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REPORT OF PROCEEDINGS OF TYNWALD COURT

Douglas, Tuesday, 17th March 1998 at 10.30 a.m.

Present: Tynwald Court. It was a place he enjoyed, he excelled in, The President of Tynwald (the Hon Sir Charles and which he had great faith and confidence in. Kerruish OBE LLD (he) CP). In the Council: The Lord Major Crellin was a Manxman, a very proud Manxman Bishop (the Rt Rev Noël Debroy Jones), the through and through. He was a real gentleman and a Attorney-General (Mr W J H Corlett), Hon C M Christian, scholar. He served his Queen and country in the RAF and Messrs J R Kniveton and E G Lowey, Hon E J Mann, army, rising to the rank of major. He served the people of Messrs J N Radcliffe and G H Waft, with Mr T A Bawden, the Isle of Man, in particular the people in the south of the Clerk of the Council. Isle of Man, in the House of Keys and Legislative Council and Tynwald Court for nearly 20 years. His attention to In the Keys: The Speaker (the Hon N Q Cringle) detail made him a thorough and competent member of this (Rushen); Mr L I Singer and Hon A R Bell (Ramsey); Court. That virtue, allied to a caring nature and a genuine Hon R E Quine OBE (Ayre); Mr J D Q Cannan (Michael); interest in people, and a wonderful and warm outward- Hon H Hannan (Peel); Mr W A Gilbey (Glenfaba); going personality, made him an excellent constituency Mr S C Rodan (Garff); Hon D North (Middle); member, as I can vouchsafe. Mr P Karran and Hon R K Corkill (Onchan); Mr E A Crowe Geoff Crellin’s life and times have had many moving (Douglas North); Hon D C Cretney and Mr A C Duggan and sincere tributes paid by others, not least by his friend (Douglas South); Mr R P Braidwood and Mrs B J Cannell and colleague and my friend and colleague, the Speaker (Douglas East); Messrs J P Shimmin and A F Downie of the House of Keys. He has catalogued his life’s journey, (Douglas West); Hon J A Brown (Castletown); Hon touching on family, his friends, his education, his D J Gelling (Malew and Santon); Sir Miles Walker CBE contribution to the arts, his commitment to the community LLD (he), and Mrs P M Crowe (Rushen); with and the countryside in which he lived, and the constant Prof T Stl N Bates, Clerk of Tynwald. thread that ran throughout is of a sincere, caring, warm­ hearted man who was always good company to be with. Geoff had a good blessing and that was the love of his The Lord Bishop took the prayers. family, a very close-knit family. The linchpin of his life was his late wife, Marjorie. Geoff regularly used to tell APOLOGIES FOR ABSENCE me, with pride, ‘I am what I am because of Marjorie’, and I am certain that she put the twinkle in his eye and his eyes The President: Hon. members, we have apologies for always sparkled and twinkled. Looking into Geoff’s eyes absence from the hon. Mr Delaney who has now returned was like looking into the Koh-i-noor diamond, it had lots to the Island and is making a good recovery. We also have of sparkle, lots of twinkle. apologies from the hon. member for Douglas North, Mr It is no exaggeration to state that Geoff Crellin played a Houghton, who is indisposed. not insignificant part in guiding and steering this Island through troubled times with his tenure at the Treasury in the late 1960s and early 1970s. He was always steady. He was a sound man and the financial foundations of our TRIBUTE TO THE LATE MAJOR present economic prosperity were laid by Geoff and others GEOFFREY THOMAS CRELLIN RBV of that era. He is a good role model for aspiring politicians to The President: Now, hon. members will have been emulate. We have an awful lot to thank Geoffrey Crellin saddened to hear of the death of Major Geoffrey Crellin, a for in the political world, but it would be a shallow tribute former member of the Keys and Council, and I call upon if I only concentrated on his political career. He was a the hon. member of the Council, Mr Lowey, to pay tribute visionary politician, yes, always demanding the best from to his life and work. himself and others. Geoffrey Crellin was, if you like, multifaceted. He was a sportsman but he liked the Mr Lowey: Thank you, Mr President. Hon. members, involvement in the administration of sport as well, and it is right and fitting that Major Geoffrey Crellin should be that included hockey, football, rifle shooting, fishing, and remembered in this honourable and ancient setting of I am going to include sea angling here. I could give many

Apologies for Absence Tribute to the Late Major Geoffrey Thomas Crellin RBV T424 TYNWALD COURT, TUESDAY, 17th MARCH 1998

yams about what he did with Ronnie Aldrich on his boat Board of Education, the Local Government Board, the off Chicken Rock, but then we have not got time. Police Board, the War Pensions Committee, and he was But his favourite fishing of course was fly-fishing, and also a trustee of the Manx Museum; quite a workload. That Mr Speaker referred in his tribute to his little piece of experience obviously stood him in good stead because on heaven up at Cringle reservoir, and I just want to relay one his re-election in 1971 he became a member of the then little story of the Cringle reservoir and Geoffrey Crellin Finance Board, a position he retained until his retirement fishing. I do quite a bit of walking round the Cringle from Tynwald in 1982. reservoir and on this particular summer’s evening I was Geoffrey Crellin’s interest and support for sporting walking on the southern shores of the Cringle reservoir, activities has been acknowledged and I would wish to place turned a comer and, lo and behold, I came across Major on record his enthusiastic following of the Colby Football Crellin and his late friend Jim Cooil, both in the throes of Club, where he rarely missed a match, and his enthusiastic casting and casting their line. That is not what was arresting support, as patron of the Port St Mary Rifle Club, always when I came round the comer. It was the scene of two following their fortunes in great detail, remembering elderly gentlemen dressed as if they were ready for a great individual scores and individual successes and taking every train robbery. They had a pair of ladies’ tights over their opportunity to congratulate those people. heads - not a pretty sight, but Major Crellin did not blink Perhaps not surprisingly, for Major Crellin one of his an eye; I do not think he could. ‘Evening, Eddie’, he said, loves was the British Legion, enjoying the success of ‘his ‘If the midges are biting, so are the fish’, and still carried girls’ when they represented the Island in the national on. It was like something out of Monty Python. I tell you, standard-bearers competitions, and he worked particularly that little episode, when I recalled it, to me encapsulated hard for the Colby branch. Just along the road from where Geoff Crellin. He was unflappable. He was always a I live is the headquarters of the Colby branch of the British practical man and he was always a happy man. He was a Legion, fondly known as ‘the legion hut’, and although man at ease with himself and his God, which brings me to much loved, a few years ago it was falling into disrepair. another passion in Geoff’s life and it was the love of his An enthusiastic Geoff Crellin got the bit between his teeth, church and religion, which he practised not just on Sundays led the fund-raisers and inspired the working parties to but seven days a week. He proclaimed his faith. He wanted once again make it a headquarters for the legion to be proud the world to know about it and he lived by those ideals. of. And as well as all of this, he was a founder member of Major Geoffrey Crellin had a full life. Our sympathy the Rotary Club of Rushen and Western Mann and, until goes out to Ian and the girls and their extended family and prevented by his failing health, was an enthusiastic attender, friends. We do send our sincere condolence at this sad time. committed to fellowship and service, and for that service Geoff will be missed sorely by many. He was as Manx as was honoured with the Paul Harris Fellowship, one of the Barrule itself. We will miss that distinctive voice, but we highest accolades that the Rotary movement can give to will remember the twinkle in his eye and we will all enjoy one of its members. our memories of a good friend whose journey through this And so we could go on. He was an enthusiastic angler, life was inspired by his family, his Manx heritage, his an enthusiastic chorister, and won’t he be missed in St church, and service to others. John’s Church on July 5th, as part of that choir. He was an enthusiastic ornithologist, never missing an opportunity Sir Miles Walker: Mr President, I rise to associate this to share the joy that he felt when he saw a bird of unusual hon. House with the tribute so nicely proposed by the hon. origin or something just a little bit different, and of course member of the Council, Mr Lowey. Since Geoff Crellin he was an enthusiastic exponent of the poems of T E died on March 6th there have been many, many words of Brown. His interpretation of the works of our national poet tribute paid to him, all pertinent, all deserved, and all fitting assisted in creating a more general appreciation of them, to his memory. right throughout this community of ours. The word I find most apt to describe Major Geoffrey So all in all. Major Geoffrey Crellin was an enthusiastic Crellin as an individual is enthusiastic. When I first got to Manxman, he was a good friend whose company and know Geoff, almost 40 years ago, he was the enthusiastic whose counsel will be missed, and the House of Keys joins landlord of the Shore Hotel in Port St Mary. He ran a good in this tribute to the life of Major Geoffrey Crellin. pub with professionalism, discipline and no nonsense but he conveyed generosity, warmth and respect as only he The President: Would you please be upstanding in could. During that period I realised that Geoffrey Crellin silent tribute to the memory of this distinguished Manxman. was an enthusiastic family man, deeply appreciative of the support and stability that Marjorie brought to their life The Court stood in silence. together and they were so proud of their three children, Ian, Pattie and Phillipa. Marjorie and Geoff shared with The President: Thank you, hon. members. their friends their joy as they watched their family grow up and mature. Not surprisingly, when he was elected to this House of WELCOME TO THE NEWLY ELECTED Keys in 1966, he became an enthusiastic and conscientious MEMBERS OF THE LEGISLATIVE COUNCIL parliamentarian. In that first five-year period of election he was concurrently chairman of the Broadcasting The President: Hon. members, this morning I welcome Commission, a member of the Assessment Board, the to Tynwald the newly elected Members of the Legislative

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Council. I would congratulate them on their success in the BUDGET SPEECH — recent elections and wish them a successful term of office. MINISTER FOR THE TREASURY — DEBATE COMMENCED

BILL FOR SIGNATURE The President: Now, I would advise you that, as the United Kingdom budget also takes place today, Manx The President: Now, hon. members, we have a Bill Radio has chosen to broadcast only the budget speech this for signature and if you are agreeable we will continue our year. Item 2 on the order paper, I call upon the Minister for business while it is being signed. Is that agreed? the Treasury.

Members: Agreed. Mr Corkill: Mr President, I beg to move:

The President: Thank you. That the budget proposals for the year ending 31st March 1999 be received and necessary action be taken to give effect thereto.

ORDER PAPER NO. 2 — Mr President, hon. members, I have devised this budget PAPERS LAID BEFORE THE COURT within the context of government’s policies and priorities, as set out in the 1997 Policy Report. As such it will echo The President: Hon. members, in keeping with the messages delivered when that document was debated standing orders 2.2(4) and (5), we turn to order paper no. and endorsed in October. 2 and I call upon the learned Clerk to lay papers. From the outset I must acknowledge that the fact that the United Kingdom chancellor’s budget is to be presented The Clerk: I lay before the Court: this afternoon is an additional complication. However, I strongly believe that we are a sufficiently mature Isle of Man Budget 1998-99 parliament to be able to deal positively and calmly with this situation. We may need to respond to some of his Income Tax Act 1970 - budget announcements in a number of ways. It is important Income Tax (Car Fuel Benefits) Order 1998 [SD that we take the necessary time to consider any implications No 118/98] and our responses. If necessary, the Treasury will return to Income Tax (Benefits in Kind) (Exemptions) this hon. Court later in the year with amendments and (Amendment) Order 1998 [SD No 119/98] proposals. Income Tax (Nursing Expenses) Order 1998 [SD Government is all about choices. We will never satisfy No 124/98] everyone with a budget, nor can one ever expect all aspects Income Tax (Payments on Retirement) Order 1998 of the budget to be universally well received. However, [SD No 125/98] what I bring forward today is a budget which aims to continue the vitally important requirement for government International Business Act 1994 - to support private enterprise by creating and maintaining International Business (Fees, etc.) Regulations 1998 economic conditions conducive to successful business, [SD No 121/98] whilst also seeking to address the maintenance and improvement of the priority service provision areas of law Hydrocarbon Oil Duties Act 1986 - and order, health, education and social services. It seeks Hydrocarbon Oil Duties (Supplementary Rebate) to do so against the backdrop of potential significant change Order 1998 [SD No 58/98] in the external conditions within which the Island must live and do business. Non-Resident Company Duty Act 1986 - The Chief Minister’s comments in moving the Policy Non-Resident Company Duty (Amendment) Report remain apt and he said, ‘Stability is a key element Regulations 1998 [SD No 57/98] of our strategy and clearly the basics do not change radically from year to year. We aim to have a diverse Income Tax Act 1970 - economy and we have a diverse economy, but we cannot and must not rest on our laurels, nor must we delude Income Tax (Medical Insurance Relief) Regulations ourselves with thoughts that we are such a wealthy 1998 [SD No 123/98] community that we can afford a level of public services which some other wealthier countries can afford. Whilst Income Tax (Exempt Companies) Act 1984 - keeping our eyes on the horizon, we need to keep our feet Income Tax (Exempt Companies) (Fees) firmly on the ground’, and I totally agree with these (Amendment) Regulations 1998 [SD No 120/98] comments. To my mind the Isle of Man’s budget’s purposes are, Limited Liability Companies Act 1996 - firstly, to report government’s assessment of the economy; Limited Liability Companies (Income Tax) (Fee) secondly, to put into financial terms the plans and priorities Order 1998 [SD No 122/98] of government as defined in the Policy Report; thirdly, to

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seek Tynwald’s authorisation to those financial plans in bring us constant and increasing change. The certainties terms of both spending and taxation proposals; and, finally, of the past are behind us. We need to accept, even embrace, to provide an opportunity to focus attention on both the change as a fact of life and strive to use our skills and need to give priority to the raising of revenue through influence to make sure that change brings improvement economic development as a precursor to spending decisions for our Island and its people. and on the steps government continues to take to put into However, the foundations laid in past years are firm effect the development and diversification of the economy and are being built upon by government in its amending I intend to break my speech into three sections dealing, and expansion of commercial legislation and in its policies firstly, with the Island’s economic situation in the context for manageable economic development and by the Island’s of the global economy; secondly, direct taxation proposals, corporate sector in its entrepreneurial planning and government finances and spending proposals for marketing and with its development of the skills of the authorisation by Tynwald; and, finally, the budget in the Island’s workforce. This latter feature, I feel, is of central context of government’s objectives. importance to the future of the Isle of Man economy. Yes, Firstly, the economic situation. The Island’s economy we will always need to have regard to taxation matters is presently enjoying its fifteenth successive year of growth. and to legislative matters, but the key to our future success Taking the last four years alone, the output of goods and will be in maintaining and heightening our reputation as services produced and supplied on and from the Island an international centre of excellence throughout all the has increased by almost one quarter. The benefits of this sectors of our economy. expansion in economic activity are plain to see in that 5,000 However, there are decisions taken, or to be taken new jobs have been created, unemployment has fallen by elsewhere, which may have significant effects upon our around 1,000, long-term unemployment has all but economy, firstly the financial regulation review announced disappeared, and personal incomes have increased by an by the United Kingdom Home Secretary in January and average of 12 per cent in real terms. All this has enabled currently being undertaken by Mr Edwards. It is my belief government to finance improved levels and quality of that the Isle of Man Government has adopted a progressive public services, notably in health and education, without and responsible attitude towards the development and recourse to higher taxation. We have now reached a regulation of its financial services industry. I trust, situation where one in three of our workforce does not therefore, that Mr Edwards’ report will be a comprehensive have an income tax liability. At a time when the United and fair analysis of our legislative regulatory and Kingdom is considering ways in which to alleviate the tax administrative arrangements compared to regimes burden on the lowest paid of its wage earners, we can elsewhere, both onshore and offshore. I shall await his proudly point to our having removed such groups totally report with interest and look forward to being involved in from our income tax net. I think this is something which any discussions on its outcome in due course. we do not give ourselves sufficient credit for having Secondly, I anticipate today that the United Kingdom achieved. Government will be announcing the introduction of further Looking back for a moment to 1985, things were very tax anti-avoidance legislation so as to maximise that different. Unemployment then numbered almost 2,500, an country’s taxation revenues. Such measures may well unemployment rate of almost 10 per cent, and this despite adversely affect our own revenue and we, and particularly some exporting of the problem as people, particularly the private sector practitioners, may well have to consider young, left the Island in search of employment. National alternative opportunities and initiatives. However, output was no higher than in 1982 and growing at only consideration of any proposals by the United Kingdom '/2 per cent per year. Per capital national income was just chancellor may take some time to study and absorb. I think 69 per cent of corresponding United Kingdom levels. it is worth making the point that there is also a difference Government reserves stood at only £2 million. If that between tax evasion, which is illegal and cannot be sounds like self-congratulation on behalf of successive Isle condoned, and tax avoidance, which is legitimate. I believe of Man Governments since then, it is not designed to be. that the distinctions are becoming increasingly blurred in Rather it is to set down the scale of the achievement and to some quarters. note the standards that we now have to strive to maintain Thirdly, there have been proposals from the European in the years ahead, years which arguably, more than any in Union on harmful business taxation which became the last three decades, will test the Isle of Man’s right to a operative from 1 st January last. The published code places place in the world of international finance. However, as a commitment on the United Kingdom Government, within an eminent scientist said, ‘One never notices what has been the framework of the constitutional arrangements, to ensure done. One can only see what remains to be done.’ I think that its provisions are applied in dependent or associated this is relevant today. We as an Island community should territories where they have special responsibilities or sometimes look back to remind ourselves what we have taxation prerogatives. How that will operate in practice been able to achieve and pay tribute to those serving both remains to be seen, but we regard the constitutional position inside and outside this hon. Court who have worked so as an important safeguard regarding the autonomy of the hard to achieve this position. Island’s tax-raising powers. But, more importantly, we must ensure that our Fourthly, we are aware that the Organisation for attentions are focused firmly on what needs to be done in Economic Co-operation and Development in Paris is also the future to protect and develop our Island and its unique considering a set of recommendations relating to harmful way of life. All we can be certain of is that the future will tax competition and the role and activities of tax havens.

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Again, how that will be developed in the coming months function of a budget which contains measures that, once remains to be seen. again, will maintain the Island’s superiority in respect of So I do not think that there has ever been a budget tax and state benefits. I hope too that we will today debate speech, at least not in recent times, that has not stressed the bigger picture, whilst acknowledging the attempts being the need to avoid complacency and the need to seek to made to address the issue of those people who are seen to maintain the Island’s competitive position. Well, this is no be in the gap of neither paying tax nor receiving state different in that respect, but given the situation I have just benefits. outlined, I do not think there is one jot of complacency I would now like to turn to the subject of European within either government or our private sector, for we all Monetary Union, as the stance adopted by the new appreciate that at the end of the day it is external and Government in the United Kingdom has a direct and international forces that will largely set the parameters for important effect on the Isle of Man. As has been publicly growth for the Island’s economy. announced on a number of occasions in the past, if the Recent events in East Asia have illustrated once again United Kingdom Government opts to join the single just how inter-related and integrated the world’s economic currency, we must follow that change here in the Island systems are. The Isle of Man cannot fail to be affected by and issue a Manx euro in place of the Manx sterling issue. the difficulties being experienced in that part of the world. The present position so far as the United Kingdom Our manufacturing sector has just recently been affected Government is concerned is that it believes in principle by key decisions on rationalisation being taken in centres that British membership of a successful single currency well beyond our shore. Further, we are also perhaps would be beneficial to Britain and to Europe. The key factor entering a phase when some kind of slow-down in the is whether the economic benefits of joining for business Island’s economic cycle would normally be expected and industry are clear and unambiguous. anyway. There are as yet no visible signs of this, but should The United Kingdom Government has directly advised the United Kingdom realise its forecasted slow-down this its Treasury of the need to press ahead with the practical year and next, then this would inevitably serve to dampen arrangements for the United Kingdom’s early entry into our own prospects. stage three of monetary union. That message was This budget is formulated with, as always, one eye on emphatically stated on 27th October last year, and I quote, such economic trends and expectations, but I would wish ‘It is essential that the government and business prepare to emphasis that the budget is just one aspect of policy intensively during this Parliament so that Britain will be formulation within the Isle of Man Government. It ought in a position to join a single currency, should we wish to, not perhaps to attract as much attention as it does. This early in the next Parliament.’ Despite the acknowledged attention generally means that the spotlight is placed on doubts and legal challenges, stage 3 of monetary union is what are typically only marginal changes to tax rate and only nine months away for some participating European allowances, when instead the focus should be on how rates countries and all government agencies and local businesses and structures are operating so as to try and ensure the in the Island must take seriously the United Kingdom’s operation of sound economic policy, for it is the whole potential participation in it in the relatively near future. width of economic policy that will be important in Steps have already been taken within the Isle of Man to maintaining the growth and development of our economy address the matter. The Treasury has commissioned a set and it is this growth and development that will be critical of six denominations of draft Euro Government notes, in providing for maximum opportunity for our people to available if needed at short notice to replace the existing improve their material wellbeing. It is success in general Manx Government notes. Manx commemorative euro policy, therefore, that will ensure that tax revenues will be coins have of course been around for some years, but available to minimise the burden on the least well-off and circulation versions will be readily available when needed. to finance the quality of public service provision and care Also government’s internal accounting arrangements have to which we have become accustomed. been changed, so in many cases from next January it will There are those within our community who are outside be possible to pay in euros to settle amounts due to the tax system and outside the benefit system. For them government, whether it be income tax, VAT, licences and there are the benefits of the economic improvements of so on. Obviously there will not be any euro notes or coins the Island, but there may be some who still see no in circulation before the year 2002, but euro cheques and improvement in their standard of living. This is an issue to euro bank transfers will in most cases be accepted. be addressed and I am pleased that the Chief Minister has So far as businesses are concerned, there is the same established a Council of Ministers committee to consider message to press ahead with monetary union preparations. this issue in particular. A guidance paper drafted by the Treasury’s economic Whilst I have every confidence in the annual figures affairs division is included with today’s budget information produced by our earnings survey, I am disappointed that pack. As far as government departments are concerned, it there are some who question the results. Our forthcoming will be necessary for them to identify how their operations Statistics Bill, recommended by a previous inquiry into will be affected by the introduction and plan their actions low incomes, should provide the confidence in the results accordingly. that those questioners seek. The select committee of this Turning now to the marketing of financial services, as hon. Court looking at the possibility of a minimum wage hon. members will be aware, the commercial development is taking these elements into consideration. However, I division has, since April 1996, been implementing an would hope that today the Court appreciates the wider enhanced broad marketing strategy for financial services.

