Government will be left to pick up some of the pieces and make some of the hard decisions that seem to have escaped the current 1255 Government. And I say that with disappointment – a disappointment reflected in the net result of the Scope of Government Review, which I have to say seems to be the same story, different day. However, it is not all doom and gloom. There have been some positive moves to keep costs down and to deliver services more efficiently, and the public and indeed MHKs do not always 1260 see or recognise the hard work that has gone into achieving efficiency savings or indeed at times the complexity of undertaking such changes. As possibly my final speech as Chairman of the Civil Service Commission and Whitley Council, at least for the time being, I want to pay tribute to the men and women who make up our public services and whose efforts and hard work are often overlooked or maligned by a public at times 1265 too willing to criticise. (A Member: Hear, hear.) There are and have been many challenges and uncertainties placed in front of these workers, and over the last two and a half years, they have faced them with determination and willingness. Of course, it is not always plain sailing, but I do want to recognise that without their dedication and professionalism, the Isle of Man would be a poorer place. 1270 Of course, this has been reflected in an era in which the average pay rise of civil servants and Whitley Council workers has been checked at just over 1% per annum, a result which has played a significant part in allowing Government to make the progress it has. Public servants who joined the Government Unified Pension Scheme have also undergone changes to their pension and associated rights, increasing payments and reducing redundancy compensation terms. I know ______852 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
1275 that these still remain too generous, but they are a considerable improvement on the previous arrangements. So the hopes that I harboured for a new smaller public sector, reinvigorated with services delivered through new corporatised and privatised bodies, seems to have disappeared, and we therefore rely on the structural changes of the ministerial reshuffle to manage the efficiency 1280 processes through to 2016. I make no secret of the fact that I wanted to see a number of Government services privatised or fundamentally changed to improve productivity and efficiency. We are too stuck in the old ways and it is holding us back. I do not doubt, of course, that some Government support would doubtless be required for these services, but better controlled subsidies than uncontrolled budgeting. 1285 But I return to the hidden budget, the costs that are likely to be passed through to the ratepayer and service users, or even the reduction of available critical services. We have challenges in front of us, we know that. We keep being told that, but sooner or later, the public is going to run out of confidence by, as I say, this drip, drip, drip effect of cuts and charges. Part of the issue, here, Madam President, I believe, is that we here in Tynwald have stopped 1290 leading, preferring instead to manage – a culture that has been ingrained, I suspect, during a quarter of a century of plenty. Right now, Madam President, we need leadership, not management. We need inspiration and motivation, not planning and organising. That is what we have highly paid civil servants for, and I wonder if, to a certain extent, part of the problems that this Government is having is because the Council of Ministers is too much an extension of the 1295 Civil Service. So in general terms, a fairly neutral, perhaps disappointing mid-term Budget, although I welcome the support for employment, and I welcome the continuation of the Tax Strategy. But I do not believe that Government will have solved the deep-rooted problems it has needed to address in the public sector. Indeed, it would appear to me that it has found a lot of excuses for 1300 not addressing these problems. I end with a word of warning: there is an increasing disillusionment with Government, a disconnect that must be concerning to the Council of Ministers and indeed to Tynwald. I am of the opinion that it was probably a mistake to allow the Transforming Government project to have been led by the Treasury Minister, and that it would have been better to have allowed 1305 Accenture or Capita or someone similar to have guided and headed up the change process, because they would have had the experience to do so. Such a body would also have been free from self-serving interests, and would have helped the Council of Ministers perhaps reach some more balanced decisions. Perhaps, though, in the end it will be public pressure that forces the Government to confront 1310 its own failings, and maybe right now that pressure is pointing the way forward. One thing for certain: if the Government cannot carry the majority of the public with it, it is certain to fail. So more listening, more thought, clearer communication would all help this Government succeed in meeting its difficult objectives over the next year.
1315 The President: The Hon. Member for Rushen, Mr Skelly.
Mr Skelly: Gura mie eu, Eaghtyrane. May I first all congratulate the Treasury Minister, as he appears to have maintained restraint and exercised tight discipline on our public finances – I think very, very much needed. Well done 1320 to him and his entire team. So we are rebalancing the Budget. It is on course. The economy is still growing. So we are hitting two of the three key priorities. How are doing with regard to protecting the vulnerable? I thought it was quite interesting, looking at the Budget booklet, where it talks about Budget Strategy and Performance:
‘… key targets and deliverables underlining the Budget decisions […]
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To ensure fairness in the raising of taxation and charges, and to understand the aggregate impact of these on different groups.’
1325 As already mentioned, the sewerage charge – I am sure we will be hearing more about that. But I had two other areas of concern, which appear to have actually been aired by previous speakers: the shrinking Capital Fund and the public sector pensions. We aired that last month and I just want to highlight once more the importance of keeping that to task and to deliver a fair and equitable solution. We simply cannot afford to lose £3 million a month – not 1330 sustainable. The Capital Fund: another worrying factor. We know it is diminishing, and we urgently need an action plan to replenish that. My suggestion to the Treasury Minister is to consider engaging about the public – the local Manx public. Create an impact investment bond, similar to National Savings Bonds – Manx national savings bonds, to help the Manx economy. It would help 1335 maintain capital spend. It would benefit the local economy and it would give public ownership and deposits, right here in the Isle of Man, where they are decreasing in high street banks. And where else would you house this? Where else would you transact this? You local post office. It would certainly be welcome business for the Post Office. This Budget shows we are on track. This is good news, and I have to say, it has to be taken in 1340 context. We have lost £200 million – a remarkable achievement that we are managing to rebalance this Budget. Of course there is pain! We have to accept that there is pain. But what we have to understand – and this is the message that is clearly not getting through to the public at large – that we have a fiscal challenge, not an economic one. We are still growing the economy, and that message is positive. That positivity instils confidence and that 1345 confidence is vitally important to not just the public, but particularly the business community, because the business community translate that into inward investment and jobs. Now, I notice that benefits are slightly higher, but it is lower than the previous year. That is an improvement and shows that we are going in the right direction. Working in Economic Development, I can tell you that we have very much joined-up approach, working with Social 1350 Care, trying to tackle the age-old issue of long-term unemployed. It is an obvious win-win. If we can get people into employment, off the benefits system, it benefits everyone. I have to tell you, we have had some really good successes of recent. I just attended a presentation a couple weeks ago, where 20 people, mostly young people, went through a training programme in the hospitality trade, and nearly half of them went immediately into 1355 employment. A fantastic win, it really is, because there are in employment – it is plain and simple – they start paying taxes. And for me, the future prosperity of the Isle of Man is all about jobs. We have this Budget: it talks about the reduction of jobs in the public sector – another 150 have gone, 500 since 2010. Big numbers, but that means we need to create jobs elsewhere, 1360 because more jobs means more taxes. It is simple really, and from a Government perspective, we should be playing the supporting role, not the dependent one. So what do we do? We have to create the environment. We have to create the environment for business and industry to flourish, because when you do, you create the environment to invest, and always thinking about creating jobs. I would also point out, job security is equally 1365 important. Support the local economy. As Chairman of Planning, I will tell you, we are doing our part too. Quite a number of former Chairmen of Planning in this Court – we know it is a tough job, a really tough balance. More than ever before, we have to recognise the economic benefit, but we have to balance that with the impact on the environment and the communities. But I will tell you, 1370 there is only a small percentage that is not approved these days. The statistics speak for themselves and I will tell you, those that are not approved are usually for very, very good reason. The pre-planning process is working very well and very effectively.
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So one of the things we have focused on in that particular Division, and I know Mr Quayle previously to me also endorses this, and that is the Customer First focus. I remember this from 1375 my days in DCCL. There was an initiative, ‘Customer First’. Whatever happened to that? We need to think about rolling this out across the whole of Government, that we really need to change that culture, that the customer and client is first. And in our case, this is the taxpayer. We do it in all that we do across all the different parts of Government. Vitally important that we bring forward the Strategic Plan for Housing. Why? Because that 1380 will give certainty to our construction trade, and encourage investment and what will that mean? More taxation – more benefit in the local economy. The Budget strategy also highlights that we must facilitate sustainable economic development and diversification. For me, diversification is the key word there. We have been ten years, trying to diversify our economy and I will tell you – and we do not applaud the past 1385 administration very often – but I would applaud those who were involved that, because that is what has stood us in good stead. That is why our economy is still growing 3% to 4%. We are very, very good at looking inward – the Manx Crab syndrome – but let's look outward, look at what our competitors are saying. Would they want 3% to 4% economic growth? Of course they do! Are they trying to mimic what we are doing – of course they are going to do that. They look 1390 at the Isle of Man and see a success story from an economic point of view. And once more, remember, we have got a fiscal problem, not an economic problem. So we should be proud of our performance, but of course we should never, ever be complacent. We are always looking for new ideas, ‘where is the next big thing?’ and we do not know where that is. All we can do is create the environment, and let the private sector bring 1395 forward those opportunities. So what do we need? We need a local focus, but with a global awareness – very important. Back on jobs, vocational: I believe vocational jobs are a key area of growth. Mr Quayle touched on manufacturing – a huge success, been around for over 60 years on this Island, very stable, massive growth opportunity and I am delighted. We have not doubled; we are actually 1400 going to triple the apprentices going through this scheme. Eighty new jobs each year being created. What is the other industry that has got significant growth potential? ICT – the one that underpins e-gaming. Very important that we try and realise this ICT University. We know there is a serious skill shortage. We know this is a very well paid industry. And if we can create the right 1405 environment there for this university to become real, it will bring inward investment and benefit to our local economy. And the key point also to bear in mind with regard to manufacturing and ICT, these are goods and services that are exported. So if you had jobs here, taxes paid here, and you export goods and services, that gives us a VAT return. And I know Treasury is delighted to have this type of 1410 business. It has to be prime for us. But we should also recognise that we do have a two-speed economy. We know there are struggling industries. We talked about it year-on-year: the retail industry, the construction industry, both having difficult times. But one year on, there are very healthy signs of green shoots emerging. The retail industry reported the best Christmas run-up that they had in years, 1415 and that is a fantastic achievement, considering the difficulty they have with regard to the nationals underselling and the internet. I think that is fantastic news, it really is. We have now delivered a strategy, long overdue for the retail industry, but it is fit for purpose, it is fit for our retail industry on the Isle of Man. And what does that do? One of the key principles of what that strategy does, it supports in 1420 town retailing. That gives certainty once more for investment. We want to create vibrant town centres. We want communities to work together. And I will tell you, that is the key to success in your towns, your villages around this Island: you get your communities working together. The national politicians, get the local politicians, get the traders and the communities working together, and you can build vibrant centres. ______855 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
1425 I know from Rushen’s perspective, Port Erin and Port St Mary, we have a very vibrant one. And I very much support regeneration, but we have not actually seen much funding come down into Port Erin and Port St Mary, but do you know what? We have vibrant communities there. We have a vibrant retail industry. (Mr Watterson: Hear, hear.) I just hope, once all the money is spent in Douglas and Ramsey, there will be some left for us! 1430 However, what I am trying to say is that money is not the critical point; community is the more important there. Construction is still in transition. We know what a big economic driver that is for any economy, and our economy is absolutely no different whatsoever. But there are again green shoots. I know again, in our own consistency, we have a major 1435 development at Ballakilley: 156 homes, 39 affordable homes, that will be of great benefit and there are many others in the pipeline. We hope to see the private sector pick up where the public sector has left off. As a Government we can no longer afford these massive capital projects. That is why we need the private sector to pick up. And we must not forget, and I know critically, there is the moral issue of the high-net-worths. 1440 They draw a huge benefit to our local economy and in particular, the construction trade, and they employ hundreds of people as well and it just needs to be borne in mind, and consider the context of that. Banking and finance sector – I know Mr Crowe has the political responsibility in this area. We must not forget this backbone of the Manx economy for many, many years. It has certainly had 1445 serious challenges – mostly external factors, nothing to do with the Isle of Man – and they are going through a transition with regard to consolidation, they have got FATCA, they have got the Vickers Report round the corner, all uncertainty, and we could see further contractions. But we must not forget this industry, because it is a very, very solid foundation and, very importantly, they pay tax. So unlike many other industries which do not, they do actually pay 1450 tax, and we must be mindful of the value that they bring to the Isle of Man. Small to medium-sized businesses: they are the real true grassroots of our economy in particular. We must consider more initiatives to widen the support there – encourage organic growth. There are many in the hospitality and tourism industries – might be relatively low GDP contributors, but they are still vitally important, not just to the economy but the quality of life. 1455 Our quality of life is vitally important to win-win investors and we should not discount that. We do need quality hospitality, that is vital. But I will tell you, there are plenty of encouraging signs of investment round the corner. From my point of view, from the tourism perspective, we see bed space grow by 5%. We have actually turned it around. All this decline, now there is the interest. We have been target marketing, 1460 focusing on niche markets and we do have some fantastic ones moving forward. Mr Cannan talks about sport tourism: a very good idea. Obviously, we had the TT – we have seen resurgence and growth opportunity there. We just launched the Festival of Motorcycling last year. That has been very well received, working together with our partners. We do see some real good opportunities. 1465 From a TT perspective, I personally would like to see a TT attraction – something that is year- round that would generate revenue beyond the actual events of TT and the Festival of Motorcycling. We are exploring a World Series, to maximise the brand revenue return. TV rights are huge potentially. And we should not forget the opportunity to promote other industries like clean tech, if we do go global. 1470 But going back to sport tourism: cycling tourism is one area that I want to see growth. Can we capitalise on Cavendish and Kennaugh – world-beaters in the cycling arena? Yes, I think we can and I hope we provide new benefits for the visitor economy. When I talk about opportunities, there are some huge ones with regard to the mid- to long- term in energy. Any modern economy is reliant upon energy, and we must try and drive energy 1475 at affordable pricing.
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Of course we have got the merger of the MEA and WASA – that shows light at the end of the tunnel, as Mr Quayle pointed out. But the offshore options for energy are significant. Natural resources will generate revenue, help our future budget challenges and drive affordability, and eventually – and this is the important one – give us energy security. I am glad, I am delighted, 1480 that we have begun this journey toward sustainability. Building on a brighter economic future and sustainable budget, I think we should really try and focus on the emerging industries. There are huge opportunities there, and we must think outside the box too. Some of these new… One such emerging industry is the creative industries. We all know the Island of Culture is upon us and I hope you are enjoying that celebration. (Mr 1485 Corkish: Hear, hear.) It is a fantastic opportunity to celebrate something that is undervalued on this Island – it goes back to the quality of life issue. But the legacy of the Island of Culture is to promote the wider creative industries. What are the wider creative industries? They are art, culture, heritage, film, technology – innovation industries, you could call them. I think there are great opportunities for our young 1490 people in this area. Only this last weekend, a young Manx girl launched her professional singing career. We wish her well on her travels, possibly inspired by the likes of Davy Knowles, or even Sam Barks. I hope you have all seen Sam Barks in our collaborative film with Pinewood – a leading star role, Hollywood star, one of our very own. 1495 But this partnership with Pinewood, still contentious to some, is still developing, and there are such strong positive signs of that. Look at the stock value: that has increased. We have had five productions to date – quality productions, spending several million in our local economy. One of those films employed over half of local talent. The first major film is Belle, and it is going to hit our screens in the next few months – 1500 critically acclaimed, and I am sure we all hope for a huge box office success. (Interjection) But what does the pipeline say? The pipeline is strong and positive. We are going to have an announcement very shortly about a new production coming to the Island. But for me, I have always been pushing Manx themed films and productions. Why? Country branding. Country branding is extremely powerful. It is difficult to put a tangible value on it, to 1505 be quite honest, but I am sure you have all seen Closer to the Edge. One of the reasons we got a success to the TT and Motorsport is because of that film. It hit terrestrial TV just before Christmas, hitting a whole new audience – fantastic success. So do we want a follow-up to that? Yes we do. Do we want another film? Maybe not. A TV series, a fly-on-the-wall documentary – something that would give us a longer benefit, a longer 1510 payback. So that is one development project we are working on. Another one is a cultural film and there is none better than Hop Tu Naa – the home of Halloween. It is a popular film genre that will be attractive around the world and what will we be doing? We will be selling that film and promoting the Isle of Man – huge benefit Another one: Mutiny on the Bounty. We have all seen the stars of yesteryear playing those 1515 magnificent roles of Bligh and Christian. But what about the story of Peter Heywood, the young Manx boy caught between these conflicting characters? A fantastic series opportunity there. We are developing that, and if any of those come off, I can guarantee they will be of benefit to this economy here on the Isle of Man. And if they do come off, they will come off because of our partnership. 1520 I ask the question: what next? Do we have the appetite for risk? I can see why we would not, but we must have that appetite, and we must try new ventures. From DED’s perspective, our remit is to grow industry and help grow the economy, because if we do not grow the economy, we cannot rebalance the budget, we cannot protect the vulnerable, and that is what we have got to focus on. 1525 It was touched on with regard to an invest fund. Why not have a sovereign investment fund? We have touched on it before. Strategic investments and partnership, I think will play a very critical part in our future prosperity too. We have just heard this morning, with regard to ______857 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
Pinewood expanding and the Welsh Government following the Manx Government, in investing in Pinewood. Regional investment, I think has a strong potential for the Isle of Man. For many, 1530 many years I spent… I do not know how much in London, trying to get new business for the Isle of Man, whereas we need to think closer to home. We need to think of the Northwest, for example. We have the aerospace cluster, whereas Manx companies have partner companies in the Northwest, going after global contracts – win-win. We have got the International Festival of business in Liverpool. We are going to have a 1535 presence there, because we can build partnerships. What about Scotland? We are about to re-- open the route to Scotland. Can we open trade links? Big changes in Scotland. These are people we have an awful lot in common with, and I think we can develop strategic partnerships. It is not being competitive. It is about working together, thinking globally – local awareness, but thinking globally from a business perspective. 1540 So with that, I will end on the point that I say, it is all about jobs. I believe our future prosperity depends on those jobs, because if you have got jobs – real jobs – you are paying real taxes. Gura mie eu.
1545 The President: I think, Hon. Members, this is probably a good time at which to adjourn. The adjournment will be until 2.30 p.m. and the first to speak when we reconvene will be Mr Speaker.
The Court adjourned at 12.57 p.m. and resumed its sitting at 2.30 p.m.
Announcement of Royal Assent – Income Tax (Amendment) Act 2014
1550 The President: Please be seated, Hon. Members. Before we continue the debate, I can announce that Royal Assent has been given to the Income Tax (Amendment) Act 2014.
2. Budget for the Year 2014-15 – ‘Working through our difficulties’ – Debate continued
The President: Now, continuing, I call on the Hon. Member, Mr Speaker.
1555 The Speaker: Thank you, Madam President. I would like to strike an upbeat note in my speech – at least for the start – by congratulating the Treasury Minister on his presentation. I do not think we should make the mistake of letting his characteristically matter-of-fact or low-key style, with no surplus or excess rhetorical frill, disguise the fact that the message delivered was actually one of the Isle of Man being in an 1560 extremely strong position; stronger than perhaps many of us believed and certainly by comparison with international competitors, with indicators that they would surely envy in terms of unemployment, growth rate and so on. He did record for us, I think, what was an impressive telling of how targets have been met, rebalancing of the books is on course and, by any measure, we have done – Government has 1565 done – a good job of reducing its overheads, cutting its costs, streamlining its administration
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over the past two to three years. The evidence is there and, unquestionably, the Isle of Man is in a very good place internationally – clearly now amongst the foremost international finance sectors. It is not a question of belief or what we hope will be the case but a matter of judgement by our peers in the field of international finance. 1570 So I think congratulations are due to the Treasury team for bringing this about over recent years, meeting the challenges of FATCA, keeping nimble and one step ahead at all times and positioning ourselves in such a skilful way against, of course, the continuing low tax strategy of zero corporation tax in order to keep us competitive as a key component of this achievement. I think it can be said and ought to be said that really we do not know how well off we are in that 1575 context – as a country, nationally – and I think we ought to take great pride in what has been achieved. So the message that really should go out from this Budget – the overall message – should be one of optimism to the outside world on the part of the Isle of Man. I think we do have a lot to be optimistic about. 1580 We are, of course, in a political environment and looking at the Tax Strategy, that has been adopted for very good reasons of competitiveness, there does appear, however, to be a disconnect in the eyes of the public between our strong international position and in the global economy, and the local economy – what is actually going on in the ground. We are not unique in this but, certainly, I think the day-to-day experience of people who have faced – as the Minister 1585 has recorded – flat incomes; no real increase in wages for five years; who are faced with high rents – certainly in the private sector; who are faced with hospital waiting lists; who are faced perhaps with the threatened closure of their local post office, for various reasons; the pressure on family budgets – what they perceive might be somewhat different. In my view, I have always felt, and continue to feel, that people accept that if they want health services, schools and every 1590 other sort of public service to a high standard they need to be paid for and will happily pay for it, provided they see that the money is not being wasted and that they see what they are getting in return, by way of good value. Government itself is committed to maintain these services that we have enjoyed – frontline services – but Government is also committed to maintain a low personal and corporate tax 1595 regime for competitive reasons. Therefore, where is the continuing income to come from to support the local demand? Well we do have of course, running strongly in our favour, our continuing economic growth – 3% or 4% in real terms, higher in bold figures – and the Vision2020 strategy, which has elements of which were alluded to very eloquently by Mr Skelly… I think are running strongly in our favour and that stands us in good stead. 1600 Where is the income to come from? Economic growth and diversity to generate the economic activity, to generate the taxes that will pay for these services. So that is good but what is also evidence is – and has been recently publicised, of course – is the notion of flat rate charges being introduced; the ‘user pays principle’ being more and more talked about; the prospect of other indirect charges on the public is likely to feature more and more in the times 1605 ahead. We know also that, as a policy, Government is looking closely at devolving the administration of centrally-run public services to a local level, to a local government structure and method of finance. It has set policies forward that have been agreed – the case of housing, for example and currently being talked about, the case of waste management – and it is part of the strategy of 1610 restructuring – I think there is no secret – that Government would like to devolve to a more local level what is seen as local services. That is all good and fine. If national taxation is not to be disturbed for reasons of competitiveness, then it is to local taxation and other methods of income that Government will be inviting Tynwald to look; and any system of flat rate charges runs the risk – as the Hon. Member for Michael has said – of 1615 being a drip, drip effect without any clear context to it happening. I think there is a risk of this and it is a pity because flat rate charges – if a case is made for them – can be acceptable to the public – can be. ______859 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
Where the term ‘user pays principle’ is employed, of course, people want to know that they are actually using the service and being invited to pay for… and I do not want to pre-empt any 1620 debate over sewerage but that, to me, is a classic example. Then we have our system of rates as a local system of taxation. A property tax based – as we all accept – on a hopelessly outdated notional rental valuation system, with all the unfairness of a property tax, in that there is no relationship between the services actually consumed and the ability of the user to pay. It is a notional concept: the bigger the house, the higher the tax that is 1625 applied; and that is what pays for the services, so called, that are consumed. That is certainly not the ‘user pays principle’ and my concern is that, even with the revaluation of property, which has been referred to – not today but was referred to earlier – and announced to take place before the end of this parliamentary term, I do not think that such a revaluation will be enough to deliver a system of local taxation that is actually fit for purpose. 1630 There will still be these built-in unfairnesses and inequalities rooted in the concept. It is a property tax and not related to the services actually consumed. So I do put down a marker that it is long overdue that we were looking at alternative ways of generating local taxation income, if that is the way we are heading – and I cannot see that we can avoid that. If this strategy is not to disturb our headline rates of tax, we are going to be 1635 looking at fees and charges. Should we not, therefore, be looking instead of property tax, with all its flaws – something that the UK moved away from, first with the ill-conceived Poll Tax, later refined to the Community Charge – should we not be looking at a form of Community Charge or a local income tax or something of the ilk? There was no mention of any of that in the Budget this morning and I may be ruled from 1640 straying from the Budget but there ought to have been some of this flagged up because this is going to be the challenge, I think, for Government as it addresses the challenge; not only the ones we know about – the big public sector pensions liability and all the other challenges, which we are very well-placed nationally to meet – but I am talking about the local challenges that people see day in day out – small in themselves but will really have the potential to affect 1645 people's lives – fixed charges and their rates bill. We need to be looking at that and I am just a bit concerned – in winding up, Madam President – that the political skill and energy that we have applied to the international situation and placed the Isle of Man in such a positive position today we are not applying quite the same skill and political thought to how we address the problems of the local economy, managing 1650 expectations of services, first of all, but those legitimate services – how they are to be paid for against this international tax strategy. So if we are going to talk about fixed charges – whatever sort of taxes you want – and the rating system, let us, please, be given some indication that this is being actively thought about at the moment.
1655 Two Members: Hear, hear.
The President: The Hon. Member for Douglas South, Mrs Beecroft.
Mrs Beecroft: Thank you, Madam President. 1660 I think, like the Speaker, I am going to start on a positive note as well, which may surprise everybody and nobody more so than the Treasury Minister – although he is aware that he is going to be getting praise twice in one day because I did say it on Manx Radio over the lunchtime programme. I do sincerely congratulate him on setting aside the £2.1 million for the quality review 1665 recommendations that will come out of the various Hospital reviews. I think this is finally an acknowledgement that things have to improve and that the Treasury Minister is aware of this and has provided the funds to start the process. I do sincerely thank him for it. I am sorry that it has been such a struggle to get to this position but, nonetheless, I sincerely welcome it and thank him. ______860 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
1670 Going back to normal, Madam President, if I may? (Laughter and interjection) No, I am not going to go over the public sector pension funds. I think other people have talked very eloquently about them and I do not wish to be repetitive. It is more questions I have about the Budget and comments on it, if I may? I think the Capital Fund is something that does concern me. I think, from memory, it is going 1675 to be down to £1 million by 2016. (A Member: Correct.) I did ask the Treasury Minister about it last week and he promised to provide more detail. I know he has referred to it in his opening speech but I would like some more details and some more clarity on that, please, Treasury Minister. Apart from those bigger issues, I think that in general terms this Budget is best described as 1680 conservative but with some more of the same pain that this has been delivered over the last few years. I think – again, other Members have referred to this – it is the drip, drip. It is painful; it is sore. Instead of a big hit and saying, ‘This is what we are going to do to get everything back on track,’ and letting everybody know at the beginning and then sticking to that plan, it has been dripped out and it is not comfortable for people. People are not liking this; they do not know 1685 where they stand; they are nervous about the future because of the drip, drip effect of it. Aside from a buoyant e-gaming sector, which I think really carries on growing now without Government interference, I cannot see any new initiatives – any real new initiatives – in this Budget to promote and improve domestic growth. I know that further money has been set aside for the Department of Economic Development but I have to agree with Mr Henderson here: we 1690 cannot just keep giving the money without something to measure the success or failure of that money from. So I would like to see some parameters, some way of measuring it. I know the Treasury Minister said in his speech this morning that:
‘This Government brings solutions whilst some only bring criticisms. What are their solutions?’
I hope the Treasury Minister was not referring to Liberal Vannin. Though, in my heart, I am pretty sure he was. 1695 Mr Quirk: I am sure he was.
Mrs Beecroft: So I would like to remind the Treasury Minister that he also referred to the 1,100 new jobs that were created over a two-year period by the National Insurance Holiday. I 1700 vividly remember, shortly after being elected – my colleague, Mr Karran, and I talked about this and I honestly cannot remember which one of us raised it, but somebody did – we were told it had not worked in the UK so we are not doing it. Lo and behold, in the next Budget process they did it! And now they are saying, ‘Look at what we have done and we do not actually contribute anything.’ Well, I say that is nonsense, we do. 1705 I think it was actually by happy chance at lunchtime, I went up to the Barrool Suite for one of the free lunches that we get – which was absolutely excellent – and I happened to bump into one of my constituents who I had had a really long conversation with when I was canvassing. He was telling me all about the renewables, which is what we have been initially talking about, and the progress and all the rest of it that was being made in that area, and I was saying, ‘This is 1710 wonderful news’. I do not think backbenchers are actually aware of the good news story that is behind all this. We have been trickled a little bit but we do not know the details. And he said, ‘Do you know, it was all down to you and that conversation that we had.’ And I said, ‘Would you mind telling the Treasury Minister that because he thinks I never do anything constructive,’ and he did promise me that he would. (Interjections) So there we go. 1715 Moving on, the Medical Indemnity Fund is showing little movement of note and the estimated income of £29,000 on a capital of £6,700,000 seems rather low. I would also ask the Minister: doesn’t he think it is prudent to increase this fund? Because on page 9 it states that:
‘… the total value of all outstanding claims is estimated to be around £10.1 million…’ ______861 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
and it does state that:
‘Treasury may need to provide additional funds for this reserve in future Budgets.’ 1720 I just wonder why it is not being addressed now when it is actually known about. Regardless of the recent press releases regarding Pinewood, I would not disappoint the Treasury Minister by not mentioning the Media Development Fund. I do have some queries but I do not want to detract from this Budget so I will follow it up separately. I was a little bit 1725 confused though – and I am sure the Treasury Minister will clarify it – because I am sure I recall just recently asking about the films that had been made and I was told there were four films, I think, last week, whereas Mr Skelly referred to five films since the funds were under the management of Pinewood Film Advisers. With regard to taxation and given the dire financial position, I would ask the Minister to 1730 rethink his stance on tax cappers. He has made the point of stating that the Budget has to be fair and when there are some of the tax cappers who are not actually assisting the economy but are benefiting from the tax cap... I am not saying that we should do away with the tax cap but I am saying that if they are not contributing in any other way, by some sort of fixed parameters – whether it is numbers employed or investment in other local economy – I am sure the Treasury 1735 Minister could come up with some sort of strategy that they would have to sign up to and prove that they were complying with to get the benefit of the tax cap. Then I would say, yes, they are contributing to our economy. But there must be some of them who are contributing nothing to the economy. Why should they be the beneficiary of the tax cap and, in effect, pay a very low percentage in income tax of their earnings? 1740 If I stay with taxation, I note there has been no reference to benefits in kind for the employed person and I would just like a little bit more clarification as to whether the Minister is intending on bringing any changes forward during this parliament. Again, what is the rationale for penalising the over-65s, by reducing the personal allowance from £2,020 down to £1,000? It just seems to me that we are penalising the elderly in our 1745 population and they are the ones who are actually bearing the brunt of a lot of these increases. They are the ones who are less mobile. They stay in the house more. They have to use more fuel to stay warm. We do not have a definition of fuel poverty yet. All these things together… I just think it is wrong that the elderly should be, again, bearing more of the brunt of this. Staying with the elderly, Madam President, I just cannot get my… There is all this talk about 1750 this exploding elderly population and the drain on the health services and the drain on the pensions and everything else, but our own Economic Affairs Division is only forecasting an additional 500 retired people by 2030-something. I do not think that is an explosion (Interjection) and I would just like some sort of justification for these repeated statements about this massively expanding elderly population because, quite frankly, their own evidence does not 1755 back these statements up. If I can just go on to Treasury income, the income from VAT is estimated to increase by over £7 million and I would just like to ask: is this a one-off receipt in respect of the usual adjustments or is it something else? Are we on a growth period in our VAT? If I could just touch on personnel budgets, I am somewhat concerned to see that some 160 1760 staff are being lost in primary and secondary education. This is particularly concerning, given that we are given a gross figure in young children going to school and I would just like some sort of confirmation from the Minister that these job losses are not actually teaching positions. Maybe they are some sort of losses because of centralising of some of the admin and catering services or whatever, but I would just like some more detail on that because if any of 1765 these posts that are being lost are teaching positions I would like some sort of clarification from the Minister of the anticipated effect on classroom sizes, particularly given that we are expecting more children in the classrooms.
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I also note that under the Chief Operating Office in Health and Social Care, there were 48.61 full-time equivalent staff at 30th September 2013, 62.80 staff estimated at 31st March 2014 and 1770 8.67 estimated for 31st March 2015. I would just like a bit more clarity on that really as to why the sudden differences. Similarly with Treasury and the Corporate Strategy Division, actual full-time equivalents at 31st September were 24.6, estimated numbers at 31st March 2014 are the same but the estimate at March 2015 is for 41.64. Again, some sort of explanation... Maybe it is staff moving 1775 around or whatever, I do not know. It is just a bit difficult to understand. Staying with Treasury but moving on to actual income, could the Minister clarify what is meant by third-party contributions on page 49? Also could he explain the fluctuation of £73,966 in 2012-13, £4,336,900 for 2013-15 and £176,000 for the 2014-15 year? Again, they are just quite huge variants. 1780 With regard to the income from VAT, we are continually told that we have lost a third of our income – some £200 million – but our VAT income in 2007-08 was £234.4 million and the estimate for 2014-15 is £338.9 million. I would just be grateful for some clarity on the VAT figures because they do not really seem to be adding up to what we are being told. On page 4 of the Budget brochure, the Treasury Minister has set out his Budget Strategy and 1785 Performance and the penultimate bullet point starts:
‘To ensure fairness in the raising of taxation and charges’.
Given that ensuring fairness is one of the Minister's key targets, could he explain how the sewerage charge complies with this aim, as the Chairman of the Water and Sewerage Authority and, indeed, the Chief Minister have both stated that it is unfair? Can he also, again, clarify how giving the wealthiest in our society a cap on the tax liability 1790 without any criteria being set is fair? I would also like to add, with regard to what is being referred to now as the toilet tax, that this was something that had to come about very quickly and there has not been time to put something fairer in place... I actually have my doubts about that, Madam President, because when I was a Commissioner and I went to the Royal Show and we had the municipal meeting 1795 shortly after that, it was actually the then Chairman of the Municipal Association who brought to everybody's attention – and I cannot remember if it was a brochure or a slide that the Water and Sewerage Authority were displaying in their tent at the Royal Show, and this was long before I was elected – at the bottom of that was a sewerage charge. So I do not believe that this is something that has suddenly been decided on. I think it has 1800 been about for discussion for quite some time and I do think that they have had time to put something fairer in place. They have certainly had since that point to actually do a rate revaluation, if that is what it is eventually going to be based on. So I just do not accept that we will do it unfairly now and we will correct it later. They had time to do it fairly in the first place. I am aware that setting departmental budgets has become far more stringent than in the 1805 past and, again, I congratulate the Treasury for that, but I do not think it has gone far enough in the setting of national priorities. One example of this can be seen on page 67 under the penultimate heading Public Transport Vehicle Replacement Programme. Last year, more than £2¾ million was approved without any need for the Department to come back to Tynwald before they could spend it. This was one of 1810 the reasons why I voted against the Budget last year. We have all seen the ridiculous situations during this year. I am not going to revisit the issue of the bendy buses and the trains but I note that, again, there is £1.361 million this year for more public transport vehicles. Don’t we think we have spent enough on new buses and trains? This can hardly be classed as a top national priority when we are cutting other areas. Yet if we 1815 approve this Budget today we are giving the Department – which is now Infrastructure – the ability to spend over £1.3 million without having to come back to Tynwald.
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I note that there is also another £1 million on page 68 which is allocated to minor capital works for public transport and would be grateful for a breakdown of this figure as, again, if the Budget is approved today the Department will be able to spend this money without having to 1820 come back to Tynwald, without having to explain itself, and I think £2.3 million without any further explanation is unacceptable. Finally, Madam President, the Treasury Minister was kind enough last year to confirm that we were living beyond our means to the tune of £91 million in the 2013-2014 Budget and I would be grateful if he could give the amount that we are still predicted to be living beyond our 1825 means in the coming year, because my estimation is £90 million plus an additional £82 million in respect of public sector pensions. I would be grateful for the amount and the breakdown of that amount from the Treasury Minister. Thank you, Madam President.
1830 The President: The Hon. Member for Douglas South, Mr Cretney.
The Minister for Infrastructure (Mr Cretney): Thank you. We have heard today of the continuing significant financial challenges that face our Island community and that there are difficult decisions that need to be made to ensure that we can 1835 continue to provide essential services and maintain a quality infrastructure to attract economic growth. I would like to set out, as a team player, how Infrastructure has and will continue to play its part, very often – at least up until now – very quietly and with very little detrimental effects on the public. 1840 The Department spends approximately 14% of the Isle of Man Government’s revenue budget, excluding National Insurance funded benefits and pensions, and will this year be responsible for delivering approximately £5 million of the £6.4 million savings required by all Government Departments. Throughout the last financial year my Department has continued to deliver efficiency savings 1845 through my initiatives to streamline the Department by merging Divisions and reducing the number of director posts. This has included the merging of Airport and Harbours Divisions to form Ports, with a saving of approximately £75,000 per annum, and the ongoing work of bringing the Highways and Operations’ functions together which will be completed by April 2014 with the reduction of a further director-level post. So, I would suggest, a fair approach. 1850 Building on the success of the Mutually Agreed Resignation Scheme (MARS), which applies only to civil servants, and in the interests of fairness to our Whitley Council manual worker colleagues, my Department, with the support of the Office of Human Resources, created the Voluntary Resignation Scheme (VRS). The Voluntary Resignation Scheme offers manual workers the opportunity of resigning from 1855 their Government employment with some security whilst they seek alternative employment or create their own enterprises. Over the past 12 months these schemes have enabled a number of staff to leave, resulting in a reduction in headcount of 64 full-time equivalents within the Department. With a focus on rebalancing our budgets we have achieved a saving of £1.2 million during 1860 2013-14. These savings have been achieved by a combination of reductions in headcount, changes to terms and conditions of employment, and changes to some methods of working, resulting in paying less for goods and services. Combined with previous savings initiatives, the savings this year bring the total saved by my Department since 2010-11 to £3 million on staff costs and a reduction in headcount of 109 full- 1865 time equivalents. I would like to take this opportunity to record my gratitude to current and former staff of my Department and their representatives for their co-operation and hard work, without which these changes that have been made would not have been possible. ______864 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
We have recently seen our successful Strategic Asset Management Unit (SAMU) transferred 1870 to Treasury in January of this year. SAMU has continued to deliver and exceed its targeted savings of approximately £2 million per annum for Government and reduce the amount of rented accommodation that Government occupies. We have continued to deal with extreme weather events such as the snow event last March which cost the Department in the region of £250,000 and the ongoing flood events which have 1875 cost a further £250,000 to manage to date. All of these costs have been absorbed by the Department in its existing revenue budget. The budget which had been identified to pay for such events, whilst usually sufficient, was overstretched by these unusually severe occurrences. Again, I place on record the thanks of Government for all the work undertaken in such terrible conditions by our workers, (Several Members: Hear, hear.) the Water and Sewerage 1880 Authority, MEA, emergency services and volunteers. Because of the weather conditions, difficult decisions with regard to priorities had to be made and thus some planned works have had to be delayed until next year in order to fund these additional expenses. We continue to be the main delivery agent for Government’s regeneration programme and this has seen schemes completed across the Island with a total spend of £2.3 million in 2013-14. 1885 These projects have been finished on time and to budget. Similarly, we continue with major capital schemes on Peel Road, Douglas, and Douglas Promenade at a cost of £3.4 million. I thank the seconder this morning, (A Member: Hear, hear.) Mr Henderson, and others in this Hon. Court for their support in taking forward these major, long overdue schemes. They assist in the Island’s economic attraction for investment and I thank everyone for their patience during 1890 the inevitable disruption which has occurred and caused short-term pain but are very welcome in terms of the provision of a more up-to-date infrastructure. This year, along with its operational activities, the Department has other initiatives to pursue which include… A high level options review has been undertaken into how the Department may change the way in which it runs itself. The review looked at how the work which the Department 1895 carries out on the ground is managed and administered. As a result of this work, approximately £518,000-worth of savings that can be delivered during 2014-15 have been identified. Further savings of this scale have been identified but these will take longer to implement and so will not be seen until 2015-16. Largely, these savings will be realised by a restructure of the Department. 1900 By combining similar services from several Departments and extending the concept of shared services, savings can be made. My Department will be taking on responsibility for the management and maintenance of virtually the whole of the Government’s property portfolio. This will realise savings of £50,000. Similarly, my Department will also be taking on responsibility for the Government’s fleet of vehicles and expects to save £400,000 by doing so. 1905 The integration of passenger transport services from the former DCCL, which transfer to the Department on 1st April 2014, brings an addition in staff of approximately 221 full-time equivalents and significant challenges of its own which will have to be addressed during the financial year with a current very significant shortfall to address in year one, on top of our current challenges. And this year the Department will manage the consolidation of all cleaning 1910 and caretaking services for Government with an anticipated saving of approximately £400,000. I would just like to say at this point, Madam President, I think the theme I am trying to develop here is I believe the route which has been followed by the present Government in terms of not slash and burn but by… The approach which has been adopted is the right one and I think very often the public outside perhaps do not realise the amount of work that has gone on and 1915 the amount of savings which I am trying to set out here. That is my Department alone, whereas there are other Departments across the piste who have done similar work. So it is, I think, a good news story in terms of where we have got to from where we were. In conclusion, Hon. Members, despite the ongoing significant reduction in budgets for the Department, we remain committed to providing quality services and responding to the Island’s 1920 communities at critical times of need as best we can. However, I am sure that you can see how ______865 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
my Department has made and will continue to make a very large contribution to addressing the financial challenges that the Government faces. We can only do this successfully across Government by demonstrating fairness in the on- going financial challenges and I once more thank staff for their co-operation in making the 1925 progress to date in this difficult and sometimes unsettling work – and I mean, there, not just my Department but across the various Departments; for example, if you were to look at DCCL, the amount of time… the uncertainty there. It really needed to be resolved and moved on in my opinion and I am glad that it has. I would like to thank the public for their understanding, generally, about the need to 1930 prioritise and the Chief Minister has told us constantly – and he is absolutely right – we need to communicate this better to those we represent in order to bring them with us. (A Member: Hear, hear.) Thank you.
1935 The President: The Hon. Member for Castletown, Mr Ronan.
Mr Ronan: Thank you, Madam President. Before I start the main bulk of my prepared speech, I would just like to again reiterate the comments from the Minister for Infrastructure for the work that has been done recently 1940 regarding, obviously, the battering that the Isle of Man took around the Isle of Man, and especially the work that the Minister has made sure happened in my own constituency of Castletown, in conjunction with the work with Castletown Commissioners. I am deeply, deeply grateful for everything that has been done... if we have that on record. Also, I would just like to talk to you on something which I was not going to mention today, 1945 but the Speaker did mention, about the need for a debate on local taxation. This is something which I have raised consistently in this Court since being elected and something which I wholeheartedly agree, and whether we agree on how it should be done, at least I commend you, sir, for living in a real constituency, raising that issue today because it is an inevitability in my mind that we have this huge gap now and we need to create a service delivery which can be 1950 affordable and can be sustainable. I would urge the Treasury Minister to... I know he is looking at a rate review and I know the complications with that. I would urge him to bring that to this Court for a debate as soon as he can to look at the bigger picture which attaches to the Scope and Structure of Government, and of course the Agenda for Change documents which were brought to this Court well over a year ago. That is a vital component which we need to forward in my 1955 opinion. Madam President, hon. colleagues, today’s Budget seems to me to be a game of two halves. The first half is all about the progress that we have made rebalancing the Budget over the last three years, and I am delighted to see that we are on track, albeit through the use of reserves. This is no mean feat at a time of immense political and economic challenge and I commend the 1960 Treasury Minister and his team for his foresight, prudence and realism in achieving this. I am equally pleased that the continued funding for the regeneration around the Isle of Man that the Minister of Infrastructure just touched on as well. Successful town centres are vital for our communities for sustaining independent retail and commercial businesses, for encouraging entrepreneurial behaviour and providing leisure and engagement for young and old. I see this is 1965 vital for future investment to sustain our Island. On page 17 of the Pink Book, the message from Minister Teare is that the rebalancing of the Budget is the first step on a longer road to sustainable public finances. The second half however, relating to today’s Budget is not such a rosy picture. Since I was elected I have majored on the need to substantially reduce the size, scope and 1970 cost of Government, both nationally and locally. This was brought home to me strongly when I recently attended the launch of the Vision2020 at the Museum. The Ministers who presented it, the Chief Minister, the Treasury Minister and Mr Shimmin from Economic Development all ______866 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
confirmed that whilst the Isle of Man maintains it impressive growth rate of approximately 4% per annum… and I can say very well done to the businesses that are enabling the Isle of Man, 1975 year after year, to delivering some of the highest economic growth figures in the Western world; however, the Ministers also confirmed that we need to achieve a 6% growth currently to pay for everything that Government needs to pay for. As I see things, the private sector are innovating, investing and marketing to achieve strong revenue for our Island; however, the giant monolith that is the Isle of Man Government, nationally and locally, is gobbling it all up and still needs 1980 more to feed itself. In my opinion therefore the focus of this Government must remain balancing revenue with outgoings and the top priority needs to be cutting the cost of providing Government on the Island now and in the future – this was in mine and many other people’s manifestoes – and I have asked numerous questions on this topic since being elected I have strongly supported the 1985 Chief Minister in his restructuring and I have supported the Treasury Minister on the Business Change Steering Group, which I am pleased he mentioned before. Since I was elected, the Pink Book shows that total full-time equivalent employment within the Isle of Man Government has fallen from 8,177 full-time roles in September 2010 to 7,531 in September 2013 – a saving of 646 posts or 7.8% of full-time equivalents. This has been achieved 1990 via enhancement redundancy and compensation pay, enhanced lump sum payments on retirement, and a MARS scheme that has seen some of the most experienced people employed by Government being paid off, in many cases to return on contracts or temporary positions. I, and others, have witnessed all of these and asked questions recently about them. To be honest with you, I think personally we are conning ourselves when we do this – 200 jobs a year out 1995 8,177 in three years – and I have heard the Chief Minister say that he does not want a slash and burn approach to reducing the size of Government, but this sounds like he and his Government are struggling to get the tinder lit. In contrast, earlier this month a top financial business on the Island faced a restructuring challenge and the local headline was that the company said it was reducing total staff numbers 2000 from 53 to 32 this year due to changes in its Island businesses – that is a 40% loss of jobs. The level of frustration within businesses on the Island because of our ‘do as I say, not as I do’ approach to downsizing is mounting, and whilst I appreciate that the Chief Minister needs to make structural changes, at last month’s Tynwald to enable further change I note on page 16 of today’s Pink Book that over the next three years we intend Government to reduce by 136 posts 2005 next year and then by 82 per year for the next two years. Surely this cannot be right. That is just over 1% for the next three years. We have to ask ourselves… this does not sound like the behaviour of a government that wants to balance 4% growth with a 6% spend. I wish to comment now on what remains my deepest concern relating to our future financial stability, which is of course the public sector pension. Hon. colleagues, let me pose you a 2010 conundrum. If the answer is £514,478, what is the question? Is it (a) what is the biggest lottery win in the Isle of Man; (b) what is the second prize in Who Wants to be a Millionaire; (c) what was the highest lump sum paid out in the new Unified Pension Scheme in 2012-13? Of course, we all know the answer is (c), and it does not stop there. That same person will receive an inflation-linked pension for life of over £50,000 per year. 2015 The Unified Pension was brought in as an improvement to the plethora of previous schemes operated across Government. However, the highest lump sum paid out under the previous schemes, according to an answer I received in June last year, was £377,730 – almost £150,000 less. So the only improvement to me is that the lump sums are getting bigger. I read the Public Sector Pensions Authority Annual Report last week and I am not surprised 2020 that yet again Treasury is bailing out the scheme to an unpredictably high level, which seems to be the biggest overspend in revenue budget across Government and as I see it, it is an expectation that Treasury will continue to do this. That is according to paragraph 3.37 of the Public Sector Pensions Authority Report, which says:
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‘The PSPA has undertaken an assessment of the future funding of all the schemes it manages and administers on a collective basis. The PSPA expects the schemes, including this Scheme to continue operating on an unfunded basis for the foreseeable future, with any shortfall between income and expenditure being funded by the Treasury.’
Well, I would like to ask, why? 2025 Everyone else across Government has to fund overspends from additional savings within their own budget, so why is this not the case? I have to say I am not surprised at this situation, because last year I asked the question of the Public Sector Pensions Authority about how they estimated the likely cost of lump sums for the pension schemes they manage for the next three years, and the answer was, and I quote:
‘The Public Sector Pensions Authority does not predict what future lump sums and pensions might be payable from the schemes it manages.’
2030 I have to say it shows. The biggest and most unpredictable expense across Government are lump sum payments to retirees, which are directly related to currently low interest and investment rates, for which we make no future provision or attempt to predict. These payments contribute nothing to improve service delivery, improve efficiency, improve stakeholder and taxpayer satisfaction, developing our economy or protecting the vulnerable, and yet we are all in 2035 this Hon. Court allowing this to happen – more importantly, unchecked. This situation reminds me of a story which I was once told about a bath that was overflowing with the taps full on and someone was trying to empty it with a thimble. As I see it, the bath is the future liabilities of the current public sector pension schemes. The taps are the taxpayers and businesses of the Island and the thimble represents the late and trivial attempts to do 2040 something about it; £28 million extra to spend across Government on the future of our residents could fund university fees, nursery provision, the toilet tax, plus a new breast cancer unit, and we would still have £20 million left each year. My next question on the Isle of Man public sector pension costs is in the Pink Book. If the number of employees has reduced over the last three years by 646 posts, how did 723 new 2045 people join the scheme in 2012-13? I have been told by the Chamber of Commerce that they wrote to the then Chief Minister four years ago suggesting that the then public sector pension scheme be closed to new members on the basis that it was unsustainable, and this was ignored. Surely, that would have been an easy win at that stage. All I know is that a lot of water has flowed out of the bath in the 2050 last four years and will continue to do so because of our continued failure to grasp the most serious threat to sustainable public finance we face. My final question to you all today is: if in 2012-13 we paid out lump sums of over £21 million to 356 retiring employees, who also received employment and state pensions on top of this, how much did we pay out in the same year to 18,000 retired state pensioners of the Isle of Man 2055 to live on for a year? The answer to this is on page 11 of the Pink Book. It is £124 million. But by my calculations, 1/50th of the number of people on a state pension received payments equivalent to 1/6th of the money that retirees have paid into their National Insurance pot all of their working lives. To simplify this, the state pension has received approximately £7,000 per head last year. The 2060 retired public sector employees an average lump sum of £59,000, plus final salary-related employee pension, plus a state pension, yet it is likely with historic contribution levels so low for the Isle of Man public sector pension schemes that the retiring public sector employee will have paid out substantially less contributions into their employment pension that the average retiree, who along with their private or third sector employees have paid over 30 years’ National 2065 Insurance contributions at a much higher rate. Is it any wonder that resentment is building, once people outside of Government see the Isle of Man public sector pensions not as a gravy train, but as a Ponzi scheme?
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Hon. colleagues, for the last two and a half years, I, and others, have regularly questioned and challenged matters relating to the Isle of Man public sector pensions. I do not envy those 2070 who have to resolve this issue, nor do I seek to deprive our workforce of an employment-related pension – far from it; however, we must resolve it. I am not a person who chucks bricks into a pond and walks away. I have tried for over two and a half years to offer constructive feedback to the Treasury Minister, CoMin and the Public Pensions Authority. In concluding my remarks for a Budget that I will be supporting today, I wish to remind those 2075 with responsibility for sustainable public finances of 10 of the suggestions that I, and others, have already offered in questions and debate on the subject of public sector pension reform: (1) Public Sector Pensions Authority to develop an accurate and timely forecast for future pension liability, including lump sum, based on history, age, age profile and future requirements of the actuarial estimates, and these figures to be an integral part of the annual Budget; (2) 2080 Departments to own the cost of restructuring as part of their revenue budget; (3) Treasury to stop using taxes to fund unpredicted pension shortfalls without Tynwald approval; (4) close the scheme to new entrants; (5) long term, do not pay both state and employment pensions to ex- Government employees; (6) ensure re-employment of the Government retirees is more restricted than recent proposals and if it is necessary to re-employ, then the pension payment 2085 should be withdrawn for the duration of their employment; (7) lump sum payments to be capped to relate to employee contributions, not because of a function of market or Government Actuary rates; (8) remove inflation-proofing pensions; (9) link to final salary; (10) ensure that there is a much closer link between contributions and entitlement. In conclusion, I have recently been made aware that the Isle of Man Local Authority Pension 2090 Scheme’s estimated future liability is currently 70% – 70% funded by that scheme’s accrued contributions and reserves. In stark contrast, page 8 of today’s Pink Book shows that the public sector employees’ pension reserve covers only 7.5% of future liability. I find it staggering how such an inconsistency of approach can have been allowed to have happened, but I am relieved at least one Government pension scheme in the Isle of Man can go a long way to meeting its 2095 own future liabilities and responsibilities. I am equally pleased that Mr Quayle's amendment to Mr Karran’s motion at Tynwald last month succeeded so strongly to enable the full review of the Isle of Man Public Sector Pension Authority’s finances and schemes. If we only achieve one major improvement for next year's Budget, it must be to put these schemes on an affordable and fair sustainable basis. 2100 I am therefore throwing down the gauntlet to the Treasury Minister today on the cost of providing Government. He already knows he has my full support on this matter and I have no doubt that he can do this job and look forward to next year's Budget where the final element of restoring sustainable public finances will be in place. Finally, Madam President, we all understand the difficulties we all face, and I share 2105 comments made before by Mr Cannan and thank our public workforces, who we all know do a great job, and certainly recently. Our concern and comments are not directed at them – not at all. It is about creating a fair and sustainable Government and Island, but more important to me, it is about being honest and fair to all of the hardworking people of the Isle of Man, in and outside of Government, and leaving our children and the Island hope and security for the future. 2110 Thank you, Madam President.
The President: The Hon. Member for Glenfaba Mr Anderson.
The Minister for Health (Mr Anderson): Thank you, Madam President. 2115 I am sure that it is already understood, both within this Hon. Court and more widely, that not only is the delivery of key public services becoming ever more complex, onerous and challenging, but this environment is further significantly influenced by the financial pressures presently facing all Government Departments.
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All steps have lately been taken towards the aspirations of the Agenda for Change strategic 2120 plan, embodied in the Modernisation of Ministerial Government proposals, agreed by this Hon. Court only last month. Against this dynamic backdrop, it is therefore much to the credit of the Isle of Man Government that it has been able to sustain its investment in healthcare and I commend the Treasury Minister for his support in this. It would however be quite wrong to believe that this is the end of the story. Increasing demand for greater levels of healthcare, more 2125 complex healthcare, and the blending of these with expectation of greater efficiency, and yet at the same time the belief that bespoke healthcare solutions should be ever more widely available, illustrates the challenge facing Government in providing this fundamental service to the community. The impending creation of the Department of Health and Social Care will allow for improved 2130 integration, joint commissioning and other initiatives to aid the delivery of the service, but please do not believe for one moment that these pressures are going to go away. They are not. They are going to increase. Presently there are around 2,500 patient contacts for treatments every day delivered through primary care involving the Department’s own staff and contractors, such as GPs and 2135 dentists. There are around 115,000 patient contacts per year at Noble’s Hospital. Outpatient appointments at the Hospital have increased by 8% since 2010 and by 21% since the present Hospital opened in July 2003. Our aging population demographic will create intense demands on healthcare and social care. Individuals will live longer, but many may be in less than perfect health. Progressively, just as in other places, the Isle of Man is affected by the fact that poor 2140 lifestyle choices are generating long-term chronic conditions in greater numbers of people than ever before. The complexity of treating many conditions is increasing, as are the costs of healthcare technology, new drugs and scientific innovation. There will almost certainly be public expectation that things are perpetually made available, so the pressure on available public 2145 finances is thus created… this is intense. Health and Social Care cannot conceivably be funded at the expense of all other areas of public services. A balance must be struck as to what resources are fair and equitable to devote to Health and Social Care. Madam President, some observers in UK have suggested that the days of NHS there are almost certainly numbered because of the affordability and that the recent structural revisions 2150 are a precursor to what effectively will be privatisation in the NHS in the UK. It remains to be seen whether these assessments are actually correct, but what cannot be avoided – and certainly not by us here on the Island – is recognition that there is likely to be significant changes to the models defining the delivery of both Health and Social Care. The NHS, which has existed in the Isle of Man since the very same day it was created in the 2155 UK back in 1948, is essentially a product of social policies described as the ‘post-war settlement’. Within that a boundary was set up between the responsibility of the individual and the responsibility of the state. It must be recognised that this now requires considerable analysis and debate as it is difficult to sustain an argument that the arrangements that applied before the middle of the 20th century remain appropriate and relevant to the second decade of the 2160 21st century. All the work that is being done to streamline Government, including the Department of Health, is of paramount importance. This includes continuing analysis of various activities under the banner of the Scope of Government Review, together with renewed emphasis on improving efficiency via shared services. Clearly, changes of this type can cause understandable concern 2165 amongst staff, particularly where there may be changes in working practices and responsibilities or even the prospect of physical relocation or change in line management; however, these things must be done and the value of undertaking this work should not be underestimated. However, more fundamental assessment of Government spending on Health and Social Care is essential. (A Member: Hear, hear.)