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However, more recently we have reviewed this strategy. public in order to fund its capital spending. This policy The review concluded that a radical change in strategy has reached the point whereby at the end of this current had been successfully implemented. Awareness had year government will have external debts of only £554,000 improved among target audiences. The Island is perceived in total. By the end of next year this will have reduced to a more positively and is improving to a greater extent than mere £32,000. Were it not for contractual obligations these any other jurisdiction except Dublin International Financial debts would have been cleared before now. By these Services Centre. A number of new businesses had been measures we have shown our sound and prudent approach attracted which had served to diversify the Island’s to government finances over many years and will continue economy. to do so. Given that the current strategy is working, no radical The budget expresses financially government’s plans, change in the marketing strategy and its overall aims are policies and objectives as defined in the Policy Report. It proposed, although many tactical suggestions have been is primarily the vehicle by which government seeks made and adopted where practical. Moreover the Treasury Tynwald’s approval to the spending associated with those agreed that in all our future communication activities we plans, policies and objectives. Therefore the broad thrust shall emphasise the following key themes. of the budget is defined by the Policy Report, taking Firstly, we should refer to the Island as an international account of current financial conditions. finance centre, not an offshore centre. These days the The healthy economic conditions to which I referred in distinction between onshore and offshore is becoming last year’s budget are manifesting themselves in increased increasingly blurred. For example, the United Kingdom government receipts. In addition some of the areas of non­ holds some £600 billion of foreign non-resident deposits, recurring receipts mentioned last year have continued for so valid comparisons can and should be drawn with the a slightly longer period than expected, although they United Kingdom. Over the past 20 years we have created remain non-recurring in nature. Consequently, probable a significant financial services industry here supplying income for the current year is expected to exceed the financial services world wide to non-residents. estimate by £21 million or nearly 9 per cent. As the current Secondly, the Island has scope, space and commitment year probable spending is broadly in line with the estimate to growth. This is our major selling proposition, as we alone we therefore have a probable surplus of that magnitude on among the British centres can offer the financial businesses the year, which will be used to bolster reserves within the the opportunity to set up a genuine business with a real previously stated budget strategy. presence, its own staff and management. Income for the forthcoming year is now expected to be Thirdly, people: the people of the Island are professional, more buoyant than was expected at last year’s Policy eager to do business, welcoming, responsive and have a Report. After allowing for the cost of income tax changes range and depth of skills. I will announce shortly, income is expected to exceed the Finally, the quality of life. The Island offers employees figure projected at the Policy Report by some £9 million, of businesses which might locate here an excellent quality taking the expected figure to £266.9 million. This includes of life in terms of recreation, travel to work, housing and customs and excise division’s duties, rates and taxes of the environment. A lack of serious crime and social £145.4 million, whilst income tax income is also projected problems, education and, increasingly, shopping. to be buoyant, taking its estimate to an all-time high of The Treasury has also decided to adopt another £119 million. This has enabled us to reinvest the investment suggestion and that is the name of the division be changed income earned by government’s reserve fund and currency from commercial development to international services account directly into the reserve fund rather than using it development division. The division’s current remit is to to meet the cost of providing services. This is the approach promote the development of the financial, professional and adopted prior to 1992. After that date, however, we had to related services sectors of the economy. The new name use such moneys to meet the cost of government services. reflects more accurately the division’s current aims and It has been a budget objective since that time to return to a activities and will avoid any confusion as to its role in the position whereby we could reinvest the investment income future. in the reserve fund, so I am pleased to be able to have The new Labour government in the United Kingdom achieved that objective in this budget. has introduced a new financial framework with two strict The overall financial position has allowed me to fiscal rules: firstly, that over the economic cycle the formulate a budget which can increase reserves, reduce government will borrow only to invest, not to fund current direct taxation and at the same time allow significant expenditure, and public debt as a proportion of national spending increases in certain priority areas, but before income will be held at a stable and prudent level over the outlining the spending increases proposed I will outline economic cycle. It is perhaps worth reminding and perhaps my views on our taxation strategy and the taxation changes congratulating ourselves on the strict fiscal rules within I propose. which the Island’s government has functioned for many Our taxation strategy is based on the measures required years. Firstly, the Treasury Act of 1985 makes it a statutory to support the government’s overall approach of seeking, requirement to budget for a surplus. Secondly, the Loans firstly, to diversify the economy; secondly, to stimulate Act 1974 ensures that we generate funds within sustainable economic growth; and thirdly, to generate government to assist in funding capital spending. Thirdly, employment opportunities. Earlier I referred to the fact it has long been Treasury policy to reduce the level of the Island’s economy is presently enjoying its fifteenth borrowing government has had to undertake from the successive year of growth. This has in part been achieved

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through the incentives created by our taxation strategy, a It was against this background that Treasury gave strategy which I hasten to emphasise involves both direct consideration to the tax changes which I shall now outline. and indirect taxation. Both have their advantages and both There has been a strong temptation to introduce a lower have their problems, but together they serve us well. rate of income tax, if only to prove our ability to do it and However, I have previously referred to the international still balance the books. Whilst this may still be a desirable issues facing us and we must remain satisfied and ensure objective for the future, I believe for the present it makes that our overall taxation strategy is taking us in the right more economic sense to put available resources into direction. To help achieve this the Treasury has established keeping people, and especially those on low incomes, out a focus group with private sector involvement to consider of the income tax net. Therefore for the income tax year possible taxation changes and to make recommendations 1998-99 there will be no changes to the rates of income on proposals for a revised strategy for the new millennium. tax. The standard rate will remain at 15 per cent and the This will be looking at both direct and indirect tax issues higher rate at 20 per cent. Companies and non-resident and I hope that it will report to me by the end of the year persons will also continue to be charged at 20 per cent. with a range of options and strategies that will give the The threshold at which an individual becomes liable to Island enhanced financial security. the higher tax rate is to be increased. For a single person it It is also very clear that in any taxation strategy national will rise from £9,270 to £9,500, whilst for a married couple insurance contributions and social security cannot be left living together the combined amount will be £19,000. out of the equation. In the United Kingdom they are being Personal allowances will also rise, and I have taken the drawn closer together and may eventually pose some opportunity presented by the current healthy growth in problems if we wish to maintain our reciprocal receipts to increase them by 4 per cent. The single person’s arrangements with the United Kingdom on such matters. allowance will go up by £270 from £6,800 to £7,070. The Until the overall direction being taken by the United combined allowances for a married couple will rise by £540 Kingdom is known I do not intend to make any to £14,140. The single parent’s additional allowance will fundamental changes to the relationship in the Isle of Man. go up to £4,840, an increase of £190, and the additional However, the position is being monitored closely by a small allowance for a registered blind person will be £1,940, an review team made up of representatives from both Treasury increase of £80. and the Department of Health and Social Security. The annual cost of the increases is estimated to be £2 Turning to just direct taxation, we have an income tax million. This increase in personal allowances, combined system which provides a high entry point for individuals with the changes in the tax thresholds, will result in a by way of generous personal allowances as well as extensive reliefs both for individuals and the corporate maximum reduction in income tax of £1.27 per week for a sector. Income tax relief is currently given on over £26 single person, £2 per week for a single parent and £2.54 million of mortgage payments, £2 million of payments to per week for a married couple. charities, £700,000 of nursing expenses and a similar Despite inflationary pressures on wages and the increase amount by way of private medical insurance. in social security benefits to be announced, these changes To encourage individuals to provide for their future, will help to ensure that the number of persons not paying assessments are annually reduced by relief on nearly £11 income tax remains at approximately 33 per cent of the million of payments into private pension arrangements, total within the income tax system. with a similar if not more substantial sum being paid by Whilst I am not privy to the United Kingdom’s employers. Plans were also announced during the year to intentions for this afternoon, I am confident that despite promote still further the attractiveness of pension any further reduction that may be made in income tax rates, arrangements, with new proposals being outlined for those a single person who has average full-time earnings in line in a caring position, such as partners at home looking after with the 1997 earnings survey of £350 per week will still children. TTiis investment in the future is essential if the be paying substantially less by way of income tax in the people of our Island are to maintain a decent lifestyle in Isle of Man compared with the United Kingdom. retirement. The budget document contains full details of all the Investment in the future is also provided on the corporate proposed changes in allowances and thresholds, together side by way of maintaining 100 per cent relief, in some with examples. The comparisons made in those examples cases more, for capital expenditure on plant, machinery, will be updated as soon as possible after any changes have industrial and agricultural buildings, as well as tourist been announced in the United Kingdom. Revised tax tables premises. In 1995-96 the amount of relief claimed have been printed and will be issued to all employers. The amounted to over £40 million. reduction in tax should be reflected in wages and salaries I do not intend to go through all the existing measures paid in the week commencing 6th April 1998. but it is worth reminding ourselves of what the current Three further changes are being made to the limits system provides. The good news is that thanks to our applying to reliefs already in operation. The first is an buoyant economy I am in a position to continue with that increase in the maximum amount on which relief may be level of support and in places improve it still further. Yes, given for payments into an approved private medical there are still some problem areas and some of our insurance contract for individuals aged 60 or over. The legislation relating to individuals is outdated and still too maximum annual amount will go up from £1,500 to £1,800. complex. However, over the next three to four years The second is an increase in the maximum amount of relief changes will be made, as evidenced by the legislative for nursing expenses, which will go up to £6,000 per annum programme outlined in the Policy Report. instead of £5,000. Finally, the limit on which income tax

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shall not be charged in respect of a termination payment Finally, before turning to government spending plans, I will be increased from £20,000 to £30,000, the existing wish to comment on the existing fuel rebate. For a number limit having been set in 1986 when the legislation was of years government has provided a rebate on the duty for first introduced. One word of caution on the latter item: unleaded and diesel fuels. This was considered by a the legislation is being reviewed to eliminate potential commission of inquiry in 1995. One of the abuse. recommendations of the commission was that the 1.1 pence Turning now to benefits in kind, for those who receive per litre rebate on unleaded petrol and diesel was no longer them I have some good news. No, it is not that I intend to justified and should be removed. I believe it is time to act do away with them, but I shall be increasing the exemption upon that recommendation. Consequently I will be moving limits. The limit for Christmas parties will go up from £50 a motion today that withdraws the diesel rebate completely to £100, whilst the general exemption limit will increase with effect from tomorrow and reduces the unleaded fuel from £100 to £400. I shall also be studying an internal rebate from 1.1 pence per litre to 0.5 pence per litre. The report on a recent review of benefits legislation by a unleaded fuel rebate will be withdrawn completely this working party of the Income Tax Liaison Committee to time next year. determine whether the existing system, particularly for car I have listened to the representations of a number of benefits, can be made simpler. For the present, however, my hon. colleagues in this area and have agreed to the existing car benefits will remain, with no change being investigate further the potential environmental benefits of made to the present cash equivalents and only an ultra-low sulphur diesel, commonly known as city diesel, inflationary increase to car fuel benefits. and to consider whether there is a case for introducing a Moving on to the international scene, regulations and rebate on this fuel as an incentive towards its introduction orders are placed before Tynwald today increasing certain and use on the Island. fees and minimum tax payable by exempt and international I now wish to move on to the proposed spending plans concerns. for the forthcoming year. Following the now well- The exempt company fee was set at £300 in 1993 and I established procedure, the capital programme remains intend to increase this to £400. The same amount will also broadly that set out in the 1997 Policy Report, debated in be payable for an international limited liability company October last. Additional resources have been added to the and status as an international limited partnership. The fee programme for the continued development of the film for late applications for exempt company status is being industry, which is an additional valuable contribution to increased from £1,000 to £1,200. the diversification of our economy. Our major capital For international companies to whom a rate of income schemes, however, remain as outlined in existing policy: tax applies the minimum tax charge is being raised to the new hospital, the incinerator and sewage treatment and £1,200, with late applications having to pay a sum of £2,400 disposal. or £3,600 depending upon the date of application. It should The 1997 Policy Report identified the problems to be be noted that these payments are in effect an advanced addressed in terms of government’s capital programme, part-payment of the final tax liability. namely that it needed to be reduced in size and that steps All these changes will be effective from the income tax may need to be taken to develop alternative methods of year commencing 6th April 1998 and whilst they will result funding of the major schemes in order to reduce the burden in increased revenue of £1.5 million a year, I believe the on tax revenue in the future. This remains the situation. As proposed fees remain competitive. the forecast capital figures appearing in the budget The fees charged for the incorporation of companies document show, if the level of capital remains at the level and the annual filing of returns at the General Registry currently projected there would be a deficit on capital were revised last year and I propose no further increase account of £29 million by the year 2001. Clearly this cannot for this year. I do, however, intend to further increase the be sustained and the Council of Ministers has accepted amount payable by non-resident companies from £660 to that as part of the development of the next Policy Report £750, effective from 1st June 1998.1 would prefer to see there will need to be a major review of the schemes within more of these companies moving to exempt status where the current capital programme and action taken to reduce the fee is only £400. However, if they wish to remain non­ the overall size of the five-year capital programme. It will resident, then I envisage further increases for as long as also have to address the extent to which departments’ this category remains. The increase to £750 has the effect aspirations in terms of capital spending are realistic of a 25 per cent increase over the last two years. achievable and an annual sum of around £40 million actual Hon. members are aware of the recent consultation over capital spending is about the upper limit. the proposed regulation of corporate service providers. This I have to say that I find the situation whereby actual has resulted in very positive support for the proposals and spending historically runs at two thirds or less of the I am optimistic for the legislation being brought forward planned figure to be disappointing and not acceptable. It sooner than expected. The supervision of companies and is one which I am determined will be addressed as part of the better enforcement of company law is an issue that this review and a reduction in the planned figure is an concerns me, and a committee has been recently option to be explored. I do not underestimate that this will established, again with private sector involvement, to be a difficult process for all involved, but I believe it is determine an improved position for the future. If the Island essential that it takes place. is to continue to prosper, then we must be more active and Turning then to revenue spending on our day-to-day be seen to be active in our controls in this area. services, I outlined earlier the position in respect of

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government income for this year and next year. After new services funded by the taxpayer, and the additional allowing for the direct taxation changes I have just running costs associated with our major capital schemes. announced, government is still able to announce a very However, whilst taking account of the factors I have significant increase of £23 million or 9.6 per cent, in just outlined, we have determined that it is right and proper government’s net spending for next year, taking it to £263.7 to use the opportunity presented by the current financial million. This is over £8 million more than was envisaged position to allow further increases totalling £11 '/2 million at the Policy Report stage. Government’s gross spending, over and above the £1172 million necessary to cover the that is, before taking departments’ own income into costs of capital financing, inflation and pay awards to allow account, is estimated at £413.6 million, the equivalent of us to improve the services provided to die people of the more than £1.1 million per day. Island. Part of the balance that any government must achieve For example, an additional £9.6 million is to be made is between the pressures to spend more money and the available to die DHSS net spending for next year. Its total pressures not to spend more money. To those who will say spending will be almost £200 million. This is more than public spending should have increased further I would say £ ' / 2 million a day and will account for almost half of we cannot allow ourselves to build up ongoing spending government’s total spending. Within this total, spending commitments to a level which may not be sustainable in on health is set to rise by over £6 million, being a very the long term, simply because the funding is available now. significant 10 per cent increase; £2.3 million extra spending To those who are concerned that spending is increasing to is being allowed in the social services division, which the extent the extent that it is, I would say we acknowledge equates to an increase of over 21 per cent, whilst there is your concerns and are acutely aware that government also an increase of over £5 million, or nearly 5 per cent, spending must not be allowed to rise in an uncontrolled on social security costs. The total cost alone of the uprating fashion. However, we are content that government’s of benefits funded by the national insurance and general financial position is such to allow us to increase spending revenue accounts is £3.8 million. and personnel this year in those areas where they will One of the areas of pressure and concern within the benefit the people of the Island most. Included in the DHSS budget is the ever-rising cost of benefits to the sick additional spending are items of a one-off nature totalling and disabled. Another major area of pressure and concern £3.5 million which will lesson the ongoing impact of the is the escalating drugs bill. Next year £10.8 million has spending increases. The details of this spending and where been budgeted for the cost of prescribed items and hospital it has increased are set out in detail in the budget document drugs. This is an increase of £1.1 million or 12 per cent which members will be asked to approve at the end of over last year’s revised estimate. today’s debate. I will outline some of the main areas of In the last five years the drugs bill has rocketed from £4 spending. However, before doing so there are some points million, or 70 per cent, an increase in real terms, after taking I need to make. inflation into account, of almost 50 per cent. The average Firstly, I do not envisage there being scope for such cost per head of population for prescriptions alone next increases in subsequent years. As the summary financial year amounts to £133. Put another way, the number of items forecast shows, if income meets the level projected by the prescribed equates to one item per person, per month for central planning assumptions, spending increases in the the whole population. The Island is not unique in facing following two years are likely to need to be held at around escalating costs in relation to the prescribing of drugs. As 4 to 5 per cent. This is likely to be enough to meet the cost is the case in other countries, it has to be addressed and of pay awards, an allowance for inflation and the financing will be one of the very difficult areas facing governments costs of the capital programme, but not sufficient to allow in the future. further increases above that level. In addition to this, funding for a major development of Secondly, we are at the top of our anticipated economic the family income supplement and the disability working cycle, with a slow-down in economic growth projected. allowance has been included, which in a full year will cost In such circumstances it must be prudent to limit the extent £520,000. This involves the introduction of both a housing of ongoing commitments entered into at this time which element and an enhanced allowance for childminding costs. will require funding through the future period when My colleague the Minister for Health and Social Security government income is not expected to be so buoyant. For is well able to elaborate on this matter. We see it as a this reason the increase next year allows for £3.5 million significant improvement to our support to those families of spending which is non-recurring in nature. on low incomes. Thirdly, given my earlier comments on the external Education will see significant developments in the pressures the Island is likely to face and the volatility forthcoming year with the opening of two new primary present in its tax base, it is only prudent to take the schools and the associated increase in teacher numbers and opportunity to build up our reserves substantially. funding. In addition, funds have been provided to develop Wherever such an opportunity presents itself we should the department’s pupil referral unit to assist in addressing do so. This has been a long-established part of our budget the behavioural problems caused by a small disruptive strategy, as set out in previous budgets and Policy Reports. minority of our schoolchildren. A total of an extra 49 posts, Fourthly, I have emphasised previously that we face the majority of which are additional teaching posts, have significant pressures for increased government spending been allowed and funded. The introduction of delegated from the escalating cost of providing existing services, the financial management in secondary schools and the college never-ending pressures to develop existing or introduce from the beginning of April is a new and significant

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development with the aim of improving the targeting of I have been the minister in a department pressing for resources to priorities by delegating more management more staff and I understand the pressures that there are responsibility to those, if you will excuse the expression, across government for increased staffing, particularly at closer to the chalkface. this time. However, I am strongly of the opinion that Law and order is clearly one of this government’s collectively we must work to ensure that the overall level priorities and the additional funding made available reflects of employee numbers is firmly controlled. This is not an this. Financial and personnel provision has been made for easy thing to do and it is one which can bring tensions and five additional custody sergeants to fulfil the role of custody frustrations into play, but because it is difficult it is all the officer to be created under the Police Powers and more important that it is addressed positively. Procedures Bill and who will have responsibility for Over recent years the budget has increasingly become persons detained in police custody. Also additional the vehicle by which Tynwald is asked to approve the resources have been made for a replacement telephone detailed spending required in the forthcoming year to put system for police headquarters and for more proactive into effect the policies of government as set out and debated policing, plus increased provision of managerial, at the October Policy Report. It is developed within the specialised and operational training to ensure personnel framework of a long-articulated budget strategy aimed at have the appropriate skills and experience to provide high- the sustainable development of the Island and its economy quality and cost-effective services to the public. in an increasingly competitive and complicated world. In respect of the prison, financial and personnel Therefore I make no apology for it being without surprises. provision has been made by the addition of 2.5 healthcare We face pressures from outside to which we will need to officers to enable a healthcare officer to be on duty at all respond positively, looking for the opportunities rather than times. In addition increased provision has been made for focusing on the threats. We need to work to protect and detainee skills training at the prison. develop our economy for the benefit of the people of the Provision has also been made for the replacement office Island. We face pressures from within the Island, often of accommodation for the fire and rescue services fire a contradictory nature. We need to work together as prevention department. representatives of our community to resolve these pressures Economic development must remain a priority, with in ways which best meet the overall needs and aspirations increased spending included for the Department of Trade of our people. and Industry and the Treasury. Also last year’s increased I believe that this budget helps us to deliver these things. marketing spending in Tourism and Leisure has been It tangibly exhibits our stability, prudence and good maintained. Within the Treasury’s vote are additional funds government. Our reserves have been significantly to ensure major computer systems are year 2000 enhanced. It continues our strategy in terms of direct compatible and revenue collection capabilities maintained taxation. However, it acknowledges that we must in future in the face of the so-called millennium bug. review and revise our overall tax strategy, encompassing There is also provision within the Treasury vote for both indirect taxation and national insurance as well as increased grants for the Manx Heritage Foundation and direct taxation. It increases spending on government the Arts Council. The grant for the Manx Heritage services, particularly those at the sharp end of delivery of Foundation is increased by 85 per cent from £54,000 to services to the public. In addition it seeks to assist those £100,000, whilst the Arts Council grant is increased by less well off in our community by the enhancements to 8.7 per cent from £230,000 to £250,000. family income supplement and disability working Within executive government an additional £250,000 allowance. In doing so, I believe it delivers that balance to is to be made available to the Mann 2000 Committee in which all budgets must aspire. It seeks to give financial both next year and the following year. The remit of this effect to government’s policy as defined within the Policy committee is to assist millennium projects, and this Report. additional provision will take the total amount to be made Finally, I would like to thank my ministerial colleagues, available over a four-year period to £1 million. In addition, members of departments and my Treasury colleagues for £50,000 is included as a one-off payment to the public their help, advice and support in preparing this budget. Mr lottery trust as a short-term measure for 1998 whilst long­ President, I beg to move the motion in my name. term plans for the public lottery are resolved. There is a final point that I wish to make in terms of M r Radcliffe: Mr President, I beg to second and reserve personnel. As with finance, there are contradictory my remarks. pressures. There is a strong and natural desire to limit the overall increase in government employees, yet strong M r Duggan: Mr President, I congratulate the member individual cases can be made for specific staffing increases. for his long speech. He has done very well; just about an The budget today includes provision for a potential 112 hour I think it took. extra government employees with 49 of these in education, On the Island there are about 14,000 old age pensioners, including 34 teaching staff and 13 in the clerical, welfare there are quite a lot of them not so well off, and die minister and laboratory category; 27 in the DHSS, of which 10 are stated this morning in the Court that there is going to be an within the health services and 17 within social services; increase. But that increase is very little when you compare 11 within Tourism and Leisure, resulting from the capital the high cost of living. We are giving it, members, on one schemes it is bringing to fruition; and 7.5 in Home Affairs, hand and taking it back with the other. Rightaway in April of which 5 will be policemen and 2.5 will be extra staff at you will get an increase in local authority rents, so the the prison. people will be little better off, Mr Corkill.

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Also the Board of Consumer Affairs on that aspect of as his priority, giving little away, even when tax receipts the high cost of living is doing very little in my opinion. are buoyant and keeping extra spending to the minimum Mrs Crowe has not done a very good job to date and all necessary. Now, no doubt he believes that this is the she is concerned about is what the content of a pint of beer strength of this budget. is. She wants to get more work done in that department. The first thing I would ask is are we masters of our own I am also concerned regarding the prison and I am a destiny? The minister has highlighted the external pressures member of the Department of Home Affairs. We built the and threats to this nation’s tax efficient status on which new courthouse, which I voted against. There were not our present prosperity is built, and I have no doubt that the even any parking facilities there. We built this new palace prudence and caution in this budget is partly a result of up the road for Mr Moyle and his cohorts to be in, and that. But the tax receipts figures in the Pink Book continue they are doing a good job, they are sentencing people, quite to remind us of another threat that is not actually or very rightly, but there again the minister, due to the torture rarely seen as a threat which is that most of our income committee coming over and the state of the prison, has got now comes not from income taxes but customs and excise. to let people out the back door more or less. He is signing This goes up every year, from 43.4 per cent as recently as every week warrants letting people be released. Some of 1991 to 54.4 per cent today. Now, I have said before but them are drug offenders and it concerns me. So that is will continue to say that we are at the mercy of the British another point. chancellor and increasingly so, and when I say ‘we’ I mean Also a point on the budget too when you look at the not only the government but the Manx taxpayer. allowances for the blind. I think there is very little being As far as Treasury is concerned it must think it is in given there, it is only a pittance. heaven. A steady flow of indirect taxation mixed up from The minister also did not mention much about the the pockets of the Manx and British taxpayer, value added hospital waiting-lists, and I know Mr Singer, the member tax, excise duties at rates set in London and Brussels, and for Ramsey, was very concerned there, like other members, more and more in Brussels, into the coffers of a Treasury and I think more should be done regarding reducing the which can and does completely wash its hands of any direct hospital waiting-lists. accountability to the Manx public, never mind Overall the budget is fair but those points I hope the responsibility for any actual pain suffered by the public, minister will bear in mind. and nothing could be more convenient for politicians than to be able to pin the blame for taxes on consumer spending, Mr Rodan: Mr President, I thought I was the only canny especially when they go up onto someone else. Scot in this hon. Court - There is an old political war cry which history shows revolutions have been fought over: no taxation without Mr Corkill: You are. representation. The Manx people are not represented in Westminster or Brussels, they are represented here, but Mr Rodan: - but I have to say that the Treasury minister the changes to their taxes increasingly are not decided here, must have an awful lot of Scottish blood in him because and already I can think members are saying, ‘Well, it’s our this cautious, guarded, safety first budget would do justice choice: we freely entered into an agreement with the UK, to the sternest, canniest Aberdonian bank manager facing we can end it at any time, it is in our best interests.’ But a customer in for a loan and like the canny bank manager the trouble with marriages of convenience is that those who is not given to dramatic gestures, the Treasury minister who are in them, especially when money is involved, find has, like last year, resisted the temptation to be bold and it easier to stay in. It is much easier to stay put when you imaginative. are mortgaged with financial commitments. That is what Now, maybe I have got it all wrong and the people out we are doing: we are mortgaging more and more of our there do not want excitement or want Treasury ministers public expenditure to an arbitrary source of income on to boldly seize opportunities for action, something which which we are becoming increasingly dependent. in reality can only happen when the economy is either doing Now, in all this there is one area of discretion and very well or doing very badly, in which case action is forced flexibility open to the minister: hydrocarbon duty and the out of sheer necessity. Make no mistake - the Manx fuel rebate which he referred to earlier. Now, we know economy is doing exceptionally well: six per cent growth, that the British chancellor this afternoon will be busy unemployment only 1.6 per cent, inflation at or under 3 putting 25 pence or 30 pence onto a gallon of petrol in the per cent, no external borrowing or debt, a revenue surplus, Isle of Man. We can either happily accept that, take this high welfare spending. Every penny spent in the Isle of windfall to our Treasury, courtesy of the Customs and Man is raised in the Isle of Man, no EU regional grants or Excise Agreement, and conveniently direct any complaints social funds here, and many beyond these shores could from the Manx motorist to Gordon Brown or we could very well ask, what on earth do we have to complain about? give it back as a fuel rebate. We already know that will not Our economic problems today are not the ones that many happen because the Treasury minister told us weeks ago countries have and indeed we used to have: unemployment, he had already built those extra receipts into his budget. flat tax revenues, a narrow economic base, no money to Not only does the Treasury minister not avail himself do anything. Our problems are the ones of managing of the one area for freedom of action open to him to return success and managing the high expectations, especially the money to the taxpayer but in fact decides to withdraw on government spending, which such success brings, and the existing fuel rebate of 1.1 pence per litre on unleaded the Treasury minister has certainly succeeded in making, petrol and diesel. Frankly I am astounded that one of the