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2170 The Department has had to fund many additional costs in the current year that were not budgeted for – for example, the inspection of costs of the West Midlands Quality Review Service, who have started their inspection of the Health Service at Noble’s Hospital. The knock- on effect of their recommendations and those of the work completed by the Francis Working Group will inevitably lead to more resource required in different areas across not only Noble’s 2175 Hospital, but the Health Service generally. These are difficult to quantify until a detailed analysis of those recommendations are known. I noted the comment that the Hon. Member for South Douglas, Mrs Beecroft made, that she was pleased to see that contained in the new Budget heading, and the Treasury Minister made reference to. I would just like to put on record that some of those bids have been known about in the Health Service a number of years, but 2180 unfortunately we have not had the resources to do them; but I am sure this work will confirm and highlight areas most importantly that we need to invest further money into. We are grateful to have the support of local trusts that have enabled us to develop services that just would not have taken place without their financial help. The new Renal Unit at Ramsey Cottage Hospital is one example when the Scott Trust enabled this to be developed, reducing 2185 pressure on the Renal Unit at Noble’s. It has also enabled dialysis patients to holiday here, something that was previously restricted. Despite the challenging financial position, the Department continues to enhance its services to the public. A recent example is the extension of the bowel cancer screening to include those in the 70-to-75-year age group. 2190 Delivery of services where we can on Island has to be good news for our residents and the fitting of pacemaker implants on the Island is a recent example, where previously patients required multiple visits to the UK, and has been a major advancement in Island care. We continue to seek a sustainable solution to treat patients suffering from age-related macular degeneration and this is our top priority in new service deliveries, but is not a simple task of 2195 transferring it from the UK. It will require resource and space, something that is at a premium across our estate. The increasing activity, especially at Noble’s, means that we are now embarked on expanding our building footprint at Noble’s for the first time since the opening of the Hospital in 2003. The building of the new neo-natal unit will reduce our reliance on emergency transfers to the UK and bring the standards that are being increased recently on an 2200 international standards into Noble’s Hospital as well. Projected healthcare costs suggest that a little more than 20 years from now, in 2035, our healthcare expenditure will be not far short of £¼ billion in today’s terms. The rise of long-term chronic conditions will almost certainly result in yet more expenditure than the current projections. Of course it remains a fundamental element of Government to provide services to 2205 the people, but not to attempt to provide services to an extent which becomes simply unaffordable and would create unacceptable financial pressure. Madam President, I would just like to touch on one or two topics Hon. Members have mentioned in their contributions. The Hon. Member for South Douglas, Mrs Beecroft, mentioned the medical identity… I will 2210 have another go –
A Member: That is easy for you to say!
Mr Anderson: The Medical Indemnity Fund. This is based on claims made, but not yet settled. 2215 Historically the level is far less than the level that is being claimed for and that is why it does not match the claim figure, and if we did that it would tie up necessary money which could be used elsewhere. In relation to the Hon. Member for Middle, Mr Quayle, who was highlighting the £2½ million upgrade to the current systems operating, this is a technical upgrade. Unfortunately it is 2220 something that if we do not put in place, the current system will be obsolete and will not be serviced by the providers and so it is something we have to do. ______871 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
In relation to his comment about Noble’s Hospital being a Rolls-Royce service for a rickshaw service, I am afraid I do not recognise that as the service that is provided by Noble’s Hospital. In relation to his remark about benchmarking, yes, we would love to benchmark and the 2225 financial officer in the Department has recently commissioned a report into patient level costing and service reporting. However, it will have headcount requirements and additional management accountants as well as its implementation costs and ongoing revenue costs. So it would be a significant extra factor to build into the Department and another bid stream, if you like. 2230 You should also be aware that additional clinical pressures coming forward from the reviews that Hon. Members already know about will take a high priority for me, as Minister of Health, because these are in order for existing services to continue. Yes, it would be fantastic to be able to financially benchmark everything we do, but we have to weigh that up against maintaining existing services. 2235 In relation to the Hon. Member for Michael, who has a concern about the centralisation of catering services, I think Mr Cannan needs to understand that the Hospital catering department champions Manx products and has a proud track record and strong working relationship with those supplying Manx products and even the producers themselves. We actually have a week where we celebrate Manx products within the Hospital. There is no decision yet on deciding on 2240 the local procurement process, but we have, as I say, a proud record on this of providing Manx foodstuffs and I am sure that will be the basis that we carry on when we have responsibility for other areas. I have referred during my remarks, Madam President, to the forthcoming creation of the Department of Health and Social Care; indeed the very budget we are debating at this moment, 2245 in the Budget that will apply for the financial year commencing on 1st April, reflects the creation of that new Department on the same date. Hon. Members will recall that the Department of Health together with the Department of Social Care came into being in April 2010 following the demerger of the former DHSS. Consequently, whereas the near future involves a change in structure and possibly a change of 2250 ministerial responsibilities, I have the pleasure and privilege to have been the Minister of Health throughout the four-year period the Department has been in existence, despite the significant challenges that have unfolded in recent times. I would like to pay tribute and offer my thanks to the staff in the Department for their unceasing work for the benefit of the people of the Island. I know this will continue under the umbrella of the new Department of Health and Social Care. 2255 I would also like to place on record my appreciation to my political members, Mr Butt, who has been on the Department since 2010, and Mr Henderson, who has joined us more recently. Madam President, I commend this Budget.
The President: The Hon. Member of Council, Mr Crowe. 2260 Mr Crowe: Thank you, Madam President. I would like to reinforce the comments made by the Treasury Minister on the benefits to the overall economy of the Zero-10 tax regime which has resulted in a very diverse economy built up over many years. Quoting from his speech, I would just like to reinforce what he said:
‘The Zero-10 regime of taxation for companies is, in my view, the cornerstone of our economy and it is vital that it continues. Continued growth in taxation receipts provides irrefutable evidence that our strategy is working well. Over 1,100 new jobs have been created in the past two years, with an anticipated increase in ITIP of £6 million. I have no doubt that our 0% company rate is one of the main catalysts in attracting new business to the Island; it assists the expansion of existing businesses, and contributes to our uninterrupted economic growth.’ 2265 I would also like to comment on the extra administration and legal burden that is being caused by the wide-ranging international reforms in governance and regulation, such as FATCA
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UK and FATCA USA, and the impact on our banks of the Independent Commission on Banking, the Vickers Report. 2270 All of these regulatory changes and moves towards greater international transparency have a direct and significant impact on the private sector. Businesses need to generate revenue and to retain jobs and create new jobs and grow the economy are one of the main planks of the Chief Minister’s policies. These are indeed challenging times for all sectors of the economy, so a big thank you goes to 2275 the private sector industries that have shown great resilience in the face of various international challenges. DED is working closely with all sectors of the economy and will be debating the Vision2020 report during the sitting. However, a brief update on the work the Department is carrying out in relation to financial and professional services – the area in which I have responsibility… The 2280 Department has been working very hard to support financial and professional services, which remains the Island’s principal source of jobs, GDP and taxes. Overall, financial and professional services continued to grow in 2013 and further growth is predicted in 2014. The international life assurance and professional services sectors continue to perform well. At the same time, some areas have reduced in terms of employment over the last year – notably 2285 banking and fiduciary sectors. These changes are being driven principally by global economic forces, not factors unique to the Island. Indeed, the Island is faring better than many of our competitors. The Department continues to work hard with the Chief Secretary’s Office to promote the Island’s interests internationally, and 2013 saw the UK Prime Minister, David Cameron, publicly 2290 acknowledge that the Isle of Man is not a tax haven. The Department has also been working particularly hard with the banking sector, the Channel Islands and the UK Treasury in order to protect our interests as the UK plans its new banking regime to split retail and the rest of banking in line with the Independent Commission on Banking. Announcements on how this will affect the Isle of Man will be announced in the next 2295 few months. So we have a close working relationship with industry, but DED and Government must continue to encourage growth through an appropriate regulatory and legislative programme. Thank you.
2300 The President: The Hon. Member for Ramsey, Mr Singer.
Mr Singer: Thank you, Madam President. I would just like to make a few general comments and perhaps some of them are cautionary. When policies are set out in one presentation, as in the Budget speech, there is more of a 2305 complete picture of where we are going and how we are doing. The Treasury Minister’s speech is positive and encouraging, but there cannot be an attitude of sitting back and that everything is going to be okay. He is not doing that. It is good to be optimistic, but Mr Teare was not overconfident, nor was he self-congratulatory because there is so much more to be done. Whilst all Departments are finding savings as a necessity, losing staff is part of that necessity. 2310 With pressure for more from the Business Change Group, there is a need to ensure that in their haste to bring in the changes, which may appear to be viable and achievable, there must also be caution because mistakes cannot always be reversible if a mistake is made. I would certainly endorse the comments that have been made about procurement, that centralised purchasing as a blanket policy can have a deleterious effect on local economies. We 2315 cannot promote, as has been said, the public to buy Manx, excepting Government. So there is a balance, I believe, to be struck on procurement. We must retain the capital schemes and the focus on construction in regard to capital spending is important for local employment, for our own workforce and for the public sector.
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The uncertainty, of course, is what happens after 2016 and how momentum will be maintained 2320 from that date. It was mentioned about the £1.3 million proposed purchase of new buses, and I hope that DoI will not just go out and spend that money on buses without the justification for and the reassessment of the need, whether Tynwald has approved that amount or not. I support the Marketing Initiatives Fund. It is extremely important that new sectors are 2325 developed to boost the economic performance, but when using that fund, it is imperative to go out to find the new sectors... the new investors. You cannot sit back and wait for them to come to you, when they have a choice, and our competitors are in fact going out to meet them. I would ask: is our presence in London strong enough? Is it value for money, our presence at a world business centre? Our competitors, Jersey, Gibraltar and I think Malta, all have an 2330 important presence there and I believe we should have a highly visible presence in London to compete with them. I therefore think that our presence at the moment needs reassessing in its effectiveness. So I support the Budget, Madam President. I have to trust the Government judgment that we will arrive at the balance point and by then the plans will be in place to confidently move 2335 forward; however, we must remain aware of and be prepared for external factors over which we have no control and which could potentially push us off course. I therefore hope that at one time the Treasury Minister was a boy scout and his motto is ‘be prepared’. Thank you, Madam President.
2340 The President: The Hon. Member of Council, Mr Wild.
Mr Wild: Thank you, Madam President Firstly, I would like to congratulate the Hon. Member for Ayre, the Treasury Minister, Mr Teare, and the wider Treasury team, including my hon. colleagues, the political Members, for 2345 delivering what, in my view, is a robust and effective Budget. Likewise, the work in the international arena by Government has been impressive to say the least. The Government is recovering from a significant loss of income and it is reassuring to have a firm and not just steady hand on the financial tiller. I welcome the fact that the Budget speech acknowledged that the economy is not a bed of 2350 roses, as highlighted by hon. colleagues in their speeches. Balancing the Budget is only one stage in the ongoing economic journey and the Budget speech alluded to the need to replenish reserves, resolution of the pension issues and the demographic challenges. In terms of balancing the Budget – and I declare an interest as a member – I feel that the Business Change Steering Group has delivered positive cost-saving outputs in a timely manner, 2355 which demonstrates that politicians and officers can work effectively together without the need to engage all the time with expensive external consultants. It is also critical to grow Government revenues by developing the economic sectors to deliver Vision2020. From a Department of Economic Development perspective, we have seen an evolution within Information Services Division, which is engaging with stakeholders, as well as taking worth a 2360 holistic view across Government for information technology. Leaner methodology is now integral to working practices to generate efficiencies and solutions and the restructure on 1st April will facilitate this ongoing evolution. Likewise, the Employment and Skills Group continues to support our young unemployed and the longer-term unemployed, working in particular with Social Care. This cross-departmental 2365 working is also extended to our colleagues in Education and Children, and Treasury, to create an academy at Hills Meadow for the manufacturing sector, which is a critical sector to our economy. Better still, this initiative also involves the Chamber of Commerce and the sector members. Economic Development is also collaborating with Education and Children to pilot an ICT 2370 scheme at Castle Rushen High School and a booster class for young people at Ballakermeen High ______874 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
School to help improve their examination grades and achieve meaningful employment for these individuals. The sectors have been incredibly supportive, in terms of the private sectors, of work placements, opportunities and work cohorts for our young unemployed, for which we are very grateful to those companies involved actively in these schemes. 2375 In my view, this is a measured Budget, but we cannot be complacent going forward. We still have a long economic journey to travel. This Budget has my support. Thank you.
The President: The Hon. Member for Council, Mr Corkish. 2380 Mr Corkish: Thank you, Madam President. I, too, would wish to be as upbeat as possible about the future. After decades of plenty, we are now having to come to terms with straitened economic times, and that change after so many years of good times is hard to accept and realisation to that does not come easy. 2385 The delivery of the Budget each year by the Treasury Minister is always a time for comment and sometimes bloodletting, but I find on some of the information given that it is not all bad news at all. Government on course to rebalance finances by 2015-16, a capital programme of £72 million includes £50 million for reconstruction schemes, including £17 million for local authority housing, and the target of £10 million efficiency savings on course to be achieved by 2390 2015-16 with a £7 million saving achieved to 2014-15, and much, much more. We would all within this place acknowledge the hard and far-reaching decisions that have to be made, and no one knows better than we, working in our various Departments, seeing at first hand the deep cuts made into our budgets and the frustrations that we feel at not being able to see through our plans and hopes of achievement, but being resourceful and set on striving to succeed within 2395 constraints, whether that be in conjoining utilities or setting free or in part by privatisation or corporatisation. Hon. Members, we are in a new world and we have to continue to adjust to such demands of that world. As the Duchess of Windsor said to the newly resigned Duke of Windsor, ‘You can't abdicate and eat it.’ (Interjections and laughter) 2400 Fortunately, in the good times we were prudent and put some monies away for a rainy day. As we know only too well, this is the rainy season and we must utilise that money as wisely as we did in saving it and that will never be an easy job, to placate us in this Hon. Court or those without its confines, but we have been and elected and trusted to undertake that responsibility by the people on behalf of the people to the best of our ability looking from the inside out. The 2405 very diverse scope of our areas of business to achieve wealth generation says a lot to that which has been and can continue to be achieved and I am aware from my very pleasant time spent working in DED of the efforts being made in the very competitive areas of business that we are involved in. In that cause, we should never be averse or reticent in sharing such decision-making and problem solving with those within our society who live and work here and who share in, 2410 contribute to and benefit from our Island need of a wealth generation. There is a great source of talent and business expertise and worldwide contacts within our Island and we should invite it in, and I hope that we do and are working together. Austerity measures are necessary, but there is a danger that in an effort to save money we could be a little too zealous in wielding and using the knife of budgetary cutting. Hard times will 2415 pass and we must and will pick up as best we can from where we left off, providing that whilst healthy pruning takes place, the root and stem remain for the spring. I am passionate about the regeneration project of our towns and villages around our Island and that it continues apace, remembering the old saying, ‘It's not good being poor and looking poor’. It is ongoing projects like this that fires confidence in our residents, encourages and 2420 impresses our visitors, be they leisure or importantly business, and sustains many of our workers. We must be united in such projects.
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I remembering hearing in this very Court very recently a Member criticising the major work scheme taking place on the Peel Road project that has been so badly needed and wanted for many years to a major arterial road in and out of our capital. Likewise, the work at last being 2425 carried out on Douglas Promenade, which I and others have been pressing for. All speed to this project, complementing the many investments made by the tourist industry there, all underlining the value placed on this area of wealth generation and of benefit to the whole Island. However, I remain saddened by the lack of progress in the Lord Street site; such lack of action there detracts from the otherwise progress in other areas (A Member: Hear, hear.) and I 2430 hope that the plans that I and others have proffered for this site will find favour and happen, and soon for the benefit of Douglas and the Island's benefit. So, Madam President, I wish the Treasury Minister in his difficult housekeeping role, the Chief Minister and the Council of Ministers, whoever they would be, the vision, strength and the will needed by this Island in challenging times. But I wish more that we, the Members of this High 2435 Court of Tynwald, accept and respect our privileged positions to act responsibly and with integrity in how we go about our business. The media everywhere love division and welcome point scoring in this place and actually see controversial headlines, and our work here is more important than that. We have a lot to achieve and a tough path to tread and it is better to do it together. (A Member: Hear, hear.) 2440 Finally, Madam President, we all have some pride in hearing the good news reported around the world that this Island is leading the way and working closely with UK Government in matters of monetary regulation, tax transparency and international conformity and information exchange, at a cost, perhaps, to the Island. I could quote some of the Treasury Minister's words today:
‘The relationship between the UK and the Isle of Man is a positive and mutually beneficial one and it is vital that we continue to be good neighbours to one another…’
2445 All good stuff, in good times and bad. But in hard times in particular, can the Treasury Minister tell me that we have a better seat and voice at the UK negotiating table when we meet together, accepting us as a responsible Government and reliable part of long-standing, with the acknowledgement that we have a right to survive or will they still continue to tighten economic stranglehold, while we are struggling to 2450 make good the huge losses inflicted upon us by a major trading partner? Madam President, I support the Budget and recognise that a great deal has been achieved, but with some pain for many here in our Island, but acknowledged that we here on the Island have much to be grateful, for despite the economic hardships that come our way and will continue to do for some time. 2455 Thank you, Madam President.
The President: The Lord Bishop.
The Lord Bishop: Thank you, Madam President. 2460 The Hon. Treasury Minister is to be congratulated on the Budget. Steady Eddie is a man of great integrity. Thank you for the Budget. Congratulations on the FATCA agreements, the Commission on Mutual Administrative Assistance in Tax Matters, on the training developments in places like Hills Meadow, and so on. Then comes the curate's egg… I have never offered a curate an egg before, but I suppose – 2465 (Interjections) The election system for the tax cap I think is an important and valued innovation, again for which I thank the Minister. However, I have some questions to ask. The tax cap presupposes that wealthy people stay on the Isle of Man because society takes less of their income in tax here than elsewhere. My experience of wealthy people is that a small
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2470 rise in the tax cap would not drive them away. Referring to companies, the Treasury Minister this morning said, ‘their reputation is more important than the amount of tax they pay’, and I could not have put it better myself. Secondly, the Minister also said, ‘I am conscious of the continual income squeeze on our working population’. Also true. 2475 Thirdly, the tax cap figures quoted in relation to employment are helpful. They are encouraging, and I do not despise them, but what would be useful would be a realistic comparison with the last pre-tax cap year. I have seen such figures, but my experience of asking for the comparison is that in fact it is an impossible request. So lack of a realistic comparison, I regret, devalues the figures that are given; however, I am grateful for the election system in the 2480 tax caps. I have just three questions, Madam President, to ask the Minister. Firstly, a possible reduction in the legal costs reserve. We all know about Legal Aid abuse, but there is sometimes a more serious danger in Legal Aid absence for some who are in need and I hope that a great deal of wisdom will lie with the Attorney General's office in pursuing that. 2485 Secondly, there was a passing reference to dealing with environmental concerns in the future, and there has been a little action in the past, for which we are all grateful, but this must be a very much higher priority in the future. I hope that in future Budgets it will feature with greater strength. Thirdly, why no mention of a possible Isle of Man equivalent of Gift Aid, making small-scale 2490 charitable giving a great deal easier? With these questions, Madam President, this looks to me like a decent Budget and I, for one, am happy to support it.
The President: Chief Minister. 2495 The Chief Minister: Thank you, Madam President. Madam President, I will only be brief today because I think this debate has probably run its course. I have to say it has been a very constructive debate and one that I think myself, the Council of Ministers and I am sure the Treasury Minister welcome, in the general air of support I 2500 think there has been for the steps taken by the Council of Ministers and Treasury to get us to where we are today. There are just two or three points I would like to emphasise, Madam President, if I could. First of all, picking up a point I think was made by Mr Henderson right at the outset, and he is absolutely right, that given the passage of time, a great many people – and it would appear 2505 politicians at times as well as the wider public – have forgotten what the start of this exercise was and what brought about the situation in the first place. I know I get criticised, Madam President, regularly, for repeating the mantra that we have lost a third of our income; but the Isle of Man has lost £200 million per year. This is what is behind it, a third of our income. If I take you back to when this started with the United Kingdom, and I was involved in the 2510 negotiations at that time, the first loss that the Isle of Man had was £100 million there and then. We managed to negotiate a lead-in time of one year, but they wanted initially for that £100 million to go immediately. That £100 million, in the context of the UK budget, was the equivalent of £75 billion being cut off the UK Budget in one go. That is the scale of the reduction, and of course that has increased since we now have lost nearly £200 million, which will be certainly 2515 well over, in present costs, £100 billion being cut off the UK budget. When we see the problems in the UK and the struggles they have to rebalance their budget, actually reducing by a lesser figure than the Isle of Man had to go through pro rata, it puts it in context, I think, the scale of the challenge that the Isle of Man is achieving. This is no small feat. It is no small sum. We also just want to kill dead, once and for all, the fact that there was some political 2520 incompetence in the Manx Government that led to this. I just want to refresh people’s memory that every change that took place relating to the VAT Agreement, over a great number of years, ______877 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
was mutually agreed between the Isle of Man Customs and Excise Authority and the UK Treasury. So there was nothing that the Isle of Man had done wrong at that point, it was simply that the economic situation was changing rapidly in the United Kingdom. The UK had a huge 2525 black hole in their budget that they wanted to fill, and all agreements of this nature that the UK had were reviewed, and it was felt by the UK that they wished to change ours. So I just want to put that on record, Madam President, just for clarity, because you do tend to forget this. This was not something brought on by the Isle of Man. It was not brought on by previous governments. It was brought on by an arbitrary decision taken by the United Kingdom as a result 2530 of their own fiscal problems – not the Isle of Man. We now though, Madam President, are left picking up the pieces, and I would congratulate not just Treasury and Mr Teare and his team for what they have done today, but every single member of this Government, both politically and at officer level, who have engaged in the process of working together to achieve the rebalancing progress that we have made. And we 2535 have made real progress. We are ahead of where we expected to be. In two years’ time, all being well, we will back in balance again – and that is a phenomenal achievement. (A Member: Hear, hear.) We should not underestimate the work that is being done to claw back a loss of over £200 million initially in a small community of 84,000 people to get back into balance again. And then we can move on. 2540 There is obviously one cloud on the horizon that we must not lose sight of and that is the VAT Agreement. The sharing mechanism is being reviewed at present and we hope to have an outcome later on this year which will give us some indication of where we are going. Hopefully it will be on the right side, but we must not lose sight of the fact that it could lead to further loss of income if it does not go in our favour. So before we get too overconfident, I think, about the 2545 next two years, there is a potential problem along the way. We can only hope that the skill of our negotiators and the work that has been done with the Customs and Excise at the moment brings a positive result for us. But as a result of the position we find ourselves in fiscally, Madam President, this administration embarked with three key priorities: rebalancing the budget, growing the 2550 economy and protecting the vulnerable. I have seen today – we have all seen today – that we are working well together to achieve the first target of rebalancing the budget. Complaints have been made by a number of Members, and Mr Cannan in particular, about the slow pace of change, that we are not bringing in… the rate of downsizing that some people… we are not privatising, we are not corporatising. We are taking it stage by stage, incrementally. 2555 Whilst I know it causes frustration – and to a certain extent it has caused me frustration that the pace of change has not been as quick as I would have liked – I am still adamant that this incremental approach is a more humane, economically stable way of bringing in changes than the… again, on a number of occasions Mr Cannan has urged that we sack 1,000 staff straight off.
2560 A Member: Slash and burn.
The Chief Minister: Slash and burn. The destabilisation that would have on the economy, on the ability to grow or maintain public services, and most of all the overall cost of funding the loss of so many officers in such a short period of time, not only in redundancy, but also then almost 2565 certainly on benefits that we would have to pay out, and the related impact that would have on things like the local economy and the housing market etc, etc. So whilst I understand people’s frustration that we perhaps are not moving as fast as they would like, I think the more measured approach – which I hope and believe has achieved stability alongside a reduction in the overall cost of expenditure in, as I say, a humane way – is 2570 still the best way forward. I apologise if Members think we should move quickly, but I do believe that is the right way to go. On growing the economy, I congratulate the Member for Rushen, who is obviously involved in the Department of Economic Development, for a very clear explanation about what is ______878 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
happening economically. The issue is often raised with me that we do not know what is 2575 happening: the economy is dying, there are problems here, there are problems there. We hear the trickle of bad news with the banks and yes, we have lost a few jobs recently, but nowhere near as many as our competitors in the Channel Islands. But what we do not hear about in such clear headlines is the new business which is being generated within the Island and the new initiatives which are being taken, and although Mr Quayle makes reference to the fact that the 2580 Economic Development budget has been cut, in some ways the figures in the book do not give a clear picture, because that figure is only reduced because the income has actually increased in other areas of activity – and you can look at the Aircraft Registry as a good example, where I think another £½ million has been brought in which helps to offset that figure. I can assure Members also that subsequent to the Budget being fixed, myself, the Economic 2585 Development Minister and Treasury Minister have already met to find funding for a number of key marketing posts within this Department, which will go, I think, a good way to start to allay some of the concerns I think Members have about the lack of commitment. As far as the representation in London is concerned, the representative office that we had in London was not a manned office; it was simply a managed office where members from within 2590 the community could go to do business. There was not a permanent presence in London. It was then told to me that that was not getting used as much as it should have, and we used that money, the money we saved, to pay for a permanent presence in London, a major salesman who is working for us at the moment and particularly helping on Chinese business. So that money was not wasted, it was transferred from a different fund. I have to agree with the Hon. Member, 2595 we have to do more to raise visibility in London. Our visibility, if anything, has dipped over the last two or three years and we need to find ways to improve that situation. I think those steps are already being reviewed at present. There are many good opportunities out there, Madam President, for new economic growth, but just in line with the steps we have to take about rebalancing the budget and improving the 2600 service delivery across Government, we also have to be aware that every single one of us, in whatever role we play in Government, has a responsibility to ensure that anything we can do to smooth the passage of economic growth to assist new opportunities, to identify new opportunities, we all are in this together to help to work with Economic Development to take that further. It is absolutely vital that every bit of red tape, every impediment that we can 2605 identify in our individual Departments should be removed to facilitate economic growth. Competition in the market is fiercer than it has ever been in recent times and the biggest competitor we have at the moment actually is not the Channel Islands any more, it is the United Kingdom and we must not lose sight of that. They are doing everything possible to claw back business, or ‘reshoring’ I think they are calling it at the moment – it is becoming the new buzz 2610 word – to bring business from offshore, whether it be in the Crown dependencies or India or wherever it may be, to get it back in the United Kingdom again. Mr Cameron has stated that as his main target he wants to make the United Kingdom the lead reshoring country in the European Union and we should recognise very clearly what that threat means to the Isle of Man. So we have got to sharpen our approach to promoting the Island. We have got to sharpen 2615 our investment in the new skill base, because as we grow the economy, we diversify the economy, we have to have the skills here to service whatever new sectors we establish. That is going to be a big challenge, both for education and for DED with the training facilities, because we cannot just bring in a completely new sector overnight and expect to have a skilled workforce to step into it, so we have then to look at problems with the Work Permits. 2620 There are lots of challenges round us, Madam President. We, as a Government, as a parliament, need to have an open mind to see what we can do to help to assist wherever possible. One other point which I did want to touch on as part of the economic growth: I am very aware, Madam President, of the concerns some Members have about the tax cap. I brought it in 2625 in 2006 and it was brought in with the specific aim of stimulating new entrepreneurial activity on ______879 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
the Isle of Man to bring young business leaders who are still active in business to the Island to give us the benefit of their entrepreneurial skills, and to create new jobs on the back of that. That is the aim of it, and that perhaps has fallen a little bit in abeyance this last year or two because we have been concerned about the debate about the tax fairness in the United 2630 Kingdom, and I did not want the Isle of Man to get caught up in that. But there are great opportunities. Every country now is looking and competing to get high-value entrepreneurs to move into their jurisdiction. The UK is one of the foremost proponents of it: it has a tax cap of £30,000 for non-doms. Huge numbers of jobs are being created on the back of that. Every country is scrambling. Canada has recently had a trade delegation to China to try and persuade 2635 high-value Chinese entrepreneurs to move to Canada because they see the economic benefit that is coming on the back of that. So do not think that this is just a local taxation change that we brought in because we want a lot of rich millionaires sitting here on our Island. It is not. It is an internationally recognised arm of economic growth, and the Isle of Man in the present environment needs to attract every 2640 piece of investment we possibly can. We cannot do it all ourselves. We need external investment. We need external energy, entrepreneurial skills and ideas. We have to be open to these and welcome them, not knock them back whenever times get hard. I accept that times for many people are hard, Madam President, and my heart goes out to a lot of people who are affected by the changes that we have brought in. 2645 I have fought long and hard for years to bring in many of these benefits and improvements myself – 30 years I have been involved in this, along with one or two other Members of this Hon. Court. I know how hard it has been to achieve these improvements and it is heart breaking to see them at least put on hold for the time being. My one aim, Madam President, alongside the three priorities that we have for Government – 2650 and I hope are beginning to be reflected in the Budget and other policy statements that we have made, and certainly in the work that Mr Robertshaw at the Department of Social Care has introduced – is maintaining fairness right across the piece. We have to be seen wherever we possibly can to be fair. There will be occasions – and the ‘toilet tax’ that we talking about at the moment, the sewerage charge – could, in the short term, be seen to be unfair. 2655 The statement I made related to the fact that the ‘one size fits all' procedure could be seen to be fair, but the Government is committed to finding a way over the next 12 months which will bring in a mitigation structure whether it is rate rebates, or means-testing, or whatever it might be, to ensure fairness is brought back into the system. We have to ensure that the principle is accepted. The principle has been discussed for a long 2660 time, this is not something new that has just sprung out of the hat. It was a part of legislation six to nine months ago, it has been discussed long before that. This is just one aberration, it will be corrected. Madam President, we have to ensure that all else we do by still maintaining our focus on rebalancing the budget, growing the economy and protecting the vulnerable, is done with 2665 fairness and consideration for those less well-off in our community. The success of any community and any government, Madam President, is reflected in how we treat the least well- off within that community, and it is vitally important we do not lose sight of that in what we do in the time ahead. It is going to be a challenge, it is an issue which I raise almost every week with my colleagues 2670 in Council. We must not lose sight of the fact that one day with the various changes we bring in, we might wake up and suddenly realise all the changes have fallen on one section of the community. That must not happen. We have to find a way, we have to be alert and ensure that we continue as best we possibly can, with a system which is fair. The fairest system of all, Madam President, is to get to the point of rebalancing 2675 Government’s budget, to get our finances straight again, and we can then start to rebuild the areas we have had to change. Fairness will be brought in by a strong economy, giving jobs to all our people, the best benefit anyone can have. It will help to create a wealthier society, it will ______880 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
help our local economy, it will bring improvements to the self-esteem of our young people who are currently struggling with jobs, it will help our children to know that they have got a good 2680 future on the Isle of Man. This all has to be part of the same whole, Madam President. And the work we are doing at the moment through the rebalancing, whilst it may not be as quick as people want, it may not… It may appear to be patchy at times in the way some sections of the community are being treated, the overall focus has to be for the greater good of the Isle of Man, and to continue to develop a fair, and just, and inclusive Manx society. 2685 I commend the budget that Mr Teare and his team have put forward today. It may not have the answer for everyone, but I do believe it is a very positive step in the right direction. And to finally end on the point that Mr Speaker made himself, that this is the day for optimism, not for doom and gloom, and picking up the negative points: we have moved a long way since that first shock announcement that we were going to lose a third of our income. We 2690 should be very pleased with the progress we have made, not complacent, not smug, but we could be quite satisfied that the sacrifices we have all made to get to where we are today, is at long last, starting to deliver.