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few mechanisms open to him has been used to increase for, as we heard, the two thirds of people who are paying fuel duty and not reduce it in the manner I have suggested. income tax, but if we cannot do anything about the heavy burden of indirect taxation which affects every person in Mr Cretney: Provided you have got the consumers. the land, and save us if Gordon Brown does anything this afternoon about VAT, if we cannot do anything at a time Mr Rodan: We seem to have forgotten that the revenue when the economy is buoyant and revenues are surplus this year, projected to be £21 million, is not unexpectedly up by £21 million, then when can we do it? government’s money. What it is is the public’s money, the Maybe it is anathema to government to actually reduce Manx taxpayer’s money. Why is Treasury not taking the tax rates, reduce them and rather than do that simply bank opportunity to return some of it by refunding the petrol the £21 million: the safety first, canny Aberdeen bank duty which Gordon Brown is taking off them? Twenty- manager approach. What a golden opportunity has been one million pounds extra revenue this year, not planned missed to stimulate other areas of wealth creation in the for, not expected, not spent in advance, not committed. economy. What an opportunity has been missed to act What are we doing? We are putting £5 million into public creatively, imaginatively and strategically in fiscal policy. service pensions; £6 million into the hospital estates For instance, in recent weeks we have been reminded development fund, which was set up, I would remind that duty-free travel within the member states of the EU is members, using surpluses from the national insurance fund about to come to an end. Industry is upset because it means precisely to avoid the intolerable burden of repaying out the loss of thousands of jobs. UK travellers will be upset of general revenues in the first place; and the remaining when they find they cannot shop duty-free on the ferry to £10 million into reserves. This is how Treasury has chosen France or when waiting for the aeroplane to Spain. What a to balance the books. chance for the Isle of Man! And before members think I would also remind the Court that last year we had a that this is yet another hobby-horse of mine and just a current year surplus of £17 million of which then £11 variation on the theme of the Customs and Excise million went to reserves and £5.7 million to the public Agreement, I would like to remind them of the words, not service pension fund which we were told was a one-off that I had to say, but what the 1994 strategy document payment to smooth out the annual impact of growing ‘Prosperity Through Growth’ had to say about excise pension liabilities on the funding of ongoing resources. Is duties. It called for a strategic approach to see if the Isle of the £5 million going into the pension reserve this year a Man could obtain an arrangement within the EU, rather one-off payment too? than just the UK, to be treated as a separate independent Treasury will say, ‘Why should we be giving back any territory for excise purposes. As such, travellers between surplus with all these spending commitments that we have the Isle of Man and UK would be eligible for duty-free and which we are pleased to have and which we vote for? allowances, increasing the profitability of sea and air Easy headlines, earning brownie points, gesture politics - carriers and with ultimately the possibility of reducing that is not responsible budgeting’, they will say. And I see fares. the imprint of Treasury’s senior accountants and Civil A similar argument called for flexibility within EU Service officials all over this budget. limits, with the aim of achieving the minimum possible But if the reason we are here as politicians is to look harmonisation of excise and VAT rates which was after the taxpayer’s interest, and I suggest it is, I see no compatible with a continued absence of customs barriers, reason to extract from him any more than is absolutely which is to say an approximation rather than an exact necessary. This is why I am referring to the petrol duty alignment of UK and Isle of Man rates to be the condition increase. It is a Westminster tax, a Tory government tax for barrier-less trade between the Island and the UK and originally, imposed in 1993 as a green tax to get people to hence the European Union. The Council of Ministers stated use environmentally friendly unleaded petrol and out of in their May 1997 report that this recommendation of their cars and onto buses in accordance with a UK priority beginning discussions on the degree of flexibility on for the environment. If I thought for one moment that taking indirect taxation that might be considered compatible with back today 1.1 pence a litre rebate in petrol or happily the absence of customs barriers was already being accepting the 25 pence a gallon that is going to be imposed progressed. And, well, if it is being progressed there is no today was something to do with an Isle of Man environment evidence in this budget. strategy, I would not be on my feet just now complaining To my mind the starting point should be the £24 million about it. But of course there is no real fiscal strategy in the in excise duty we receive each year on beer, spirits, wine Isle of Man for the environment. and tobacco: an opportunity surely for progressing this So it was quite within the Treasury minister’s gift to flexibility policy we supposedly have, to allow, may I put something back into the pockets of the consumer. There suggest, duty-free bonded shops at the airport, at the sea are precious few ways open to him to do this and in the terminal and on the carriers through a separate procedure case of petrol duty he could be seen to be doing something for accounting for duty. Now, I do not think the mechanics positive about the exorbitant cost of fuel which plays such would be necessarily difficult. It would be purely a an important part in a rural Island community and directly bookkeeping exercise and a separate accounting procedure impacts on the very cost of living of a rural Island economy. for the uncollected duties settled once a year with the UK So that is a pretty poor show. Customs and Excise. We are increasing income tax allowances for direct Now, I could not tell you how much of that £24 million taxpayers, 1 per cent more than inflation, which is fine duty we would lose from such duty-free shops, but

Budget Speech — Minister for the Treasury — Debate Commenced TYNWALD COURT, TUESDAY, 17th MARCH 1998 T435 shouldn’t we at least be doing a feasibility exercise? After is clear we have heavy spending commitments. The all, if we can successfully negotiate with the UK our not minister has told us he is committing another £11V2 million collecting £1 million on VAT from bed-and-breakfast to meeting the aspirations of the departments and the accommodation as an exercise to boost tourism, how much minister has met the targets he has set within the overall more of a boost would be the deliberate removal of excise budget. duty on those goods which travellers like to purchase in The heavy financial discipline he is meting out will give duty-free shops when they go on holiday, an experience great satisfaction to those who value financial stability we know is going to be an increasingly rare experience, it above all else. My view is that there was scope this year to is going to be a treat in future, at least as far as European do more by creative use of fiscal policy to stimulate other travel is concerned. wealth-generating sectors of the economy and to do more It is not hard to think of other fiscal initiatives which than usual for the people of the Isle of Man whose efforts could have been contemplated at a time of buoyant tax after all within the economy have actually created the receipts. The Treasury minister will be well aware that the record tax revenues which the minister has reported this mutual fund managers have been pressing him for some morning in this year’s budget. To my mind it is a safe, time for a tax-exempt platform to make the mutual fund cautious, canny budget - none the worse for being that - industry in the Isle of Man more competitive. While captive but sadly one of opportunities missed. insurance, shipping managers, life managers are all exempt from tax and thriving, our mutual fund industry has been M r Waft: Mr President, I would like to welcome this static at best or declining for these last few years, at the budget, albeit we find ourselves in exactly the same very time the worldwide market for these products has position as in previous years, that of the minister fulfilling been growing exponentially. The offshore side of this his usual role of adjusting thresholds whilst trying to business is now worth US$550 billion in assets. We are achieve an operating balance and knowing full well the missing out and we continue to run the risk of being need to keep the reciprocal agreement firmly in place. undercut over the tax treatment that we give by our major We know that if we continue to follow the line on competitors and all for the sake of the £200,000 or the widows’ pensions, retirement pensions, unemployment £300,000 in tax revenues which would be lost by such a benefit in the form of jobseeker’s allowance, maternity move, against which of course is the prospect of more new benefits and our position with regard to VAT we will not business. Just as only three years ago it was tax incentives be able to achieve any real meaning for the expectations which was the original trigger for our now burgeoning film of the Isle of Man. The real changes will as usual come industry, so it would have been an imaginative and not especially onerous move to put new life into the fund from the effects of the indirect taxation from the United management sector in terms of the overall competitive Kingdom Government. Even Manx Radio, I am given to package that we can offer to potential investors. understand, has abandoned us and is following the UK Surely too there has, while the minister did touch on budget, which will of course have a greater effect on the the subject, been a failure to grasp once and for all the Isle of Man. nettle of non-resident companies. At the time the Irish The Institute of Fiscal Studies have enlightened us to Government is reportedly seriously looking at the the fact that, based on their information, the last 20 years continued existence of their 40,000 non-resident companies have seen the most dramatic change in the distribution of on the basis that they jeopardise the reputation of Ireland’s income. The fact is that there has been seen to be no financial services sector, what we are proposing is to significant change in the poorer paid in our society. As a increase non-resident company duty by £90 to £750. Now, consequence, income distribution has widened the what is the object of that exercise? Is it to discourage the inequality in the United Kingdom and it must be of a similar use of such companies? Hardly, when in percentage terms range in the Isle of Man as a consequence. Based on it is the smallest of all the increases in duties being imposed, recorded manual figures, we find that the earnings of the especially when compared to international companies poorest have remained virtually the same for two decades. liable for income tax which are going up from £300 to The gap is getting continually larger and if we continue to £1200. Is it an attempt to squeeze a bit more out of them follow their lead, we will find ourselves in exactly the same while we still have them? No Treasury will willingly situation. True, we are able to soften the blows from time contemplate the loss of £5 million in duty and the £8 million to time and we are able to say that we have much greater in income tax, and in this year’s Pink Book it is even more benefits that those in the UK. But when we are faced with which these companies bring in. But if one accepts that the fact from the institute, which is totally independent, the majority are bona fide operations which would simply that the gap between the rich and the poor is now as bad as re-establish as international or exempt companies, the loss it was in the 1880s, we must sit up and take serious notice. of those which turn out not to be clean and above board is Should we be comparing ourselves with a jurisdiction a small price to pay for the sake of our international which has followed this situation and allowed itself to get reputation, and a signal from the Treasury minister that he into this position? I think not. was going to have us grasp this particular nettle for So how has the situation arisen? One suggestion has ourselves, in advance of whatever the Edwards report may been that skilled workers are in very short supply and can or may not say about the subject, that would have been a therefore demand much higher wages. They can and do strong move. sell their skills to the highest bidder. So how can we address Now, I have not even touched on the areas of the situation? We are looking at the need for better training departmental spending contained in the Pink Book but it and education to achieve these essential skills, to enable

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individuals to attain higher wage levels and lessen the our own institute for fiscal studies but the UK centre have widening drift in the income distribution. We must not highlighted the problems and we should be making our ignore the fact that society cannot exist without the own enquiries. Only this year our own education minister unskilled workers, the blue-collar workers who do the jobs mentioned that there are areas of deprivation within the that many of us are not prepared to do. We would be unable Island. Knowing that they exist is half the battle and let us to exist if it was not for their contribution to the needs of do what we can to address the situation. Let us set up our society. own survey and find out the extent of the gap in the There are of course different concepts of living below distribution of income and how we can improve the quality the poverty line. Since Seebohm Rowntree’s study of of life for those living within these areas. poverty in 1899 there have been numerous others. Poverty, On a lighter note, it was heartening to read in the budget like beauty, is often said to be in the eye of the beholder. that the minister was able to increase the amount we give From the Island’s standpoint we should be researching not to overseas aid. This has long been overdue, though this is so much the old indicators such as unemployment rates, nowhere near the amounts that the island of Jersey has average heights and weights, but such things as equal given for a number of years. We are now able to distribute distribution of resources, net disposable income of the £100,000. This is still nearly not enough, but I remind this chronically sick and disabled, the one-parent families, the hon. Court of the amount which we gave towards the lone pensioners on fixed incomes whose durables have Afghan disaster through the Red Cross, a disaster which long-since worn out, the carers, the youngsters looking claimed the lives of 5,000 people and made thousands of after ill parents and still trying to cope with schoolwork. people homeless in freezing conditions. The Isle of Man, In what conditions do they live and what will our increases through the Council of Ministers, gave £5,000 from a really provide for their standard of life? Do they live in disaster fund of £15,000. I would suggest that the Manx furnished or unfurnished accommodation? What is their people give extremely generously to a multitude of good eligibility for help and who is checking to see that all those causes and expect the Manx Government to act as a who need supplementary benefit are actually receiving it? government and pay their fare in a distribution of aid to What is being done for those who find themselves just Third World countries. outside the supplementary benefit level? We have all heard In the words of Descartes, ‘Cogito, ergo sum’: ‘I think, the stories, but how can we make their lives a little better? therefore I am.’ If you think like a United Kingdom local In an Island consisting of only 200 square miles why authority, you will act like a local authority. If you think do we allow so many local authorities to do their own thing like a nation, you will act like a nation and take on the with regard to the way they treat applicants who apply for responsibilities of a nation. The Manx nation expects us to housing? How can one housing authority allow applicants govern as a nation and we will be judged by how we looked on their list if they own their own house which is far too after those least able to look after themselves. Mr President, large for them and they are totally unable to maintain it, I hope I have been able to give the minister some food for far less heat it, and yet another housing authority will not thought. Thank you. allow them on their list irrespective of their financial situation if they own their own home? Surely it is not Mr Singer: Mr President, anyone in this hon. Court beyond the bounds of reason on this Island that we can today could be forgiven for believing that the hon. Treasury deal equally fairly with all applicants if the need is there. minister accidentally picked up and read last year’s speech The United Kingdom Government is quite well aware when he said the Island’s economy is in excellent shape of the needs to be addressed. Their problems, or most, I and inflation is low, sustained economic growth, low and would think, will be through the benefits system. They falling unemployment, all excellent pointers to a know full well the widening gaps that have occurred in prosperous future, and there are the same indications that the wage distribution. We should be doing our own survey. the economy is facing a continuing bright future for some. The Isle of Man has similar problems but I would suggest As Treasury minister, Mr Corkill has to be careful and not to the same extent. prudent, I accept that, but not to the extent that for his We have never had the fullest of information with regard secona year he is not prepared to offer a little more to to the quality of life, a much-quoted phrase in this hon. enhance the living standards of those people on the Island Court. The correct indicators should be sought within a who work extremely hard in the less well-paid jobs than Manx context. We should be looking at such things as the the finance industry and who are struggling to make ends need for improving cultural and spare-time activities, the meet in supporting their families and paying their ability to have a decent holiday, the ability to go out on a mortgages. Apart from increasing allowances regular basis. approximately in line with inflation, what is in this budget Who would deny the need to expand the finance sector, to ease their financial burden now or in the near future? the film industry, tourism and the rest? But let us make The Treasury appears to be actually mesmerised by the sure that all sectors of our society benefit from such efforts. so-called average earning figure which they proclaim to Let us see improved access to social and healthcare the public each year. We all know that it is selective, if not workers, improved living conditions for those I have inaccurate, and therefore discredited, but the replies are mentioned, access to retraining and improved childcare. invalid because there is no mandatory power to make A comprehensive survey of that sector of the community I employers return the questionnaire, and the minister have mentioned will highlight the best way we can target himself, having been involved in retail, is surely aware of benefits where they will do the most good. We do not have the large number of families where the breadwinner is in

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the category of a low earner and is taking home probably such ideas, no social conscience. But the 6,000 public less than half the purported average wage. Surely it is time service employees are going to do all right again, with £5 to help these people when the Island is doing well. We all million going to the public employed pensioners this year support a successful finance industry. Well, the success of and the proposal that the same amount be put in next year. the finance industry makes even more important the need It is time that all the people shared in this second for people who work in shops and deliver goods et cetera. unexpected occurrence. In what we hope is a society caring The minister has largely forgotten these people. for all the people, we have a ‘Tough luck’ approach In summing up his last budget the hon. minister said displayed to certain sections of our community. that every year the subject of low-paid citizens was If, however, I may briefly touch on the matter of the discussed and that he was committed to finding a new hospital, it is quite clear that the DHSS are of the mechanism to help these people. He certainly has not found opinion that only they are right and that everyone else is it in this budget or during the last 12 months. Whatever wrong in their assumption that we are getting value for happened to the select committee looking into the money on the present plans for the building and ancillary minimum wage? Does anybody know? The lack of activity works. I believe that in their ivory tower they have no idea certainly makes it seem that the government does not care, of the damage they are doing and are going to do to the and I say that as one who is not convinced that a minimum long-term future of the local building industry on this wage is the best way to create jobs or increase efficiency Island. They have been warned by members in this Court, and wealth, but I do strongly question why it appears to particularly by the member for East Douglas, Mrs Cannell have been put on the back burner, as it is important that and by knowledgeable people in the industry of the we are given the opportunity to discuss the report in this consequences of their massive spending and the way they hon. Court. are spending it. And I am sure that there are many in this We then have to look at this budget in the context of hon. Court and senior officers in departments other than what extra it is going to do to help the senior citizens in the DHSS, whether they say so in public or not, who are our community or the handicapped. It is very difficult to fearful of the devastation that can be caused to the future find anything positive. I think we all agree that our spending potential of this government which will be tied up for many years in paying for this hospital and there pensioners are better off than those in the UK, but that is will be little left for anything else. not the reason to sit back and not seek to better the final The hon. Treasury minister quite rightly wishes to be years of the people who actually laid the foundation-stones steady, prudent, careful, but surely he must be warning his of today’s healthy economic climate. If I can make a ministerial colleagues of the dangers. No-one is aware of comparison to the biblical seven plentiful years and the what the future holds for the finance industry and that is seven lean years, there is no doubt that at the moment we why, quite rightly, we are seeking expansion in other areas are in a plentiful year and in the good times it is surely the of commerce. But the Treasury minister is placing £6 opportunity to strive for new initiatives, reshape our million of his surplus into the new hospitals estate fund approaches and strengthen our policies. It is a period when this year and, according to the financial forecast, intends we have the time to forward plan. However, the message to put another £6 million in next year. We should be seeking from this budget is one of self-satisfaction, pushing to the to reduce our costs on the hospital building, not aiding the side the fact that the £21 million bonus is available, not ever-rising projected spend, and we should be learning because of our policy strategies, but because of from other similar projects that have been completed in miscalculation. We are constantly in the position where other places, projects which are absolutely acceptable in we give with one hand and immediately take back with quality and at a much lower cost. The Public Accounts the other and this usually from the most vulnerable in our Committee, I have to say, performed very badly on this society, those with the least resistance and those with the subject when requested to look afresh and reconsider the least power to protest, and this is done under the blessed hospital costs. They seem to have remained in limbo. social security reciprocal agreement. I have to ask, with I believe we must also heed the warnings recently raised apologies to the Bishop, why is this agreement written in concerning the manner in which Bovis, as managers of stone? Why can we not review aspects of it with which we the hospital contract, are to be allowed to allocate work to disagree? This agreement, together with the political the detriment of local Isle of Man businesses and which policies of the British Government, are causing severe could devastate the future of our building and construction hardship to certain residents of this Island who need help industry and its allied trades. In a few years Bovis will and are refused it by this government accepting without have disappeared with their profits and the Island industry question all the diktats of another country’s political could be in ruins. Bovis are paid to manage the contract as decisions. It is time we reviewed our stance on parts of the the client has stipulated and the client, as far as I am reciprocal agreement. Surely a positive review of the concerned, is this parliament on behalf of the people. The agreement, not a few officers in back room discussing it DHSS and the present minister are aware of the concerns when they have the time, is of no disadvantage to anyone. of this hon. Court and if Bovis are not prepared to run the Last year the minister, having held his position for only contract as originally stipulated and protect this Island, a short time, appeared not to be too sure what to do with then they should be escorted to the sea terminal under the the millions of pounds that arrived unexpectedly on his terms of the exclusion of non-resident offenders Bill, desk, how we might help those in the community who are because the effect on this Island’s industry will be criminal. less well off. Twelve months later, with even a larger The government has also maintained that it intends to amount - £21 million - it appears that there are still no offer the very best health service here on the Island and it

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is a sentiment we would all support. However, we cannot promised? Three years. The people of this Island need to possibly do that until we can recruit our full complement see a long-term planning for the fiiture, not only by putting of staff to run not only the new hospital but the Noble’s money in reserves, but by the allocation of funds to help Community Hospital and the Ramsey and District Cottage those who genuinely need extra help. We need positive Hospital. And there is no attraction or incentive at the action to prevent financial leakage and wastage through moment to join the health service, as has been demonstrated inefficiency, obstinacy or incompetency. by the number of nurses leaving and the difficulty in The Treasury minister pointed out in his speech the large recruitment. We need firstly to keep our present staff and increase in the drugs bill. What have we or what have the ensure not only that they are well paid but that all levels of department done to try to reduce this? We specifically management are properly trained in communication skills employed a pharmaceutical adviser 18 months ago, yet so that the morale of the nurses is high. It is the nurses that we have not been made aware - certainly I have not been aid a patient’s recovery and not the management. It is made aware, despite asking questions - of any savings or imperative not only that we attract nurses to our NHS but changes that have occurred in medical or pharmaceutical that they want to stay for more than a short period, thus costs because of that appointment. reducing the need to use agency nurses which throws a There must be the aim of flexibility, both in policy considerable burden on the health service finances. If we review and forward planning where the politicians tell the cannot get the staff there is no use in laying a single brick officers that their job is to show how it can be done, not on the hospital site. accept the excuses why it cannot. Everyone is entitled to May I return to the excess of £21 million and express share in the better times as much as everyone would be my real concern at the manner in which it is being allocated expected to tighten their belts in the bad times. This budget, in 1997-98 and in which it is proposed to be allocated in once again on the advice status quo, does not reflect kindly 1998-99 where part of it is being allocated to benefit a on the opportunity missed again by the Treasury minister small section of the community, many of whom already and the government to ensure all the community shares in benefit from good terms of employment and security of the Island’s success. Thank you, Mr President. tenure. My alternative approach would mean it being invested to the benefit of all the people on the Island. Mr Lowey: Mr President, I tend to think that we are in Certainly £5 million or £10 million of that money should danger. Perhaps the Treasury minister must be thinking ‘It be placed in the reserve fund, but £10 million of that should is not my day’. However, let me say to him that the budget be returned to the national insurance fund to compensate is good news. That may surprise him, coming from me. for the wrongful appropriation of the £44 million and to There will be a few reservations, as he is well aware. As better ensure the payment of an adequate pension in the far as I am concerned, we are here, we have got a very future to all the people on the Island at the time that they good set of financial figures. We are in surplus for the 15th qualify for a pension. year on the trot, irrespective of all the tales of woe and We were promised consensus government, that all Cassandras where we were told that we were not going to members in the House would have their views taken into reach the promised land. But I think we are entitled to go account. Since then we have seen a deterioration in the back to last year’s budget and what we were forecast then relationship between the executive and the backbenchers. by the hon. minister was that we were on a very, very tight Whilst we have had these seminars to supposedly listen to rein and I think that something like £100,000 was about the views of the backbenchers, this budget proves that the the margin. Well, we have once again got our sums wrong non-executive views are being pushed aside or ignored. I and we know where we are getting our sums wrong. We wonder whether the messages have been heard by the Chief always underestimate income and always overestimate Minister. It would be folly and extremely damaging to expenditure and the result of the last 15 years has been allow us to return to the weak point of the previous good. Now, today the minister in his budget has attempted administration where a member of this hon. Court was again to say, ‘And in two years’ time, boys, we won’t even either an insider or an outsider, because the general public have a surplus.’ Well, our recent history gives us hope that made it quite clear at the general election that that land of in another 15 years we will look back and say, ‘Well, we government by junta was unacceptable. were wrong, but isn’t it nice to be wrong?’ Well, if you keep up the good work of the last 15 years, sir, we will be Mrs Hannan: No, they did not. delighted to say to you, ‘You keep threatening all sorts.’ But the reality, what you are hearing this morning, Mr Brown: That was their choice. minister, from members in this Court is they are disappointed at the choices you have made and the Council Mr Cannan: Hear, hear. of Ministers in presenting their budget, and I too would have to go along with a lot of that. I do believe I said last Mr Singer: How many times during the last year have Wednesday, when you kindly gave us a briefing on this members been fobbed off at question time with promises budget, that I was bitterly disappointed at once again being that action would be taken? I ask you carefully to go told that there was nothing in it for the, I used the term, through your Hansards and find out the number of times have-nots, people that you have described this morning as this has happened, and I think you will be extremely falling between the ones that do not pay tax and do not get surprised. Is it not three years since the introduction of a benefits, and there is a group there, a rather large group. It fair and a just NHS patients complaints procedure was has been recognised as such and the problems of getting