The President: The Hon. Member, Mr Karran. 2695 Mr Karran: Eaghtyrane, I think the Budget… I think we must agree that the idea that there is a more thought-out idea on a tax cap is something that we must say is very good. I think the issue as far as making the changes, as far as the health service is concerned, and putting the budgetary priority as far as that is concerned, that should be supported as well, even 2700 if I think it is as much to do with the opposition to shame people into action, over everybody wanting to be cosy within this Hon. Chamber. I think the situation that the Chief Minister mentioned about the effects as far as the Customs Agreement is concerned, there are two points that I think have not been mentioned: one is the fact that how much the tax policy that was brought out has had as equally as much 2705 effect as far as the finances, as far as the Government is concerned, and to be fair, Mr Bell and his colleagues were warned, not in this Chamber, about their reckless actions, which resulted in bringing this about in the first place.
A Member: Dear me! 2710 The Chief Minister: What reckless actions?
Mr Henderson: That’s slander.
2715 Mr Karran: You know what the reckless actions are: you were told in the Members’ Room. (Interjections by Mr Henderson and other Members) The point is that I think it is important that we do look at certain points within the Budget today. I am glad that the Chief Minister has clarified the point as far as DED is concerned, that there is income coming in, to offset the reduction… the non-growth, as far as DED is concerned 2720 for financial help. Obviously, I do not want that being developed on the basis of not going on the right criteria, not being benchmarked correctly. I think that it needs to be on the basis of knowledge as far as any improvement is concerned. I think the problem with the Budget is that whilst we are limited and we are where we are, I 2725 still do not see the movement that we need, even though the movement has improved out of all recognition, which has been a long hard slog for the individuals – a few of us who are not prepared to be part of the cosy arrangement that actually built the foundation of the problems that we are inheriting now, as far as the problems we have got to try and move ourselves out of. (Interjection by Mr Henderson) ______881 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
2730 I think it is important that the Budget is seen that we are trying to deal out of a difficult situation and we have to try and be as positive as possible, but it is in my opinion still very sterile as far as getting on with things that we need to do. There has never been a more important time to seek out new engines for the economy, to bring in new proposals to get better value for money as far as the taxpayer is concerned, and to try and stop some of the ever-increasing debts 2735 and liabilities for the next generation. Many of the problems that we have got today, as far as the economy has to face as far as trying to create that environment, have come around from the fact of Government… the crazy system that we allowed, to allow the off-Island transport costs with the User Agreement, which is stifling business as far as trying to get more business onto the Island. The energy cost, that we 2740 keep putting off the reality of the legacy of the bad process within this Chamber as far as the MEA is concerned is another issue, and now we have seen with that, which is equally concerning as the costs that are going to have to be put on, as far as the sewerage implication is concerned, which work out somewhere in the region of about £150, if we are to end up having to pay back for it, as far as every man, woman and child, as far as the Island is concerned. 2745 Then we have the problem as far as property is concerned – the fact that we have allowed a few to manipulate the situation as far as property is concerned. We need to sort out the issue as far as making sure that we get affordable rents to get the businesses to come to the Island, as far as anything to do with production and manufacturing is concerned, and there are ways that we can deal with that. We have talked about the issue of the first-time buyers where we create 2750 planning where there is so many of the proportion of the houses have to be for first-time buyers, and maybe we need to develop a way in planning that we find a way in the planning system that we have some sort of facility to provide affordable starter units as part of any planning for the future. I know, Eaghtyrane, we will have black turning into white, as far as this thing, but you will 2755 come around to dealing with many of these issues. It just takes so long to try and get these things done. I am as committed as anyone in this Chamber (Interjections) as far as the issues of trying to get things forward. That is why in the previous Budget, I put forward the issues of the EEZ to create a new engine for the economy, to try and bring about better tendering procedures for 2760 consultants on capital works, backed up with the rule of law, so that those who are getting top dollar should be held to account, to stop the disgraceful abuse that has happened as far as the taxpayers being ripped off on poor value for money projects, where people are being paid professional fees. Many outside this Court will not be agreeing with the rest of you in this Court. They would 2765 look upon it as being almost criminal as far as the poor job for so much to get such a bad return, and that is partly why we will be seeing on this Order Paper today the toilet tax – another panic measure, (Interjection) not brought out, not thought out as far as that is concerned. And these are issues that we need to fundamentally change, and we do see – as the old Manx saying – beggan ry veggan ny share, little by little we are seeing some movement. 2770 Like my hon. colleague said about the issue over the National Insurance holidays, it could not happen – just like the 5% as far as home improvement, it could not happen, the moon would fall out of the stars, and I think these are things that we all contribute, to try to bring the Government into a more flexible and realistic approach, as far as what needs to be done. Thirdly was the issue of bringing the end to the final salary scheme, as far as Members were 2775 concerned, in order that we can show that the hurt starts with us. I would remind Members that it was about seven or eight years ago that I first raised this, and I think if Members go back into Hansard, they will see that this is something that needs to be addressed. I think the Treasury Minister needs to address the issue of the fact of the increased money for executive Government and the Cabinet Office for the people outside this Chamber and it is 2780 important that maybe he can tell us – it seems we have heard from the Chief Minister about the tax cap – how many individuals the Treasury Minister forecasts in his calculations for income. ______882 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
Are the individuals going to be paying this maximum liability as far as tax is concerned at £120,000 a year? I have to say that I do agree with the Chief Minister on the fact that, in the UK, ‘non-doms’ 2785 will only have to pay £30,000. I do think sometimes we need to be a little bit more forceful about that, that if any of us in this Chamber was to win the Euro Lottery, we would be far better off moving to the UK as non-doms, and we pay less in tax. I do feel that what we need to also highlight with this proposal, as far as the tax cap is concerned, you should be more actively promoting that thing, as far as the UK is concerned. So I 2790 do agree with the Chief Minister that his presence in the London scene, that is the sort of thing that does need to be promoted. It will be interesting to see, also by the Shirveishagh Tashtee, the issue with the merge of the MEA and WASA, and the implications as far as the transfer as far as the reserves per year for the next five years to meet the obligations as far as the external bankers are concerned. I think these 2795 will be points that need to be addressed. I am glad to hear my colleague from Castletown about the issue of the public sector pension, which is something like half what we need in order for it to be sustainable. I know we are going in the right direction, and I congratulate the Chief Minister and the Treasury Minister for this, but what a battle it has been over the last seven or eight years, as far as trying to push as far as 2800 that issue is concerned. I remind Hon. Members, read your Hansard, before we get the usual diatribe, as far as that issue is concerned. I think it is important that we have a number of issues that we are going to have to address and I think as far as I am concerned, yes, we are moving in the right direction and we need to do everything we can to keep moving in that situation. I think that we as legislators create the 2805 environment for business to work, and it is up to us to create that environment, and I do not really see in the Budget that issue really being as addressed as it should be. We have issues such as the ever increasing dependency on the construction industry on the Manx taxpayer. I believe that the recent one is the 80%... It is somewhere about 80% at the present time, which is totally unsustainable, and I am sure the Minister of Economic Development after me can tell us what is 2810 the percentage of the construction industry, as far as the employment of people. It is something between 15% and 20% of the economy, I believe is in construction. So that means that 70% to 80% of that industry is dependent on the taxpaying population. And I understand totally the Chief Minister, as somebody who has sat here almost as long as the Chief Minister, on the same political persuasion for many of those years, as far as that is 2815 concerned. I understand that we do not want a scorched earth policy that many of his colleagues would have had, if they had had the opportunity, and more likely would have ended up with a situation of a fire sale, where we would have ended up with mates’ rates as far as the public assets are concerned. I am glad for that from the Chief Minister, as far as that is concerned. 2820 But it does concern me with this Budget, the fact that here we have a situation where, with the likes of these factors of the construction industry, we are ending up having to pay something like one in three – one in four, if not one in three is dependent on taxpayers’ money for his employment and that is not sustainable. I think it is important that we all recognise that. So I would have liked to have seen some real initiatives, maybe on progressive orders 2825 regarding planning and other issues, which I have raised – I did raise, when I was a Minister for my brief time there – to try and create the environment, to minimise Government spending as far as the taxpayer is concerned, to get people outside Government actually spend their money, instead of depleting our reserves. And I think that I still see that void that has not been carried out and I suppose we will have 2830 to spend more time dragging Government into looking at these issues, because I believe these are the things that are missed out, as far as the Budget is concerned. We need more progressive ways of how we are going to sustain… because I am very proud to be associated with the most of the achievements that Government has done as far as social welfare is concerned. As Mr Bell ______883 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
will remember that they used to groan at us, not over ‘vanity over sanity’, but over ‘four legs 2835 and a woolly coat, pampered; and two legs, there was nothing’. (Interjections) You can say what you like, Hon. Members, but the fact is, those things have been achieved by Mr Bell and myself and many others who are not in this Hon. Chamber today. (Interjections) What I feel is that what we have got to do is… We are not is seeing that sort of environment that we as legislators should be trying to encourage the executive Government to do. 2840 I realise that the problem that the Treasury Minister has as far as the problems that we have got, as far as the hard times that we have got outside this Hon. Court... But I do feel that some of the points that need to be asked, as the likes of the Hon. Member for Ramsey said, about the new buses: why are we seeing this as a priority? How much has been spent on new buses in recent years, as far as the DCCL is concerned? Is this a matter of having to keep promises for the 2845 buses, that have been promised to be purchased?
Mr Cregeen: That’s scandalous!
Mr Karran: I think – 2850 Mr Cregeen: Prove it, Mr Karran!
Mr Karran: I think the point is that what we need to say –
2855 Mr Quirk: Members!
Mr Cregeen: Madam President, he is making assertions that there is a promise and corruption. Can you ask the Member to retract?
2860 The President: I will ask the Member to retract.
Several Members: Hear, hear!
Mr Karran: Hon. Member, I have not mentioned anything about corruption! (Interjection by 2865 the President) All I am saying is that –
A Member: Yes you did!
The President: Hon. Member – 2870 Mr Karran: All I have said is, Eaghtyrane, the fact is why is it seen as a priority –
Mr Cregeen: No you didn’t! (Interjections)
2875 Mr Karran: – as far as it is concerned, and is it because we are under any commitment?
The President: Hon. Member, will you retract the wording ‘promises made’?
Mr Karran: Obviously, if it means corruption; I did not say that. (Interjections) What I said was 2880 why is it seen as such a priority when you are bringing in a toilet tax and other things? (Interjection) Why have we seen when there is so many in this Hon. Court have complained about the issue of the purchasing of new buses, which is not a new event?
Mr Quirk: He hasn’t withdrawn it, then. 2885 ______884 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
Mr Karran: I have withdrawn it.
The President: The Hon. Member has indicated he did not intend to imply corruption. (Mr Karran: Absolutely.) Hon. Member, just be careful with your wording, because it could well have 2890 been construed in that way. What I also point out is that towards the end of the debate, there is a potential to repeat what has already been said before. (Mr Corkish: Hear, hear.) Could I invite you –
Mr Karran: I am afraid… Yes. 2895 The President: Hon. Member –
Mr Karran: There is, but there are very few that dare to repeat what this Hon. Member says in this Hon. Court, (Interjections and laughter) because the fact is it is too cosy. That is why we 2900 are in the mess we are in now. (Interjection by Mr Cregeen)
The President: Hon. Members!
Mr Karran: I think the point is, on the business change, I think this is a right way of going 2905 about things, but the point is it is trying to bring about that institutional change that needs to be addressed. I think this situation is that what we have got to also look at is when we are talking about the tax cap, is the issue of the Home Affairs Department – the cut that is going to be within the Home Affairs Department. The law and order is going to be a major factor. If you want these 2910 wealthy individuals to come over here, we have got to keep the high standard as far as law and order is concerned, and I am very worried about the false economy, as far as cutting back on Home Affairs on that issue – whilst my Minister is bringing about the penal review, which is long overdue and would have saved us a lot more if it had been done sooner, preferably in the early 1990s. 2915 I would go on to say that I think we do need to look for some real initiatives. Now, as far as the engineering training is concerned, that is great – absolutely great that we are, and that is something to get us into tangible jobs that can create real opportunities, as far as this Island is concerned. I appreciate that when I look around this room and see other people who would be Chief Minister, then there would be a total assault, as far as the working people are concerned, 2920 as far as what would be happening, even worse than we have got at the moment, which basically allows that the only real people who are paying tax are the working people, which is part of the thing that I had to bring into this debate when talking to the Chief Minister about his tax policy. It worries me, and it worries me greatly today, that what we see is far too much adulation. 2925 Obviously we need to be positive, but when I listen to the likes of my good friend from North Douglas, Mr Henderson, about the issue of the Peel Road development, whilst I totally agree with the Minister, our workmen need to be congratulated on the work that they have done, I do feel that something needs to… there are deep concerns, when those staff feel they cannot say and express their concerns that they feel that the wrong materials are being used for such 2930 things. The situation is, what we have got to do is we have to bring about accountability within the public service. We were the ones who fought for the redundancy pay, the unfair dismissal, but there has to be accountability for the work they do. And as for the issue of congratulating on the promenade, I think it sums up one of the big 2935 problems we have got is the crazy capital spending. The real issue that should have been spent on the promenade, instead of that and Nelson Street and these pretty things, is fundamental issues, (Interjections) like the issue of the sea wall; the fact that we have got the problem of ______885 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
contamination of IRIS, where the water is going into and having to be pumped up to Meary Veg. And little things like that would have been far more important – maybe not as sexy, and maybe 2940 (Mr Corkish: Rubbish!) not as… as far as the public is concerned –
Mr Corkish: Absolute rubbish!
The President: Hon. Member! (Interjection by Mr Henderson) 2945 Mr Karran: The point is, Eaghtyrane, we would have been far better addressing those sorts of issues than these glamour things that look good, but do not weigh up in the long term.
A Member: They’re just silly. 2950 Mr Karran: I understand people do not like listening to what I have to say, (Interjections by Mr Houghton and other Members) but someone from outside this Chamber will be absolutely delighted that someone is standing up here. (Interjections) There are issues that I would like to also raise on the budgetary process. I feel that we need 2955 more initiatives – issues like the taxation policy on the buy-to-let, I do feel that we should have been coming along and saying that if anybody owns or any corporate owners have more than to two residential properties, or has a beneficial interest in more than two properties, under £300,000, who is renting them out, we should have seen the rent level… the tax levels at something like 35%, in order to try and discourage that, and to actually start fighting to create 2960 the property-owning democracy that needs to be done. I also feel that if we had… and I think, again, that is the sort of issue that we have to do, if we are trying to create that environment for executive Government. I would like to have seen with the Department of Social Care, as one of the orchestrators of the cost of living bonus from Chislett that turned into the pension premium, and many of the 2965 other issues, that I would have liked to have seen, instead of a situation where pensioners are on a taxable income of say over £30,000 to £35,000, that is not what we want we give them for. They are the sorts of places where, Eaghtyrane, I would have liked to have seen Government attack, because I have to say, many are criticising the Government, because whilst the intentions are good by the Chief Minister, which I cannot argue against – he sincerely believes this – the 2970 reality is the cuts seem to be hitting the wrong people to what the Chief Minister wants, as far as his reality that he tries portray to us in this Court today. I had a disgraceful case the other day, not a constituent of mine, who has been put through hell and back: benefits stopped from March, a person who has been on long-term sick for 14 years. I feel that it is genuine people who seem to be getting the hits and the cuts. I think if the 2975 Minister had done that, that is the sort of thing that, yes, would have affected my constituents, because an awful lot of my constituents who vote for me are elderly and wealthy, beyond the public perception that this Court – (Interjection) Don’t worry, I am used to the insults from you, but you can say what you like. (Interjection and laughter) 2980 The situation is that I do hope that the Minister of Social Care… I want to be part of a responsible legislature which is prepared to be associated with unpopular decisions. That is very unpopular in my constituency – just like standing up for human rights and all the other things where there was a Dutch auction in this Court, as far as the standards going the other way. Because as somebody who is creeping up to being a pensioner, in my opinion, as far as the 2985 priority is concerned, I think the priority needs to be more on working families, particularly working families on low pay with children need to be where the investment is. That is why I think the proposals like I am proposing, where there is a ridiculous income – just like the majority of people in this Hon. Court who are on pensionable age will be at – that is the sort of area where we should be cutting, because I think Minister Robertshaw, your heart might be in ______886 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
2990 the right place, but I am afraid you have not got any idea of what is actually happening in the real world. I go on, Eaghtyrane, just to say I would also be interested to see from the Shirveishagh Tashtee, the Minister, where these new engines are coming from, for the Isle of Man. I would like to see these new initiatives that are coming, as far as that is concerned. I am not denying… 2995 We went to a presentation at dinnertime with the accountants. They are doing very well – very well indeed. But the reality is making sure that we have that inclusivity in our society, and not exclusivity, for the ones who are fortune enough to be in that situation. I think that it is important that when we do give you a hard time in this Court, that we do put alternatives up, and I have put a few alternatives up for this Court. 3000 What I feel is lacking also is the fact that we have got to create a more efficient, more effective… than we are at the moment and we are not doing it, in my opinion. It will be interesting when we see the Questions coming out tomorrow about where these cuts have been, whether it has come from management or at the ground level, and I fear it is more at the ground level than at the top level. 3005 Can I say, finally, on the proposal, I think that the issue that the Member for Middle, Mr Quayle brought up about the computer issue, as far as the Hospital is concerned, is not an isolated case. There is something that desperately needs to be done, when I think over the last decade, as far as that, and that comes down that we need to take a fresh approach and find some way of actually getting the likes of that sorted out. 3010 Finally, Eaghtyrane, I would thank the Treasury Minister as far as the National Insurance holidays. I am really pleased about the issue of 1,100 jobs. I would have liked to have seen… I know that the sincerity is there, from DED and the Chief Minister, as far as young people are concerned, but I would like to have seen some initiatives of a more progressive way of getting more young people off the dole. That is not Peter Karran MHK 3015 speaking; that is people in employment agencies asking me, ‘Can you see whether there is something that can be done so that we can get these young people off the dole?’ I would have said that one of the things that I also would have liked to have seen is I really do think – and it might sound horrendous coming from me – but I think the tax credit needs to be re-prioritised, in order to try and get that tax credit working effectively. I know it is the brainchild 3020 of the Chief Minister, but if it is not working effectively, you in the Council of Ministers need to raise that issue and argue that point, because there is a considerable money going out on that tax credit which, personally speaking, upsets an awful lot of legitimate, hard-working people who are above that. I do hope that that will be looked at. I understand the difficulties that that places today. 3025 The points that the Health Minister has raised: I hope that he appreciates the hard work and the battling that my colleague has done in order to get people to face up to what needed to be done as far as the Budget is concerned. Eaghtyrane, it is important in this Hon. Court that I know there is a fixation as far as the film industry is concerned, but I do feel that it is important that we stay firmly with our feet on the 3030 ground about what is actually reality and what is not something that would be more akin to the film industry itself. Hon. Members, what I feel is that outside this Hon. Court, many people will be saying, ‘Why have we got into this situation in the first place?’ We are stumbling in the right direction, and I will congratulate that the Ministers have at least started to address the issues which for far too 3035 long they would not address, whilst a few of us who were isolated by saying what needed to be said.
The President: Hon. Members, we will now take a break. The break will be until 25 minutes past five by the Court clock. The first to speak when we come back will be the Hon. Member for 3040 Onchan, Mr Quirk.
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The Court adjourned at 4.59 p.m. and resumed its sitting at 5.25 p.m.
2. Budget for the Year 2014-15 – Debate concluded – Motion carried
The President: Please be seated Hon. Members. We continue. I call on the Hon. Member for Onchan, Mr Quirk.
3045 Mr Quirk: Thank you, Madam President. First of all, I would like to say a big thank you to the Treasury Minister for actually providing us the documentation well ahead of time. I do appreciate that, for those that were in the House early, they had an envelope on their desk. I opened mine and found a speech there and was already ahead of him at the time, so I found it quite useful. (Interjections) No, they have not! 3050 Madam President, the Budget itself is an opportunity to give to the nation really what is happening within Government – what is central Government, Treasury and the Council of Ministers, if you want to call it, up to. Well, here we have it laid out. It shows you the good work that the Government has done, not only with the Council of Ministers, but other Members as well that are in this Hon. Court. Then I felt that the Treasury Minister should have given a bit of 3055 credit, although he has given credit to some other Members in there, but I would say even all, including my hon. friend, Mr Karran, who has probably had an influence in that as well. If I could say regarding one or two of the issues, if I could just ask the Minister just to respond on, really, and it is probably down to my good friend, Mr Shimmin, which is the tourist sector. A nice big paragraph on there, we all know the TT and we all know the Manx Grand Prix. But I was 3060 quite interested in my colleague from Kirk Michael, Mr Cannan, regarding the ideas that he had and I would like to see something developed, not maybe as big as what Mr Cannan was on about, but exploring some of the other avenues for visitor experiences to the Isle of Man. Especially the one where we had… somebody mentioned cycling in the debate as well. There are opportunities there, there are opportunities to be had. 3065 I have to put it on the record once again, when we want to sell a branding exercise, we have got to make sure we do not just give it away, or that somebody takes it off us. That branding of what the TT is to the Isle of Man is precious, and it should not be hawked away or given away lightly, it belongs to this particular nation. The other issues I have got regarding the debate, and the speech there, actually clearly 3070 indicates the job losses, as well, and telling the public out there 600 actual job losses, with a handful of compulsory redundancies. The Government is actually doing some of the work. Some may say not quick enough, but then the work has been done. Which brings me to my other friend from Castletown, Mr Ronan, which is the concern I had when he flagged up some of the issues of the redundancy payments and packages of mutual 3075 agreements that has been done. The concern I had was there where we could have potentially redeploying people that have left the service, and I just wonder whether the Minister could just touch on that briefly when he winds up, regarding what is the mechanism there, if he knows what the potential numbers have been, and were they needed. Because I, in my small estimate that once these assessments are done, the Government should be looking at what is the value in 3080 the person, or the loss of their job, or if that job is going to be absorbed somewhere else, somebody else can take it over. So the need for replacing a job on a contract for a short-term basis, or a long-term basis – we do not know. There are alleged to be contracts which are still out there with Government from plans for five years ago. One would hope that those contracts
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have actually diminished or finished, and I know that one of them lies in Social Care. So that 3085 should be outsourced at the time, it should be coming towards an end. The other references in the Budget too, I hope that we could get to the means-testing exercise. The nub for me is really when we are cutting benefits, we are increasing charges, to me Treasury Minister, the exercise which puts into my mind really is that means-testing model, the way we are going to do this for us all, and we all signed up to that, would be the model that 3090 everybody will look at. With Social Care and benefits going over to Treasury after 1st April, one would hope that that particular model can come out a lot quicker than maybe your Department is thinking of. I think you would do a great favour to yourselves and a great favour to this Court by putting that model out and testing it with us a little bit earlier, and getting it going. With just a little reference there to my colleague from Onchan too, he forgets that myself 3095 and Mr Hall are Members from Onchan – it is not just him that has constituencies, we all three of us have the constituencies – and with that in mind I have to remind him too that under planning there is money that is set aside, there are developments, big developments have to put so many first-time buyers out there, so the scheme is there. It is administered by the Department of Social Care. I am sure my friend and colleague, Mr Robertshaw would nod. 3100 Mr Robertshaw: Bless you, David.
Mr Quirk: There you go, he did not nod but he said yes. So the scheme is there and I did not want to give the people out there that we have not done 3105 that; we have always done that –
Mr Karran: I never said that.
Mr Quirk: You did. You look at Hansard – and I will remind you, Mr Karran, Hansard would 3110 always remind you, you were wrong – okay? Regarding the other bits in the document here too and it goes with means testing, if I can say it, is the rating exercise. I know it is 2016, it may be as we come towards an election it will become a massive issue then, towards the election. I wonder whether that can be pushed a little bit further in towards 2014-15, the exercise. Although we may have little bits that are wrong in 3115 it, the main components of that exercise really should be done. As you say, there are two models that were done a long time ago, one was to do with Onchan and the other was to do with Kirk Michael, so that always gives you a good basis to look at it and it may be an exercise that central Government could actually push it out to somebody, to actually come up with a solution, that would be a first would it not? If we could do that, it 3120 probably would not be a first but it is a good exercise probably to do. A fresh face on it, somebody looks at it, comes back with a model, Treasury support it and brings it to the House and away we go, and we do all that. And then the fairness comes in, and I remind Members it is a sewerage charge and I am sure my colleague from Onchan too, voted for the sewerage charge some time ago, so I remind him of that as well. 3125 With reference to some of the other issues within the debate, the balancing of the Budget – not the Budget as such but bringing the losses together – you have got to give the officials, Treasury itself, Members, everyone that is committed towards that sum to bring that forward and bring those balances together, which shows and even on page 9, where he said:
‘We will rebalance the revenue budget in 2015, but that will not mark the end of the journey.’ 3130 and hopefully people out there would realise that, that we are to re-balance the Budget towards 2015, but we have not got to lose our eye on the ball and some of these other issues that we should be looking at, should be coming about.