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to it are not new because we raised it, I think, over three or the consumers where it was intended in the first place. four years ago and steps were taken then to try and assist. That has been a subsidy to the wealthiest companies on But nothing has been done since and we have been offered the Island, the two companies that import oil. I make no in this budget a committee. Now, that is fine if it is an bones about that. I think that was graphically expressed in instrument to try and move the thing along, but it has taken the very good report given by the Energy Commission a an awful long time to set up a committee. But I would few years back. I think it is right to phase it out and so have been much more impressed if the minister had said, therefore I will give my wholehearted support to the ‘And to assist that committee we will have a sum of money minister on that particular front. put into the contingency reserves so that if they come up As he said himself in his speech, there are many with an idea of how to get some assistance to these people contradictory things, and I accept the point made by the we will then have the wherewithal.’ Because do you know hon. member for Garff when he says we have an option what this committee will do? The committee will report here to alter it and yet at the very first,. . . but then fife is round about July and then we will be told, ‘Well, we haven’t funny and political life is funny like that, but I err on the budgeted for it, so there is no money in the kitty because it side of the minister on that particular item. I can say also is in the reserves and they are sacrosanct, they cannot be that the minister did say that he was not going to apologise touched, and therefore you’ll have to wait till next year.’ for not having surprises. By gum, he ought to apologise So there is another year gone and it will take another three when he has to fill in his budget speech by announcing the or four months after that. So I am bitterly disappointed change of the title of his advisory committee as a budget that a sum of money was not transferred. Do not tell me, item. Now, that is pretty thin, no matter how you dress it like the hon. member for Ramsey says, that it cannot be up. Really, that it shows a lack of political will to make done, because if government want it to happen, it will things happen, and that is what choices are about and that happen. We are bound to what you said in your own is where I do fault the minister. remarks. Budgets are about choices. We are choosing to I have also thought myself on the side of Mr Waft when put all this money into reserves. he says about the overseas aid. I can recall many years ago Now, it may very well be right and proper, and I hate when we started it up that we gave a token amount and we the word but every page you have got ‘prudent’ on, every said then that we would try to be generous. I do not think word ‘prudent’. For ‘prudent’ I have initialled alongside it £100,000 from the Isle of Man Government for overseas ‘paralysis’, and I think it is only fair to the minister that if aid is generous, however you want to say it. I do believe I am criticising his choices, then I should put some choices we could do a lot, lot better. There is a United Nations aim of my own as alternatives to him. And you have already for countries, developed countries, and I would put the heard, going from the duty-free to the national assistance. Isle of Man in the league of developed countries. I do Mine are more practical than that, and I have not come up believe that 0.02 per cent is our contribution, 0.02 of 1 per with an idea, even over three or four years. I know there is cent. It is minuscule and I do believe that we ought to set a a problem. I do not know the answers. But I will say that target to get it up to 1 per cent over a five-year period, and we all know that some of the more successful schemes I know that is not going to be very popular with the man in introduced by the Government of the Isle of Man to help the street, but I do think that we have a duty to look overseas Manx people have been those that we have actually adopted to help those less well-off as well as looking after the less and made our own. What is wrong for a negative form of well-off on the Isle of Man. So I am being consistent on help for people’s electricity bills? Every family uses that. electricity. We already have the principle installed. That I do not believe the minister is going to have too much could be dramatically increased and if you want then to difficulty getting his budget through today because, as I adopt a sliding scale so that the very wealthy do not benefit said at the very, very start, this budget, no matter how we from it, then you already have the fact that you have got have arrived at it, is good news for the Isle of Man. The everybody’s tax receipts. Again, my point being that if the criticisms that are coming the minister’s way are the officers are given an instruction to make it happen, it will choices in which he and his team have decided they should happen. But again it is difficult, but just because it is he deployed. I do believe much more attention should be difficult does not mean we should not do it and we have given to encourage the local Manx people that it is theirs. been four years knowing of the problem and we have had There is a tendency to think it is ours and we are the better four years of economic progress, and may I echo the words judge. History proves that if you let people look after their of the member for Garff: if we cannot do it when we have own money it will come back to you, minister. If you give got £21 million, when on earth are we going to do it? them the money, believe it or not the Treasury revenues Now, the reserves have got a triple boost this year. Do will benefit. So your worries for the next few years would not get me wrong. I am not against building up the reserves, be actually relieved, not heightened, as is the theme and I remember the days when we did not have any reserves throughout your speech of ‘We’ve got to be prudent, we at all when we started on this road, and you will know can’t spend, we must save.’ I think there is a danger there what I said by looking at Hansard. I said, ‘Don’t make the and I am saying to the minister I think you have got it reserves a totem pole. Don’t make it a totem pole.’ I regret wrong this time by putting all of these triple whammies to say that I think we are in danger of making the reserves into the reserves because I do believe this afternoon there the totem pole. It must all go to reserves. I think that is a may very well be steps which we will, under our wasted opportunity. I really do. obligations, again have to follow that will actually have Let me give a word of comfort. I support the minister more impact than our own budget here this morning, and I on the tax rebate on the fuel. That has never ever gone to find that regrettable.

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I am forced to the conclusion I will be supporting his We talk about, and the hon. member for Garff talked budget. I was a lone voice last year against it. I am forced about, the duty-free situation and this has always, I think, to say that I will be supporting it but with great misgivings been one of the problems with the debate. It is already because I do not believe we have taken the opportunities concentrated on drinks and fags basically and saying, ‘This that we should have done to address the people that need is where we can earn all our money.’ The issue of duty­ the help. They do not need it next year or the year after. free is a dead issue in Europe because for anybody who They need it like yesterday and today, and this budget does has been to Europe recently, and I went last year to France, nothing for them. they are not going to the duty-free shops in the way they used to. Yes, they still go there while they are there. That Mr Brown: Mr President, naturally I welcome the is not where the money is being spent. They are actually budget which is careful and cautious and I think, as we travelling by shuttle for £8 or £9 or by sea for a pound have heard so far, some are concerned it is over-cautious. with their car, going to the hypermarkets in Calais, loading I think the difficulty is that we actually have a difficulty in the cars to the top, and the vans, and driving back. Duty­ identifying clearly how to control the expenditure that we free is of no consequence to them because they actually are able to actually undertake due to the amount of money get cheaper prices in the hypermarkets in France. So that that we have coming into the Island, and that, from my is the difference. And I have to say my view is that I think point of view, is a welcome change from when it was when when duty-free goes within Europe, because it will still be I first came in which was that we actually were struggling there when you go to America or anywhere of a different to meet our commitments and had very little money to continent, when we are talking about it within Europe I do meet what we wished to see happen, and as was said by not think that if the Isle of Man had duty-free then it would the previous speaker, in fact our reserves, when I first came be a major impact for us, and certainly whether or not it in 1981, were £1.5 million and we had no money, we had would compensate for the loss of income we may have or no buffer, we were struggling. Two major capital may not have at present is something that has to be looked programmes were under way and clearly I can remember at very carefully. It is not an issue to rush into because the the considerable pressures on all members trying to meet implications for our people and for the Island could, and I the expenditure controls that we had because the money emphasise ‘could’, be far more disadvantageous. And just was not available, and I suppose we have to expect, whilst with any agreement you have an agreement that when income to the Island is as good as it is, that then works well for both countries, whether that be the transfer there are different pressures put on us: how are we going of pensions or whatever it is, then my view is that you to help people? And of course the budget is one component keep it. You do not cut your nose off to spite your face. of what we do because we help people through the whole Yes, you try and make changes where it is beneficial to system in terms of benefits, pensions, the enhancements yourselves, but that is what you would do in any that we have brought into the Island specifically to help partnership. So I do think that is one we have to be careful many people in different areas. So it is a thing that goes with in terms of where we go. right across the board in different ways, but this debate of When we look at the expenditure within our overall course concentrates on the issue of what are you going to expenditure of what we are identifying it is phenomenal do with that money that you have? what we are trying to achieve and what we are able to I have no problem at all in supporting the building up achieve because of the income, and I have to say there are of our reserves. Clearly the ambitions of some members bits in that budget that I do not like. There are bits that I in this hon. Court make it absolutely essential that we build would like to see happening that are not happening. That up the reserves of the Isle of Man Government because if does not mean that I am opposed to the budget. What it they get their way in terms of breaking with certain means is I will continue to encourage and fight for what I agreements, then the Isle of Man will have to identify believe should be changed, as I have done since I have substantial resources in its own way to support the services been in this hon. Court, to see things improved and to make we presently provide - changes. But clearly, whilst we have this problem of, as Mr Lowey called it, the have-nots, that has been a concern Mrs Hannan: That is right. many of us have had for so long, and it is a problem we have created for ourselves by enhancing the tax allowances. Mr Gilbey: Hear, hear. We have actually taken more people out of the tax bracket and therefore found a group of people who it is then very Mr Brown: - and unless we have the safeguard of a difficult to provide some other type of support for because substantial reserve fund we cannot do it. So I think that is they cannot get it through taxation. something that we have to accept. I am one who is content We made one small but important contribution when with the basis of our Common Purse agreement. I think we increased child benefit by 50 pence and we got the adjustments we have done have been beneficial to the absolutely hammered by some members because it was a Island, and, yes, there may be other things that I might waste of money. Well, I can tell you, some of the families like to see happen, but then I have to balance up on behalf who got that 50 pence a week per child did not see it as a of my constituents whether or not making that next move, waste of money because some of those could not get any which could break the agreement or if we decide to break extra help any other way because they were not eligible the agreement, is in their best interests. My view is it is for FIS or they were not eligible for supplementary and not. they were not in the tax system, and that 50 pence a week

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to them, over and above the ordinary child benefit, was generated a substantial amount of income for the fund, seen as quite important, and, yes, we can all balance up all and if you want to use the term, we then used that money the other arguments, but it was one way of doing it. that we had earned off-Island for the benefit of people on- We have to be imaginative - 1 am absolutely sure about Island in the one area where everybody can benefit. And that - in how we can we deal with it because there is one people who are not sure about that, as some members thing sure - there is no easy answer of how to directly feed clearly are not, should actually listen and hear the other funds to those people outside the tax bracket who are in side of the argument, because it was Tynwald Court that work, who are not on benefit, but need maybe that extra made the decision by a vast majority, Tynwald Court, the boost because of other costs that are increasing, and we representatives of the people of the Isle of Man, and I am will have to be imaginative to do that, but whilst we are proud to be one of those, I am actually proud, and my always pushing resources elsewhere, that job will be even concern is that we are not getting on with the job and I harder to do because we will have limited resources to have to say the biggest concern I get from people in my help those other people that we wish to help. area is ‘Why on earth aren’t you building this hospital?’ There are not many things I am going to cover but there And people get up and they are talking, and we are going are a number of things that have been raised already in to hear it during this debate, about how the costs have gone debate and one I would certainly like to cover is the up and it is irresponsible, all this. The biggest increase in criticism about the £5 million into the public sector pension costs has been because of the delays in planning. (Mr fund, and I find it quite strange to understand why there is Gilbey: Hear, hear.) It is a nonsense where government criticism of that because we, the public sector, are civil has a statutory responsibility and it has to adhere to the servants, manual workers, men working for the Highway normal planning procedure. It is something that needs Board, the hospital service, right across the whole range looking at. of government, and here we are saying instead of spending our money we are going to take £5 million last year and Mrs Cannell: It is only part of the reason. (Messrs £5 million this year and hopefully, if we can afford it next Cretney and Duggan interjecting) year, to put into a special pension fund to secure those people’s pensions, ordinary workers in the Isle of Man, to Mr Brown: The Isle of Man needs a new hospital and secure their pension rights and ease the potential tax burden if we do not have it, other people will be standing here in the future on the taxpayers. Now, I cannot understand saying, ‘How irresponsible of Tynwald in days gone by how there is criticism of being careful to secure those that we now hardly have a hospital.’ The decision whether people ensuring they get their pensions. We are not talking it should be in Douglas or not has been made. The decision about the state pension, we are talking about their has been made. If you cannot respect decisions, then you individual pension rights they get as employees of should not be in the House. You fight your comer. You government, and it is not civil servants, it is everybody fight your battle. If you win it, you win it. If you lose it, who works for government. you respect that you have lost it and you get on with the Now, by investing that money at this stage and by job, because the taxpayers expect us to get on with the earning interest on that investment in a similar way that job. That is why democracy works, because the majority we did with the national insurance fund, then that has to make a decision, and the sooner we get on with this job be a good thing because it will certainly reduce any the better because the longer it is delayed the longer and commitment on future taxpayers, and if we do not build the more it will cost, and if there are problems with that up, future taxpayers will have a choice of funding contractors or whatever - and do not forget in the pensions for civil servants and manual employees of commercial world there are a lot of things going to be said government or providing services because they will have on this because it is a big contract, a lot is going to be said no other way to find that money. So I would have thought by people with a direct potential financial interest because members would welcome this early initiative to secure they have a financial interest in it - you need to keep your what is seen as a potential problem in the future. (Mr eye on the rabbit and that is how do we build this hospital, Gilbey: Hear, hear.) So I welcome it. I think it is a very, and the sooner we get on with it the better. very important move that we made last year and I look The other point again I must say I cannot let go by from forward to building that fund up to a level that we know my hon. colleague was this point about how he did not will reduce any commitment on the future taxpayers. want to see the situation of the last government with those One of the other points that was raised I certainly would inside and those out. Let me put it on Hansard again. In like to answer because over the years we have heard a the last government the only people who decided they did number of issues made about the decision of Tynwald Court not wish to be members of this government were the to actually move money from the national insurance fund, members who decided for themselves. Nobody said, ‘You to a hospital fund and my hon. friend and colleague the could not be a member of government.’ Nobody said, ‘You member for Ramsey said, ‘The wrongful appropriation of cannot have a job within government.’ They consciously the use of the NI fund.’ Well, I have to say I do not accept decided they wanted nothing to do with what they called that at all. The money that we used was not earned. It was the ‘Walker administration’. Nobody else, they decided it. not money that was paid in by contributors. It was actually And I hate to think what pills, maybe bitter pills, the hon. money that was earned because of the initial amount that member was given before he came into this hon. Court was paid in by contributors which stopped in 1978, was (Interjections) but I can assure you everybody who wanted invested in the stock markets across the world and to work within departments of government was offered it.

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Those who did not, decided they did not want anything to causing much of the friction, and I hope that we will look do with it, and I think we need the record straight because at this issue and certainly I think it is important because if it has been distorted over time: they decided, nobody else. we do not, our communities are being undermined because Whilst I welcome the vast majority of the budget, I have people are moving out and people who have lived in their to say one of the main areas that is giving me concern, and own area, which is important in the Isle of Man, are having it very much relates to my own area and I think it is reflected to move elsewhere and are in fact mostly centralising in in other areas throughout the Island, is a problem that is the Douglas/Onchan area which is expanding Douglas and building up and the problem is housing. The hon. member Onchan to a size and everybody is moving into the centre, of the Council, Mr Waft, mentioned about the differences and we have to overcome that and we have to have in housing authorities. I have to say in my experience - communities living outside the central area of Douglas/ and I was very much coming to that view and I am now Onchan. more convinced of the view - the only way we can deal Mr President, I welcome the budget and I hope members with housing in the Isle of Man public sector-wise and will support it fully because I think we are fortunate to be have different housing authorities 100 per cent funded by in the position we are allowing that we are unable to meet government is actually to amend the legislation and give everybody’s needs, but at least there is a willingness to the Department of Local Government and the Environment endeavour to try and progress improving the situation the powers to make regulations which housing authorities generally. have to adhere to, because there are people out there being abused by members of local authorities because they are The President: Hon. members, I think it is appropriate asking to be housed by that public authority, and it is time to adjourn at this stage and the adjournment will be until that this government grasped that one, and I encourage 2.30. Thank you, hon. members. my colleague the Minister for Local Government and the Environment who may already be looking at this, and his The Court adjourned, at 1.06 p.m. colleagues, because the only real way to do it, I am convinced now because we have tried persuasion, is regulations, proper regulations where people have rights BUDGET — DEBATE CONTINUED for housing laid down in law. But I go back to my other point - and I am winding up, The President: We resume our debate on item 2 on the I have just got one point I wish to make - which is about order paper and I call upon the hon. member of the Council, the first-time buyer situation and there is a real problem Mr Kniveton. which is developing out of town and that real problem is the land issue. In my town we have had no new land for M r Kniveton: Thank you, Mr President. Many hon. housing for now something like 17 or 18 years. It is not members outside of this Court have expressed the feeling unique to Castletown, it is similar elsewhere, and I believe that sometimes it is not worthwhile to take part in a budget that we need to look, as government, at a new initiative on debate because the budget itself is designed in such a way this in terms where government, in conjunction with local and at such a date as to make it virtually impossible to authorities, buy land and they will buy the land specifically change the terms and directions of such a budget. By that to meet the needs of our local people who are first-time I mean, in the first instance, I do not believe, certainly in buyers. And first-time buyers can go up to a budget of my memory, that a budget presented by a Treasury minister somewhere around £100,000 price because we know there or a chairman of finance previously has ever been refused are different ranges where people would be first-time by this hon. Court. We may have had voices of dissent but buyers. We need to look at doing this so there is a we have never had the budget thrown out, simply because partnership between local authority and government and the effects of the budget are planned to come into operation then the first-time buyer themselves to portion out the land from the beginning of the new tax year and thus, if the cost, and then if we control some of that land, not all of it, budget was refused, we might well have no income coming but control some of the land in the small towns like in, we might well have no authority to pay our moneys Castletown, villages like Port Erin and parishes, then we due, let alone the wages of so many people employed by as government can feed the land out in a way that does not government. And so, as I say, this budget will most certainly cause offence in those areas. Nearly every young couple be approved, in my opinion, and probably unanimously. in my town is having to buy houses out of town. They are I know that it is being queried that the Manx budget having to leave the town. They do not want to, but they and the UK budget are being presented on the same day are having to, because all the old part of the town has been redeveloped over the last 20 years. Most of the people have and within hours of each other, and I wonder, bearing in bought houses as first-time buyers and there is just now mind we have to have our budget in place by 6th April, no more land internally for that to happen, and the only whether in fact we should have it presented to us, say, four way we are going to cure that problem and at least tackle weeks earlier, which would give hon. members more of it is to use a new initiative to try and ensure that there is an opportunity to express their wishes, their comments, land available and the key is the land. You can then look at and propose any changes if they have any, and I would be the rest of how you develop it, but it is how you do it. And interested to hear from the Treasury minister his comments the present issue of relying on developers to do a big mix on this particular point, because I do not think reference of housing and actually do big developments is what is has been made to that fact today.

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I am sure that most of us will agree that we are in a standard of living on this Island - evident, for instance, by fairly sound financial position. In fact, I think we will all the amount of holiday travel off the Island, the amount of agree that. We are showing growth, we are showing income tax being received and other forms of income to increased income and, of course, spending an awful lot of the government, primarily of course on account of our money covering a number of important capital finance sector and associates, but whereas I do not want to developments. That does worry me today, equally as much repeat all that my colleagues, Mr Waft and Mr Lowey and as it did last year, and I would say also, I believe to some indeed Mr Singer, said this morning, I do remind myself extent it certainly concerns the Treasury minister, as he that there are a lot of people worse off than others, and if has hinted. As I say, we have a lot of money coming into we really think about it the successful finance sector would government coffers but, by Jove, we can spend nearly all not be so agreeably placed if it were not for those persons of it just as quickly as it comes in and so long as it keeps who work in less popular forms of employment, many with coming in. Okay, we do put some to reserve which, to my very unsociable hours and many poorly paid, mainly mind, is not enough. We need to exercise more prudence - because they do not have qualifications, all these people that seems to be the operative word that I heard this providing services to the finance sector. I have to ask morning, and on the radio last night - and we ought to myself: what is there really in this budget for those people? conserve more of our cash against the chances of any I have to answer myself: not a lot. These people are not harsher financial climate in the future. paying income tax, so we give them increased tax I believe, and history has proven, that there is always allowances which, of course, is of no assistance to them. some crisis in one form or another, large or small, just We used to knock a few pence off petrol, didn’t we, by around the comer which can have an adverse affect on us. subsidisation but we are going to take that away from them now. I know we all benefit from that, but certainly those Of recent months we have shuddered to think what the less fortunate people who have transport of their own, even effects of a Gulf War would have been on the rest of the it is only to get to and from work odd hours of day and world, let alone our own comparatively small income. As night, are the people I believe we should not be taking far as I am concerned, we are spending too much money these subsidies off. at the one time. I look further and I see that the allowances for those I venture to say, in particular, that perhaps we should who can afford to pay private medical insurance have been be considering putting a temporary hold on the enormous increased considerably. This is okay for those who can capital requirement which lies ahead, I would suggest, in afford to pay the £1,800 or so a year, but that, of course, is the form of the new hospital. I know it is a controversial of no benefit to those people who cannot afford that sort subject and here I will differ with Mr Brown, my minister of money. I do have to wonder, in the case of medical and the hon. member for Castletown, but I would agree insurance, whether this is a way and means by Treasury - with Mr Singer, the hon. member for Ramsey, at the and the Treasury minister will probably respond by saying Department of Transport the three of us get on very well no - of persuading the better-off person to go for private working together (Laughter) and I must say it is unusual medical care rather than depend on National Health Service to disagree, but today it is about personal opinion and we treatment. cannot all be correct. I am not saying that we should not I would remind hon. members, and especially the have a new hospital; I have never said that. I am not saying Treasury minister, that it is a mark of good government now, after the will of Tynwald has been expressed and when the less well-off members of society are cared for. I agreed, that the hospital should necessarily be other than have to ask our government whether it is demonstrating at Ballamona; again, I have said that. I have been obliged its care and understanding of the needs of the whole to accept that site but I am not obliged to accept the community in present times - I repeat, the whole escalating costs facing us. I, like a number of others, believe community - and I do look forward to that reply. that maybe we should consider wiping out some of the I will not continue to delve any further into this budget. money already spent and restarting the development, based My concerns are for, as Mr Lowey described this morning, on something like the more realistic hospitals we know of the have-nots, and I am re-echoing the words I expressed in other places within the UK. We might, I believe, well last year. I only hope that when the UK budget is considered save money by that action. There are hospitals, the plans alongside our own - and I have a feeling that this of which can be taken off a shelf and for which the capital government in the Isle of Man will be reaping considerable cost is known before we start - different from the benefits from that UK budget - Treasury will think about construction we plan to have at the moment for which I the have-nots rather than grasp with eager hands for even clearly stated when it was being finally approved that we more to spend on goodies and costly developments. That were signing an open cheque which would cost this Island is, of course, if they have not already allowed for all of dear. I believe that if this government agrees to relook at this extra income in advance. Thank you, Mr President. this development, then Treasury might well breathe a sigh of relief and welcome it. What a monster, hon. members, Mr Braidwood: Mr President, first of all I would like Mr President, they have got upon themselves, and do not to congratulate the Treasury minister on his presentation let us blame just hold-ups on planning, as we heard this of the budget report and also on the briefing last morning; let us blame the dreamers who passed this Wednesday. When one speaks later on in a debate, many monster, as I call it, onto us. of the relevant points you wish to convey have already When I look at this budget I have to remind myself been said and the notes made might as well be tom up, but how so very many people are enjoying a good life, a good I will not! (Members: Ah!) (Laughter)

Budget — Debate Continued T444 TYNWALD COURT, TUESDAY, 17th MARCH 1998

The budget represents an outlook of vibrant economic minister, in his briefing last week, stating it was not being growth but, in the words of the Treasury minister, is coupled passed on to the consumer. If so, the Board of Consumer with prudent housekeeping measures. The minister has Affairs should have been investigating this anomaly. I do made comment on the key objectives of current budget believe the Treasury minister should rebate this unfounded strategy, two of those items being to facilitate sustainable increase which will benefit old people in all spectrums of economic development and also to develop flexibility life in the Island. He has a surplus to implement this within the Customs and Excise Agreement. The minister procedure. has increased fees for exempt companies, international Much comment has been made on the transfer of funds. limited liability companies, increased the minimum tax I have no problem in increasing the reserve fund as that charge for international companies and raised the limit on follows a long-established policy to increase the fund to a late applications, at the same time saying that the fees level equivalent to half of government’s annual revenue- remain competitive. funded gross spending. What does start alarm bells ringing One area he seems to have overlooked, and which the is the transfer of £12 million over the period 1997-1999 hon. member for Garff, Mr Rodan, mentioned and which into the hospital estate development fund, particularly when has been raised previously in this hon. Court, is the the Treasury minister indicates there will be a major review investment business such as mutual funds. I do not want of the schemes within the current capital programme and to reiterate the sentiments of Mr Rodan, but I believe that action taken to reduce the overall size of the five-year Treasury has missed an ideal opportunity to decrease the capital programme. The hon. member for Castletown, Mr annual fee of £4,000 for an authorised fund manager. This Brown, mentions the reason is because of the delay in reduction would have made the Isle of Man a more planning, but the fund is also benefited by a further year competitive base against its major (as in the words of the of investment. So is the hospital project going to be the Treasury minister) international finance centres - the rivals hare we cannot catch or will it run out of steam? such as Jersey, where the fee is only £1,200, Guernsey I may also add that I thought the hospital should have and also Dublin. The number of funds decreasing in the been built across the road from Noble’s but, I do accept Isle of Man are 12 per cent to 97 over the last three years the will of Tynwald, and the new acute general hospital which is in comparison to Dublin, where the number has will be built at Ballamona, but I am concerned about the increased by 244 per cent to 438 in that same period. cost and the damage it may cause to our local construction The hon. member for Garff, Mr Rodan, also brought industry. into the debate the question of the Customs and Excise I would now like to turn my attention to some other Agreement, particularly duty-free allowances, which he details of the budget. The 9.7 per cent increase in the DHSS has also brought into the limelight over the last few months. budget is to be commended, particularly the plan to I would concur with the sentiments expressed by the hon. introduce a housing cost for people on family income member for Garff. In my manifesto of 1997 I maintained supplement and disability working allowance. This is a that, with the abolition of duty-free allowances between step in the right direction to improve conditions for people member states of the European Union in 1999, the Treasury wanting to return to work, 70 per cent of their housing should explore the possibility of flexibility and the Customs rent in local authorities. and Excise Agreement for duty-free goods on such as all I hope the DHSS will also bear in mind, from their air and sea routes. The hon. member for Castletown, Mr additional surplus, the report from the working group Brown, stated in his contribution to this debate that people looking into the problem of people losing their homes to going to France on day-trips et cetera were not bothered pay for nursing or residential care. This long-awaited report about duty-free as it was cheaper in the hypermarkets. That is now two years overdue and, I hope, will rectify this is all well and good if the duty in the receiving country is anomaly which is a travesty to those people who have saved low. Tell that to the people going to Ireland in their droves all their lifetime to improve the quality of their life. This, on day-trips from Liverpool, or vice versa, who receive of course, will have a budgetary consequence if the right their two bottles of spirits and 400 cigarettes! What a bonus decision is made. it would be to the Isle of Man and, as Mr Rodan said, it I also hope, from the budgetary increase, the DHSS would probably subsidise fares to the Island. minister will sanction the implementation of a full diabetic I appreciate that the income derived through customs clinic at a cost of £63,000 which, in the long run, will save and excise is £145 million, £14.5 million more than money for the DHSS by preventing complications arising anticipated in the budget last year, 54.5 per cent of our from the non-diagnosis of diabetes. Mr President, I will total income, with duties on beers, spirits, wines, cider, be supporting the main platforms of the budget. I thank and tobacco contributing nearly £25 million. I do not intend you. for the Treasury to put this total amount at risk. The only portion to be discussed would be the amount attributed to M r Crowe: Mr President, the problem any Treasury travellers. minister has is that he cannot please all of the people all of The hon. member for Garff, in his contribution, the time. Sharing the cake is one of taking a considered mentioned the windfall for Treasury from Westminster judgement on directing resources in the best way and to increasing the tax on petrol, 28 pence to 30 pence per spread the benefits across as wide a spectrum as is gallon, whilst the Treasury in their wisdom are removing reasonably possible. the fuel rebate over the next two years on petrol and on As is usual on these occasions, the usual hobbyhorses diesel from tomorrow, a saving of £350,000, the Treasury are trotted out and the opportunity is always taken to have

Budget — Debate Continued TYNWALD COURT, TUESDAY, 17th MARCH 1998 T445

a sideswipe at some of the ministers. This is all good, reaction that we did have to this budget. Obviously some knockabout stuff, good for debate, and it also allows us to of the effects of this budget and the UK budget will be focus on special interest groups who may have been felt, it will make an impact on people’s lives, but I think overlooked in the budget and to see that their problems one of the areas that I feel that we, as other parliaments, are recognised and addressed. have to deal with is the past voice of reactionary. It could However, the main point I want to make today is that be likened to Old Labour in the Labour Party or it could we must maintain the long-term objective of keeping the be likened to anti-European statements that have been made Island on a firm financial footing, providing stability and in other places, and I feel that it is quite negative to keep the right legislative and taxation climate for business looking back all the time to see what could have happened operations to develop. That is why I was particularly in another time, another climate. Yes, we could have got pleased to see that a focus group, with private sector rid of our customs agreement; yes, we could not have joined involvement, has been established in order to review the the European Union as we did; yes, we could have done Island’s future taxation strategy, both indirect and direct. many things in many different ways. It is important that the Isle of Man, as an international However, that did not happen. We have reached this finance centre, keeps in the forefront of jurisdictions which spot and the question could be asked: we are starting from can encourage business operations, particularly here - where do we move on to? And we probably would international ones, to conduct trade and business on, with not have started from this spot only that we are here now. or through the Island. This is especially relevant because We are here and we have to react to what is going on today. of the challenges and changes which the Island faces over What is going on today is, we are able to present our budget the next few years. It is worth reiterating that the taxation to our people to tell them how we are going to spend the review will cover both direct and indirect tax matters and money which is collected, and comment was made this no doubt the question of tax treaties as well. morning about ‘It is not your money, it is the people’s Looking at the broad picture in the budget, we can take money.’ Well, yes, it is, but we are collective within that. comfort from the many positive statements in the We are the representatives of the people, governing this document. These include - and others have referred to them Island. We might not like it. Somebody likened us to a but they are worth emphasising - virtually no local authority before and, yes, if we have a local authority unemployment and many job opportunities, low inflation, mentality that is where we will be at, but when it comes to low direct taxation, a range of benefits which are better levying taxes we are all very happy to reduce taxation to than those in the UK, almost no external debt and our people. We would be very happy to reduce it so that significant transfers to reserves planned for this year and people are paying less tax, but when it comes to actually next. As politicians we have to recognise the threats or imposing tax that we in this hon. Court want to spend, that challenges to our way of life, the Edwards review of our is a problem for us. We want to spend the money. legislation regulation, future tax harmonisation in the TTie member who has just resumed his seat suggested European Union and European monetary union, which will that he wanted £60,000 for a diabetic clinic. That is fine. I see massive social and structural changes right across want money, other people want money, not just in Europe, ourselves included. departments but throughout government, to improve the All of these threats or challenges run concurrently with services that we give our people, but we have got to get our ability to compete in the global market and this needs the money from somewhere. It is not manufactured out of the Island to always have the ability to be competitive in the sky. There is not a magic money tree down the road world markets. Our long-term aim must be to generate an where we just go and pick it off. So it means imposing economic and political climate in which business taxes, it means raising money and it does not matter opportunities can be maximised. Part of that long-term whether it is through businesses, through ordinary people; objective is to have the Island on a sound financial footing even it is a third of our people who do not pay taxes, we and be always ready to adapt to changing circumstances. will have to raise money from somewhere to make ends As long as we keep our eye on the ball and focus on the meet. long-term future of the Island and its people we should be Now, when we talked before, one of the members talked well placed to face the challenges on the horizon. about no taxation without representation. But we have On a cautionary note, I share with others the heavy agreed that. We have entered into that agreement and I do capital programme we are entering into, and it has to be believe that each Tynwald, when it sits, does take a decision managed very carefully. The likelihood is that the time during that time that we will continue with that agreement scheduling may slip and some of the projects may be spread because it is in our interest to do that. over a longer period, but it is something we in this House I think the member for Garff was speaking as if we can certainly manage carefully and effectively. were in some way isolated from the real world, and that is Finally, I would just like to say that we in Tynwald can why I say ‘looking back’, because we are not now isolated only walk bravely into the future if we desist from the from the real world. We have a relationship with the habit of always looking backwards. We cannot change what European Union through the United Kingdom; we have a has happened in the past, so we must manage the present relationship there in which we can trade. We cannot pull and plan for the future. Thank you. up the drawbridge. We cannot say we have not got an agreement on this, no. We could give up that agreement Mrs Hannan: Eaghtyrane, I was a little bit alarmed, I tomorrow. We could tell people tomorrow, our people here, think, after the Treasury minister sat down, to have the and organise it so that we can pull out of this agreement.

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Six months notice on either side - that is all it takes, but I think it was the member for Douglas East who every policy debate, every budget debate, the motion is commented on Dublin and how Dublin was improving in put forward - well, the suggestion, I should say, is put its fiscal area, but of course in European setting Dublin is forward that this should happen but no motion ever comes onshore and not offshore, and I note the comments made out of that. There is no motion to say that we should by the Treasury minister possibly changing that title, but withdraw ftom that, but every budget, every policy debate, at the moment we are deemed in European terms to be lots of members say this is what should be changed, and offshore. Dublin can trade with Europe; we cannot trade yet it is never progressed any further than that. fiscally with Europe. So I think we have to remember those We do have many changes: we have the UK budget sorts of issues there - quite a different situation altogether. today, we have the Edwards report, the European Union, We can look over our shoulders, we can see these advances OECD, we have CAP reforms, we have the common that other people in other jurisdictions can make; some of fishery policy which is changing; all of these things are these opportunities are not open to us. going to affect us. We could maybe take no notice of these I could go on about local issues but I think the member things. We could just carry on and just say, ‘We will get for Castletown has covered some of them with regard to the money in’, but we do have to take notice. This is the housing. I do see that, because we are still moving on with real world that we live in. We do have to take notice of regard to employment, the finance industry, and obviously these organisations. We do have to continue trading, and there will be changes in the future, but the need for people without having that sort of money we do not have the to stay and work here is an added advantage but it does money we can put into the health service, schools, pensions put pressure on the housing estate that is available to us, or, indeed, public service employees’ pensions reserve. The and so I do believe that this an area we should address member for Castletown has mentioned part of where this with some urgency, not just private housing development money goes to funding. He said it was government workers, but also local housing development, and I would hope that but I would like to remind members that it is civil servants, the Department of Local Government is prepared to look government workers but policemen, firemen, teachers, at that because it is all right providing a budget, providing nurses, other workers in the health and social services, increased funds for everybody throughout the whole of manual workers, civil servants and Manx Radio staff - they the area of government and the country in general, but we all come within that reserve and I would like to ask do need housing and we need good quality housing. So I members what they would think of us, these people who will be supporting the budget Eaghtyrane. are in this pension fund, if we did not put money into reserves in this day and age and when they retired there Mrs Cannell: Mr President, I have to say I am were no funds left available for them. This is a pay-as- somewhat confused. I have just been thinking, has the you-go system, but to look to the future and to be abe to Minister for Agriculture been elevated to the position of fund for the future is something that I believe is prudent - Treasury minister? I think not. But anyway, to get on with and maybe this budget has been described as being prudent the budget, I have to say that I believe this particular budget - but it is nice to be able to be prudent in that way, to look lacks quite a lot of sparkle. I think the Treasury minister for the future and to look after people’s interests. We are could have put a little bit of sparkle in this year as he did forever telling people that they should get together a make excuses last year, being his first year, and we all pension fund themselves but I think, when we have that understood that he had more or less to go ‘steady as she responsibility, it behoves us to do that. goes’ as she had always rolled and sailed before. But I I welcome the comments made by the Treasury minister think he could have put a little bit extra in this time. It is with regard to the European Monetary Union and the obvious to me that this particular budget does provide for advances and preparations should that come about. I those people who do already experience wealth, and it does believe, as part of Europe and trading with Europe, that it little if anything for the ordinary man, woman and child in is something we should be mindful of and that we should the street. be prepared positively to encompass that as part of our Now, if I can just turn briefly to the debate that was future development, because I see that as the way forward. made by the Treasury minister this morning, he spoke about I hope the UK enters with sterling and I hope we would those people who are without, and he said for them there not be reluctant to follow. are the benefits of the economic improvement of the Island With regard to income tax, just following on from - that is to say that the odd crumb may well filter down to comments made, I think, by the member of Council, Mr them if they are lucky enough to spot it - but there may be Waft - he was talking about the people that were paying some who still see no improvement in their standard of taxes - 1 would like to see all our people paying income living, and he says that they are concerned and they are tax because then all our people would be fairly well off. A wanting to address that particular issue. Now, it was said third of our people do not pay income tax. They do get before lunch that this has been given lip service time after help and assistance in other ways, and the Treasury minister time after time, and yet we still have not seen the bones of has spelt out that we are looking for ways to help people an initiative in order to address this situation, if it is with a on lower incomes that do not get help through family special committee of some sort. We have not seen anything income supplement or through these other areas. But I coming out of the Council of Ministers for that. would certainly like to see all our people paying income It has been mentioned that a third of the population are tax because our country then would be a lot better off, as not within the tax bracket - in fact, it is 33 per cent as it they would be. quoted in here - and yet the Treasury minister is quite proud

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of the fact, actually, that they are managing to retain it. He government department in terms of expenditure, in regard says in his debate again, ‘Despite inflationary pressures to responsibility, and I also believe that we must at the on wages and the increase in social security benefits to be next policy debate evaluate and put together an action plan announced, these changes will help to ensure that the for splitting the Department of Health and Social Security. number of persons not paying income tax remains at We must do that at all costs because we cannot continue to approximately 33 per cent’ and I think that is quite increase the budget with seemingly very little gain for the appalling, not only in accepting that there are 33 per cent people at the end of the day in terms of service provision of our population who do not pay tax, do not earn sufficient and keep on increasing this budget and the workload of enough to pay tax and derive all of the benefits from that. one particular minister. There is sufficient work within this He is quite happy to keep it at 33 per cent, and I would be department to warrant two ministers, and I hope that that grateful, and I am sure most hon. members in this Court will seriously... I am putting a marker down here for our would be grateful, if something were to come forward, next policy debate; I am seriously considering that and some sort of initiative from the Treasury which perhaps putting an action plan in place. will enable those people in the future to benefit like others What we could have done with this budget, what the do from the payment of income tax. Treasury minister could have done, was to address the issue I believe that any responsible government should be of nurses’ pay. There is nothing there for the nurses. We seeking to regularly review its agreements. Now, we have rely upon the nurses to provide our care irrespective of heard much here today from those who are saying that a whether they are delivering that service from a dilapidated review should be undertaken of the customs and excise; old building or a brand spanking new building. What is indeed, a review also should be undertaken and considered important is the nursing care which we and our people with regard to the reciprocal agreement. We have also heard receive. That is more important than anything else. In the from the previous speaker that you can break this war times, people were delivering nursing care in tents agreement six months either side, but we are not talking out in fields, in ditches, wherever you like; it was the care of breaking any such agreement, but I believe there is a and attention that counts, not the building and the ambiance strong feeling within this Court that we would like to have in which it is delivered, and I think more emphasis and the opportunity of reviewing such agreements to ensure more focus needs to be placed on the nursing provision, that we are getting the best possible deal for our people looking after who we have, what we have and encouraging and for this Island, and there is nothing wrong with regular and putting in place the incentives to attract more staff, reviews of any agreement. It should be as a matter of course because we do have a problem in terms of recruitment, a for any responsible and caring government to make sure problem which will only grow if this building, this that we are getting the best, not merely to read in a report ambitious hospital project, ever gets off the ground. This submitted at budget time each year that we are getting the problem of nursing provision, medical provision, will best and it is in our interests to remain within. I believe grow; it will not go away, no matter how much money you there are many of us in this Court who would like to be keep throwing at it. You have to throw it, if you are going able to sit down and to have the opportunity of looking at to throw it at all, at the roots, and the roots are those who these things with fresh eyes, if you like, a review. deliver the care, and I am disappointed that there is nothing Now, if I can just briefly turn on to issues with regard in there for the nurses. to health, and I make to apologies for what I am about to Again we have, as part of this £21 million, £6 million say on health as I have spent most of my new time in here, going to the hospital estate fund. I would have supported shall we say, questioning the health minister and her had someone moved an amendment today to actually representative. The purpose of members asking questions apportion some of that £6 million towards some kind of in any democracy is in order to test policy, to enquire of it. fund to ensure an increase and sustainability in nurse pay. It is healthy, it is democracy. Long shall questions come The cost of drugs - again we hear forever bemoaned from backbenchers to ministers. What is disappointing, of the cost of drugs, the prescription abuse, and yet course - and it was previously mentioned this morning - is backbenchers have consistently over the last 15 or 16 that we very rarely get a satisfactory answer, and that is months asked questions and made practical suggestions disappointing because what comes over to the people of on ways of minimising the burden of the cost of drugs and this Island is ignorance and arrogance; more a display of the abuse in the prescription system, and yet little, if arrogance, I feel. Perhaps it is unwittingly, and I feel sure anything, has come out of that. Now, there is a lot of money that particularly where the Chief Minister is concerned and being lost here. I am concerned, I suppose as primarily a he is answering questions, it is unwittingly, and I feel sure housewife, if you like, and mother, with wastage. I am that if he had the knowledge that it was being received as also very concerned with cost but I am concerned with arrogance then he would certainly seek to do something wastage. If there are areas where you can see there is a big about it and I hope that he and other ministers will. We ask hole and the money is falling out, then I believe you have questions, we expect at least a civil answer, not to be paid the right and you should, if you are properly accountable, lip service, not to be made to look foolish because we are be plugging that hole, repairing that hole so you are not asking the question and we will continue to ask the losing that money. questions because that is our job as the directly elected Again, complaints procedure - now, we heard in another chamber of this hon. Court. place that there was financial provision for this at some With health I see no new initiatives in here, which I time and at some time a member of the department of health find extremely disappointing. I realise it is the largest saw fit to actually remove it from the budget, which is a

Budget — Debate Continued T448 TYNWALD COURT, TUESDAY, 17th MARCH 1998 great shame because there is no complaints procedure in level of capital expenditure. We cannot. Three major place for patients or for staff, and that is quite appalling. schemes and still we have the prison waiting in the wings The infrastructure of health care needs to be rejuvenated - four major schemes, if you like. We cannot sustain all of before we start looking at ambitious building programmes. them at the same time. Our construction industry cannot It is the infrastructure that we should be investing in. sustain all of them all at the same time. This is where we Now, just very briefly, I am going to talk about the cost are failing as a government if we do not recognise the of the hospital, and I do not think it will come as any great capabilities of our own industry, design and tailor all of surprise to any hon. member in this Court of my feelings these capital schemes to the benefit of our own industry. If on this particular issue. I, like my colleague next to me, we do not do that, then what will happen is that we will have accepted that it is the will of Tynwald that this new lose our industry and we are very, very close to that hospital will be built and it will be built on the Ballamona happening with regard to this new hospital. Estate; I have accepted and do accept that. What I do not It was said as early as January this year, as a warning accept is the escalating cost, the way in which the from the Department of Trade and Industry during very management contractor has been procured, the way the protracted talks with the Department of Health and Social packages are being dealt with - all of this I have complained Security, that under this present arrangement, the way all about and fought hard and long from day one with the has been set out and laid out, there was a very great Department of Trade and Industry, and I make no apologies likelihood that the management contractor, when for that. It was wrong from day one with the management recognising that by bringing workmen over was going to contracting approach, and members in this hon. Court who be problematic because it always is if you are working were fortunate enough to be in the last administration were offshore, you would then turn to the local workforce; you equally warned at that time about this sticky road of would then turn to engage the local craftsmen on a project engaging a management contracting approach for the such as this. If that happened, they would be obviously building of a new hospital, and there were reservations at dangling a carrot for the workmen and they will be saying, that time. Now, I can understand members were very close ‘Come and work for us on this project and we will give to a general election and they did not want to be seen to be you x amount extra’. Now, recognising on the one hand doing another U-turn. That is understandable, and that is we have 33 per cent of the population who cannot afford fairly acceptable, I suppose, in the circumstances. But to even pay tax because of their low income and on the nevertheless we all went out, it was general election time, other hand you have a big contractor who comes and says, and it was quite clear from the people and their vote at that ‘Work for me and I will give you a bit extra’, if that happens time how they felt with regard to this new hospital, because then you will find - and I hope that this never comes to the health minister of that day lost his seat. There may be fruition because I hope we will have the sense to do speculation as to exactly why he lost his seat, but I think, something about it in a proactive manner - a lot of our if you were to go out and speak to the people as I and local construction industries will face the wall; they will many of my colleagues in Douglas do, you will find that it go bankrupt. The management contractor will finish, he was because of the hospital and the apparent lack of will take all of his takings off-Island and we will be left wanting to listen to the people at that time which caused with devastation. But we will have a nice, brand-new them to reject the health minister of that day. I fear - and I spanking building. That is what we will have; a place of put another marker down here today, and I have the highest wonderful ambiance set in the heart of the countryside and, respect for our present health minister, a very eminent with God’s blessing, 6,000 acorns being planted, it will be person, a very capable person of any ministry, but with surrounded by a beautiful oak forest. TTiat is what we will this particular ministry in mind, I think we are in danger have. But will we have nurses in there? Will we have of allowing it to continue down the same road as the vibrance then? Will we have economic stability then? I previous health minister did and the same repercussions would suggest that we would not. So all I say is, please, may be felt in a very short time to come. llie warning please be very, very cautious, be on your guard, Treasury signs are all there, and I hope that the Treasury minister minister, and do something about this scheme. will take on board. He said in his briefing to members - There was mention of the £44 million and despite the and I do not think I am going to betray any confidence by critics in this hon. Court who will defend vehemently till this - that things such as the hospital, the spending of the their death their right to have voted to apportion that £44 DHSS, the spending of the Department of Local million to the hospital estate fund, the people did not like Government and the Environment and the capital spending that move one bit. They did not like it, they have never of the Department of Transport all need to be reviewed trusted it, and I do not see why we should have to condone when we get to the policy stage; it must be reviewed. the actions of previous ministers and backbenchers and Now, he has said that, he has told hon. members that, politicians in this hon. Court. We have already seen from and I hope that on this occasion he will show that he is a today’s budget proposals that another £12 million has got strong man and means his word - to go in there. If we cast our minds back just three years, the then health minister said the £44 million is sufficient Mrs Crowe: But that’s arrogant! to finance all of the money for the building of all of the hospital, and here we are, two or three years down the Mrs Cannell: - and he will keep to that and we will road, putting in another £12 million. You see, all of this review it and we will scale this down because even though has been said before. Members have said these things we are enjoying good times now we cannot sustain this before, but it has fallen on deaf ears. It seems only if you

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are wearing a minister’s hat in this government do you get If I can just turn my attention to the budget again in listened to, and perhaps even then by only your own terms of the blow for the environment - because that is the ministerial colleagues, because this is what is happening only thing that it can be described as being, a blow for the with this hon. Keys in the Court. environment - this is with regard to removing or axing the subsidy on green fuel. If that was part of an environmental Mrs Hannan: It isn’t! policy, part of an environmental strategy, then I may be swayed into supporting that. But it is not, from what I have Mrs Cannell: There is a great divide and there is a big heard today, what I have read of the speech made by the rift. If certain ministers do not want to recognise that or Treasury minister, although he does say that he had been are unwilling to see that, then I have the greatest of approached by some colleagues with regard to looking at sympathy for them. a new initiative. That has been thrown in. When we were briefed just a short while ago, there was no mention of Mr Cretney: Thank you. that. But no matter how members would like to describe it, that is a blow for the environment and it is not being Mr Brown: Here ends the lesson. replaced by any other new initiative, and that is a very sad day for the Isle of Man. Mrs Cannell: Now, looking at what is in the budget, I note that our capital spends from last year were £32 there is an encouragement, there is a financial incentive million; this year they are £38.2 million. Again I have to for private health care. That makes me smile, because it is emphasise that we must curb our capital programme, and obvious that this has been put in to act as a buffer for the I mean really curb. The budget is based upon the policy DHSS. It has often been said that that is the way things are document but, if my memory serves me right, the policy going with regard to health provision on this Island, that document, although debated in this hon. Court, was never we are following the UK under the reciprocal agreement adopted by this hon. Court; it was merely received. So to who themselves are going more towards the private health my mind, in theory and also in practice, the policy care road. Again I do not believe we should be following document really does not feature very much in terms of that same path; we should be tailoring things to meet our providing policy of this Island or policy of this government. needs for our people with our own money. It was received; it has never been adopted, not in my short I notice in the policy document there are one or two time. Perhaps the next policy document - if it were truly to things here I just wanted to bring out. On the pink pages reflect the views and aspirations of the people in this hon. on page 41 it talks about the analysis of hospital activity House who represent the people out there, then perhaps and the average daily beds available. Members will note one day very soon it may well be adopted, but I think, that has actually gone down by 83. Now, it may well be only if the views and aspirations and desires are taken on that the likes of Ballamona, where we have lost 22 daily board and seriously considered will it ever be adopted bed spaces - that is obviously because of the works that again. have taken place up there, but overall we have lost 83 beds, Just finally, I would like to make a mention to my and this while costs are rising; they are going up. Again if constituency. My constituency, as I am sure many members we look at page 43, outpatient attendance, members will will appreciate because of my predecessor and his note the totals for 1994-95 going right up to 1996-97, we predecessor and so on and so forth before him - a large have actually treated, in real terms, 92 patients less than part of East Douglas is made up of the tourism from 1994-95 to 1996-97. The costs are going up, accommodation sector. Now, for two years running there becoming more expensive and yet the service seems to be was provision; there was a nice carrot there for the tourism going down in certain directions. accommodation sector in terms of bed and breakfast being Finally on the pink pages on health, if we look at page classed as a non-exportable service, and for that two years 47, I wonder whether or not whoever has put this there was a boost in tourism. At that time I seem to calculation together has made a little error, or maybe the remember one of the senior officers for Treasury predicted fault is mine, but on page 47 in the box at the top right ttiai by bringing together this incentive it could attract hand comer it talks about residential care, direct provision, something like 10,000 extra visitors per year. Now, I am number of places provided. It has figures for 1996-97, not exactly sure on the exact number - perhaps the tourism 1997-98, 1998-99 which is, I assume, an estimate. If we minister may have that at his fingertips - but there was look at the totals in column 1 the book indicates a total of definitely a boost. The result for my constituents in that 304; well, my calculations make it 272; the third column, particular area was a good one. They all felt the benefit of the book indicates 297, my calculations indicate 265; the that and it was a welcome boost. I see nothing in this year, third column, which is the estimate, the book indicates there was nothing in last year and I would ask the Treasury 333, my estimates are 261.1 think somebody has calculated minister, has he now just put the tourism accommodation those wrong. They are quite simple, that somebody has sector to one side, the industry of tourism to one side? actually put the wrong figures in there. So where in fact it Does he not regard it as an important contributor to the shows in the Pink Book that 1997-1998 we have residential Island’s economy any more? There is nothing in this budget care places numbering 297, we have in fact only got 265. for tourism. I am concerned that the places for the elderly, the residential I think that is about it. There is much more that I could care provisions, actually seems to be diminishing. We have say but I will not. I will keep it. But I do hope that what I actually got less, and I worry about that. have had to say the Treasury minister has heard but, more