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As regards the reforms of the benefit system, I have to say it will all depend, Chief Minister, 3135 on sometimes where you are putting these Members, where these Ministers are going to be. Because I hope and I do pray really that those Ministers then will take advice from backbenchers when these schemes are coming forward, and listen to Members and have briefings with Members and engage with Members, because if I could say to the Ministers that I have worked with, they do engage. They may not always like what Members say to them but I have always 3140 had a fair crack of the whip, and it does give a Minister another chance to look at it another way. I hope that, when the restructuring does take place of the Departments and Members, and we lose the DCCL Department on 1st April, and then we have the new one coming in which is the Manx Utility, and as far as I am concerned that is a win-win situation. Two major departments come together and we have a structure then that climbs out for the future, and at 3145 the end of the day, as somebody said to me some time ago, it is all taxpayers’ money. Treasury are just the custodians of it, and Treasury has to make sure that the money that is invested in Government Departments is spent right. And I believe that Treasury role does that, it may come up with some sometimes radical ideas or thoughts. And the Business Change Group which the Treasury Minister was in charge of, I still would 3150 like to see a bit more coming out from that. We never know, as far as I am concerned, I do not know if anyone else feels it, but I never know anything different until maybe Mr Ronan who is on that gives us little snippets, or the Minister for Agriculture suddenly says to us, ‘Yes, there are going to be plenty of jobs because some of your Members are not going to be doing anything.’ He told us that last week – and I believed him. (Mr Gawne: Ah!) 3155 So, I wanted to wrap up, and I wish that Members, if they have evidence to back up their substance, what they say in the Court, they produce it to the Court, and just do not make wild statements.
The President: The Hon. Member of Council, Mr Braidwood. 3160 Mr Braidwood: Thank you, Madam President. Madam President, I believe amongst the rhetoric in the contribution of the Hon. Member for Onchan, Mr Karran, was that the Budget has been damned with faint praise. But once again he brings some of the skeletons out of the cupboard: his idea of an EEZ, which of course, last 3165 month, the Chief Minister said was untenable for the Isle of Man – different for such as Jersey in the Channel Islands, which has close proximity to France. Also on the construction industry, that we did not follow the principles of the United Nations – I believe in the reply from Treasury last month was that we have been following this for a decade, and in actual fact it is only for developing countries. 3170 Mr Karran also likes to mention the IRIS scheme. As we know, the IRIS scheme changed in 2006, in that we had a review of the scheme. I was the Minister for Transport at the time who asked for the review, and when the review came through, the IRIS scheme for the South, Onchan, Douglas was the right way forward because it involves 67% of the population. And we have gone to regional sewage treatment works which, in actual fact, when he listens to Answers 3175 or his question yesterday, it will show that how the estimates coming in are far below the capital which we said in April 2011, of just under £40 million. Madam President, I will try to restrict my comments to the Capital Programme and Capital Account, because quite a few Hon. Members did bring it up during their contributions. I would probably guess that the contribution at the moment for the Capital Programme between 3180 Government and private is probably about 75% to 25%. And Government stepped up to the mark in 2008 when there was a downturn in the construction industry, and we brought forward our Capital Schemes to take up the slack. And I was glad to hear – and I know that Mr Skelly mentioned it in his contribution – the 156 houses which are going to be developed in Port Erin, 39 of those being for first time buyers.
______890 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
3185 We know now that it is starting to pick up in the private sector, particularly with some of the high-net-worth individuals’ properties which are going through planning. So the green shoots are starting to show in the construction industry for the private sector. So it actually shows that the principles that Government brought in stepping up to the mark, in actual fact stopped any ‘slash and burn’, because otherwise if there would have been the 3190 reduction in any of the revenues which would have caused quite a problem. Yes, there has been a reduction in the Capital Fund: one of the reasons being that on the Capital Loans Fund, we did not charge any interest and therefore that allowed… we did not put it in the revenue of Departments, because otherwise they would have had to cut a little bit more, and that would have been the slash and burn. But again, that interest charge is being 3195 reintroduced next year for Departments. If we look in the Treasury Minister’s speech on Capital:
‘Treasury believes that the MEA has now reached its peak debt in terms of the amount owed back to the Capital Fund… In the years ahead it will, as part of the Utilities Authority, be repaying to the Capital Fund more than it borrows each year, and this will finance a growing proportion of our future capital programme.’
So that is where the money is coming from, and if we look on page 62 on the summary of 3200 estimate of capital payments, we know this year it is £95 million, next year it is going to be £86 million, and then £81 million in 2016-17. The estimate for 2017-18 will be round about the same. Madam President, what we have tried to do in the Capital Projects Unit is bring forward schemes if any fall back and, as the Treasury Minister said, particularly out of the Capital Programme of £96 million this year, we have spent basically near enough 89%, which is 10% 3205 more than the previous years. So what we are trying to do is get a Capital Programme that we can fulfil, and if we can achieve 90%, I think that will be remarkable going. It is also mentioned that we had £95 million of the Capital Programme this year with the £72 million. The remainder of course is local authorities – I think that was mentioned by the Hon. Member of Council, Mr Corkish – and some of the Statutory Boards, one being the Post Office of 3210 course. And £50 million of that is in the bricks and mortar in the capital schemes, because one of the largest schemes this year in the Capital Programme will be IRIS at £9 million, that is £100 per person for the Isle of Man population. That is again going into bricks and mortar – it is the change in the principles of using IRBCs for the IRIS scheme. Madam President, I would just like to finish on the personal allowance credit (PAC) which was 3215 mentioned by Mr Karran. It was reduced last year by £200 to £500 – it has stayed at £500. However, the Treasury Minister has given a commitment that we will be looking at the PAC to see if we can target it better to those people who actually need it. Thank you, Madam President.
3220 The President: The Hon. Member for Malew and Santon? No. (A Member: Yes.) The mover to reply.
The Minister for the Treasury (Mr Teare): Thank you, Madam President. I promise I will not take as long in summing-up as I did in delivering my speech. 3225 If I could crave your indulgence, Madam President, the indulgence of this Hon. Court, I would just like go through the major themes that have come out, and then deal with some of the individual issues. I think that would be more precise, in a way. There is a general theme here about the feeling that we have not delivered long-term sustainability, and to a certain extent I think that is correct. What we have said is, we are going 3230 to bring out a new fiscal strategy at this time next year when we will explain, not only how we are planning for next year for the next two years, or the next election, but for the next generation, so we can see the path clearly ahead.
______891 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
To take the Hon. Member from Michael’s point, to actually set out a clear strategy with everything on the table. And I think that will help to resolve some of the uncertainty that 3235 undoubtedly exists at the moment. I think we all acknowledge too that change is unavoidable: it is how we deal with change that is the important thing. It has to be managed sensitively, and consultation has to be undertaken. It is easy to assume that people understand, but unless we explain it to them they are probably not going to understand. It is the old axiom really: it is always easier to do somebody else's job 3240 than do your own. So, we must manage change and manage it sensitively. The subject of public sector pensions has come up more than once and I would agree it is unsustainable, but there was a motion in this place last month where we agreed that Treasury would look at it again and come back with proposals. I would say too that the same could be said for the state pension scheme, where we have currently got in the region of 18,500 claimants – 3245 and it is going up by approximately £500 a year. To support all this, though, economic growth is essential, and my hon. colleague, the Minister for Economic Development, will be dealing with this in a debate later on in this session. But where we as politicians have a responsibility is how we manage expectations. We must acknowledge, I respectfully suggest, that we cannot say yes to everything: we need to put things 3250 in context, so people understand the picture that we see and we need to try and explain to them why we cannot deliver what they are expecting. Everybody will have different expectations. Turning to the tax cap: we are dealing with a competitive area and on the analysis that I have undertaken, the Isle of Man is already at the top end of the tax rates available, but we will keep it under review. The Hon. Member for South Douglas did mention that perhaps we could put 3255 some more conditions or strings with it. The success of our tax system, I would suggest to date, is that it has been simple, easy to understand and easy to explain, and that is a big plus point for us because the analysis of some of the other tax caps I have undertaken is that they are not easy to understand. We need something that hits the button straight away. These are busy people, we need to explain in simple words so they pick it up and say, yes, I understand that. There are 3260 no strings. And what we have demonstrated is the very substantial exchequer benefit that they bring into the Island, and also economic activity as well. There was also a feeling that any review of local authority taxation should be brought forward as quickly as possible. That is a big exercise and the extent of that should not be underestimated – but the message has been taken on board. 3265 Also means-testing: this is a very emotive subject but it has to be very accurately targeted once again. We need to protect the genuinely vulnerable and we will need to deliver a bespoke scheme. It is no use relying on what happens in the UK, for example, we need to deliver something that reflects the needs of the Isle of Man and our society. This now, following 1st April, will rest with Treasury, so the then Treasury Minister will have to deal with it. 3270 Finally going to the main points of the individual contributors. The Hon. Member for Middle, Mr Quayle, mentioned an increase in national health insurance of 1%. Unfortunately, whilst this would generate extra revenue, only just under 20% would accrue to the health budget, so that would be approximately £500,000. He did mention outstanding debt: the proposal is that Treasury considers setting up a collection unit to undertake a more, shall I say, aggressive, debt 3275 collection policy because he is quite right, these debts cost us in two ways. The first is the administrative burden in collecting them or chasing them up, and the second is the loss of interest in the meantime. And it would also help our cash flow as well. I will confirm to him that those funds which were in the Agricultural Fund and are now going to be held in the Agricultural and Forestry Fund, of those ones which are there and are 3280 hypothecated for agriculture will remain hypothecated for agriculture. There is no intention to reallocate them between agriculture and forestry. He mentioned, too, the cuts in education. I just explained to him that that is just a reflection of the impact of tuition fees – nothing more than that.
______892 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
The Hon. Member for Michael questioned whether there were any hidden costs or charges 3285 on where they were. If there are any hidden costs and charges I am certainly not aware of it. He also said that we should have cut faster, harder and quicker, and what I would say to him is, just look at the proof of the pudding, we do not have to go far. We are still growing, and if you compare that with other jurisdictions, other jurisdictions would give their eye teeth to get what we have got. We have done well and we should not ignore that. 3290 I am not being self-congratulatory, I have had precious little to do with it, but we are in a good position, a good place. Contrast that with the Republic of Ireland, look what has happened there: there has been a mass exodus of 35,000 people, mostly young people, young talented people, and they are still 10% below the GDP prior to the crash. So maybe we should learn from what has happened elsewhere. 3295 He did say that the Business Change Management Group should have been headed up by Capita, but look at the savings again. We are on track and we plan to deliver £10 million of savings. So we did not have to explain to an outside agency how Government worked and the realities of the politics of the Isle of Man – myself and my colleagues picked up the task and got on with it. I have to pay credit to Mr Ronan and Mr Wild for the dedication that they have shown 3300 in what has been a very time-consuming exercise – but it has been very productive for the taxpayer. The Hon. Member for Rushen, Mr Skelly, said that we should seek infrastructure bonds from the public. I have explained before, and I did in the last Budget, that this was very much on the radar screen, but I would not seek funding from the public until we actually needed it. So at the 3305 moment, yes it is there – I can see some merit in it, but it is not an immediate prospect. One of the interesting things he said, certainly very interesting things, is that we must be prepared to accept an element of risk – and I wholeheartedly agree with him, and I know that my Chief Minister colleague agrees with him as well. Nothing is guaranteed. We need to be prepared now and again to consider propositions, evaluate the risk and say, well, it is not 110% guaranteed 3310 success, but we think it is worthwhile investing in. Unless we take these opportunities now and again, we are going to miss the obvious golden eggs. Mr Speaker: I was impressed by his upbeat message and the recognition that the Isle of Man is in a strong position. And we need to give out a cautious optimism. We are not crowing: we are in a good position but there is a lot more work still to be done. And he has hit the nail on the 3315 head as ever: the challenge is raising revenue. But there will come a point that we will have to consider the balance between raising revenue and expenditure, and where does that dividing line lie? The Hon. Member for South Douglas, Mrs Beecroft, asked a series of detailed questions. I am afraid that her tongue was faster than my hands, so I was not able to write them all down. The 3320 question about Capital Fund has been dealt with by my colleague in Treasury, Mr Braidwood, and I thank him for that. The Medical Indemnity Fund, why haven't we increased it now: there is no certainty or clarity over claims at the moment – these things take years to go through the system so we do not think there is any need to actually make a provision at the moment. 3325 She asked about age allowance, she said it was wrong, but I would suggest that the elderly have already benefited by an increase in their pensions, and it is only the more wealthy who will be affected, as I said in my speech. There would be 420 individuals and 200 couples who would be affected by this and, of those, 260 involved and 75 couples would have an increase of less than £50. And that is certainly more than compensated for by the increase in the state benefit. 3330 She asked too, about the reduction of staff in education. That is through the centralisation of the catering service. She just mentioned too, the number of over 65s that we expected by 2032. She quoted a figure of 500: I am advised that we expect the increase to be 5,300 at that time, substantially more. I confirm that, as I said in answer to a question in another place last week, we have 3335 developed four films with Pinewood since the agreement was signed October 2012. ______893 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
The Treasury staffing reflects the transfer of the Strategic Asset Management Unit and the Rates staff and others into Treasury. She asked how much are we living beyond our means, and it is approximately £86 million when you take into account pensions, etc. 3340 The Hon. Member for South Douglas, Mr Cretney, has I feel quite modestly achieved a lot. He has cut a lot of expenditure in the Department of Infrastructure: it is not his natural area, but he has done well, and I thank him for that. He and his team have made a major contribution, and I look forward to that contribution continuing as they are an integral part of rebalancing this Budget. 3345 The Hon. Member of Council, Mr Corkish: I thank him for his supportive comments. He asked, do we have a good seat when we meet the UK, and I have to say that my recent experience is that we have a much more open door policy with the UK now. We get heard, we are able to articulate our views, and I feel that we have a very good working relationship with them. Quite naturally we are not going to agree on everything, but they do listen. 3350 The Lord Bishop said that he was uneasy about legal aid and I can quite understand that. As Chair of the Select Committee into the provision of Legal Aid in Family Matters, I saw the damage that the provision of legal aid in certain family matters did to families and children of that union. I think really that we need an alternative approach rather than the present adversarial approach which, I have to say, only finishes up with firmly entrenched positions. He 3355 asked about why don’t we have a look at Gift Aid. The theme of the taxation strategy for the Island is that we keep it as simple as possible, but what we do is we still allow tax relief on charitable donations. In the last year for which I have information available, there was £3.2 million claimed for 2,700 cases and tax relief of £500,000 was given. So maybe that is a different way of putting the collection box around, Lord Bishop. 3360 The Hon. Member for Onchan, who is not in his seat at the moment because I am in his way again, sir, he mentioned reckless actions brought about VAT. Nothing could be further from the truth, and if it was not so serious I would laugh at it. The truth is – and I have done considerable research into this – when the VAT agreement was set up with the UK, our economies were virtually identical, and the composite parts of the economy were identical. As the 40 years have 3365 gone by, the Isle of Man and the composition of its economy has diverged from the UK. A large part of our economy now is exempt of VAT, or zero-rated – certainly higher levels than seen in the UK. So, it is not unnatural that there is… it is time for a review, we are undertaking the data to support the new agreement but as the Chief Minister said the outcome is not guaranteed, the coin is on the edge at the moment, it could fall one way or the other. 3370 The Hon. Member did, however, say that we were moving in the right direction – and then he went off in the wrong direction! He said that we should be looking at new initiatives, but the difficulty is that every initiative that we have a look at, we seem at times to meet a wall of criticism, and that is acceptable within this Hon. Chamber, but the thing that we have to remember, Hon. Members, is that we have microphones in front of us and what we say goes out 3375 into the wider world. And if we are not careful we are going to damage confidence (A Member: Hear, hear.) – and confidence is a very fragile flower, as it were. However, I am pleased to note that the Hon. Member for Onchan has been on the road to Damascus, like St Paul. He said that the engineering facility was a good idea. However, I seem to recollect him and his colleague in the Liberal Vannin Party actually voted against it! (A Member: 3380 Hear, hear.) But it is nice to see that he has gone round through 180 degrees. The Hon. Member for Onchan, Mr Quirk, mentioned tourism and that we should explore alternatives, as the Hon. Member for Michael did. Actually the Department of Economic Development is currently undertaking different ways of altering the tourism product, as it were, including other areas and sports tourism. 3385 I think, Madam President, President, that concludes my summing-up but, finally, before I sit down I would like to thank my colleagues in Treasury, Mr Braidwood and Mr Downie, and also my Chief Financial Officer, Dr Couch, and our colleagues in Treasury for their help and support in ______894 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
preparing what has been a very time-consuming, and shall I say at times difficult, path to deliver this budget to you today. 3390 So, Madam President, I beg to move.
The President: Hon. Members, the motion before the Court is set out at Item 2 on your No. 2 Order Paper. Those in favour, please say aye; against, no. The ayes have it. The ayes have it.
3395 A division was called for and electronic voting resulted as follows:
In the Keys – Ayes 19, Noes 5
FOR AGAINST Mr Quirk Mr Hall Mr Ronan Mr Karran Mr Crookall Mrs Beecroft Mr Anderson Mrs Cannell Mr Bell Mr Thomas Mr Singer Mr Quayle Mr Teare Mr Cannan Mr Cregeen Mr Houghton Mr Henderson Mr Robertshaw Mr Shimmin Mr Cretney Mr Watterson Mr Skelly Mr Gawne The Speaker
The Speaker: Madam President, in the Keys 19 for, 5 against.
In the Council – Ayes 9, Noes 0
FOR AGAINST Mr Corkish None Mr Wild Mr Crowe Mr Downie The Lord Bishop Mr Butt Mr Turner Mr Braidwood Mr Coleman
The President: In the Council, 9 for, no votes against. The motion therefore carries.
______895 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
3. General Revenue and Capital Payments 2014-15 – Expenditure approved 3400 The Minister for the Treasury to move:
(1) That the Treasury be authorised to expend during the year ending 31st March 2015 sums not exceeding those set out in Column 3 of pages 20 to 23 of the Isle of Man Budget, being the amounts required by the Revenue Funded Government Departments and Other Bodies after deduction of the receipts of the said Government Departments and Other Bodies (estimated at the sums set out opposite their names in Column 2) to enable those Departments and Other Bodies to expend sums not exceeding those set out in Column 1 totalling £920,317,856 for the purpose of carrying into effect the services approved by Tynwald. Provided that a Department or Other Body, having the duty to administer expenditure out of monies provided by Tynwald, may transfer savings on any main heads to meet additional anticipated expenditure to be incurred on any other main heads of its Vote, subject to the conditions set out in Financial Regulation FD18 – Virements, issued by the Treasury in November 2013. (2) (a) That the Treasury be authorised to expend during the year ending 31st March 2015, from the Capital Transactions Account, sums not exceeding those set out in Column 1 of the Capital Estimates of Government Departments and Other Bodies on pages 25 to 28 of the Isle of Man Budget, totalling £27,875,145 (being expenditure on projects already approved by Tynwald). (b) That Tynwald approves the expenditure detailed in Column 2 of the Capital Estimates of Government Departments and Other Bodies on pages 25 to 28 of the Isle of Man Budget and authorises the Treasury to expend during the year ending 31st March 2015, from the Capital Transactions Account, sums not exceeding those set out in Column 2, totalling £27,462,331. (c) That, upon Tynwald approval to such projects being obtained, the Treasury be authorised to expend during the year ending 31st March 2015, from the Capital Transactions Account, sums not exceeding those set out in Column 3 of the Capital Estimates of Government Departments and Other Bodies on pages 25 to 28 of the Isle of Man Budget, totalling £16,296,477. (d) That Tynwald sanctions borrowings not exceeding those set out in Column 4 of the Capital Estimates of Government Departments and Other Bodies on pages 25 to 28 of the Isle of Man Budget, totalling £46,359,000 being made by Government, such borrowings to be repaid within the appropriate period as set out in Column 5.
The President: We turn now to Item 3. I call on the Minister for the Treasury.
3405 The Minister for the Treasury (Mr Teare): Thank you, Madam President. Item 3 approves the Revenue and Capital Spending of each Department in 2014-15, as outlined on pages 20 to 23 and pages 25 to 28 of the Pink Book, except those schemes in column 3 on pages 25 to 28 for which a separate Tynwald resolution will be required. Madam President, I beg to move the Item standing in my name. 3410 Mr Braidwood: I beg to second, Madam President, and reserve my remarks.
The President: The Hon. Member, Mrs Beecroft.
3415 Mrs Beecroft: Thank you, Madam President. It is a shame I cannot vote for this one, but I cannot because of (2)(b), and that is this column 2 particularly with the £1.3 million in for public transport vehicles. ______896 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
Thank you.
3420 The President: Minister, do you wish to reply?
The Minister: I do appreciate the Hon. Member's position, but she will appreciate too, that this Budget is built up and has a considerable number of constituent parts, and just to say, ‘I am not going to vote’ for, in effect, the whole revenue and capital spending of each Department just 3425 because of one item of which, with respect, is only a small part of total gross expenditure of £926 million –
Mrs Cannell: Not the Member’s choice.
3430 The Minister: – is in effect… Is it not spoiling the ship for a ha’porth of tar? But with that, Madam President, I beg to move.
The President: The motion before the Court is set out at Item 3 on the No. 2 Order Paper. Those in favour, please say aye; against no. The ayes have it. 3435 A division was called for and electronic voting resulted as follows:
In the Keys – Ayes 19, Noes 5
FOR AGAINST Mr Quirk Mr Hall Mr Ronan Mr Karran Mr Crookall Mrs Beecroft Mr Anderson Mrs Cannell Mr Bell Mr Thomas Mr Singer Mr Quayle Mr Teare Mr Cannan Mr Cregeen Mr Houghton Mr Henderson Mr Robertshaw Mr Shimmin Mr Cretney Mr Watterson Mr Skelly Mr Gawne The Speaker
The Speaker: Madam President, in the Keys 19 for, 5 against.
In the Council – Ayes 9, Noes 0
FOR AGAINST Mr Corkish None Mr Wild Mr Crowe Mr Downie The Lord Bishop Mr Butt Mr Turner Mr Braidwood Mr Coleman
______897 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
The President: In the Council, 9 votes for, none against. The motion therefore carries.
4. Investments and Reserves – Transfers approved
The Minister for the Treasury to move:
(1) That Tynwald approves the transfer of £203,000 from the Reserve Fund to the General Revenue Account in 2013-14 in respect of additional investment income earned by the Reserve Fund during 2013-14. (2) That Tynwald approves the transfer of £19,000,000 from the Reserve Fund to the General Revenue Account in 2014-15 in respect of £8,000,000 of investment income and £11,000,000 to meet the anticipated deficit in 2014-15. (3) That Tynwald approves the transfer of £2,100,000 from the General Revenue Account to establish the new Health Inspection Fund in 2013-14, the purpose of which is to provide a reserve to meet additional extraordinary costs in connection with healthcare provision. The application and release of such funds to be subject to Treasury concurrence. (4) That Tynwald approves the transfers from the General Revenue Account and External and Internal Funds of the amounts set out in column 2 totalling £45,090,000 and the transfers to the General Revenue and Capital Account and Internal Funds and Other Expenses’ expenditure set out in columns 5 and 6 totalling £197,973,000 and £3,955,000 respectively of the Investments and Reserves, Probable 2013-14, on page 30 of the Isle of Man Budget. (5) That Tynwald approves the transfers from the General Revenue Account and External and Internal Funds of the amounts set out in column 2 totalling £28,500,000 and the transfers to the General Revenue and Capital Account and Internal Funds and Other Expenses expenditure set out in columns 5 and 6 totalling £112,877,000 and £3,615,000 respectively of the Investments and Reserves, Estimate 2014-15, on page 30 of the Isle of Man Budget. 3440 The President: Item 4, Minister for the Treasury.
The Minister for the Treasury (Mr Teare): Thank you, Madam President. I would like, with your permission, to move parts (1), (2), (3), (4) and (5) of this resolution 3445 together, and to vote on them separately. Part (1) approves the transfer from the Reserve Fund of £203,000 additional investment income, earned by it, to the General Revenue Account during 2013-14. Part (2) approves the transfer from the Reserve Fund of £19 million to the General Revenue Account in 2014-2015. 3450 Part (3) approves a new fund to be known as the Health Inspection Fund, to be established by the transfer of £2.1 million from the General Revenue Account, the purpose of which is to provide a reserve to meet the additional extraordinary costs in connection with healthcare provision. The release of such funds are to be subject to Treasury concurrence. Part (4) approves transfers from the General Revenue Account, and External and Internal 3455 funds as set out in column 2, and the transfers to the General Revenue Account, the Capital Account, the Internal Funds Account, and Other Expenses as set out in columns 5 and 6 of Investments and Reserves, Probable 2013-14, on page 30 of the Pink Book. Part (5) approves transfers from the General Reserve Account and External and Internal funds as set out in column 2, and the transfers to the General Reserve Account, the Capital 3460 Account, Internal Funds and Other Expenses as set out in columns 5 and 6 of Investments and Reserves, Estimate 2014-2015, on page 30 in the Pink Book. Madam President, I beg to move the motion standing in my name. ______898 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
Mr Braidwood: I beg to second, Madam President, and reserve my remarks.
3465 The President: The Hon. Member, Mr Karran.
Mr Karran: On the issue of the pensioner's allowance over 65, if this would have been at a realistic level of what I said in the Budget debate of where we were talking about –
3470 The President: Which motion are you speaking to, sir?
Mr Karran: I am speaking to the one to do with the age allowance, Madam President. I would have been a lot more happy with it –
3475 The President: I think you are on the wrong motion, Hon. Member. The age allowance appears in Item 5; we are now debating Item 4.
Mrs Cannell: I thought he had moved them both…
3480 The President: Are we clear, Hon. Members?
A Member: Yes.
The President: Right, the motion… If no Member wishes to speak? Does any Member wish to 3485 speak?
Mrs Cannell: Point of clarification please, Madam President. I thought the Treasury Minister was moving Items 4 and 5 together (Several Members: No.) but asked for them to be voted on separately – 3490 The President: No, the Treasury Minister moved Item 4, and requested that it be debated as one, but the recommendations (1) to (5) within Item 4 be voted on separately.
Mr Karran: With that correction, Eaghtyrane, I would just like to say that the issue on the 3495 transfer of the £2.1 million from the General Account, as far as the Hospital Inspection Fund, I would hope everybody would support that (A Member: Hear, hear.) as I think that is something that this Court should be supporting, and is a move in the right direction, and I am sure it will add to the efficiency of the Health Services.
3500 The President: The mover to reply.
The Minister: Thank you, Madam President. I would like to thank the Hon. Member from Onchan for his support, and I would like to reassure him that these funds will be used wisely. 3505 The President: The motion before the Court is set out at Item 4, Hon. Members. I will move the recommendations separately. We will take recommendation 4(1) first. Those in favour, please say aye; against no. The ayes have it. The ayes have it. Recommendation (2): those in favour, please say aye; against no. The ayes have it. The ayes 3510 have it. Recommendation (3): those in favour, please say aye; against no. The ayes have it.