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importantly, that he has listened and that he will take more referred to the issue and he did not know how to solve it, than just note of what has been said. and here is a man who has been a lifelong member of the Labour Party and who has been fighting for these people Mr Shimmin: Mr President, not unusually I disagree in our society actively for many years. He has not got an with much of the previous speaker’s comments, not least answer; there is not an easy answer, and to make glib her maths on page 47. (Laughterj Having said that, I think comments that we have got to do more is unacceptable. that there is a grave danger that because some of the things (Mrs Crowe: Hear, hear.) We know it is difficult and yes, which she has said are viewed personally by those listening there is a challenge down for all of government and all of we ignore some of the comments and messages that she is us to come up with solutions. The recognition has got to actually making. be there and I trust that we will continue to strive genuinely When she refers finally to the Treasury minister to be to try and do something. There have been opportunities, listening, and previously she talked about questions going and I was impressed with Mr Lowey’s comments this out to ministers, I think that all existing ministers will morning regarding a contingency fund which I feel would realise that as backbenchers many of you in previous have been a genuine step forward had the Treasury taken incarnations used to ask a lot of questions, used to probe it upon themselves at this budget to put aside some of the and there was legitimacy then as there is now in questions moneys that are almost a bonus to us this year and actually being asked of ministers. But she says that the ministers allocate that to a contingency which could be used should do not listen, and I am hopefully going to prove her wrong we find an answer to this difficulty. That was not done at a now by talking on one of the most contentious issues raised time of affluence. again today, which is that of the capital programme and in Also at a time of affluence - and there was mention this particular the hospital. There is so much misinformation morning by my hon. friend Mr Waft regarding the overseas clouding the issue, and I have spoken at length with many aid - this Island has got one of the most proud reputations members in this Court and elsewhere and I would urge the for being one of the most charitable areas in the British minister to take on board that it is not with a view of judging Isles and beyond. At a time when we have this sort of her as being arrogant but it is a genuine concern from money I find it disappointing that we have not taken an myself, present ministers, backbenchers and people in the opportunity of increasing that budget. public to actually understand what is going on, and I would I also find it is very disappointing that all of us concerned urge the minister to make arrangements in the near future with the have-nots in our society and those of us to actually give us a briefing which I feel is long overdue constituency-based have all reaped the benefit of the public for members of this Court to actually understand fully the lottery in recent years. The Lottery Trust has assisted people position. Existing ministers have a busy workload and they in our local areas, individuals or groups and helped the are entrusting you with looking after the largest budget of communities, something which too little is often recognised this government. There is a need for reassurance and I trust or done for our local communities, the individuals that do that that will be coming in the relatively near future so fall through the net of our governmental departments, and that I, and those who have supported the minister in a to throw £50,000 almost as a token towards the Public previous election, will be able to go forward with the Lottery Trust I find very disappointing. I would have liked confidence that the decision has been right. This is not a to see that figure multiplied four-fold so that we can lack of trust or lack of belief in your ability. It is a genuine continue to do work within the local communities. At attempt to say we do need more information than we have present many good initiatives are not getting off the ground got at present. That capital programme has a consequential because they cannot be kick-started in local communities knock-on effect on everything that this government is going because the Lottery Trust can only offer in the region of to do in the years to come. 20 per cent start-up. That figure is down from the 50 per The Treasury minister, I believe, has begun to identify cent which was quite regularly given out to areas all over the priorities of most people in this Court, which is where the Island. he looks at education, the DHSS and the DHA and has The area also mentioned by the previous speaker, Mrs given those three departments an increased quantity of Cannell, which I can fully support is one where money which would satisfy most of our priorities. I still opportunities arise and are sometimes not taken. Although think the Treasury and central government are wrong to the fuel rebate may not have been originally designed as look at these in isolation as individual departmental an environmental issue it would have been one where the problems and that is still an issue which will have to be moneys that are going to be accessed from the removal of overcome in the future. There is a recognition money is that rebate could have been put towards some form of going in, resources are going in, and I commend him for genuine policy of government towards pollution and that. environmental matters. I know the Treasury minister has But what has constantly come through - and it is an attempted to look at some of these areas and I trust that he easy one for backbenchers, it is a far more difficult one for and the Council of Ministers will continue to do so. It can the ministers - is how to address the issue of the have-nots be expensive, but at a time like now we have an opportunity in our society. I genuinely believe that the Treasury minister of at least putting down a marker from central government and all of those who have been actively working towards that we will take these issues seriously. this budget are fully aware of the concern expressed in I hope that they will not take too seriously some of the this Court for long years about the have-nots in our society. comments made earlier on regarding the duty-free situation. Indeed, the member of Council this morning, Mr Lowey, As much as I find it sounds quite romantic, the idea of

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‘Oh, yes, we will attract more tourists back to the Isle of investigation work as far as nurses’ pay and a few other Man,’ I have absolutely no interest in having day trippers things are concerned - 1 think it was refreshing to hear her coming to this Island, drinking themselves silly en route say what she wanted to say, because one of the things that to the Island and then going away again, offering very little I wrote down to a previous person who contributed to this, towards this Island but to use it for a cheap shortcut for talking about the drugs bill, was the fact that I could save drink and cigarettes. The issue is one which is well known at least most of the sleeping potions by supplying tapes of to most people. the hon. minister’s speech in this Court today as far as Many of the hon. members in this Court understand far making sure that people who were suffering from insomnia better than I the Customs and Excise Agreement. It is one would be cured overnight! As far as I am concerned, where that has served us well from all accounts. I have to trust she was right, there was no vision, there was no zap, there people’s judgement and, from what I have heard so far, was nothing. And I think that is where I would defend the the issue is continuing to be looked at. I am trusting people hon. member for East Douglas. And whilst I have taken that it is being genuinely looked at and, as much as I believe quite a bit of criticism from the hon. member, I think that the hon. member for Garff’s concern is true, is genuine - has to be accepted and I think that is healthy for this Court, and I share it - that in the future this method of funding and if there is a difference between having the hon. member should not be the bedrock of our financial strategy, I believe for East Douglas’s input, which may not be always strictly that we are making moves away from that area but certainly accurate, at least we know where she is coming from. I would not support a move down the road of duty-free to I think that the hon. member for West Douglas should this Island without a great deal more debate. It strikes me also realise that there must be a balance as far as the hon. that it is one of those issues that is easy to say but has member’s right to speak to the budget debate today, because many repercussions that would be less desirable. this idea of level and sensible - the truth is there is a problem As a basic, genuine rule I would support the cautious there, no matter what he says, as far as the ministerial stand taken by Treasury. I believe there is an expectation system is concerned. There is arrogance there. And maybe within this Court and elsewhere that we can put markers there is arrogance on our side as well for not listening to down in certain areas. They have been well versed already it. But I do get concerned by the way that some members today. I trust the Treasury minister has taken these issues in this hon. chamber should change their names to some on board, but just because we are backbenchers does not Chinese name, because they would be far better at home mean that we have an automatic right to get our own way. in some Chinese parliament where they are not supposed The fact that we are listened to, as far as my experience is to dissent, they are supposed to tell the world that the world concerned - 1 have no difficulty in being listened to by any is flat when it is round in order that they will benefit their minister. The fact that they do not always agree with me is ministerial position so. I think that cannot be taken away not a problem. I do not expect that. But to discount, just from the member for East Douglas. because I do not get my own way, the fact that I am not I would take issue with some of the points that she has being listened to I find quite insulting. When ministers complained about regarding the health department. I totally genuinely do not listen to the backbenchers or to the agree with the hon. member. I do not think increasing members of this Court then there are enough of us to do prescription charges will be the answer, but what I do not something about it, and if that is a genuine case and it is a want is this Court mincing about when pressure groups genuine experience of many members, then they have the such as the GPs and the chemists start screaming and power within their hands to do something about it. I think shouting about self-certification and putting maximum the comments that are made at times are purely personal amounts down on a prescription instead of ‘Oh, I will send or for own agendas and I wish we would move past that you away with three months’ supply’. Do not come back stage on to an area where we look at what is best for the to this Court then bleating to us because we made the people of the Island. It is easy to say the words - and I am unpopular decisions. I have to admit that where I do agree doing it myself now - but it is the actions of the ministers with the hon. member for Douglas is, if there is and in particular the Treasury at this stage of the budget ‘shirveishaghitis,’ the ministerial disease, there is certainly process that we have got to rely upon, that they have taken inverted ‘shirveishaghitis,’ being the other way as well, the message and they have done the best within what is a and I think what we have to do is get away from the fact very successful, promising time for the Island. I will that we are in one gang and another lot is in another gang support the budget happily. Thank you, Mr President. and so consequently we lose sight of the point the hon. member for West Douglas says about the people being the Mr Karran: Eaghtyrane, I have found the debate quite most important thing. interesting. I think before we get on to the substance of the I would just say, as far as the hon. member for East debate there were some contributors that I thought had Douglas’s contribution is concerned, that we want to some very interesting points. I think the point that concerns address issues such as complaints procedures, but I do not me is there must be a balance when we talk about want to just spend money for a window-dressing exercise ; backbenchers and the input as far as this Treasury debate I want something that is going to be effective, efficient, is concerned between the hon. member for East Douglas and if I had brought in what was brought in from the and the hon. member for West Douglas. adjacent isle - it is not working in the adjacent isle and I Whilst I could not agree with very much of the hon. do not think it would work in this Island. member for East Douglas’s input into this debate - and I I believe that we have done not badly out of this budget would suggest that she does need to do a little bit more from the department. We could have done a lot better and

Budget — Debate Continued T452 TYNWALD COURT, TUESDAY, 17th MARCH 1998

I would say that I could have spent the money that some Can I say that I welcome the fact that it must be members have talked about. We could have done with a reasonably common knowledge that my minister is going couple of more million if that was going to come. But I to do a presentation to members of this hon. Court about think the point that we have got to say is that the the new hospital. I get very annoyed when I hear people in Department of Health and Social Security does need more this debate complain about the new hospital, especially financing, and the point that she raises about whether the when some of them have put the millions that have been department should be split is a very valid point. So I would put on it in the first place, in their delay tactics as far as the hate this debate just to have a downer on the hon. member hospital is concerned. I have never said that the new for East Douglas just because we do not agree with her. I hospital is perfect but the problem you have got is you think the point is that she makes us think, and I think that have got a lot of vested interest, you have got a lot of self- is the value within this hon. Court that I think this budget interest out there with the building industry, and what has lost. It has not done any thinking. The member for concerns me more than anything, as I told a couple of the West Douglas talks about the lack of any ideas; there have new members, as a member for health with the albatross been loads of ideas round this hon. Court. This hon. of the new hospital around my neck, the problems that we member attacked and moaned and groaned for years about have got with certain parts of the hospital - 1 was fighting taking the low-paid out of paying income tax, and for years those corners beforehand. The best thing for me is for the we were rubbished and then all of a sudden it becomes the new hospital to disappear down the tubes. Politically it is, norm. We have attacked for years the fact that we would but it is not the best thing for the Isle of Man and the people not reduce family income supplement to 16 hours a week. of this Island, because we talk about a National Health Now that we have managed to do, it it is amazing the Service - we would not have one, because if we do not number of women who have come off the supplementary address the issue of a new hospital and we get the new list and gone into the workplace, even if it is on a short hospital built - not at any price - we will end up in a situation thing. There are initiatives there and I think it is wrong to where we will not be able to run an effective health service give the impression outside this Court there are not. on this Island in the next five or six years. Now, I am not One of the issues that I have fought with over years is arguing the point on the finances; there are costs involved, the fact that low-paid should be not paying a national and I am not painting the scenario that we will solve all insurance stamp. That is a way we could do it. Another our waiting lists and all things like that. We have got to do thing that we need to be looking at is the rate rebate scheme. other things in the health services to get better efficiencies. I know the problem with being the Water Board but, as I am gravely concerned that there are things that are not you say, without a sound financial basis we can do nothing finance-led in order to get our waiting lists down, but it and we need to do it. But at the end of the day it is wrong will help when we have more operating theatres. We have for the hon. member for West Douglas to say there have not been any ideas. There have been ideas but there is not done our best to try and gain control over the use of our the will. There is not the will at the present time and that is operating theatres for the benefit of the people instead of what really disturbs me about this budget, because we the vested interests but, hon. members, the new hospital - should be applauding this Court that we have got a third this inverted ‘shirveishaghitis,’ this wanting to see the thing of the people out of paying income tax, not ridiculing the destroyed simply for the fact that it would do their egos government on that side. We should be applauding the more good than the people of the Isle of Man, is equally administration for doing so. But the point is now, we have obnoxious to me as the arrogance by those who have got got to get to those people who are not benefit-dependent ‘shirveishaghitis’ on the other side. but who want to work for a living and do not want to end I would just like to say, on a few of the other points that up on benefits. They are the people we have got to aim for were raised, as far as the other hon. member for East and I believe that once again we have missed an opportunity Douglas is concerned, I think that the government of this by bringing in a proposal to get the low-paid out of paying Island and my department need to come clean as far as a national insurance contribution. It could have been done residential homes are concerned and the fact that you if the will was there, and I think part of the problem is the should have an automatic to save your house. If that is Treasury itself could do with a zap up with some fresh done - and I live in a property-owning constituency - we blood in it, in my opinion. And I am not trying to get rid of will almost certainly end up with a situation where we the minister, my junior colleague for Onchan (Laughter), will return to poor houses on this Island because we will I am talking about within the membership. I think the time end up with a two-tier system because we have an ageing has come for some new initiatives and some new members. population. Where he is right is that this budget should have at least Mr Duggan: Peter is ready! doubled the personal allowance for persons to keep going into a nursing home and residential home. I think £12,500 Mr Karran: I very much doubt that I would ever be is not sufficient at the present time. It should be brought given the job in the ministry of finance simply because I up to a realistic amount and then we should come clean might do a few things that are long overdue that no-one with the general public. I know it would be very painful in would have the political bottle to sit up and do, and that is my own area but at the end of the day I cannot see why the what upsets me with some of these members when they person that lives in the council house who saves £20,000 attack the department for not doing things when the truth has to pay his contribution and I live in my own house is they would be the first one running with the pressure with my tax relief and have a £100,000 house when I go groups when we do it. into my residential home and I should not have that

Budget — Debate Continued TYNWALD COURT, TUESDAY, 17th MARCH 1998 T453

included into the assessment. I think the hon. member is the mainland - we would have gone down a road of, in this right, the Treasury should have been pushing that part, budget, doing away with non-resident companies. I am because that is something that is needing to be addressed; not criticising putting money into reserves because there if it does not get addressed in the near future we are going is somewhere, I think, we are going to have to put some to see once again where we end up bringing out universal money in in the near future as we are going to have to look benefits where we are forced into a comer and this Court seriously at setting up our own shipping service on this is given the bum’s rush because it is getting near the Island. So the money that is put into reserves may even be election and we do not want to be unpopular with our needed for that. constituents. And that happens far too often. So the hon. But it saddens me that we have just blindly, because member is right: we need to get this sorted out and the there is no new blood in the Treasury, put the £20 million Treasury should have led the way by giving the resources. into reserves instead of looking at where we should have I would just like to say on some of the other points by been putting it. We should have done away with the likes some of the other members like the hon. member for Garff of non-resident companies, got that out of the way, we - he talks about reciprocal agreements and that, and he should have maybe even put£l million into a sinking fund talks about the agreement over indirect taxation. I am very to see whether the other islands want to do an investigation concerned. I think the exercise needs to be done as far as into the City of London financial situation instead of rolling the true facts for the case for and against, but I would be over and playing dead with the colonial powers. I need to very frightened to see many of the members in this hon. tell this hon. Court - and I am so delighted with the hon. Court having to make the decisions on the 60 per cent that member of the Council, Mr Waft - that the gunboats are brings in the money because I can tell you what would not in the harbour any more; they have gone away. We do happen to our budget: the weak, the sick and the poor would not need to roll over and play dead with the British imperial go out of the window instead of addressing the issues of government on the adjacent side. We can stand up to them. putting the levies on to create the income for this hon. Now, the other thing that let me down on this budget is the lack of addressing the social issues, and I have to say Court, and when the hon. member for Ramsey talks about that I was quite impressed by the hon. member for our reciprocal agreement it is not so long ago that the left Castletown’s input. I would promote him if I was Chief fought for the reciprocal agreement and the right fought Minister from member responsible for deck chairs at Port against the reciprocal agreement. Now, fair enough, those Skillion to member responsible for deck chairs at Port days have changed and now the right fights for reciprocal Soderick! (Laughter) But I have to be honest about it: he agreements and the left fights against them, but I think is quite right, there is a housing crisis on the horizon, and before we go down that road as far as reciprocal agreements building 50 local authority houses and forgetting the on our benefits are concerned, we want to make sure that replacement houses is not going to touch the issue. We we want to do that. There is no problem; if the Treasury have seen nothing in this budget for initiatives on social wants to bring in new initiatives for benefits then they issues. There is no money in here as far as I can see on should be brought in as far as that is the case. some sort of part equity mortgage scheme, which is I think Mr Singer’s input was good and I appreciated desperately needed for the housing crisis that is coming his input, but again we have a problem as far as the hospital round the corner. We are getting a bit of money on urban is concerned and, by God, if we cannot destroy the hospital renewal, one of my motions that was down, but it is a little by any means, then we are somehow sunk. We know that too late. We see nothing on another pressing social issue it is not perfect but it is the best we can get it at the present such as the transport problem in this Island. Where is the time and, as far as I am concerned for the new hospital, money for a free, comprehensive transport system this hospital has to go ahead. It does not have to be through throughout the Island? Not again, no imagination, no blind vision, and I am worried that when members talk initiative, because once again we have a Treasury that is about taking the money back out in order to put it back in dead! (Laughter) the national insurance fund, I think it is very good rhetoric Now, I get annoyed; the other issue that worries me and and it might sound good but when you weigh it up and I think that needs to be is that I hope that no-one in this you assess it and you look at the maximum benefit for our hon. House thinks that the private health insurance initiative people, it does not stand up as far as that is concerned, I is anything to do with the the member for health. I might believe. have a communication problem with the hon. member for I also would say on the contents of this budget I find it East Douglas but I would like to make it quite clear before very flawed. I am disappointed with this budget. It talks she asks any questions in another place that we have about ‘We need this £20 million for a war fund’ - or nothing to do with this. I am concerned; whilst it is not the whatever fund - for the adjacent island, that we have got big issue, I feel that it is once again giving the impression to put it into the bank in order for a rainy day; the truth is, to people outside this hon. Court that you should accept a if we had any sort of logical thought process from the second-class health service because you have not gone Treasury, we would have been far better getting rid of non­ private. I am disappointed with the Treasury’s unwritten resident companies off our legislative books which give agenda as far as this issue is concerned in that I think that this Island a bad name, which 85 per cent of the money that should not have been put in because it insults the people that we would have lost of the - 1 forget how much it is - outside. Just as much as I am glad that common sense is £12 million, £14 million, we would have got back. If we about to happen as we are not going to see this average were serious about not forelock-touching to the adjacent earnings insult put out next year like we have done it on a island - the ones in this Island, this nation, that still call it regular basis.

Budget — Debate Continued T454 TYNWALD COURT, TUESDAY, 17th MARCH 1998

The last thing I would just say as far as my be got over that this budget is supportive of those members disappointment over this budget is that we have been told, in our society who have the least opportunity to benefit ‘Oh, well, there is nothing we can do for the third of the themselves, and that is a grave responsibility that is on us. population that is not paying tax.’There are ways of helping But, hon. members, it is on us for 52 weeks of the year for that third. There is no will to help them and that is why I a five-year period of election; it is not just on us at budget have serious reservations whether to vote for the budget time, and I think we should recognise that. in that for years I have pleaded for getting the low paid out I believe that those people who are the less fortunate in of paying a national insurance stamp and it has been our society, who we all can recognise - 1 believe that their rubbished. I just see it again. It has not been addressed. situation is improved by taking them out of the tax net, There has been no will as regards a rate rebate scheme. and I think the fact that we are able to move a third of our And to throw up the fig leaf that we have got a working people out of that situation to be of great benefit to them. party - there must be that many working parties coming But I believe that the way that they will be best benefited out of the Council of Ministers, there must be nothing else is by continual development of the Isle of Man economy being addressed but working parties. I will be amazed at by providing different opportunities for them to make a the next working party that is coming about! living, providing the resources to education, for training, I think this budget is disappointing and I have to say for retraining, and it is a situation that is going to go on that it will be with much regret to have to support the and on and on. Never before, I believe, has the world, the budget, but it lacks total imagination in my opinion. economy, been so fast moving, and I think we would all recognise that nothing is forever. Sir Miles Walker: Mr President, as one of the living Now, I believe that the boring bit of this budget, the dead I will try and respond to some of the points that have prudence which has been criticised, perhaps, is eminently been made by the hon. member Mr Karran, and I have to sensible because there are a number of threats out there say I do hope that at the end of this debate he decides he and if we do not recognise them, then we are foolish in the will support this budget. extreme. The Treasury minister, I think, when he was In my view we should be shouting from the rooftops presenting his budget outlined some of them. There is the the conclusions and the recommendations that are in this Edwards review, there is the UK attitude towards their budget before us today. I think it is a good budget, I think taxpayers and putting into place anti-avoidance measures it is a sensible budget and I applaud the Treasury minister - an absolutely proper thing for them to do, and I believe for the way that he presented it earlier on today I have to every established community in the world is doing the same say, a Scotsman likening the Treasury minister to a canny thing. We are doing it ourselves, but nevertheless it is an Aberdonian bank manager I view as a great compliment added threat to our business sector. The EU harmful and I think he is probably at this stage the right person in business taxation issues - very real, and harmful tax the right job. I think it is a good budget, and I say that competition. And when we think about harmful tax because I believe that it reflects the way that the Isle of competition, I think it underlines the common sense attitude Man community is developing and continues to develop of the Treasury minister not to reduce to a zero percentage and the strengthening and broadening of our economy, and tax on any particular product at this time. It would seem to I say, knowing full well that it is not every business out me that that would be just chancing our arm, and I do not there that is prospering and it is not every single member think we should be in that game. There is greater of the community that is feeling the full effect of it. Of competition from other jurisdictions, from other course we all recognise that, but in broad terms the Isle of communities that are involved in international financial Man community is doing well and I believe it is doing services, and that competition is growing. I think that this well, because of the thing that is perhaps boring and that Isle of Man is in a particularly strong position to counteract makes the hon. member for Onchan refer to the living dead, it, but I do think we need to hold our nerve, we need to and that is this issue of stability. And I agree with him, it is have reputation at the forefront of our minds and we need not always exciting but, by golly, it is important to the to be prepared to get rid of that business which brings us business sector outside! into disrepute from time to time. I do believe that the Treasury minister, when he was on There is the other point, the other threat to our economy his feet earlier on, was speaking to at least three different which, I agree with the hon. member for Castletown, I audiences: he was speaking to his colleagues in here, the think is very real, and that is the lack of housing provision parliamentarians, the members of departments, his because I think if there is anything that can undermine our colleague ministers; he was speaking to the business sector own economy quicker than that, I do not recognise it. We out there, consoling them, in a way, that that message of have seen it happen before and I think we should learn stability was there and certain in his hands; and he was lessons from it. also talking to the broader community, to our constituents, So there are threats and we should recognise them and and I believe that the message will be got over to them we should recognise that this is the time to put money into that we understand their problems and that there are the bank, and this budget recommends exactly that. There problems, we would certainly, or I would certainly, accept. are threats out there and they may or may not have effect We understand their aspirations as individuals, as families on the continued development of our economy. We have wanting to do the best for themselves and their kids, and it to wait and see. I believe that the way the business economy is up to us to provide those opportunities for them to take has developed in the Isle of Man stands it in a good position to improve their situations, and I believe the message will to face up to those threats. Diversification, so important

Budget — Debate Continued TYNWALD COURT, TUESDAY, 17th MARCH 1998 T455 not only within the finance sector but within the whole This budget is a good one. The Isle of Man is doing economy, may be boring to the hon. member from Onchan well. There are a number of threats out there. Let us but, by golly, it is important. And this budget gives support recognise them. I would argue with those people who say to the Department of Industry to continue to develop and we should be spending more. This is the time we should diversify the economy in other areas than the finance sector. be saving it - 1.6 per cent unemployed out there. An That will bring me on to the the Customs and Excise increasing number of job opportunities every day and more Agreement we have with the United Kingdom, and I know people in work than ever before. Is that not time to let the how sensitive and emotional it is, and I know how easy it private sector continue to develop, and we will save our is to say, ‘Ah well, we are sitting back and letting somebody resources, because the time will come where we will need else do all the work.’ The truth of the matter is - and the to spend to sustain a vibrant economy? I believe that to hon. member for Garff was exactly right earlier on this put our resources away for that time is absolutely the right morning - it is our decision to keep that agreement. I believe thing to do. that at this moment it is in the overall interests of the Isle As far as the hospital is concerned, it would be wrong of Man, and that is not to say that that situation will be for if this budget set out to change government policy on the ever, but at this moment in time I have yet to be persuaded hospital. So it should not be the budget that is criticised that that is not the case. because of the hospital decisions. As far as I am concerned, It takes me on to the other reciprocal agreements which I am absolutely convinced that my constituents deserve perhaps have been criticised: our reciprocal agreement on and require the best possible hospital that we can afford in health, our reciprocal agreement on social security. As far the most convenient place. Now then, a lot of work has as I am concerned, those agreements should stay. Now, been done to try and get to that particular point. I believe we can review them. We can review them as individuals; that the minister, Mr Karran, her colleague on the we can review them formally. But it is my view that those department, and all the other members in here share the agreements were negotiated when the situation in the Isle concern about the cost; they are doing things about it, and of Man and the United Kingdom were quite different, I think the call from the hon. member for West Douglas against the background of perhaps 400,000, 500,000 or for a display by the department into the new hospital and 600,000 tourists a year visiting the Isle of Man and a its associated costs is a timely one and I would look forward resident population of perhaps 50,000. It is different now. to the minister setting that up. But that we need a hospital I know in my heart where I feel the balance of favour lies I have absolutely no doubt at all, and our health services in those agreements, and I think we would be very stupid will not be sustained if we do not get on with the job and indeed just to cast them aside. And it does not mean that get on with it quickly. Nurses and servicing of the hospital the level of service provided in the United Kingdom under itself, I think, is a system that will fall into place following either of them, under health or under social security, is the the procurement of the hospital. I do not believe that the level of service that we want to give to our people. We existing premises are conducive to people deciding a career should be considering that as a minimum, as a floor level, in that particular work and, as far as I understood, their and building on top of it in terms of benefits for our own pay has quite recently been linked to the emergency community, and that is the policy of the Department of services on the Island and I had understood that that was Health and Social Security and the policy that I will an acceptable agreement with the nursing fraternity and support. their representatives in the workplace. I was unaware that This budget provides all the resources that have been there was a need for another initiative in that direction. required by all the departments of government in real terms. So every department within this government has been Agriculture and Fisheries - agriculture has probably come supplied with the resources that are required to enable them through - 1 hope it has come through - the most difficult to provide for our people the services that they have got time that it has ever experienced. I think there are signs used to. We have had the ability of putting a substantial that the thing is moving forward, but the Department of amount of money into reserves for the war chest, for the Agriculture needs to be in a position to support that rainy day - call it what you like - and we have had the industry, to assist it on its way through. I do not believe ability to put more money into the hospital development the fishing is there yet. I am sure there is much more pain fund now that we have a clearer picture of what the overall to be felt by that industry, but unfortunately I do not think costs will be, and that is now that the planning issues are it is just a matter of providing more resources that will get all but settled. And hopefully it will take out of the public it out. domain the argument, ‘Ah yes, but they are going to take The budget provides financial assistance to the more out of the national insurance fund.’ We know that commercial development division, and we have been there is not any more in that national insurance fund to criticised - or the minister has been criticised - for take out. This is the prudent way forward, I would suggest. announcing its name change in the budget. It is important, As far as the pension reserve fund is concerned, I would I think, when you are making these changes to look for an just leave members with the thought that putting money opportunity to make these changes, and I agree into that reserve does not increase our commitment in any wholeheartedly with him when he says we should stop way at all. What it does is put us in a better position to talking about our offshore finance industry, we should be meet that commitment when it falls due. talking about our international finance industry, and it is a Mr President, I hope members will support this budget time like this that you should start putting those new words and will support my minister. I believe it is good; I believe into play. it is prudent. I think the Isle of Man is doing well and I am

Budget — Debate Continued T456 TYNWALD COURT, TUESDAY, 17th MARCH 1998 certainly not ashamed of anything that is happening here. young people seeking employment either in the United Thank you, sir. Kingdom or further afield. There has been a quite remarkable turn-around in that short period of time, and it The President: Hon. members, the Court will now take is a short period of time, and I do not think we should lose a break. We will resume at quarter to five by the Court sight of that fact. It is very easy to denigrate these clock and the hon. member for Ramsey will be the first I achievements but they are, given the difficult circumstances will call upon to speak. we have had to operate in, I think a great credit to everyone who has been involved in it. The Court adjourned at 4.28 p.m. The debate itself, as all budget debates, tends to focus more on the mundane than anything else. That is not a criticism. It is just a fact of life that we do focus in on ANNOUNCEMENT OF ROYAL ASSENT individual elements of departmental spending, investment perhaps in our own constituencies and particular problems which we have signed up to as individual members. But The President: Hon. members, I have to announce that the Mental Health Act of 1998 has been granted Royal where I think this year departs from previous years relates to the point which in particular the previous speaker, the Assent this day. hon. member for Rushen, has raised, and that is now the external threat which is building up and in fact has already started, I think, to concern a number of people outside on BUDGET — DEBATE CONCLUDED the Island itself. We have had comments, Mr President, by both the Treasury minister and by Mr Walker about the The President: I am going to call upon the hon. member Edwards report, the anti-avoidance legislation, the for Ramsey. European moves against harmful business taxation and the actions proposed by the OECD. Now, these are not, I Mr Bell: Thank you, Mr President. The one certainty believe, independent actions. I feel that there is now about a budget debate is its predictability, and I think this concerted hints of movement building up internationally year really is no exception from previous years that against what have previously been seen as low tax areas, certainly I have been involved in. But I think there is a offshore tax havens whatever designation you need to put difference this year. on it. I particularly believe that the United Kingdom I have to say to start with, listening to the debate this Government, whether or not it has publicly stated it, has morning left me extremely depressed and really confused an agenda which is designed to severely restrict if not as to what in fact I had heard the Treasury minister curtail completely the actions of places like the Isle of Man, announce during the budget, because it seems to me the and I believe that the problems which have led up to the issues and results and proposals raised in his budget speech Edwards inquiry were not accidental, I believe it was are exactly the sort of things which most countries in planned and I believe there is a real political agenda now Western Europe would give their right arm for and in fact to see this undermining of our position continued and that are projecting to have achieved in the next 20 or 30 years, the Crown dependencies are reined in. I believe there is a given a very fair wind. But it seems even that is not good very real threat to the Isle of Man’s economic future if enough for the Isle of Man or certainly for certain members these measures continue. of this hon. Court. As the hon. minister has said himself, That then throws up the question as to what our options even in the last five years we have created 5,000 new jobs. are, and I am a great believer - and I have always argued What other country in Western Europe can claim pro rata this point long before I came into this hon. Court - that that sort of achievement? It is something we should be political freedom is entirely dependent on economic extremely proud of: 1.6 per cent unemployment, real strength, and if we are going to have the political freedom incomes increased, higher benefits wherever we have the to respond to whatever threats may materialise over the freedom over the UK, and, in spite of what has been said, next two or three or five years, we have got to have a strong better treatment of our pensioners than anywhere else, economic foundation to be able to respond to it. That is certainly in the British Isles if not further afield. This is a why, though, perhaps from a personal point of view, it goes record we can be very proud of and it is something we against some of the arguments I put forward in years gone should be boasting about and telling our people about time by, I strongly support the budget today for the very reason and time again, to let them know just how successful in that it is ultra-cautious; it is putting money away in reserves, fact the Manx economy has been. and for once I have to question whether we have put enough But those who detract from this achievement perhaps away in reserves, bearing in mind the real dangers which are those people who either were not on the Island at the might exist round the comer. time or have very short memories and do not realise that We debate the Common Purse Agreement. We have had the improvement which has taken place has only taken our other reciprocal agreements brought into question place over about the last 10 or 12 years. At that time the today. The only way we can possibly amend or withdraw Isle of Man was in a very serious economic decline with from any of these agreements is if we have the financial very high unemployment, very few job prospects for our back-up to be able to do it, and I do not believe at the young people, absolutely no prospects of them buying their moment the Isle of Man is strong enough to achieve a own homes, and our major export at that time was in fact continuation of the level of service, the level of provision

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that we are doing at the moment without these strong service, not trying to undermine it through the introduction reserves underpinning those policies. So, Mr President, of this new populist approach which seems to be for those who criticise the Treasury minister and the budget developing in Tynwald. We have heard complaints being proposals today, I would urge them to raise their eyes to a made that there are no new health initiatives, and yet we broader horizon for one year. Members of the House of have seen a very substantial increase in funding for the Keys, in particular, are elected certainly to look after the health services today in the budget. This will lead to new interests of their constituents, but they are also elected from initiatives, it will help to reinforce existing ones and to time to time to give leadership to this Island and to look to improve the ability of the health department to respond to wider threats which might ultimately engulf those new ideas as they come along. constituents, and I think this is one of the times where we We have heard that we need to give the nurses do need to look to broader horizons and we do need to be substantial increases. Once again, instead of logically and aware of the storm clouds which may well be gathering objectively discussing the problem, we have populism not too far away. creeping in and I do believe this does not help the argument The other points which I would just briefly like to touch which is obviously taking place around the health services. on relate to perhaps only two or three small points. The We have heard that there will not be enough nurses to stability that has been argued that we are proud of and has provide an adequate service in the new hospital when it is done so much to underpin the economy of the Island is built, and that we are not training nurses. The reason, if I obviously something of great importance and it needs to remember rightly, that the nurse training facility was closed be protected at all costs by this economic strength, but if in Noble’s Hospital was the threat of withdrawal of we are to respond to future challenges and future threats I recognition by the Royal College of Nursing in 1991 do believe that we need to see greater imagination from because Noble’s Hospital did not provide a high enough Treasury and the newly renamed commercial development standard of facility to qualify for training approval. It is division a year or three down the road so that they are far not a decision which has been taken by the current health more capable of responding to new opportunities than minister to reduce or cut out nurse training. perhaps we have seen in the past. I think we are moving We have heard pleas to reduce our capital programme, into a period where we need to be far more creative, far partially in relation to the health services, but once again more imaginative in our stimulation of the economy than we have had no schemes, apart from the hospital, identified we have been over the last few years and I speak, using as by the hon. members for removal from that programme. It an example, perhaps, the extremely lukewarm endorsement would be very helpful, I think, to the Treasury minister initially of the proposal to start a film industry, which took and to the Council of Ministers to know which schemes nearly 10 years’ gestation before it actually came into being hon. members would like to see reduced or removed from and is now providing a great deal of employment and that programme. activity within the Island. We cannot afford to be so slow We have heard in relation to tourism, first of all, that by and cumbersome in future in embracing new ideas and breaking away or renegotiating the Common Purse new initiatives, and I would urge Treasury if nothing else Agreement the Isle of Man can offer duty-free on its to look at that particular area to ensure that any other transport services to and from the Island at a time when opportunities which do crop up, which usually are duty-free is being removed from most of Western Europe, fleeting... and, as has already been said, the pace of change and I have to say I agree entirely with the hon. member for is accelerating all the time. We have to be in a position to West Douglas when he says, ‘Do we really want the Isle respond at very short notice to some of these initiatives, of Man to be known, from a tourist point of view, simply and I still have to be convinced that the structure is there as a venue for cheap booze and cheap fags?’ I would have to respond quickly enough to those opportunities. thought we had striven for years to try and get away from Most of the obvious points relating to the budget have that image on the Isle of Man. It is the last thing we want already been covered, but there are probably just two others to introduce now, just when we are trying and starting to that I would want to touch on. First of all, I have to say I be successful, I believe, in improving the image of the am perhaps not surprised, but somewhat alarmed at the Island as a quality destination for tourism. concerted attack there seems to have been on the health We have also heard complaints that there is no provision service today. The health service, I know, may not be in the budget of the tourist department in relation to non­ perfect; it certainly has its problems, and likewise there is exportable services, which affect the smaller hotel on the concern over the hospital and its development there, but I Island. Now, this initiative was started while I was Minister think we need to put the development of the Isle of Man for Tourism. It has been going on for a number of years health services in the context of what has happened in the and it relates to a provision within the Common Purse United Kingdom over the last five or 10 years and realise Agreement; It is not a budget provision of the Department we have a health service still to be proud of on the Island. of Tourism. So, once again, the allegations are completely It is not crumbling, it is not collapsing as has been intimated unfounded. in some quarters. What other community would turn its The only issue which has not been touched on and which nose up at having a brand new hospital built within a I would like to raise in relation to my own particular population of 70,000, especially in the United Kingdom concerns in the north of the Island is another plea to where they are more used to hospitals being closed rather Treasury and indeed to the Council of Ministers, I suppose, than rebuilt? We should be throwing our weight to speed up their consideration of proposals for encouraging unanimously behind all efforts to try and improve the health economic development outside of Douglas to give the north

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of the Island, in particular, incentives to stimulate new costs will be effected by events elsewhere today. And the employment opportunities there. The imbalance still exists Council of Ministers for the first time have shown real within the Island. There is still an unhealthy focus on commitment in the establishment of a working party. Now, Douglas, not only for employment, but also for unfortunately the working party was described in the development generally. Places like Ramsey and the North Treasury minister’s notes as a committee, and I am all too are crying out for new development, they are crying out well aware of all these various committees, and perhaps for new investment, crying out for new jobs and we do there are too many committees. I, however, consider this need a more creative and imaginative approach from to be more important than a number of the ones which are Treasury in particular to stimulate these incentives to established because it is going to address a real issue which encourage development in those areas. has been recognised in here for far too long and there has Mr President, I promised the hon. member of the not been the action taken about it. Council, Mr Lowey, I would not go on too long this It is great that now and for the future there are far more afternoon! (Interjections) There are only two or three points opportunities for our young people with good salaries, and at this stage I really wanted to raise, but I would like just it is good that education and training opportunities for the to finish by saying to the one or two members who have future will equip our people with the skills to take on the claimed the moral high ground for themselves, that they opportunities for the future on our lovely Island because do not have a monopoly of concern for the low paid, for we all remember, those of us who have lived here for a the disadvantaged, for the environment. We all share those little while, that the situation used to exist that people used concerns. Many of us have been fighting for a great many to have to leave our Island, lovely as it is, to find years to improve the lot of the low paid and, as I said at the employment. Thankfully the situation, through a lot of hard outset, given the very low starting point of some 10 or 15 work by those who went before us and carried on by those years ago, I think we have been very successful. There is who have carried on that torch, has, in co-operation with obviously more that needs to be done. There will be more the private sector, substantially improved the situation and things done, I am sure, over the next year or two to address we should all be very grateful for that. But there is at last, this problem, but I would hate the message to go out, Mr however, I believe, a recognition of the needs of those who President, that there are only one or two members of this currently fall outside of the tax bracket and I recognise hon. chamber who have the concern of the low-paid and that this is one of the principal areas which still needs to the disadvantaged at heart. We all do, we were all elected be addressed, and members can be assured that this matter on that basis and I am sure collectively we are all fighting will be given the attention it so rightly deserves. for the same end. We can achieve that, I think, more I do hope hon. members will take the assurance that effectively by providing a sound, financially as well as this person, who used to ask quite a lot of questions, will politically, economic structure for the Island and I would be energetically playing his part in seeking answers and urge hon. members to support the budget today. It is a very solutions to this perennial problem, because it is all very good one. It may be boring, but, given the political climate, well to ask the questions, we can all ask the questions, the politically unchartered waters that we are moving into dead easy to ask the questions, but even my hon. friend, at the moment, I think it is the right budget for the day and the member of the Council, Mr Lowey, this morning it deserves our support and our applause. indicated, rightly in my view, that it is not going to be an easy problem, but it is one which we should address our Mr Cretney: Mr President, some years ago Tynwald minds to. When we become ministers for a time in took the initiative to take our low-paid out of tax after representing the Island, we do not jettison our principles; representations over several years, led by the hon. member it is just that all too often we do not get the same opportunity for Onchan, Mr Karran. Consistently following that, we to publicly announce or advertise what we are trying to have repeated the situation arising from that bold and do, and it can be very frustrating, I can tell hon. members. forward-thinking policy where difficulties have arisen I hope we will be in a position to actually do something because, while some incomes have not increased about this issue rather than just talking about it and I hope substantially, many of their costs, including some imposed members will take our honest assurance and vote for the by government and local authorities, have increased over budget even though, like all things, it is not perfect. and above inflation. This situation was at the centre of the debate at budget time last year, and when the Council of Mr Quine: Mr President, I can honestly say this will Ministers were considering the draft budget proposals put probably be my shortest contribution that I have ever made forward by the Treasury this year, it was recognised that to a budget debate. (Mr Downie: Hear, hear.) I simply again this issue had not been addressed in any dynamic or want to deal with one matter which has been raised that meaningful way. affects my department and I feel that in a factual form that Now, whilst this is a budget that will be well received information should be before hon. members today in this for good housekeeping and prudent forward thinking in a debate, although I am fairly certain that most hon. members number of ways, we will again be faced with our will be aware of that. But I am referring to, in the main, constituents, a number of whom still live in inadequate comments made by the hon. member for Onchan, Mr housing, still receive far less than the suggested average Karran, and I fully accept his good intentions in raising wages and for whom the annual publication of the figures the issue, because it is an important issue, but at the same causes much aggravation, still have to meet over-inflation time it should be recognised the record is there to increases in a number of areas, and no doubt their fixed substantiate that his concerns about housing - firstly they

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are not exclusively his concerns, they are matters that advocated it several years ago myself, and we will certainly concern all of us, I am sure, and secondly I think we all be looking at that when we are reviewing this particular should be aware of just what has been done and is being scheme. Also, he will see there that we have elderly done and, to a certain extent, what are the difficulties in persons’ housing in St John’s, in Kirk Michael; there is a doing more about housing. housing scheme for Minorca, Cronk Grianagh stage 2, and, Perhaps I could first ask the hon. member, when he gets if you want, quite recently we gave approval in principle a moment, to start from page 67 of the estimates book, for a study into the Ramsey Harbour regeneration scheme and he will see there that there are a couple of tables which where there is a subsidy element and there is over a hundred I believe are a very good starting point, because from my units of housing involved in that as well. So there is a point of view the basic data is simply that we now have great deal of activity on the housing front which comes some 5,000-plus housing units; that is the stock that is there under the bracket of die actual department. Separately from now and, for a population of our size, I think that is very that, under the local authorities, if you look at the latter creditable. But, equally important, he will see that on that page, which is page 134, he will see that there are some page we have a list of the waiting list times running over a 400 units over the five year programme there, and that period of years and he will note that in fact the numbers excludes the estimated 250 for the lower Pulrose area. on the waiting list have decreased and they are lower now So there is a very serious commitment to providing than they have been for a number of years, and I am sure further housing, and I think it would be unfortunate if we the hon. member, being an honest and fair man as he is, were to go away from this debate or anybody listening to will give us credit for the fact that that is statistically correct. this debate was to get the impression that we are not taking on board seriously our public housing needs, our social Mr Karran: Not factually true. housing needs; we are, and a great deal of money is being put into that programme. We have - and I will end on this, Mr Quine: Absolutely true, and I am sure you would sir, if I may - some £40 million to £50 million earmarked not seriously suggest that I would tell you an untruth. there which is spread over the five years and, on top of (Mr Karran interjecting) that, we have further expenditure identified of another £25 There is another table just below that which again, hon. million. So I am sure, and I trust the hon. member will members, I think and perhaps the media will be interested accept from me, that within this budget there are provisions to see, where we have brought out some of the costs which running from the current year, the first year of this budget, are attached to housing stock, the cost per head of through to the end of the five years and beyond, a very population, and it should be, I think, recognised that at serious and heavy commitment to meeting our public the moment the cost per head of population in providing housing and our social housing needs. Thank you, sir. public housing units is now in excess of £30 per head of population and the cost in respect of elderly persons’ units Mr Gilbey: Mr President, the hon. member for Onchan, is now in excess of £17. So that is the first thing I would Mr Karran, referred to gangs. Well, I am in the Treasury mention. gang, although apparently he thinks I should be kicked Now, again the hon. member for Onchan would give us out of it, but speaking as a member of it at the moment I the impression that there is very little in this budget and in would like to refer to one or two points that have been the estimates covering the next five years in respect of made by hon. members. public housing. That is certainly not the case, and I would Firstly those by the hon. member for Garff, Mr Rodan, just take the liberty of referring him to again two pages who said that the Customs and Excise Agreement was a which are in that book that give quite a lot of meaningful marriage of convenience. I do so agree with him, because data, and that is pages 73 and page 134. I will try to just it is a most convenient and beneficial marriage from the touch upon these in summary form because quite clearly point of view of this Island. It is totally voluntary and we the data is there to be read if one wishes to read it. could leave it at any time on six months’ notice. However, In revenue terms this government is currently I have no doubt at all that it is absolutely in our interests to underwriting, subsidising - use whatever term you wish to have it - in our interest financially; we certainly could not use - public housing, both that provided through the raise so much revenue with the same levels of tax if we department and that provided through local authorities, to were not in it. That is a fact. The next think is, if we were a sum that is in excess of £4 million per annum. Now, I not in it we would have to about double the size of our think that is a sizeable commitment indeed and, for a customs and excise officers force. Then we would be going community of our size, a burden indeed. In terms of the totally against world trends. The whole world is reducing capital situation and what is there for the future I would barriers. If we leave the Customs and Excise Agreement draw his attention to the fact that he will see in the estimates we will have a customs barrier at every port and airport that we have the house purchase and refurbishment scheme which is served from the Isle of Man in the United and there is £3 million identified for that, and again, in Kingdom. Now, it is not just the EU that are reducing trade that regard, as he is well aware of course, we are looking barriers, it is North America with a free trade area growing at a revision of that scheme. I take on board his suggestion; between Canada, United States and Mexico. It is also the I give him a commitment now that his suggestion will be Far East. Then, as most of us know, to end the agreement fully considered, and that is that we look, as part of this would have a disastrous effect on the manufacturing exercise, at the principle of a split equity. I am perfectly industry. We know that at least one firm has repeatedly happy to do that. I could not do otherwise seeing as I said that they could not continue without that agreement,