A division was called for and electronic voting resulted as follows:
______899 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
In the Keys – Ayes 22, Noes 2
FOR AGAINST Mr Quirk Mrs Cannell Mr Hall Mr Thomas Mr Karran Mr Ronan Mr Crookall Mr Anderson Mr Bell Mr Singer Mr Quayle Mr Teare Mr Cannan Mr Cregeen Mr Houghton Mr Henderson Mrs Beecroft Mr Robertshaw Mr Shimmin Mr Cretney Mr Watterson Mr Skelly Mr Gawne The Speaker
3515 The Speaker: Madam President, in the Keys 22 for, 2 against.
In the Council – Ayes 9, Noes 0
FOR AGAINST Mr Corkish None Mr Wild Mr Crowe Mr Downie The Lord Bishop Mr Butt Mr Turner Mr Braidwood Mr Coleman
The President: In the Council, 9 votes for, no votes against. The recommendation therefore carries. Item 4(4): those in favour, please say aye; against no. The ayes have it. The ayes have it. Item 4(5): those in favour, please say aye; against no. The ayes have it. 3520 A division was called for and electronic voting resulted as follows:
In the Keys – Ayes 22, Noes 2
FOR AGAINST Mr Quirk Mr Hall Mr Karran Mr Thomas Mr Ronan Mr Crookall Mr Anderson Mr Bell Mr Singer Mr Quayle Mr Teare Mr Cannan
______900 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
Mr Cregeen Mr Houghton Mr Henderson Mrs Beecroft Mrs Cannell Mr Robertshaw Mr Shimmin Mr Cretney Mr Watterson Mr Skelly Mr Gawne The Speaker
The Speaker: Madam President, in the Keys 22 for, 2 against.
In the Council – Ayes 9, Noes 0
FOR AGAINST Mr Corkish None Mr Wild Mr Crowe Mr Downie The Lord Bishop Mr Butt Mr Turner Mr Braidwood Mr Coleman
The President: In the Council, 9 votes for, no votes against. The recommendation therefore 3525 carries. I now put to you the substantive motion as printed, Hon. Members. Those in favour, please say aye; against no. The ayes have it.
A division was called for and electronic voting resulted as follows:
In the Keys – Ayes 23, Noes 1
FOR AGAINST Mr Quirk Mr Thomas Mr Hall Mr Karran Mr Ronan Mr Crookall Mr Anderson Mr Bell Mr Singer Mr Quayle Mr Teare Mr Cannan Mr Cregeen Mr Houghton Mr Henderson Mrs Beecroft Mrs Cannell Mr Robertshaw Mr Shimmin Mr Cretney Mr Watterson Mr Skelly Mr Gawne The Speaker
______901 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
3530 The Speaker: Madam President, 23 votes for, 1 against.
In the Council – Ayes 9, Noes 0
FOR AGAINST Mr Corkish None Mr Wild Mr Crowe Mr Downie The Lord Bishop Mr Butt Mr Turner Mr Braidwood Mr Coleman
The President: In the Council, 9 votes for, no votes against. The motion therefore carries.
5. Income Tax Act 1970 – Personal tax allowances approved
The Minister for the Treasury to move:
That in accordance with section 119 of the Income Tax Act 1970, it is hereby resolved – (1) That the personal allowance – (a) in respect of two persons who are spouses or civil partners of each other under subsection (1) of section 35 of that Act shall be £19,000; (b) in respect of individuals under each of paragraphs (a), (b), (ba), and (c) of subsection (3) of that section shall be £9,500. (2) That the age allowance under subsection (1) of section 43B of that Act shall be £1,000. (3) That this resolution shall apply in respect of the income tax year commencing 6th April 2014 and subsequent years.
The President: We turn now to Item 5, Hon. Members. I call on the Minister for the Treasury to move.
3535 The Minister for the Treasury (Mr Teare): Thank you, Madam President. This resolution is made under section 119 of the Income Tax Act 1970. The effect of this resolution is to increase the personal tax allowance to £9,500 for resident individuals, and to £19,000 for jointly assessed married couples and civil partners for the 2014-15 tax year, and subsequent years. The age allowance is reduced to £1,000 for the 2014-15 tax year and 3540 subsequent years. Madam President, I beg to move the motion standing in my name.
Mr Braidwood: I beg to second, Madam President, and reserve my remarks.
3545 The President: The Hon. Member, Mr Karran.
Mr Karran: Eaghtyrane, I am disappointed as far as the issue of the age allowance. I understand the issue as far as we are in hard times, we want a positive contribution in this Court to help. With the problems that many people have with low interest rates, and all the other 3550 issues, if there had been some sort of tax cap, as far as this is concerned, where they were over a certain income, I would have had much more sympathy with the Treasury Minister on this issue.
______902 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
I am disappointed that the Minister did not ask for this to be voted on separately, as far as these issues are concerned, and maybe as a point of order we could possibly have that, Eaghtyrane, if we are allowed – 3555 The President: Hon. Member, if I could make it clear that the motion has been proposed and seconded. It is now open to you to propose that it be voted on separately.
Mr Karran: Eaghtyrane, I would hope that we would see the separation as far as the voting 3560 on these issues –
The President: Are you requesting that, sir, under Standing Orders?
Mr Karran: I am. As I say, Eaghtyrane, I think it would be the right way forward and it would 3565 show us a clear lead as far as that issue is concerned. I hope Hon. Members will, and I hope that Members will agree to that procedural amendment.
The President: The Hon. Member, Mrs Beecroft. 3570 Mrs Beecroft: Thank you, Madam President. I am happy to second that.
Mr Braidwood: It is just a suspension of Standing Orders… 3575 The President: The Minister to reply.
The Minister: It is quite interesting, this one, because what we are doing is in effect, we are cherry-picking. We are saying we do not like this one, but we are quite happy to have the 3580 increase. I have to say that if we do not get the two together, then we are not going to be able to raise the personal allowance from £9,300 to £9,500. As it is, there is a cost to the exchequer of approximately £380,000 in this, and if we forego the income by raising the basic rate of allowance to £9,500, and also maintain the existing age allowance then there will be a big financial impact, and I would just warn you of that. 3585 We have a very tightly balanced budget and there is no scope for dealing with this – it is as simple as that. So, Hon. Members, if you do decide that you like one but you do not like the other, there will be implications. This is not a zero sum game, unfortunately.
3590 The President: Hon. Members, the motion before the Court is set out at Item 5. To that we have had a proposal that it be voted on in separate parts. Is that agreed, Hon. Members?
Several Members: Yes. Agreed. 3595 The President: We take then Item 5(1). Those in favour of 5(1), please say aye; against no. The ayes have it. The ayes have it. Item 5(2). Those in favour, please say aye; against no. The ayes have it.
3600 A division was called for and electronic voting resulted as follows:
In the Keys – Ayes 18, Noes 6
______903 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
FOR AGAINST Mr Quirk Mr Hall Mr Ronan Mr Karran Mr Crookall Mr Houghton Mr Anderson Mr Henderson Mr Bell Mrs Beecroft Mr Singer Mrs Cannell Mr Quayle Mr Teare Mr Cannan Mr Cregeen Mr Robertshaw Mr Shimmin Mr Thomas Mr Cretney Mr Watterson Mr Skelly Mr Gawne The Speaker
The Speaker: Madam President, in the Keys 18 for, 6 against.
In the Council – Ayes 9, Noes 0
FOR AGAINST Mr Corkish None Mr Wild Mr Crowe Mr Downie The Lord Bishop Mr Butt Mr Turner Mr Braidwood Mr Coleman
The President: In the Council, 9 for, no votes against. The recommendation at 5(2) therefore 3605 carries. Item 5(3), Hon. Members: those in favour, please say aye; against no. The ayes have it. The ayes have it. I now put to you the substantive motion as printed, Hon. Members. Those in favour, please say aye; against no. The ayes have it. 3610 In the Keys – Ayes 21, Noes 3
FOR AGAINST Mr Quirk Mr Karran Mr Hall Mrs Beecroft Mr Ronan Mrs Cannell Mr Crookall Mr Anderson Mr Bell Mr Singer Mr Quayle Mr Teare Mr Cannan Mr Cregeen Mr Houghton Mr Henderson Mr Robertshaw Mr Shimmin Mr Thomas ______904 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
Mr Cretney Mr Watterson Mr Skelly Mr Gawne The Speaker
The Speaker: Madam President, in the Keys 21 for, 3 against.
In the Council – Ayes 9, Noes 0
FOR AGAINST Mr Corkish None Mr Wild Mr Crowe Mr Downie The Lord Bishop Mr Butt Mr Turner Mr Braidwood Mr Coleman
The President: In the Council, 9 votes for, no votes against. The motion therefore carries.
6. Income Tax Act 1970 – Income Tax (Resident Individuals) (Income Tax Cap) (Temporary Taxation) Order 2014 approved
The Minister for the Treasury to move:
That the Income Tax (Resident Individuals) (Income Tax Cap) (Temporary Taxation) Order 2014 [SD No 2014/0019] be approved.
The President: We turn now, Hon. Members, to Item 6 on the No. 2 Order Paper. 3615 I call on the Minister for the Treasury.
The Minister for the Treasury (Mr Teare): Thank you, Madam President. This Order is made under section 115A of the Income Tax Act 1970. The effect of this Order is to provide for individual taxpayers and jointly assessed married couples or civil partners, who 3620 are resident on the Island, to be able to elect for the tax cap. If an election is approved by the Assessor of Income Tax, it will apply for five consecutive years of assessment, following the year in which the election is made, at the amount payable for the first year of the election. The amount of the tax cap for 2014-15 year of assessment will be £120,000 for an individual and £240,000 for jointly assessed married couples or civil partners. 3625 Madam President, I beg to move the motion standing in my name.
Mr Braidwood: I beg to second, Madam President, and reserve my remarks.
The President: The motion before the Court is set out at Item 6, Hon. Members. Those in 3630 favour, please say aye; against no. The ayes have it.
In the Keys – Ayes 20, Noes 4
______905 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
FOR AGAINST Mr Quirk Mr Hall Mr Ronan Mr Karran Mr Crookall Mrs Cannell Mr Anderson Mr Thomas Mr Bell Mr Singer Mr Quayle Mr Teare Mr Cannan Mr Cregeen Mr Houghton Mr Henderson Mrs Beecroft Mr Robertshaw Mr Shimmin Mr Cretney Mr Watterson Mr Skelly Mr Gawne The Speaker
The Speaker: Madam President, in the Keys 20 for, 4 against.
In the Council – Ayes 9, Noes 0
FOR AGAINST Mr Corkish None Mr Wild Mr Crowe Mr Downie The Lord Bishop Mr Butt Mr Turner Mr Braidwood Mr Coleman
3635 The President: In the Council, 9 for, no votes against. The motion therefore carries.
7. Income Tax Act 1970 – Income Tax (Disclosure of Information) (Temporary Taxation) Order 2014 approved
The Minister for the Treasury to move:
That the Income Tax (Disclosure of Information) (Temporary Taxation) Order 2014 [SD No 2014/0048] be approved.
The President: Item 7, Minister for the Treasury.
The Minister for the Treasury (Mr Teare): Thank you, Madam President. This Order is made under section 115A of the Income Tax Act 1970. The effect of this Order is 3640 to enable the provision of income tax data to a person providing economic modelling services to the Treasury or the Assessor of Income Tax, as long as the person to whom the information relates cannot be identified.
______906 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
It also provides for information to be passed to the Chief Secretary, or a person authorised by the Chief Secretary, for providing economic advice or statistical analysis, or to assist in the 3645 production of Government statistics. The Order makes it an offence for anyone to whom the information has been given to disclose it, other than for the purpose that it has been supplied. However, production of anonymised data that has been provided for statistical analysis will be permitted, such as in the publication of the National Income Report or the Digest of Economic and Social Statistics. 3650 Madam President, I beg to move the motion standing in my name.
Mr Braidwood: I beg to second, Madam President, and reserve my remarks.
The President: The motion before the Court is set out at Item 7, Hon. Members. Those in 3655 favour, please say aye; against no. The ayes have it. The ayes have it.
8. Social Security Administration Act 1992 as that Act of Parliament has effect in the Island – Social Security Legislation (Contributions) (Amendment) Order 2014 approved
The Minister for the Treasury to move:
That the Social Security Legislation (Contributions) (Amendment) Order 2014 [SD No 2014/0018] be approved.
The President: Item 8, the Minister for the Treasury to move.
The Minister for the Treasury (Mr Teare): Thank you, Madam President. This Order amends the Social Security Contributions and Benefits Act 1992, as it is applied to 3660 the Island, so as to increase the amount of Class 3 contributions to £13.90 per week with effect from 6th April 2014. Madam President, I beg to move the motion standing in my name.
Mr Braidwood: I beg to second, Madam President, and reserve my remarks. 3665 The President: The motion before the Court is set out at Item 8, Hon. Members. Those in favour, please say aye; against no. The ayes have it. The ayes have it.
9. Social Security Contributions and Benefits Act 1992 as that Act of Parliament has effect in the Island – Social Security (Contributions) (Amendment) Regulations 2014 approved
The Minister for the Treasury to move:
That the Social Security (Contributions) (Amendment) Regulations 2014 [SD No 2014/0020] be approved.
Item 9, Minister for the Treasury. 3670 The Minister for the Treasury (Mr Teare): Thank you, Madam President. ______907 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
These Regulations amend the Social Security Contributions Regulations 2001, as they are applied to the Island, so as to increase the weekly lower earnings limits for Class 1 contributions to £111 with effect from 6th April 2014. 3675 Madam President, I beg to move the motion standing in my name.
Mr Braidwood: I beg to second, Madam President, and reserve my remarks.
The President: The motion before the Court is set out at Item 9 on your Order Papers, Hon. 3680 Members. Those in favour, please say aye; against no. The ayes have it. The ayes have it. That concludes consideration of that Order Paper, Hon. Members.
Supplementary Order Paper No. 1
2. Standing Order 2.4(1) suspended to allow further business
The Minister for Economic Development to move:
That Standing Order 2.4(1) be suspended to the extent necessary to allow the business relating to the Vision2020 report to be taken.
The President: We now turn to the Items on our Supplementary Order Paper. I call on the Minister for Economic Development to move Item 2.
3685 The Minister for Economic Development (Mr Shimmin): Thank you, Madam President. This motion seeks to suspend Standing Order 2.4(1) to the extent necessary to allow the business relating to the Vision2020 report to be taken. It was always intended that the Item be placed on the main Order Paper for the February Tynwald, but unfortunately owing to an oversight within my Department this did not happen. 3690 I apologise to the Court for our failure. Given the importance of both the 2020 strategy to the Island, and previous undertakings, I wanted to ensure that it was debated by Tynwald as soon as possible. I beg to move.
3695 The President: The Hon. Member, Mr Skelly.
Mr Skelly: I beg to second, and reserve my remarks.
The President: The Hon. Member, Mr Karran. 3700 Mr Karran: Eaghtyrane, I am just rather concerned about the suspension. This is more likely a major issue as far as the Department of Economic Development, and I do not really think it should be on the hoof at the end of a Supplementary Order Paper. I think it should be… with the fact that we have got such detailed and pressing things on the 3705 agenda I just think that maybe it would be wrong for us to suspend Standing Orders, and I hope Members will not suspend Standing Orders. I am not here to object and I am glad to see that Ministers – some Ministers – are seeing that we are not just here to object. We are actually here to contribute.
______908 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
I just feel that if we support this today, with the time restrictions being on people with other 3710 items on this agenda, it will not get the input that maybe it deserves as far as supporting this. So I would say we should –
Mr Anderson: Point of order, Madam President.
3715 The President: Point of order.
Mr Anderson: What are the of time restrictions on Hon. Members in this Court?
The President: There are no time restrictions beyond Thursday. 3720 Mr Karran: Eaghtyrane, the point is that it is done at a very late date and it did not go out with the original Tynwald papers. I do not know why we have got to have this pretence on the issue. All I am saying is, this is going to be the flagship as far as that Department is concerned, and I think it would be far better, allowing for the… you have got the Budget today, you have got 3725 the Sefton Group, you have got several major things on here. I just do not think Members will have given the gravitas to this issue as far as the importance of it, when allowing for the fact that it is supposed to be one of their flagship policies. That is why I think this Hon. Court should not, because I do not think it will get the scrutiny it deserves – the work that has been done by the Department. 3730 The President: The Hon. Member, Mrs Beecroft.
Mrs Beecroft: Thank you Madam President. I could not agree more with my colleague Mr Karran: to have it given to you with one or two 3735 working days before the sitting of Tynwald to debate the Budget, I do not think it is acceptable. I feel sorry for the Minister if it was meant to be on the agenda, but that is not our problem. When Mr Karran referred to time restrictions I do not think he was referring to actually sitting here in Court, it was the time restrictions, the time taken to scrutinise all these documents that we are given. We are often accused of being nodding dogs in here, and I feel that if we were to 3740 actually debate this today – or, supposedly debate this today – without the proper thought that we should all give to it… well I do not want be a nodding dog. So I make no bones about it (Laughter and interjections) – thank you, ‘boom-boom’! – I will be voting against the raising of Standing Orders, and should that fail I will not take part in the debate on this issue and I will vote against it on the basis that I have not had proper time to 3745 scrutinise it, because we were given insufficient time.
The President: The Chief Minister.
The Chief Minister: Madam President, this is nonsense. 3750 Several Members: Hear, hear.
Mrs Cannell and Mrs Beecroft: No, it is not.
3755 The Chief Minister: This is a flagship document put forward by the Department of Economic Development and it always was the intention of the Department to put it on this agenda because it is most appropriate that the future strategy for economic development, one of the keystones of Government policy, should be debated alongside the Budget – a logical connection. But I would also remind Members it is not very long since we actually had a presentation to 3760 all Members (Several Members: Hear, hear.) and for those that bothered to turn up, they would ______909 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
know full well what was in the Report and would have had plenty of time to assess their views on it long before now. There was a presentation to Members, there was documentation given to Members, and the only thing that happened, Madam President, is there was an oversight in the Department 3765 whereby it did not get on the actual agenda in time. But in terms of making the information available to Members, it is already… Members have had a week or two already to look at this and I would urge of Members please support the suspension.
The President: I would make the point that a presentation is not obligatory as far as 3770 Members are concerned, they do not have to attend, but I think the papers were circulated… were they circulated to all Members?
Several Members: Yes.
3775 The President: The Hon. Member, Mrs Cannell.
Mrs Cannell: Thank you, Madam President. Despite what the Chief Minister has said, it is not a nonsense at all.
3780 The Chief Minister: Of course it is.
Mrs Cannell: It is not a nonsense at all. (Interjections) It may well have been the intention of the Council of Ministers to bring this forward, for we do not know what goes on in the Council of Ministers, or their thinking, because that is kept very close to your chest, Chief Minister. 3785 What I would say is: you require the suspension of Standing Orders to receive it in order to debate it. That means that it did not make it on time. Tough! (Mr Karran: Hear, hear.) (Mrs Beecroft: Exactly.) It will have to come back next month. Suspension of Standing Orders to receive something late because the intention was that it ought to be debated at the same time as the Budget, ‘but we did not make it because there was 3790 an error made’ – well, I am sorry, but I do not think the parliament should be asked to abuse the parliamentary process simply because somebody made an error of judgement and it was not on the agenda as it was anticipated that it would be. It is serious because this is setting the policy and the strategy for the next what, 20-odd years. So it does deserve proper time, proper scrutiny, to actually receive this. But to receive it at 3795 the weekend with the sitting today, Madam President, is not good enough. Yes, we could easily go into recess now for half an hour and read through it, but it is still not acceptable, and this is why Madam President has said yes, you can bring it on a Supplementary Order Paper, but you require to get the suspension of Standing Orders to see whether or not the Parliament considers it appropriate to receive it now. 3800 I say that we do not, because an important principle would be broken otherwise.
The Chief Minister: Madam President, can I just ask one point of clarification. The Hon. Member refers to this as an abuse of process. (Mrs Cannell: It is!) Could you rule – ?
3805 The President: It is a not an abuse of process, it is perfectly legitimate for suspension of Standing Orders to be proposed. It is for the Court to determine whether or not they will suspend Standing Orders. The Hon. Member for Onchan, Mr Quirk.
3810 Mr Quirk: Thank you, Madam President. Just to put some clarity on to it. We have had the document for a long time, in fact… a good Department, Mr Shimmin’s… a feather in his cap. ______910 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
I rang his Department some time ago and they sent me an electronic version. So I went to the presentation as well, and we questioned the Minister. 3815 So I, for one, am quite happy to debate the particular document that it is front of us, because I have seen it for a while.
The President: The Hon. Member, Mr Cretney.
3820 Mr Cretney: The only point I would make, Madam President, is we have had the debate on the Budget today, it has taken us most of the day to have that discussion, and often mentioned during that discussion was the fact that we needed to make sure that the Department of Economic Development got on with the important side of developing the economy, finding new businesses, working with existing businesses. This strategy does exactly that. 3825 Please let us get on with it.
Several Members: Hear, hear.
The President: The Minister to reply. 3830 The Minister: Thank you, Madam President. The only thing I take exception to is the Hon. Member for East Douglas referring to this as an abuse of process. My apologies were genuine in the moving of this motion. There was an oversight between two of my officers who are mortified about their error. The Chief Minister and others have made 3835 it certainly clear to me how regrettable that was. I am grateful for the Court to at least consider this opportunity to do it now, because as in the previous debate a number of Members talked about the colossal task we have within the Department of Economic Development. I would point out to all Members that it was on 27 January, when this was a presentation, firstly to the Members, then to the media, then to the business community. It went live at that 3840 stage and in exactly the same process that we have been attempting to bring forward documentation, such as the Agenda for Change in our Economy document that came before Tynwald: not to be approved, but to actually be noted and received as with this debate, because I do not expect all Hon. Members to actually contribute and agree with everything we have put in, but we do want to seek their views. This has been alive for over three weeks with the 3845 knowledge stated at all of those occasions that it was due to come to February Tynwald. I genuinely apologise to Members for the unorthodox way of doing it. However, I would say that it is part of our reporting back to Tynwald to try and show Hon. Members firstly but also the public – and critically the business community – that we are serious about getting on with the job. 3850 I would urge you if you can see it possible, to actually give me that opportunity today. I beg to move. (Interjections)
The President: The motion is that Standing Orders be suspended. I think we need to take a vote, Hon. Members. It will require 16 votes in the House of Keys 3855 and six votes in the Council to succeed.
Electronic voting resulted as follows:
In the Keys – Ayes 20, Noes 3
FOR AGAINST Mr Quirk Mr Karran Mr Hall Mrs Beecroft Mr Ronan Mrs Cannell Mr Crookall
______911 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
Mr Anderson Mr Bell Mr Singer Mr Quayle Mr Cannan Mr Cregeen Mr Houghton Mr Henderson Mr Robertshaw Mr Shimmin Mr Thomas Mr Cretney Mr Watterson Mr Skelly Mr Gawne The Speaker
The Speaker: Madam President, in the Keys 20 votes for, 3 against.
In the Council – Ayes 9, Noes 0
FOR AGAINST Mr Corkish None Mr Wild Mr Crowe Mr Downie The Lord Bishop Mr Butt Mr Turner Mr Braidwood Mr Coleman
The President: In the Council, 9 votes for, no votes against. The motion therefore carries, Hon. Members. 3860 3. Vision2020 – Report received
The Minister for Economic Development to move:
That the Vision2020 report be received.
The President: We will proceed then to Item 3. I call on the Minister for Economic Development.
The Minister for Economic Development (Mr Shimmin): Thank you, Madam President. 3865 I do want to try and get back on track with being very optimistic about this after a long debate today on the Budget. Many Hon. Members did draw to our attention the importance of how we are going to actually include the growth in the economy necessary to continue to provide the services. That is going to be vital if we are going to generate substantial additional Government income. And all 3870 Hon. Members, I think, agree with that as the intent. So Vision2020 builds on what we have been doing within Government and within the Department for some years now, and it does provide a clear economic vision for how our community can continue to prosper. It builds on the plans set out in the Government’s Discover the Agenda for Change in our Economy document, which was published last year.
______912 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
3875 We have focused in this document on the wealth-creating sectors – and it does not mean that the other sectors are less important. But what we must understand is that if we are to meet the needs of the wealth-creating sector successfully, then all other sectors which include the public and the third sectors can benefit. We had discussion this morning within the Budget regarding the number of jobs created by high-net-worth individuals coming to the Isle of Man. 3880 You can normally use a factor of a multiplier of two, for jobs created by those people coming to the Island which then support two further jobs. So the 360 jobs brought forward that we can identify, you could actually take that figure to over 1,000 jobs created by those individuals. So we need to make sure that if the wealth- creating areas grow then the other sectors of our economy will also grow. And ultimately two 3885 years ago in the Departmental meeting, I can remember that we thinned it all down – and I have said this before, in this Court – that basically my Department is about jobs. It is about creating jobs, it is about maintaining jobs, it is attracting people to our Island, and keeping people in work. So what we did within the Department was set off, and to try and ensure that we worked 3890 with the local business community. All Hon. Members are probably aware that I could try for more resources in my Department – many of you today and on other occasions have actually said we need to put resources into DED to grow the economy. I was grateful that the Chief Minister earlier in the debate talked – and almost gave me the green light for more resources following a conversation we had last week, I 3895 am not sure the Treasury Minister was in the Chamber at that time – but certainly I am grateful that we will need to actually grow our economy by getting some more jobs within the Department. But let's be honest, the differentiator between the Isle of Man and our competitors is the relationship we have with the business community. So we went out to that business community and research was undertaken between June and 3900 August of last year. We had over 220 questionnaires completed, we had desk research analysis undertaken, we had workshops with over 80 industry-leading participants across the whole range of our economy. We had findings that came out sectorally, those areas that we know are in difficulties, we have already talked about quite often. They are particularly the banking area and the fiduciary sector. We anticipated a decline in the number of jobs available. 3905 We then looked at the growth areas, and much has been discussed by, earlier today, Mr Skelly who covered a very clear introduction to this Vision2020 and an overview of the economy. So we had an issue there where we know where the jobs are going, we know the skills required, we know the opportunities and the risks – and I am grateful to all my political colleagues in the Department, five of whom today spoke clearly about their own areas of responsibility. 3910 Because one individual is not going to achieve this, Tynwald Court is not going to achieve this, but the Island community united certainly can and will succeed. We seem to make light about this fact that we are on a 3% to 4% growth at the moment. I think all Hon. Members still have a level of complacency to consider that just happens automatically. No, it does not: the business community have really rallied over the last few years 3915 since the difficulties of the economy arose around the world, particularly in the Western part of the world. And our business community who had to spend most of their careers in growth, were put to a challenge. And there was a genuine concern – I know from the Chief Minister – about whether we had the leaders within our business community to step up to the mark and to continue to grow our economy. 3920 And yes, they have. We have got some inspirational people in our business community who have led the charge, whether it be in e-gaming, whether it be picking up the opportunities of shipping and aviation, whether it be those who have actually identified the opportunities as well as the risks. And the comment that has been used on the radio recently is, ‘one door closes as another two possibly open’. The reality is that, yes, we can concentrate on some of the 3925 negatives and the down side of the challenges facing the Western economies, or we can turn
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round and say we are nimble enough and good enough and skilful enough to identify where the opportunities arise. I think the best example of that was the mood of the Government leading the parliament and leading the Isle of Man on FATCA, because what it has done is shown a clear differentiation 3930 between ourselves and our competitors to show that we are going to take the lead and take this forward as understanding the issues that the world community expects. And as the banks and the other companies around the offshore jurisdictions look to where is leading the way, the Isle of Man is already at that position: reputationally and internationally we are leading in many fields, which is why we are in growth when many of our direct competitors continue to be year 3935 after year in either neutral or negative growth. Many Hon. Members here – and I think it was Mr Henderson this morning – wanted performance indicators. Absolutely. We want to make sure that we can get from the business community and pass on to yourselves and the public, whether we are actually achieving. The fine words in this document, I do not believe many Hon. Members will have too much 3940 concern about. The real challenge is: can we deliver? So we will be working with the business community. We have, underneath this strategy, hundreds of pages of documentation of targets for my own staff, and I am grateful to Tynwald that some time ago you allowed me the flexibility of employing people who were non-civil servants. We have already seen the success of that policy, and we have got another new 3945 member of staff coming into the Business Development Managers at the end of this month. With the support of the Council of Ministers I hope to be getting a few more resources that will not be civil servants, but they will be people coming into those areas that we know there is a real capacity to grow. But if you were to give me 5 or 10 or 20 new members of staff, the reality is that business is still driven by business. 3950 We have used the example of a runway, that the airport has a runway that the planes come in and land: that is what we as a Government are here to do. It is not to do the job of the private sector, but to work with the private sector to encourage and allow them to do what they are good at. So within our 2020 document that has been circulated, and it is something which gives again 3955 what Hon. Members have asked for. The Hon. Member for Michael talked about vision and leadership. It is a document, but it does have an ambition that we can be excellent: for a small community we have an ambition to be an international business centre of excellence. I put the concentration on the word excellence: because we will get nothing in the future if we are mediocre. We have got to aim for a striving for excellence whether it be at the 3960 parliamentary, the governmental, or the business, or even the community level. We need to be an incubator for innovation. What has come to light after Vision2020 is the real growth potential following our biomed conference in December. We are not guaranteeing that will be a major new cluster of business. But all of the opportunities are there, for some of these new opportunities that Hon. Members 3965 are looking for. If I had to single out four areas of the biggest opportunity for our Island, there would be the engineering sector, the ICT sector, but there would also then be the energy sector and the biomed. So we have got all of these things going on in the Department and we have notified all Hon. 3970 Members that we will be having briefings for Members every month, running out a programme explaining with our technical people and the business community to all Members of Tynwald who can attend to actually tell, not just the Government message, but the community business message as well. We are going out to business communities in the sectors: I, myself, next week will be visiting 3975 Ballakermeen High School twice. Sometimes many Hon. Members go to the schools and talk to the students, whether they be at options or maybe in the sixth form. I am going out next week at their invitation to talk to the staff. If I can tell over 120 staff how the economy of the Isle of ______914 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
Man is shaping up to the future, then those 120 staff can become ambassadors to help us inspire and teach young people to have the opportunity to go into the careers and the 3980 opportunities that are in growth. One of the areas the Chief Minister and others have talked about is for high-net-worths – and indeed everybody who comes to our shores, and already has lived here – is the security and the feeling of safety. Hon. Members only need to go off Island, possibly down to London or major cities in order to realise that we are blessed on this Island to have a safe and secure 3985 environment (A Member: Hear, hear.) and a quality of life that we should be very proud of and hang on to. That does not mean it stays as it is, but it does mean that we will have the opportunity to draw people to our shores. And literally every week of my life since I have been in this job, I have had multi-millionaires coming into the Department talking about the opportunities and what 3990 they would like to do with us on the Island. Some of those people already live here and have done for years. Others are moving their businesses to the Isle of Man and others are coming from as far afield as China, but looking to see how they can work with us to grow our economy. And the people who stay here are the ones who love and are attracted by what we do best. 3995 The comment that comes up quite often, which has been resonant within the business community about why people feel safe here, is we do not do bling. I think the Chief Minister either created or borrowed it from elsewhere. But we are not trying to attract those people who come from Surrey or Kent, who want to come and experience a lifestyle that they are used to. We want to have people coming here who can integrate in our community. 4000 So we have put in our document all the information that is there: we have split it into eight strategies, and those strategies are all underpinned by a level of ‘the best we can be’. I had an e-mail only yesterday from somebody who said, ‘you should put on the end of your strapline “where you can… be the best”’. And it is that element that we are striving for. So we need to take comment from my colleague Mr Wild about the skills training: a major 4005 part, more important now than probably ever recognised in the last 25 years in Tynwald. We have got to do what Mr Robertshaw said this morning which was, ‘put the customer first’. When he was talking about individuals wanting individual services from Government, the same applies for people in the business community. So we have got to make sure that our fiduciaries and our banks are looking at individuals and making sure they provide what those customers want, 4010 because it is no good to be compared to Jersey and Guernsey and say, ‘we offer the same’. We have got to do it different and better. When we launched the presentation of this in the library, I was absolutely delighted with the warmth of the feeling for an expression – and I have said it before in this Court – the business community and the people still love the expression, ‘Freedom to Flourish’. It has gone down a 4015 storm when we go to China, to actually take the video which is some years out of date, but they aspire to that principle, allowing people the freedom to flourish. And we should not back away from that. It sums up the opportunity for people to come and join us. Let us not forget that we are not starting from a low position: we are building on our reputation. When I go to Manchester and the North West to see the mayors, and the 4020 universities in Manchester and Liverpool, the biomedical sectors, the IP experts – they already know about the Isle of Man. We are working hard to ensure that they do not see us as being predatory, trying to steal the business or the high individuals. But we will work with partners to create the job opportunities on our Island, would work with Merseyside and elsewhere. So we are looking in ICT for companies that employ 10 to 50 staff – rapid growth, start-ups, 4025 innovation, entrepreneurs. And what we are saying to the North West is once we get those businesses to a level they will want to expand, and they will expand not on the Isle of Man but into the United Kingdom and therefore partner with us in those areas. As a ‘Tech Isle’ we have still a few challenges, but we can be a leading European data hub. It is anticipated that data use will, in the next six years, grow by a factor of a hundred. It is ______915 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
4030 exponential, and that data that currently is being left in the ether is going to have to be stored because data protection in the European Union is going to dictate that when a supermarket stores your shopping list, that data is stored somewhere. And for many people, storing data that will have to be done securely, and through our already expertise in this area and e-gaming we certainly have the opportunity to be doing an excellent job in that field. And we are looking at a 4035 third self-healing ring which will give us better bandwidth and prices. Madam President, I could wax lyrical about the Department, about business, about the success and opportunities for the Isle of Man. This is not meant to be a lecture: this is meant to listen to yourselves, because already today I think we have had one outstanding contribution at least, regarding an opportunity, which was the Member for Michael. Not always on the same 4040 wavelength and page as myself; (A Member: Hear, hear.) however, today he was talking about a practical opportunity for sports tourism. I look at my friend Mr Corkish in the Legislative Council. How successful that little choir event, which started small but has grown to having large numbers of people coming out of season. We had it with a football tournament last Tynwald Day, where a… [Inaudible] called CONIFA, 4045 one of these non-FIFA recognised competitions. In the old days, all of us – except possibly one of the Members for Rushen – are old enough to remember the university events coming at Easter. We are working already on cycling events – certainly the Member for Michael was talking about a specific targeted ‘go out and do something specific’ in those sporting areas. I commend him for that and we will hopefully pick it up at a later date. 4050 Manufacturing, we have talked a lot about, and I think everybody is up to speed with that. Offshore energy hub: a major growth opportunity for jobs, but also for revenue. We know that we have very good wind, we are working towards having some time – (Laughter)
Mr Corkish: Too much sometimes! 4055 The Minister: And I have been quiet all day, Madam President, but they still give me a hard time! However, some of the issues regarding offshore wind, tidal energy, and potential for conventional gas, are areas that we are rapidly moving towards and I believe by 2018 to 2020 4060 they will be sources of significant revenue coming into our coffers from those areas. Everybody often talks how easy it would be, and important to grow the visitor economy. So we are pushing for the destination, coming to the Isle of Man, and we have work to do, I think as my friend, Mr Skelly, talked about one of the training courses just gone on in the hospitality area, as we speak. But we know we have to get better at the retail and the service, and the 4065 hospitality, and the skills – and to create an opportunity for young people to take opportunities for careers rather than part-time jobs. A former student of mine is now on the board of Heron and Brearley, one of the largest employers on the Isle of Man, over 900 staff. And he was a young man who left school at 16 and now, in his early/mid 30s, is the retail manager and on the board of one of the biggest 4070 companies on the Isle of Man. And he is revolutionising some of the hostelry-type establishments we have, because he is seeing it with younger eyes, with a new way of looking at the changes that we can all aspire to. But all of that is going to have to build on trying to be different, so we have an unrivalled reputation for outdoor adventure. We have heritage and culture being celebrated this year, which again we hope people will 4075 rally behind. I apologise to the Member for Onchan who is yawning at this; however, I have listened to him far more often than he has listened to me (Interjections) so hopefully he will give me little bit more time. We had a recent debate in Tynwald about food and drink and tried to actually pick up the 4080 idea of getting a pride in our local food and drink industry. We will be pushing and working with DEFA particularly for that area – indeed the DEFA Minister and myself had a meeting this week ______916 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
with one of the supermarkets to try and see how we can work with them and the producers better.
4085 Mr Downie: About time.
The Minister: The ‘Isle of Enterprise’ is to try and make a business climate and unfortunately when I think it was Mr Teare, during his closing speech, was talking about how the comments being made in this Chamber are heard by our community and by our business community, and 4090 we have to lift the optimism and the confidence again to actually show that we will give the entrepreneurs the opportunity to thrive on our Island. The House of Keys next week will have the opportunity to discuss work permits and the Control of Employment legislation, coming forward. So are we going to tie the hands of business or are we going to embrace the opportunities to allow them to bring in the people they need to 4095 create more jobs? The eighth strategy – which is probably in some ways one of the most exciting – is our international reach. The progress that we are making with China, the Middle East, with the North West of the UK, and with new evolving jurisdictions – or ones which mean that we are not fighting against other small offshore jurisdictions – we are actually going into an area where we 4100 can be the first to create an opportunity for growth, which our business community can sustain very effectively. Madam President, in conclusion, we already have a business-friendly culture on the Isle of Man, but that is fragile. If we do this wrong and if we do not give out a clear message of confidence and optimism, then there are enough soothsayers out there who will say the Isle of 4105 Man is going downhill. We hear it in this Court every month. The Isle of Man is still one of the most successful jurisdictions that you could actually look at. We have a business community that is keen to be supported and work with its Government. We have an ability to strive for better excellence, and at times we still tolerate mediocrity. Some people seem to think that just because a business is Manx, they deserve the support of 4110 Government and the support of the public. If you are not providing what the customer wants, you will not succeed in business, and I am afraid still a message has to go out to certain sectors that they need to do their part. One of the areas that has had the most challenging five years is the construction industry, and I remember a year and half ago saying to an assembled group of people in one of many 4115 forums we have, ‘what more do you want from Government?’ I thought it was telling that this head of a construction firm said, ‘we don't want anything from Government, keep doing the capital programme, we have had the good years, this is what happens in the private sector, we deal with the bad years.’ The private sector should not look to Government for a hand-out to provide for them: that is 4120 why they are in the private sector, doing business to succeed. We are there to provide grants to grow jobs, to provide support in an environment, and we will do that when the Chief Minister goes to China, we will do that when we have the International Festival for Business, and we will do it to work with those parties. But it should not be an opportunity for people to think that Government will provide. 4125 Madam President, I am grateful for the opportunity to explain some of our ambitions. The information is within the Department below these records, and I have said it before but it is worth repeating: Hon. Members who want me to show all of the cards that we have to all of our competitors, I would just urge you to look at what is happening in Guernsey and Jersey, with the aircraft registries. They have started treading in our territory: if we tell them exactly where we 4130 are going to go with all of our business plans in advance, they will just steal it. It has happened within all the financial services for years, we have a head start against our competitors, we have to guard some of those abilities a little bit carefully.
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I will share all of this with Hon. Members and indeed the public, but I am not putting too much written information into the public domain, which will be picked up immediately by our 4135 competitors, and used to take jobs and the economy away from our Island. I beg to move.
Several Members: Hear, hear.
4140 The President: The Hon. Member of Council, Mr Wild.
Mr Wild: Thank you, Madam President, I will be brief. This document, in my view is already embedded in the community, both the wider and the business. I, myself, and I am sure other Members have already been engaged – in my case in a 4145 positive way – by business people, and have received positive feedback from the presentation at the Manx Museum.
The President: Are you seconding, sir? Seconding?
4150 Mr Wild: And I am seconding, yes. Sorry, I do apologise. This is a concise, strategic summary that provides the answers and solutions to grow the economy aspect of the Budget debate today. I think my hon. colleague, Mr Skelly, gave an excellent overview of the economy, which has just been rounded off nicely by the Minister himself. In many ways I think most aspects of this document have been fully debated today, in 4155 the Budget debate. The Isle of Man is here to partner other jurisdictions, it is not in competition, it is to complement and work together. Thank you, and apologies.
The President: The Hon. Member, Mr Thomas. 4160 Mr Thomas: Thank you, Madam President. I just have a couple of questions for the Minister. The first one is about page 7, which is entitled the Executive Summary, but it is actually about the analysis, and I just wanted the Minister to tell me a bit more about how the national income 4165 estimate of 3% to 4% growth relates to the Government income estimate of 1% to 2% growth. And, in particular, do you have a model? And, even more particularly, do you have a model that goes between different sectors? Is this one more valuable for Government income, and is that one more valuable? On a similar line: jobs. To me it is quite unusual to see ‘jobs’ rather than ‘people’s income’, or 4170 something like that, and I wanted to know a bit more about why you have chosen the word ‘jobs’ rather than thinking about what people were earning. Is it because you perhaps lack cost of living information, and you could not actually [Inaudible] anything about the income that people were getting. What matters, at the end of the day, is we need economic growth to get income to provide public services through Government, through the people who earn their 4175 living. So I would have thought it would have been people’s income there. The second question I have for the Minister, Madam President, is about the link between this document – a very good document – but I wanted to see what else it might be used for. Specifically, what is the connection between this document and the planning and the economy document that is becoming more important in the planning, in particular when the Minister 4180 issues one of the 20 letters supporting a planning application? Also, what is the connection between this document and things like the retail strategy and the Central Douglas Master Plan? Are you more likely to get encouragement if you are in line with this in the Central Douglas Master Plan, or does it not matter?
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Finally, what is the connection between this document and the Enterprise Act, and finances 4185 provided under that Act? Madam President, the Minister also brought up China, and I just wanted to ask (Interjection) about China in the context of your visit to Ballakermeen School. I am always hearing from Ballakermeen School and places like Ballakermeen School, that it would be wonderful, the fact that they have engaged with China for 10 years, and in some sense this could be encouraged and 4190 rewarded by Government. It is very expensive for parents and teachers, and headteachers, to constantly keep receiving Chinese people, and I actually think, knowing the Chinese quite well, that that would be incredibly important in the 10 year strategy. So hopefully the Minister can give the Ballakermeen headteacher when he visits Ballakermeen, great news: that a little bit of money will be available through the education budget to encourage these valuable exchanges 4195 that we have.
The President: The Hon. Member, Mr Cretney.
The Minister for the Department of Infrastructure (Mr Cretney): Yes, thank you. I wanted to 4200 stand to support this Item on the agenda. I think the Minister, for a schoolteacher, did pretty well really! (Laughter) I have been around here a long time – the same day as Mr Karran was elected, I was elected – and this is, for me, the most important matter in terms of going forward. And the differences here are that we can work closely with businesses. We need to demonstrate that we can use the 4205 mechanisms that our parliament can provide by making sure we have appropriate legislation. We can be customer-focused, and I just think that this document, for me anyway… It is called 2020: well, in the 20-odd years that I have been here, it is one of the best documents for me, in terms of headlines. It is not all great detail; it is headlines and areas that are going to be focused on and I just hope that everybody here, outside and the community get behind it because it is so 4210 vitally importantly for the future.
Several Members: Hear, hear.
The President: The Hon. Member, Mr Cregeen. 4215 The Minister for Community, Culture and Leisure (Mr Cregeen): Thank you, Madam President. As somebody who started work in the late 1970s with the first recession in 1982, and with another recession, it is a tough thing when people are being made unemployed, and do not 4220 know what is happening with the future. And for those people now who have lost their job and are worrying where the next week’s wage is coming from, it is very personal to them and the whole world can be just round what they are seeing. From talking to a number of the businesses around my constituency, one of their concerns is: where is the future, where are we going, where is the PR? And that is where this document is 4225 actually very positive. It is going out to the businesses and it is telling them where we are hoping to go. One of the main areas that I was trying to push a number of years ago was medical devices, through the Economic Initiatives Committee. I am really pleased now that the Department of Economic Development has actually picked up on that and it is one of the areas of growth that 4230 they are looking at. Health is probably one of the areas that people cut back on last – they give up other things but they try to keep on their health, as we find with our own Department of Health which is more protected than anywhere else. The Hon. Member for Michael earlier on said about tourism. A number of years ago, adventure tourism across the UK was a big thing, and I think for the Isle of Man we have the 4235 perfect environment for adventure tourism. We have seen the success of the Parish Walk, the ______919 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
End to End mountain biking. These events are really popular and if we can make that one day event into a long weekend, we will attract more people over here because it is such a fantastic event to go to. I feel that if we had delayed this debate for another month, it would have been much to the detriment of the businesses out there. We need to give them a clear idea of where 4240 we are going to, and that we are really supportive of where we are going. I would hope that all Members would support this, because if you do not support this you will be sending a message out to those businesses that you do not really care. And it is a very poor excuse to say that you could not find 20 minutes to go through this very small document, to say, ‘I do not want to debate it, I am not going to support it because I have not got 20 minutes’. 4245 Mrs Cannell: Is that all you give to scrutiny, 20 minutes? Shame on you! (Interjections)
The President: We have been through that debate, Hon. Member –
4250 Mr Cregeen: I am sorry, Madam President, there are some Members who do not even pick up their Tynwald pack until three days before Tynwald sitting, so to say that they have not got 20 minutes to read through this, I think it is just a poor excuse. The Isle of Man has got a lot of positive things going for it. We are so keen to hear Members in here running us down. One of the things that amazed me when I first got elected was, with 4255 other Members, we went round all the Departments to see what they were doing, and it was amazing to see some of the stuff they were doing that we did not even know about. We were so poor at putting forward the good things that we were actually doing. This is one of the good things that we are doing. Let's go out and tell people about the good things we are doing. Compared to many other countries, they must be so jealous where we are. 4260 Let’s not run ourselves down all the time, let’s go and say when we are successful, we are successful.
The President: The Hon. Member of Council, Mr Coleman.
4265 Mr Coleman: Thank you, Madam President. I think this document is laudable, and I think it is excellent. It is actually a campaign document. It has multiple strategies in it, so I consider it to be a development campaign for the Isle of Man. When I think about campaigns, I go back to a guy called Thucydides: in 420 BC he wrote a history of the Peloponnese wars. In that, he said a successful campaign consists of 4270 politics, strategy, tactics and operation. This contains the strategy, and quite a number of the tactics. Here, we will provide the politics, and when you get into the detailed implementation of this policy, then we will get into the operations, and I look forward to seeing metrics against operations. Again, I support this wholeheartedly. 4275 Thank you, Madam President.
The President: The Hon. Member, Mr Quirk.
Mr Quirk: Thank you, Madam President. 4280 I will be supporting the document too. We went to the presentation, and I know a number of businesses and I did send a number of electronic versions out to certain people who asked for it, and I was thankful for the Department and the Chief Executive who organised that. If I could just touch on a few things, like the energy for the Island, whether that is wave technology, or the offshore energy hub. What a great concept, really. We are at the centre of 4285 the universe as far as we are concerned: there are good links to the Island, good services for power, fibre-optic links coming in. Who knows what the future is going to be?
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Just referring back from that to the number of places now which host data centres. I think there are about seven large businesses which hold data centres on the Island: Manx Telecom has got two of them, I know Wi-Manx has got another, and there are a few others. Domicilium down 4290 south has got a few others there too. So there is good opportunity for people to engage in the Island and we have a workforce that is very flexible, we have a Government that is willing to do things, and if you had a business coming to a location like this, it is a centre of excellence, it has a low crime rate. Where else would you want to be in the universe but the Isle of Man? 4295 One of the other issues I do have which is more to do, I suppose, with planning and the future. I wish that when development plans come together… and the Strategic Plan is still to be emerged out, it is slowing down, and we have not got the Eastern Plan going. There are development lands which are available to be done, and there are businesses out there… even on our own constituency colleagues. In the next week or so there will be an announcement that is 4300 going to happen in Onchan – which I am quite surprised about – that is happening with some of the Department’s help. But, anyway, that is for the future. If I could touch on a little bit too, regarding the procurement side and the experience of food and drink. There are lots of things to be had: we have ploughed money into the park at Peel, and sometimes I wonder – and it is not a slight on the Peel people, because I know a lot of people in 4305 Peel – I wish they would appreciate sometimes what they have actually got down there and engage into the facilities. And then we have the other one, and I will wind up on this, is ‘Destination Island’. What a great place to come to for sport, and as I said in the Budget there, I do hope, Minister, and your members will concentrate on the other experiences like Mr Cregeen has just said. If you put 4310 anybody in your Department they will still do the TT, the Grand Prix and the other bits. What I am looking for from your Department is, going out and getting those other bits that we need, the other parts of the year that we need to fill up. I must put on record though, whether Hop tu Naa – or trick or treat, or whatever is going to be the wonderful thing – the jury is out as far as I am concerned, so I would not be spending too 4315 much money on that, because you will have me getting at you.
A Member: Hear, hear.
The President: The Hon. Member for Onchan, Mr Hall. 4320 Mr Hall: Yes, thank you, Madam President. Just a few points that I would like to bring to the Minister’s attention. I will support the document itself, but in terms of when we are looking at growth, I think that probably one of the few things that the Government can actually do, is encourage the sectors within the economy 4325 that are in financially strong position to spend more money, and thereby increasing and boosting demand. I think anything else is very much based on hope. When we are looking at and talking about growth, and GDP growth – and which I would like to bring to his attention because I think it is important – policies, generally speaking, that are aimed at GDP growth can have a somewhat uncertain impact on income inequality. That is a 4330 well-known fact. So, I think that is important to take on board and to ensure that this is actually looked at because that is like I said, one concern that I do have when we are pursuing these types of policies, and it can be a bit of a trade-off at times. The other thing which I have previously raised with the Chief Minister – and I actually wrote to him last year about it, and I think I recall bringing it up in Questions in the House of Keys – 4335 was when we are looking at growth, and then of course what that brings, and we have got better for our society and our economy, but actually GDP fails to capture the wellbeing of most of our citizens.
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So the Minister is pursuing a growth strategy, we want that then to go and filter through to our people, so therefore we alternate to supplement the GDP with something where we can 4340 actually measure the economic wellbeing of most of our citizens which GDP does not. I think that is a bit of a shortcoming. And I have called for this before, and the response I did get back from the Chief Minister was encouraging, that we need to supplement GDP by a broader indicator of economic wellbeing – and I have called that we should be tracking the median household incomes. I think that is an important point as we are moving forwards to 4345 boost our GDP, because that will then provide the approximate way of reflecting what people are actually receiving out of the national income. That will represent the middle of the income distribution, and the median will then give a good indication of the living standards of the typical household. I believe that is important for any government to be aware of. So if we have a new focus on what the median household incomes are, this would then likely 4350 influence the debate about growth policy, by taking into account distributional issues particularly for the poorest and then the most vulnerable parts of society, which of course is one aim of this Government. It will provide different yardsticks against which to measure policy initiatives. So that is a bit of a cross-government… I know it is not solely largely sitting with the Minister, 4355 but I think it is something that he, perhaps, may wish to consider and take up and look at with the Council of Ministers. In my view, that is important. And to do it together, looking at the growth policy and whether it has got then the positive and negative side effects on income inequality. There is a lot of information about this, with boosting growth and then its effect on income inequality, and I think that the United Kingdom is one of the countries which is up there 4360 with a great deal of income inequality. So I would like to see some work put into that, because that would be a good way to supplement the initiatives that the Minister is trying to do, assisted with his Council colleagues. So that is just a couple of points I wanted to raise at this stage, but I do welcome the document, and it is certainly a good step in the right direction. 4365 The President: The Hon. Member, Mr Singer.
Mr Singer: Thank you, Madam President. I have not actually prepared anything to say about what is an excellent document. What I am 4370 standing up for is to actually congratulate the Minister. It is important that he projects his enthusiasm for the future, and he did that today – in fact I was quite worried, he became quite animated. The presentation, Minister, was upbeat, it showed great aspiration, so let's make sure that we achieve the maximum return. I am a hundred percent behind the principle of this Report. We do not actually need to 4375 discuss each item in the Report separately: to me it is a whole package. So basically, it is firing up the imagination of your Department, firing up the business sector, firing up the investors, firing up the angel networks. Also, making sure that you can cut out the red tape, and you must have to be prepared to take risks – not everything, of course, will be a success. But like I said in the Budget debate, you show your enthusiasm and belief by going out and getting the customers – 4380 do not wait for them to come here to you. So, literally, Minister, walk the walk, and I hope you get 100% support for this document in this Chamber.
A Member: Hear, hear. 4385 The President: The Chief Minister.
The Chief Minister: Thank you, Madam President.
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Madam President, it has been heartening to hear the comments not just in the debate now 4390 but also in the Budget debate earlier, about the economy and the growing consensus I think there is in this Chamber now for a greater focus on expanding the economy further. Undoubtedly, that is the source to the solution of a great many of our problems into the future. We can reactivate and stimulate further the economy that we have and to diversify further then we have a great chance of fulfilling the other two aspects of our administration, 4395 which is rebalancing the budget and protecting the vulnerable. All this comes in together. For those who have taken the time to read this document there is a lot in it that we can learn from and develop further. But I would just point Members to what I think is the key to the document, on page 10: and this is the overall vision for the Isle of Man. It is to be ‘an international business centre of excellence’. That has to be the ultimate 4400 aspiration. We can have all the tax strategies, we can have all the grand ideas that we want: unless we focus on being the best we can be, as a genuine centre of excellence in all that we do, we will lose out increasingly to the competition. We look to the world economy moving east, through Asia, driven by China, but many other Asian countries on top of it, they have an outstanding contribution I think now, a commitment to 4405 excellence and stimulating their economy and society the best they can. The one danger we run in the Isle of Man, Madam President, is the fact we are currently in our 29th year of economic growth, and after that period of time complacency sets in, energy runs a bit flat, enthusiasm goes because we take it for granted. What the Isle of Man has to do, Madam President – and I hope that this document will be a 4410 first step toward it – is to rediscover the hunger that the Isle of Man had back in the 1980s, when our backs were literally against the wall, when we were in serious recession, very high unemployment. You have heard the story, I have been over it with you when you many times. But for those who remember it, it was a frightening time for the Isle of Man, and it was only because we as a community – business, Government, and the wider community – pulled 4415 together and took some, what were quite difficult and risky decisions through that period, that we finally, through our own efforts internally, not through any external largesse, managed to reignite the economy. And we have enjoyed the success now ever since. It is not something you can just pick up easily, to have a firm commitment to it, but we must have that focus, we must discover that hunger. Unless we can squeeze complacency out at every 4420 level, we will not achieve the full possibilities of what is in this document. We need ‘a transparent international business partner’. The Isle of Man, I think, has proven that already with the work we have done with the international community over the last few years, particularly in the last 12 months. The Isle of Man is in the strongest place it has probably ever been, in terms of international recognition, and in particular the recognition of its 4425 transparency and its probity in terms of a genuine business centre. We need ‘an incubator for innovation’: speed has value, and we can also use our small size to good effect. To capitalise on that, Government has to be willing to move quickly, and this applies to every single person in this Chamber and it applies right across Government: we have to cut through red tape, unnecessary bureaucracy, unwillingness to take any sort of risk whatsoever. 4430 We have got to take opportunities as and when they come, because they will not come a second time. It is no good having this is a document, ‘speed is of the essence’, if we cannot deliver it. And it is most important, Madam President, that we do not just accept this document today, say a lot of nice soft and fluffy words about it, and then put it in the bin and forget about it. 4435 We have got to deliver on it, and it is a responsibility of everyone – or at least everyone in this Chamber who is engaged with the economy. We need to pull everyone together to change that culture across Government. We are already seeing changes, Madam President, in the engagement from the Chief Officers Group, for example, in the regular meetings we have with CoMin now. They are far more 4440 engaged, focused and making positive contributions to the overall policy structure, and in ______923 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
particular that of the economy. That is a major step forward: it is starting to break down the culture that has held the Isle of Man back internally for years – at last. We spoke this morning about green shoots: we are starting to see some green shoots there as well. And it is only by Government coming together, we can start to deliver this. 4445 ‘A skilled technology centre’: we are already starting to develop that through the work that the Department is carrying out. ‘Secure and safe’: I think in the Budget debate, again, it was mentioned this morning. I have met over the last 12 to 13 years, most new businesses, wealthy people coming into the Island to live. In the early days… and I always ask them, ‘what brings you to the Isle of Man’? And in the 4450 early days the answer was always, the first at the top of the list was taxation, ‘We are here because you have got an attractive taxation.’ And then there are a number of others. The last few years though, Madam President, increasingly the item at the top of the list for the most attractive reason for coming to the Isle of Man is the secure and safe quality of life that we have on the Island. Tax is still there, but it is mid-table now. It is personal security, it is safety, 4455 it is quality of life – both for them and for their children coming along behind. Do not underestimate the economic value that this has in attracting new business and new people to the Isle of Man, and it is something, frankly, we do take for granted and we do not promote anywhere near enough as part of the overall economic package. We have a great opportunity here. I had – as you know – the Chief Ministers of Jersey and 4460 Guernsey were over a week or so ago. I took the opportunity to take the Chief Minister of Jersey around the Isle of Man – the first time he had ever been to the Isle of Man. We drove pretty well all the way around it just to show him what it was like. And in spite of all the advantages we often look to Jersey as having in some areas, the one thing he was blown away with was the space that the Isle of Man has to grow, the quality of life and the overall ambience of the Island. 4465 Something that no other small jurisdiction can take from us, that is something they cannot compete on. We have it here... God and Nature has given it to us, and we should make the most of it. The quality of life is absolutely essential. We have had the ‘Chairman's wife syndrome’ – we all know about that – but increasingly people are concerned about the secure future for their 4470 children, and the security we give not just financially, but physically to their kids for the future. These, collectively, if we put this Vision2020 together now, just these six items, we have got a major story to tell to the outside world. What is missing at the moment is an absolute commitment internally in Government to actually to deliver on this: everybody, as they say, has a role to play in this, Madam President. And then we must step up our marketing and we must 4475 start shouting louder from the rooftops. We were talking about this morning, I think, visibility in London. It is visibility in London: wherever we see the markets we have got to raise the Isle of Man’s game, we have got to raise its profile. Now is not the time to be shrinking violets any more: we have got to go out and start making noise about the Isle of Man if we are going to attract business here. I said this morning, or earlier 4480 I think, Madam President, that competition for the new business, the new economic activities which are evolving is fiercer now than I think it has probably ever been. We have the UK right on our doorstep fighting for every crumb from the table now, whereas in the past we were able to enjoy them. We must not underestimate the competition around us and we have to step up our game on 4485 that. And as far as it impacting on our local population, I welcome the comments made by the member for Onchan, Mr Hall, about the different comparisons between GDP as such and economic wellbeing. And Mr Cameron, although I think he regretted it afterwards, started talking about a happiness index in the UK for a different type of measurement to judge the impact of the economy and others on the wider community. 4490 One of the biggest problems which is starting to evolve worldwide now – and it is particularly in the US, but the UK and in Europe – is the widening income inequality. The gap between the rich and the not-so-rich. Only by growing the economy, by getting better quality jobs here, ______924 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
better opportunities for our young people, long-term career stability. Only by doing that will we ultimately start to narrow that gap between the high paid and the less well paid. 4495 We have a great opportunity, I think, to solve a whole range of problems facing us here, if, led by this Chamber – or those of us in the Chamber who want to lead – can inspire Government, first of all, right across the piece, to engage with the Department of Economic Development to deliver this vision, and then outside, by example, the business community will follow. They are looking for leadership, they are looking for guidance from the Government at 4500 the moment, and in particular they are looking for a statement of confidence from this Chamber that we are absolutely committed to economic growth and we will do all we can to support the business community, through what are clearly challenging times for all of us. The one good thing though, Madam President, that we should never lose sight of – and I take you back to the starting point on this – we have been here before, and I know you get sick of 4505 hearing me say this, but we have been here before. We have been in worse situations 25 years ago, 30 years ago, a much worse situation, but we came through it, as a result of our own efforts, our own commitment, our own innovation and energies – and we were prepared to take a risk. That is the big difference between then and now. We have got to be more entrepreneurial and innovative in what we do. 4510 But we have done it before, we can do it, and I would urge Hon. Members to put their petulance behind them and rally together behind this document. I think it gives a strong message to go out to the wider public, and it will start now to give the leadership, I think, that the business community is looking for in terms of the medium to long-term direction to the economy. 4515 I congratulate the Department on the work it has done in putting this document together, I think it has given us the start now for continuing this debate, and I would urge Hon. Members to support this please.
The President: The Hon. Member, Mrs Beecroft. 4520 Mrs Beecroft: Thank you, Madam President. Just a point of clarity, if you would not mind please: the motion on the Supplementary Order Paper is actually that the Vision2020 Report be received, it is not asking for our approval. So in the vote, we are just voting on whether to receive it or not, surely, not whether we are 4525 approving it? Is that correct?
The President: That is correct.
Mrs Beecroft: Thank you, Madam President. 4530 The President: The Hon. Member, Mr Ronan.
Mr Ronan: Thank you, Madam President, I will be as brief as I can. Obviously I will be standing to support this, which I think again is an excellent document, but I 4535 just really… it is just the whole concept of the Vision, the Vision document, what the Vision says, it says where do we want to be. And I think this is very bold of the Isle of Man to be saying this. And I just think, not just nationally, but locally, it is about having that idea of where we want to be and I have been totally supportive of this certainly in my time in the Department. Just the way, to me, it is simplified, it is clear, and it has direction. 4540 ‘Clients first’: obviously, we have to be – as the Chief Minister has said – we have to be totally customer focused. We have to be the best at what we do. ‘Tech Isle’: emerging sectors, manufacturing. As Mr Skelly said before, this is an area which has been with us a long time and we have to move on with it and we have to make sure… and
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the great work being done, certainly regarding getting the apprentices scheme going, I know it 4545 has been difficult, but here we are trying to treble this. This is all drawing into this here… ‘Offshore energy’: again, massive potential. We do not know exactly where it is going to end up, technology, but the Isle of Man is saying to itself, right now, we want to be at the table. So an area which, Hon. Members will be very aware of, my passion for the established sectors. Tourism, ‘Destination Isle’: this can only grow. I know Mr Skelly is very keen, very 4550 passionate man about this, something we support. I see it in the pie graph, the simple definitions of where our economy is – little segments, it used to be big segments. What we have got to do is keep an eye on this and just grow these areas, and it is not about making the pie any smaller or making the segments bigger, it is making the pie bigger. That is where the Isle of Man needs to be. And quite clearly… and you said page 10 is the best 4555 part in the document, I again agree, but I think page 9 to me focuses in on what this document is all about: you see about the work force, and we must adapt; the work demographic of where we are now; management, professional, technical and clerical – all going out of the bottom. Well the demographic of the world is changing. I went, as part of my manufacturing remit, with some Hon. Members. We went to a 4560 manufacturing place in Onchan, where we were just talking about how things are changing in the world. And somebody said to me, ‘we are not going to be able to compete with fingers and thumbs’. And that was something I had never heard before, but it is just the way it is. But this document, I just think is clear, it identifies that. We are going to have to move on with it: as long as we know, and the businesses know exactly where we want to be. 4565 Madam President, I think it is an excellent document and I will be supporting it. Thank you.
The President: The Hon. Member, Mr Henderson.
4570 Mr Henderson: Gura mie eu, Eaghtyrane. I just want a few points to go on the back of the debate there for Mr Shimmin. I have got no problem in 100% supporting this document and the strategy and the philosophy behind it. I found the briefing enlightening and invigorating to be quite honest, and it was a breath of fresh air to hear this new philosophy – or the new way of pulling it all together – being put out. 4575 What I would say to the Minister is what I said this morning: we need to have a look at some performance indicators, though, because in the past and – okay, I will talk about the old DTI – we have heard the talk and seen no walk at the end of it. We need to see some results here. You, sir, are operating in the Department that, as I said this morning in the Budget, you are operating the mitigation to the problems at the minute to an extent. And you have got a very big 4580 job on your hands, there is no doubt about that. The Chief Minister is so right in what he said, with regard to space: how many times have I gone on in here, especially at Budget time, about promoting business, and so on, about space – I mentioned it this morning. I just want to reiterate that, Eaghtyrane, that we want to not only repackage things, we want to put a new carton in that package – or in the wrapping paper, 4585 rather. I think this document can do it and, again, it is a belief that has to go throughout Government. It has to filter down, as the Chief Minister said, and that is absolutely correct. We have to have a belief in ourselves. The Isle of Man is special and it is a great place and we have got to, as has been said, sing that 4590 from the rooftops at every available opportunity. The opportunities to grab business in here are going to be exceptionally difficult, but we do have some unique special qualities that other places do not have. I have been saying it and I am pleased to see that other people are starting to say it now. That is what we should be doing. And I make no bones about it: when I say we should be banging doors down and go into CEO’s offices to sell the Isle of Man, I mean it. That is 4595 one of the other things we could do with doing – robustly. ______926 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
I have just been reading some management reports, earlier, with the turnaround of Thomas Cook. It is amazing, if you have got some enthusiasm and belief, and just go for it. I think that is the kind of message I have been getting from this document and I think that is what we need to do. And credit to the Minister, but we do need some feedback and we do need some 4600 performance indicators here to show us how it is going basically – and to show, as I said this morning, what additional exceptional things we been up to in the background. I know that is hard work, and it is a departure from the old imperial style, but we have got to break out of the mould as we have heard already. And, again, I would cite the turnaround of Thomas Cook's fortunes there, it is a good one to look at and I would wish the Minister well with 4605 this document.
The President: The Hon. Member, Mr Downie.
Mr Downie: Thank you, Madam President. 4610 I think we have had an excellent document and I think the Department should be congratulated on the work that they have done. I think there are issues here that need to be addressed and things that need be said tonight – and some people might not like what I am going to say. I think we have had some huge successes: we have had a fantastic last couple of TTs, we have built on that event; we have had 4615 the Festival of Motorcycling last September, which was absolutely fantastic. But here we are, we are already turning people away from these events. What has got to happen, if we are going to grow our economy, we have got to get the Steam Packet Company, and whoever else, to start working with us. Hon. Members may not be aware what is going to happen in the Isle of Man from the first 4620 day of April: we are effectively losing 32% of our carrying capacity by air. That is going to have a significant effect on the economy of the Isle of Man because, however we dress it up, the south of England is very important to us and if we are going to be running lots of events, we need to find ways in which we get back into Gatwick, into Luton, into Southampton and other areas like that where they attract numbers of people coming across from the continent. 4625 You cannot fly here directly from the continent – but there is a huge audience in Europe who love to come to the Isle of Man. This last week, I have had about 18 telephone calls from people in Italy, who are desperate to come to the TT: they love the place with a passion. And it annoys me very much that I have to be in a position where I have to say, ‘I am sorry’. I have mentioned it to the Hon. Member for Rushen with responsibility for tourism, I know he is taking this matter 4630 seriously. But we need to either get more vessels chartered in so we can bring the people in, or we need to be looking at chartering aircraft. It seems ironic that over the weekend, where my hon. colleague from Michael is talking about developing his sporting-based opportunities, where we want to bring walkers in, and mountain bikers. It is virtually impossible to get here from the south of England, because the 4635 easyJet flights do not work. Now that is something we have got to start to concentrate ourselves on – and in the middle of it all they are making huge profits, but nobody wants to come in here and go at midday. So they are all things that have to be factored in to the Vision and we have got to identify those early on, and turn them round. 4640 I had a call last week from a German shipping company who specialises in offshore wind farms. And funnily enough the discussion I had last week led me on to a discussion I had at lunchtime, and there is a lot of interest. But this baby has been five years in the ‘gesticulation’ period (Laughter and interjections) and we need to be getting on there now. We still have not seen the spatial plan come to Tynwald: there are all the other aspects of it, 4645 the trading issues, the renewable energy credits, and all the rest of it that all need to be pulled together, so we can actually get out there and get some business here.
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As the Chief Minister said, there are people out there marking time and while they are marking time other things are coming along. And if we have not got the bus ready and we have not got the fuel tank filled and the route mapped out, we are going to lose out here. 4650 I think it is important that we give the Minister 100% support and you bear in mind some of the things I have raised – and if we are serious about getting some business here we have got to make this place a lot easier to get to, attractive and more cost-effective to come.
The President: The Minister to reply. 4655 The Minister: Thank you, Madam President. I would firstly like to genuinely apologise to those who did not want us to have this debate tonight, and invite them into the Department to actually follow up further because we do believe you are supportive, but the situation tonight has not afforded you that opportunity. It is 4660 an invitation to all Hon. Members to come in and talk to the Department, but particularly for those of you who felt as if you were railroaded a bit today – that was not the intention. If I can go firstly to my colleague in West Douglas, when he was talking about the executive summary with regard to GDP – and it comes to the same issue as the Member for Onchan, Mr Hall was talking about. We do lack data. It is an admission that those of us who are in the Council 4665 of Ministers, and particularly the National Strategic Group, have identified that in difficult times for business we have not gone out to them for more information, but we have been going out on the VAT, we having been going out for information that we needed for the census and other things. But I know the Chief Minister is very strong on this issue, and it is particularly to try and ensure that, under the new Cabinet Office, or Policy and Reform, it is going to be looking at 4670 trying to get the Economic Affairs body going into that Central Office to provide data. Income inequality is a real condemnation of Government, to lose the trust and the confidence of the people. They hear us talking about averages and it means nothing to them because it is not in their real world. I think we do have a difficulty because of the size and scale of the Isle of Man to make some of these statistics meaningful, but it certainly is one where I 4675 reassure both Hon. Members: we do realise that concurrent information requires that being collated by somebody in Government. We have got to have more people doing that collation. But we are conscious and I think the Chief Minister has already indicated tonight that he understands what we have got to do. The Hon. Member for West Douglas was still talking about differing models – indeed that is 4680 one of the fundamental challenges we have. We know that there is in a Zero-10 corporate world, those businesses that do not pay tax. Where do we get the benefit? What we have attempted to do in this summary is what we consider to be a conservative approach to say that although the GDP will be growing, the level of revenue income to the Island is at a lower level, that seems perfectly reasonable. 4685 Why do we measure jobs? Because, in the absence of other data, that is one which we can quantify based on businesses that are saying where they see their growth potential over the next one, three and five years, and beyond. So we have done what we are capable of backing up with evidence – and there are some areas which will get better as we work through the next few years. 4690 He talked about the planning economy document and the letters that my Department put in to support those who have an economic benefit to the Isle of Man. We will continue to do that. There has been over £30 million of high net worth property approved by the Planning Committee – and indeed they have admitted from the planning side that, under the previous rules, many of those permissions would possibly not have been approved. Out of the last six, 4695 that five were approved, some of those would not have got through under the previous arrangement, because they are now balancing up, not just the opponents to a scheme, but also the economic interest.
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That is not just about the construction industry, is not just about the chef and the gardener: it is about those people coming forward and bringing in on occasions, many dozens, if not 4700 hundreds, of jobs. I have talked about that previously, but I will only use our powers or our support sparingly, in order to make sure that we do not abuse that position. Therefore, I want the planners to get the confidence that, if we are putting forward that this is economically of interest and benefit to the Isle of Man, they will understand and take that into account. With regard to the retail strategy: that is a strategy worked up with industry. None of this is 4705 John Shimmin turning round saying, ‘I have the answers’. Nor is it indeed the civil servants in my Department saying it. This is a cohesive coming together between the private sector and Government – the retail strategy is exactly that. Again it is a direction, a way forward, there will be challenges but at least we will have something that we can now be judged against. 4710 The Enterprise Act is fundamental with all of this, it is one of the few tools that Government has to actually inject money at the right time in order to create job opportunities. So we will continue to give grants, loans, or even indeed take equity in businesses to allow them the growth spurt that they require. Those grants certainly in Government will continue, but we do want to encourage banks and lenders to come in to fulfil that role so that we are doing it purely 4715 linked to the job creation. We do not give grants to businesses without conditions, and they are normally timed over a period that says we will give the first 10% or 15% grant when they have 5, or 10 or 15 members of staff. So we look at the model to see what works. The final point from my good friend is regarding Ballakermeen High School, it is in our 4720 constituency. They have done outstanding work and been ahead of the curve with regard to their exchanges with China. However, I would also put on record, that QEII have been way beyond the expectation of the Isle of Man to be at international award ceremonies in Dubai twice now. (Several Members: Hear, hear.) We are dealing with a level of recognition that does us all proud. Therefore all of the schools on the Island have the ability to do that. 4725 With regard to China, it is close to my Department’s heart. I will talk to the headteacher next week in order to try and see what they need and whether that support can come from businesses who are facing China – Chinese businesses coming to the Island – or indeed whether it is appropriate to come out of my Department. I thank all of those of you who supported. I will pick up just a couple of points, if I may. And it 4730 goes back to previous debates and this will surprise him, but I fully endorse what Mr Karran said regarding challenges. He was talking in the previous debate about transport costs and energy costs. Certainly the Hon. Member of Council, Mr Downie, talks about transportation: we are very alive to those challenges. We have businesses coming in, particularly in engineering, who talk about electricity charges. I could talk for a long time over the challenges that we have got to 4735 overcome into our businesses. I would prefer to concentrate on how we get those solutions. So, yes, we live on an Island. Yes, it is difficult to get people here. But there is an attraction to get here. So we are looking at working with technology. If you are in the south of England, and you are wanting to come to the Isle of Man, you go online and you want to be able to get an airline you 4740 have heard of, and stay at a hotel you have heard of, with all booked online, with everything concentrating just going through in a manner and ease that we currently do not have. It is those sort of areas where the private sector can work with us to actually make it more efficient. There is a lot of competition for those visitors. But do we know where the third most visited UK destination is at the moment? Liverpool. International travellers coming in: Liverpool has 4745 shown itself so ambitious to drive real opportunity and growth, and therefore people are getting to Liverpool – and we are still struggling to get people who live in Liverpool to come across to us. Only a week and a half ago we had some of the most important family wealth advisers that had ever stepped foot on the Isle of Man, and they did not know about us, and they came and they loved it. The Chinese ambassador has done the same. ______929 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
4750 If we can get people to consider putting the Isle of Man on their shortlist of opportunities whether it be to visit or to do business. If we can get them onto that shortlist, then we can normally win that negotiation and argument. We need to be more visible, and that is part of the marketing challenge that we will always have. The issue then becomes: how do we all pull that together? Well, I have said before, we need 4755 every one of us in this Court who are working in Government Departments, not just Ministers, but all the Members. When you have divisional meetings, when you have your officers there with an agenda that they have prepared, giving you information that they have prepared, giving you the questions to ask almost, what your question should be is: the economy, what have we done as a division, as a 4760 Department, to help grow the economy of the Isle of Man? And that is all of our responsibility, to challenge the civil servants, to take them into a different culture where it is their job in planning to consider the implications of what it means to say no. It is those people who have to turn around and understand that the bureaucracy or the paperwork, or the hoops they make people jump through because that suits our model, is going 4765 to be a disincentive for business. We always talk about red tape, but as soon as I try and cut any corners, we are hauled before a Standing Committee or an Economic Committee. And if you want us to take risks, then we will have to have a discussion tonight or tomorrow, to say, most of the time we get it right, but there is no way we can do this job, with all the challenges Mr Henderson talks to us about, without on occasions making mistakes. 4770 Nobody in business has been successful without making mistakes. (Two Members: Hear, hear.) In our Government we have a culture now which turns round and avoids any of this because then you get… the 99 successes do not count; the one failure is the one you are persecuted for, and that means that we can not change our culture unless we change that very approach of us 4775 within this Court.
Mr Henderson: I am happy for you to try.
The Minister: I would point out – and it is something that many Members of this Court will 4780 probably read The Economist, or read literature about the economy – there is a massive change, the rich are getting richer. The top small percentage in any industrial economy like ours, any successful economy, the rich get richer. We see it in China quite easily, we see it in Russia. We even see it Britain and the Isle of Man. Those particularly over the last five years, who have access to cash, to money, are able to pick 4785 up properties, pick up businesses at a much reduced rate. The rich are getting richer. The jobs for the poorer ones are being offshored, as has been discussed already today. So we have to give our people the skills to make sure that they have a value to a business, and to attract businesses here that will pay reasonable wages. And that comes to the comments about 4790 Mr Hall from Onchan, which is exactly where the danger arises. If we are purely bringing in those people who are working at the top end… new residents coming to the Island to take the top jobs, then that is going to be a disservice to the equality across our income level. We are going to have to try and understand that people have got to be adaptable. There is no surprise to this. For the last 10 years or more we have been talking about climate change, and 4795 we still seem surprised by the weather conditions. For 10 years or more we have been talking about London's airports are already saturated. We seem surprised that businesses, companies and airlines are buying these at massive prices. We sometimes seem to think that technology is changing our lives and that young people now are going to have many different careers and therefore skills to match. That is what is 4800 happening. Therefore we need to make sure that we get our young people to realise that there is no longer a job for life, there is no longer one set of skills. One of the most important thing ______930 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
schools and parents can teach is an adaptability for people to adopt new skills and opportunities and challenges. Coming to an end, Madam President, but I really would like to thank everybody’s support. 4805 The Member for North Douglas, Mr Henderson, I give you an assurance that when I go into a meeting with Mr Teare and Mr Bell, they are saying exactly the same. They are not going to support extra resources going into my Department unless we have those performance indicators. The culture that we have adopted within DED is very much about key performance indicators – but not ones done by civil servants, ones done by business. 4810 We are more now business-orientated in our way of working and therefore we will be able to evidence whether the money that is being spent in DED produces a benefit to the public. You have a right to expect us to be able to justify that – and certainly I would not get away with it with the Chief Minister or the Treasury Minister. The Hon. Member of Council, Mr Downie: a little bit on a sour part. I understand exactly what 4815 he is talking about, and he does summarise one of the problems, which is how long have we known about offshore wind, and we are still not there yet. Some of that is within our control, and some of that means that we collectively have got to say that a priority is the marine spatial plan; a priority is to work with the UK Government to get the rocks approval; the majority is to work with other parts of Government. And that is where I am urging us all to unite behind it. The 4820 private sector expects it; we have the ability to do it. Yes, there are challenges with transportation to and from the Isle of Man. If there was a bridge that was easy, there would not be the Isle of Man because we would just be like any other part of the UK. Therefore, we have got to try and make sure that we expose to people that we are worth making the effort. 4825 We will be flying people to the Isle of Man, we have done it previously with some of these family wealth, that we are funding some of their travel because they have the ability to do us an enormous amount of good. We need to get travel agents and journalists, business leaders to come to the Isle of Man, and that is where we have to invest some of our money. The very point the Member for Michael was talking about, and has said in a previous debate: 4830 sales, sales, sales. Mr Henderson said it today. We have got to make sure we are funding people in Government to do those jobs to close and deliver sales rather than just to talk about it and wait for a nice key performance indicator, ‘I have had 20 meetings’. How many of those landed on the Isle of Man? We are getting there. (A Member: Hear, hear.) We will report back to Hon. Members in 4835 presentations, it will be the first or second Monday of every month, but we will also be running out to the private sector. I know that you are not accepting today, but you are receiving, and I am grateful for that. I beg to move.
4840 The President: The motion is that Vision2020 be received. Those in favour, please say aye; against no.
Mrs Beecroft: No, on principle.
4845 The President: The ayes have it.
A division was called for and electronic voting resulted as follows:
In the Keys – Ayes 22, Noes 2
FOR AGAINST Mr Quirk Mr Karran Mr Hall Mrs Beecroft Mr Ronan
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Mr Crookall Mr Anderson Mr Bell Mr Singer Mr Quayle Mr Teare Mr Cannan Mr Cregeen Mr Houghton Mr Henderson Mrs Cannell Mr Robertshaw Mr Shimmin Mr Thomas Mr Cretney Mr Watterson Mr Skelly Mr Gawne The Speaker
The Speaker: Madam President, in the Keys 22 for, 2 against.
In the Council – Ayes 9, Noes 0
FOR AGAINST Mr Corkish None Mr Wild Mr Crowe Mr Downie The Lord Bishop Mr Butt Mr Turner Mr Braidwood Mr Coleman
The President: In the Council, 9 votes for, no votes against. The motion therefore carries. 4850 That includes consideration of the Supplementary Order Paper, Hon. Members.
Procedural
The President: We now take a look at our main Order Paper, and I have already announced that we will deal with Questions tomorrow morning at first business. I would like your guidance: it is almost eight o'clock. I would suggest that perhaps we deal with one or two Orders and at eight o’clock determine whether you wish to continue – 4855 (Interjections)
A Member: Items 5, 7 and 8.
The President: – rather than dealing with a major debate at this point. Are you content, Hon. 4860 Members?
Mr Karran: I would like to propose, Eaghtyrane, that we go at eight o’clock.
The President: That you… ? 4865 Mrs Cannell: That we finish at eight o’clock. ______932 T131 TYNWALD COURT, TUESDAY, 18th FEBRUARY 2014
The President: Finish at eight. Right we will see what we can manage before eight.
Mr Quirk: Madam President, an alternative is, I would like to do, if we can, Items 5, 6, 7, 8, 9 4870 and 10.
The President: I do not think we get through all… We have to decide at eight o’clock, Hon. Members, let’s get started. I do not want to take the major debates now.
Order Paper No. 1
5. Road Transport Licensing Committee – Mr Frederick Peck appointed
The Chief Minister to move:
That in accordance with the Road Transport Act 2001, it be approved that the Council of Ministers shall appoint Mr Frederick Peck to the Road Transport Licensing Committee for a term of five years ending 20th February 2019.
The President: Item 5: the Chief Minister to move. 4875 The Chief Minister (Mr Bell): Madam President, in accordance with the Road Transport Act 2001, members of the Road Transport Licensing Committee are appointed by the Council of Ministers, subject to the approval of Tynwald. The Committee consists of five non-Tynwald members with a chair, a vice-chair and three 4880 other members appointed for a term of five years. Council is seeking to appoint to the Committee, as the term of appointment for one member, Mr Frederick Peck, is due to end on 20th February 2014. An advertisement was placed in the local press and on the Government website. Two applications were received and both applicants were interviewed. 4885 The interview panel consists of Mr Cretney, as the Council-nominated Minister of Appointments, and Mr Keith Watterson, Chair of the Committee. Following careful consideration, the Council agreed to recommend the appointment of Mr Peck, for a further term of five years ending on 20th February 2019. Mr Peck is a highly valued member of the Committee who has served the Committee extremely well. 4890 Madam President, I wish to recommend that this Hon. Court approves the appointment of Mr Frederick Peck as a member of the Road Transport Licensing Committee.
The Minister for Infrastructure (Mr Cretney): I am happy to second.
4895 The President: The Hon. Member, Mr Turner.
Mr Turner: Thank you, Madam President. I just wonder if I could ask the mover of this: with the possible future looking at the structure of Government, when we appoint people to these bodies for a period of five years, the RTLC is 4900 possibly one of those bodies that could be replaced or abolished, or merged or something, and how do these appointments, if we are appointing for five years, sit with the proposals to look at
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some of these bodies such as the RTLC? There were talks not so long ago about the RTLC being abolished.
4905 The President: The Hon. Member, Mr Karran.
Mr Karran: Eaghtyrane, I have no problems with the proposal as far as the Chief Minister is concerned, but I do agree with the point of the Hon. Member of Council. I have to say that this is a body… I think it is something in the Budget, if I remember rightly, 4910 there is £100,000 for, so I think that has gone down, the cost of this proposal for the Road Transport Licensing Committee. But what I do feel is that I think the Member of Council has got a very valid point, as this is a prime example of where it should have been put back to the local authorities and let them pay for the costs of the administration of the hackney licences. And I just wondered if the Chief 4915 Minister had any time period as far as trying to put this back to local government. Obviously I will be supporting this, I have no problems as far as the recommendation of in the Council of Ministers. But I do feel that the Hon. Member of Council is right: the fact that we are appointing for five years and the fact that we hear an awful lot of talk about local government reform. 4920 This is something that is a small thing that should be easy to obtain, and I would just like the Ard-shirveishagh’s views.
The President: The Chief Minister to reply.
4925 The Chief Minister: Madam President, I have given an undertaking to this Hon. Court that, following the restructuring proposals which were approved recently, work will now move on to look at a whole range of other areas. We wanted to get the more urgent ones out of the way first, and they will come in on 1st April. But I have already committed to come back, I think by the end of June, with further 4930 proposals, and I am quite content to review the situation on an ongoing basis until we have gone through all the various committees of a similar structure right across Government. So this appointment now in no way inhibits what we will do for the future, if indeed it is decided to scrap this, that it no longer serves its purpose, then it would be disbanded – we will not be holding back any disbanding of it until the five year period is up, I can assure you. 4935 As far as giving the powers back to local government are concerned, that is something obviously we will consider at the same time, but before we do that we need to have a strong local government structure to put it back to. (A Member: Hear, hear.) And the sooner we can get on with the reform of local government and have something of substance there to hand these powers back to, the better everyone will be, I think. 4940 The President: Hon. Members, the motion is set out at Item 5 on your Order Paper. Those in favour, please say aye; against no. The ayes have it. The ayes have it. Hon. Members, it is after eight o’clock. I propose we adjourn unless there is any alternative proposal. 4945 Several Members: Agreed.
The President: The adjournment will be until 10.30 tomorrow morning, when we will start with the Question Paper, Hon. Members.
The Court adjourned at 8.01 p.m.
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