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and also it is often forgotten that many of our manufacturing Mr Gilbey: Thank you very much, Mr President. I am operations are doing jobbing work for the UK and firms in glad at least it was not that I was doing anything wrong. the UK would not send that work if they had the problems (Interjections) of customs clearance and forms. I was just saying, Mr President, that the hon. member If you turn to the financial sector it is argued that the for Garff wants us to have duty-free and I remarked that abrogation would be in its interests, but that is not entirely this is a matter that the Treasury has looked at in the past true. There are many firms in this Island who are benefiting and I am sure will look at from time to time in the future. enormously by the fact that we can operate triangulation The hon. member for Castletown is quite right that with the EU which cannot be done by the Channel Islands. throughout the EU duty-free is declining in volume and The hon. member then attacked the Treasury for ending what is taking its place is this bootlegging, which is having the fuel rebate. As the hon. member for Council, Mr Lowey, a very serious effect certainly on the adjacent islands, but has said, that money was not going to the consumer my personal view is that it would be totally impossible for (Mr Cretney: Hear, hear.) it was just going to various firms us to be members of the Customs and Excise Agreement in the petroleum industry, and the hon. member for East and allow duty-free on services between ourselves and the Douglas, Mrs Cannell, is wrong in saying that removing it adjacent isles, because I am sure that the UK would just is a blow to the environment, because it is interesting that not agree and of course we must remember that, whereas the commission that looked into this at the behest of this we can end the Customs and Excise Agreement on six hon. Court made it perfectly clear that the arrangement months’ notice, so could they. Furthermore I personally was serving no purpose whatsoever. believe that even if we did end the agreement they could Then the hon. member for Garff asked, ‘What are we easily prevent us having duty-free because they would doing?’ Mr President, it is quite clear to me what we are merely levy duty on such stocks as they were brought into doing. We are providing millions of pounds to maintain UK airports or ports. and improve our services substantially, we are reducing I also personally very much agree with the hon. member taxation by putting up personal allowances et cetera, and for West Douglas, Mr Shimmin, that we should not forget we are also wisely building up our reserves in readiness the social consequences of duty-free. Do we want to for possibly more difficult times in the future, and these encourage excessive drinking, with the problems that more difficult times could be caused by external pressures always go with it and more smoking, with the health from the UK, the EU, the OECD, which Sir Miles, the problems that that involves? hon. member for Rushen, has so clearly referred to, and But then the hon. member for Garff came back to his they can also be caused by the growing commitments to favourite subject, the tax-free status for fund managers. capital expenditure on both capital and revenue accounts, Now, this is a subject which he often refers to. He seems particularly the enormous capital programme to which a to forget that in fact an enormous amount has been done to number of hon. members have referred. In these assist the fund management industry over recent years. circumstances I am sure that any wise person, any wise Contrary to what the hon. member for East Douglas, Mr family or any wise government would build up its reserves. Braidwood, said, the fees charged for authorised funds are The hon. member for Garff suggested that we should reasonable and were approved by this hon. Court. reduce tax rates. Oh, it is so easy, Mr President, to reduce Furthermore quite recently the VAT position in respect of the rates of tax, but in this Island as a financial centre it fund management has improved. The industry also has would be almost impossible to ever increase direct taxation marketing support, the present low rate of income tax that again because of the effects on confidence in the financial applies to it and all the other advantages that apply to those sector. operating in our financial sector. This package is having Then he wants duty-free and this is a matter which in results and I believe that the number of funds with us will fact the Treasury has considered and will undoubtedly be growing from now onwards, and as Sir Miles has so consider again. rightly said, this must be the wrong time, when we are being looked at by Mr Edwards, by the UK, by the EU and The President: Hon. member, forgive me interrupting by the OECD, for us to introduce a nil rate of tax for any you. Would this be a convenient moment for you to pause sector at the moment. But there is a further point. If we in your address to the Court? Certain papers are being reduced a nil rate of tax for fund management, many other circulated which are distracting every member of the Court parts of the financial sector would say they should have and taking their attention away from your presentation, the same - the banks, ordinary fund managers running sir, and with your permission what I propose to do is give individuals’ portfolios et cetera et cetera - and then we three minutes for consideration of this document and ask should have insufficient tax for our needs. But also I am you to resume. It is totally unfair to have that sort of surprised that the hon. member for Garff should suggest situation. So, hon. members, study your document. this because it would make us even more dependent on the indirect taxation, the rates of which he complains are A three-minute pause followed. decided in the adjacent isles. The hon. member for Ramsey, Mr Singer, attacked our The President: Hon. members will appreciate the new hospital expenditure. As the other hon. member for difficulty of a member speaking against a background of Ramsey, Mr Bell, has said, how do those who attack the examination of documents (Members: Hear, hear.) Now I hospital expenditure and say that we should cut back on it call upon the hon. member for Glenfaba to resume his address. propose this should be done? I believe that those who

Budget — Debate Concluded TYNWALD COURT, TUESDAY, 17th MARCH 1998 T461 propose this should have the courage to come forward and well spend more, but I recognise that with a budget now give us the details. What wards would they cut out? What of approaching £200 million it is a very large chunk of operating theatres would they cut out? What else would this Island’s expenditure and we need to recognise that they do? other departments too have their demands, and given the I of course agree with the hon. member of the Council, sort of issues that face us for the future it is indeed prudent Mr Lowey, that the budget is good news. I did feel, that we are putting money aside in various reserves. however, he was perhaps tongue-in-cheek when he said It is interesting during the course of the debate to that he was critical of the hon. Treasury minister referring consider whether there is another department in this to the change of name of the present commercial government, because the focus seems to have been very development division. This was in fact only a small aside largely on the DHSS. I think we need to recognise that in relation to a report on the vast amount that is being done there has been an acknowledgement of the demands of to encourage the growth of the financial sector. other departments too. In particular education has received I was surprised that the hon. member for East Douglas, a considerable chunk of the budget, and that is right and Mrs Cannell, should suggest that the Treasury minister proper, and so too have other perhaps less large departments should have addressed the matter of nurses’ pay. This is in terms of their expenditure but equally important not a responsibility that is primarily that of the Treasury. It departments in terms of their contribution to the Island’s is that of the department concerned and the Personnel economy. Office. No individual wage or salary increases are ever I think I too would thank those members who have proposed in the budget. However, the Treasury does and commented on the fact that we should be proud of the fact always has provided sufficient finance for all public sector that we are able to do so much by way of benefits and staff at the levels that have been decided by the departments health provision for our community. It is extraordinary in concerned and the Personnel Office. my view that a population of70,000 people is able to make She also objected to the transfer of money to the hospital the kind of provision that we have for health and social fund and she claims that the public at large object to this. I security and whilst I and my colleagues on this department can only say in my sheading I have had a few people who would acknowledge that we can always make have initially, but that when one explains the situation to improvement, and we know, for goodness’ sake, where them in an honest and straightforward way, they accept it there are strengths and where there are weaknesses, I do and do not complain any more. not think that should negate the fact that much that is good Finally, I would like to refer to the remarks of the hon. is going on. member for Onchan, Mr Karran. I was very surprised that It was not my intention to deal with specifics, but I think he of all people should say there is no money for social I do need to respond to some of the comments that have issues. I would not bother to comment on such an been made because they do, in my view, tend to give an extraordinary remark. However, it is on record and unbalanced portrayal of what is happening in health and therefore I feel it must be refuted. A vast amount of money social security. that goes to the DHSS is for social issues. Furthermore, as In the first instance I think we need to recognise that of a member of that department, I am amazed that he should that £9.6 million at least £2.3 will be going in pay and pay have forgotten his own department’s press releases, of increments. That is not an insignificant amount, and we which I have three here. One talks about a boost for have had comment about nursing pay and so on, and pensions. The DHSS budget for next year has an additional members, if they had enquired at the department, would £3.3 million to be provided for pensioners. Then there is be aware that we have a working relationship with the another press release here which refers to a £ ’/2 million unions and have entered into an agreement which is better boost to family income supplement and then a final one than the UK national scales and is better for the unqualified here which refers to ‘Details were announced today of £113 nurses than would apply in the United Kingdom, and we million provision for next year’s social security budget’, are conscious of the fact that we are in a competitive market an increase of £5 million over the current year. Now, surely and need therefore to provide necessary incentives to staff the hon. member must be aware of all these things in view our hospital. of the fact that the press releases emanate from a There has been comment too about ‘no new initiatives department of which he is a member. in health’. I do not know why that has been said. It is Finally, I would say I do very much hope that this budget perhaps because it has not specifically been commented will get support, indeed unanimous support, because I on in the budget speech or in the budget report, but that believe that it meets the objectives of a good budget. It has could be said of very many areas in other departments too. a balance between reducing taxation, increasing There seems to be a particular focus on this. We have, as a expenditure for the benefit of all our people and at the result of the ability of Treasury to give us this extra funding, same time, when we can see possible difficulties ahead, in a list of committed items which we will now be able to increasing our reserves. fund to the tune of £3.25 million which represent either an extension of the existing services because of demand for M rs Christian: Mr President, I welcome the budget those services or the introduction of new services. Now, proposals and in particular I welcome the additional £9.6 against that we have had some personnel provision. At the million increase which has been allocated to the same time we have on top of that, in addition to those Department of Health and Social Security. Some might committed items, a provision of £1.924 million for other argue that we should be seeking more. Indeed we could items of service.

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Now, the department has a list of at least £4 million Now, the hon. member who joins me in the department which they would like to carry out and so we will have to with the responsibility for health and I will say that we determine our priorities. Within the priorities which have recognise there are weaknesses. Comment has been made been funded, which were listed as our priority 1A items, about a complaints system. It is not accurate to say there is there is a requirement for personnel, and we have not been no complaints system: there is one. But when the hon. awarded the personnel. Now, I recognise the difficulties member looking at budgets had to decide whether or not with regard to personnel, but I think what I want to signal the time was right to introduce a complaints system or use here is the fact that we have resources but not the personnel the money to fund some actual clinical or healthcare, the numbers and therefore it will be incumbent on the decision at that time was to use it for healthcare. Now, we department to seek ways of providing its services which recognise that there are different views on that and that do not impinge upon those personnel constraints. Now, will no doubt be evaluated in terms of the money which is we will not be unique in that, other departments will have now available as to what the priorities shall be. the same problem, but I would ask that when we come It is a matter of regret to me that the responses which back with approaches and mechanisms for doing that we have been given by my department to questions have been get a recognition of our difficulty in relation to personnel. regarded as arrogant. It is not my belief that we have been The proposals for our expansion of services do not of arrogant in our response or uncivil in our answers. I will course only deal with health. We are, through this service, leave the Court to make their own judgement on that seeking to implement much of the recommendations of particular issue. the McManus and Leslie reports which have the backing The fact is that this budget is good news in terms of of this hon. Court and which we regard, along with the what we are going to be able to do in relation to low-income members of this Court, as priority needs. We recognise families in particular. The boost to the family income that those reports highlighted the fact that our social supplement is, I think, a very considerable improvement services division is in its infancy and needs to be developed. for those on low incomes, and I would suggest and remind We recognise that there is a need to strengthen our the public perhaps that it does not only apply to people psychiatric services and those things are being given a with children. Married couples are considered to be family measure of priority. when it comes to applying for this benefit. This is a very In terms of comment about the hospital, a number of substantial increase and it not only improves the situation members have commented on the hospital. It is the policy for those who are currently receiving it, but it will bring of this Court, not the Department of Health and Social more people into the family income supplement net and it Security alone, that we build a new acute hospital, it has will allow those parents, single parents in particular, who been decided where it is and it has been decided by the have been on supplementary benefit to get out of an income Court how we should procure that work. I think it would trap, to work if they so wish to increase and improve their be incumbent on all of us, whilst recognising that this is a own situation. It is my view that where children are under major development in the Island and whilst some members school age we should not particularly push mothers into may criticise the procurement method and the impact which working and this structure that we have provided allows they believe it may have on our construction industry, if that where parents can work 16 hours a week, which would members want to criticise that, they might at the same time, allow them to fit in with school hours, they will now be to give a balanced view, consider what might have been able to get an enhanced benefit to improve the lot of their the consequences for the construction industry if we had family. followed the conventional route, and I would suggest that I do not want to go into the specifics in any great detail the same arguments would be propounded in relation to about the enhancement of benefits, but members will that type of procurement of the hospital, so this is a no- recognise that very considerable sums are being paid by win situation. We are pursuing what we believe will give way of our uprating of benefits, they have been spelt out local people the opportunity to contribute to this in a circular which has been given to members, and I think development. that that too needs to be regarded as a considerable In terms of the comments about various detailed aspects achievement for the Island, bearing in mind that we do of the health service provision, I would suggest to the hon. have a much better benefit structure than applies in adjacent member for East Douglas that she has been somewhat islands and many other places who would be pleased if selective in her analysis. The fact that beds available are they could indeed provide the sort of benefit that we are down might be regarded as a criticism. On the other hand able to provide and indeed exempt as many people as we it might be regarded as an efficiency measure if those beds do from the tax net. were only 50 per cent occupied in the first place. Comment has been made about reciprocal arrangements. Details about out-patients may be selected and quoted I would say that those are under review constantly. If there through the Court, but what we should be focusing on is is a change in the United Kingdom we do not automatically how many people have had health care and treatment in follow without considering whether or not it is to the benefit our service, and that is a growing number of people per of the Island. The fact that we have thus far always annum. We should not be afraid to say that, nor to say that concluded that it is of benefit does not mean that we are we have increased the number of consultants who are not looking at the issue. available in the Island in a variety of specialties. The service I think that I have responded to most of the points that is expanding, slowly in some people’s view, but we are have been made. making greater provision over the years and improving I would just comment to the hon. member Mr Duggan the services which are available. who opened the debate that the fact that local authority

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rents were increasing would pose a difficulty for old-age along in a very satisfactory way. But having said all that, pensioners. I would just comment to the hon. member that we are still not masters of our own house. We have all any rent increases will be accommodated fully in received the second part of today’s budget in the form of a supplementary benefit payments. pictorial leaflet and it is not punitive. The cigarettes, the We should be supportive, I believe, unanimously of this wine, the beer - that is fair enough. The one thing that is budget. We are fortunate to have had a surplus and I think punitive is the increases in petrol because that affects every that it is prudent and timely to use it in the way which is department of life. Whether the van delivering the bread being proposed. or the potatoes or the service van or the contractor’s van, they all require fuel, and fuel prices have gone up 10 per The President: The hon. member of the Council wishes cent and on top of that the Treasury minister has taken off to raise a point of clarification. half a p on the hydrocarbons rebate, so in other words it is 4.4 plus another half pence at the pumps and it will be 5p Mr Lowey: Mr President, could the minister clear the a litre at the pumps here in the Isle of Man, and that affects Court and I do hope the Treasury Minister is going to listen everybody. It affects the millionaire, who does not really as well. take any notice of it, and it affects the chap at the bottom of the scale living in the country who has a second-hand The President: Will you pose your question, sir, never car and has to have it to get to work, to find employment, mind the general address. to get out and about -

Mr Lowey: Can I say, sir, the minister has just said Mr Duggan: The poor taxi-drivers. that she has been given a sum of money of £1.9 million with no personnel to carry out the wishes of the department, Mr Brown: Poor! therefore they will have to buy it in, and also tax relief for private medicine without the DHSS input. Isn’t this a case Mrs Hannan: Poor! of the Treasury imposing a policy on the department? Mr Cannan: - and that is a fundamental truth, and it is The President: Reply, minister. all very well the member of Castletown saying build houses outside Douglas, but the experience that I have in the Mrs Christian: Mr President, the policy in relation to constituency is when young people want a house they do personnel is one of the Council of Ministers. It poses my not want the travelling, they cannot afford it, and they will department with certain difficulties, as it does every other buy a house in Onchan or round about Douglas, and that is department. It is not unique in that sense. I am simply the trend and that is why the houses are being built. If it pointing it out because in terms of the numbers of people was not so, the houses would not be built. So I think that we need to employ and because it is a big department it is that is a disappointment and the fact that we are not masters perhaps more significant in our case than it would be in in our own house. I will not go into the abrogation debate, relation to other departments. I am simply pointing out some of the comments made by the hon. member for and it is not new from our department’s point of view. We Glenfaba were perhaps economical with the truth actually. already work with the private sector, we already buy in a I think that is the current phrase. (Interjections) But the lot of our services, and again I might respond to a comment exaggerated disadvantages of it are open to debate and to about nursing home numbers, bed numbers, residential care question. bed numbers. Those go down, but it does not mean that The one matter that I look at in this budget is that there there are not enough beds, because the private sector was excess income of expenditure of £21 million and all provides. We have always followed that policy in working of it has gone to reserve. In my experience at a previous with the private sector. time when there were large surpluses 50 to 60 per cent went to reserve and some of it was returned to the people Mr Lowey: You are extending it. who had earned it, and if we talk about ‘Isle of Man pic’ let us talk about any other pic. In the good years they declare Mrs Christian: It may well mean we have to extend it, a dividend and there should have been some dividend to but that is government policy, sir, and I do not have any the people of the Isle of Man. Now, where the dividend disagreement with that policy. should have come most is to those who have least and that we all know and I am not quite sure now how it can be Mr Cannan: Mr President, there is one certain truth best done, but it certainly does not assist those who have about this budget and that is that the government accounts least when the indirect taxation is increased, because are in good order. They are in good order, there are everybody but everybody is a taxpayer, because those who surpluses, there is almost no unemployment, there is a are not paying direct tax are all, every man, woman and general feel-good factor amongst the large majority of the child, paying indirect tax at the same rate, with no community, and that cannot be disputed. Wages are high discrimination between the ability to pay. and I am talking about the vast majority, not those at the So somehow we have got to - and, as I say, I have not bottom end of the scale. Taxes are low. Opportunities are really got the answer - assist those in that area. We also there. You have only got to pick up your weekend papers need to assist them in the area of the social services or to see pages and pages of adverts. The Isle of Man is going welfare. All of us, I think, have probably been to these

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tribunals where people have appealed against decisions able to compete with the best whenever these job vacancies on welfare payments and in fact two experiences I have arise. We cannot have the Manx children always holding had were where the tribunal wished to assist and made the second job and not the first job: very, very important. positive recommendations to assist because here was a case So, hon. members, there is a feel-good factor. The of need, only to be told by the bureaucracy, ‘These are the people, our electorate, our constituents, I believe, are in rules: you cannot, you must not, you will not give any general satisfied with the privileges of their standards of assistance or use any positive discretion’ and then I wonder, living, their wages, their employment opportunities. We because these panels to assist the low paid have a lawyer cannot, of course, be complacent, but we should not only and two assessors. The cost of the panel is perhaps £500 a expect the best in the Isle of Man and continually talk about day, I do not know, but it is certainly not very much less the ‘Isle of Man pic’, but we should from time to time and yet they do not have that ability to make proper declare a dividend and that dividend can be in many forms, decisions because the rules are so tight and so close, and whether it comes off a surcharge on the electricity or reduce so we sometimes, I feel, pay lip-service to wanting to assist the water rate, whatever. But there are possibilities to assist those who really need assistance and yet are tied in to throughout the general community when there is a surplus something where we do not have that ability to make to just give just a little bit back. It is encouragement to decisions. everybody and it makes people feel that much better and The biggest single item of expenditure, as we all see, is in the past when it has been done it actually proved the Health and Social Security, part of which I am just beneficial because the government receipts increased at a talking about, at £107 million. It is a commitment that all far greater rate than had the old rates of taxation prevailed. of us, I think, are aware of, concerned about and from time Finally, there is room, contrary to what the member for to time members express their concern either publicly or Glenfaba says, to still reduce the bottom level of taxation. through the ballot-box, and it is important that we get value If it was wrong to have reduced it in the past, why hasn’t it for money. I think most of us in our constituencies have been restored? In fact it has benefited prosperity all round and I can see in the future that if our prosperity continues had complaints from constituents about the service as it is continuing now, and I can see it continuing through provided in the hospitals. We have also had a lot of the coming year, I say to the Treasury minister, on behalf complimentary letters. We have had a lot of complementary of ‘Isle of Man pic’, next year, sir, declare a dividend. ones. But some of the complaints are quite serious and it seems to be that there are more managers than nurses, there M r Radcliffe: Mr President, I rise, obviously, to support are more people giving management instructions, and this the budget as presented here today. Comments have been is a complaint coming through from nursing staff, there made that it could be said to be boring, lacking sparkle are too many people with clipboards and not enough, to and, as the hon. member for Onchan said, lacking zap. I use the Treasury Minister’s favourite phrase, at the do not know what that is exactly, but it is no bad thing to coalface. These are matters of concern, I believe, not just have a budget which is in that line and the whole budget here, but to members of the public. People are not writing has been indicative to the public of the Isle of Man of good in letters of complaint, and some of them are serious housekeeping, of prudential housekeeping and good complaints, if they are not genuinely concerned about what housekeeping, despite the fact that it has been possible to is going on. increase the moneys allocated to departments, an increase Then we come to the new hospital which is a decision which has been well over inflation and will enable of Tynwald, it is going ahead, contracts have been given. departments to do slightly more in their particular lines, But I do not think that Tynwald has given an open cheque and despite this generosity, if you like to call it that, it has book. I think the expenditure needs to be kept under been possible to allocate moneys once again to reserves. constant review and cost control. The worst thing that can This should always be the case, that whenever possible happen with big government capital expenditures, and we moneys should be put in reserves so that we will eventually have either seen it in our departments or in our private reach the target, the often quoted target, of having at least business affairs, is when budgets get out of hand and cost 50 p :r cent of the annual revenue requirements in reserve. control waivers, and so big is the hospital that a 2 per cent It is going to take a while to get there but at least Treasury or 3 per cent overspend or lack of cost control or out of is endeavouring. budget and we are talking in millions. It is worth reiterating, I think, the remarks that the hon. These are matters that need our attention, and the other minister made in his speech this morning, that the capital big spending is the nearly £50 million for the Department programme is one which is worrying everyone. It certainly of Education. I am on that department. I believe that we needs a review, a major review, of the various proposed are spending it carefully and wisely. We have brought in schemes. It has got to be undertaken, I feel, and I know delegated financial management so that the secondary that the minister is in agreement with this, before the next school heads and governors have a responsibility and policy statement, and before that policy statement is accountability to get the best results, spending the money produced we have to try and I was going to say retain but in the best possible way. We are moving forward, we are it is almost regain control over the capital programme. It progressing. We have heard the United Kingdom is galloping on, it is a tremendous figure involved at the government’s favourite phrase, ‘education, education, moment, and I think we have just got to try and get control education’, and, yes, they are right, itis desperately, terribly of it again. (Mr Duggan: Hear, hear.) important as the requirements for employment go ever- Many members during the course of the debate have increasing in importance, because our children must be mentioned the have-nots and the problems that exist for

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some people in that band which is slightly below the tax be done in the coming 12 months, and of that we obviously threshold and yet slightly above where assistance can be are very appreciative. But like all departments we also were given. We acknowledge, I think, that some assistance is up against die very strict control of personnel and, although required there and hopefully through the committee which there has been a lot of battle to achieve the end, I must has been formed that will try and find a solution to this also thank the personnel committee for the fact that they particular problem and what assistance may be given. have allowed education in particular to have a very large, It is worth noting that of all the contributions made by comparatively large, number of additional posts, posts that the various members, pointing out this difficulty, this were absolutely essential to opening the two new primary problem, not one member has suggested a solution to it. It schools and to extend some of the services that we needed is up to them to try and find solutions, them, they, being to do. But having said that, even with that increase, we the Council of Ministers or a committee formed by that still are in the position, as is the Department of Health, in Council, and it would nice, I think, to have some having funding for particular services without the ability constructive comments and suggestions as to how this may to actually employ the personnel so to do. Now, that is a be tackled. situation that is very difficult to accept. But if you come I would like to refer to the hon. member for Onchan back to the thinking behind the budget, of course each new and his contribution. He went on about many things. The person that is employed is actually a long-term liability to hon. member for Glenfaba has answered most of them, I this government and until we can be sure that the future feel. But he spoke, according to my notes, almost the funding is going to be there it is wise and it is prudent, to longest period of time about many things, but I noted that use this word that has been repeated time and time again when he finished his contribution he got his notes, he tore today, to actually ensure that we do not take on liabilities them up and consigned them to the bin - rubbish - and I that in the long run we cannot sustain. am sorry to have to say that it was rubbish that he spoke in So, yes, I say to members of the Council and one in his contribution. (Laughter) particular who is very concerned about this that of course we may in certain circumstances have to buy in services Mr Karran: A personal insult is no answer. and actually contract to people outside government’s employ, certainly during the early stages of a new project, to ensure that we actually have got the service right and Mr Radcliffe: It has been a prudential budget, a careful have got the number of people employed right, and that budget and the public at large, I think, will be well satisfied, will happen in education to a smaller extent, possibly than indeed probably will be thankful that this is and has been in health and social services, but it will occur. a prudential budget and not a profligate one. So really the thinking behind the budget is, if I have got it right, that we get the balance right between committed Dr Mann: Mr President, there has been in this debate, services which we know we can go on funding and putting of course, the usual rhetoric, the usual repeat of many the surplus that is otherwise available into reserve until expressions that have gone on for years and years and we we see how things go over the next year or two. So from all somehow end up by thinking that everything is fine, that point of view I think that is the key to whether this everything is going to go on well. Well, I am supporting budget has achieved the correct end and I think, on balance, the budget, needless to say, because my department has it has. certainly done well out of this budget. But I want to just Now, reference has been made to the very large capital try and bring people back to the actual budget speech programme and that very large capital programme can because most of the contributions have had no relation to almost appear to be frightening and certainly I fully support the budget speech at all, nor has anybody actually keyed the Treasury in any review of the way in which this capital in to the thinking behind the proposals. The one phrase programme has got to be handled, certainly over the next that immediately should make us stop and think is the fact two, three, four or five years. In particular we have got to that the Treasury minister said what has been given this be very, very careful that because there is this very large year is not necessarily going to be repeated next year or commitment of the hospital we are not going to a damming the year after. Now, once you assume, as the Minister for back of capital projects in other areas. the Treasury has assumed, that there are troubles ahead or In education itself we have been very grateful for an potential troubles ahead, then you stop and you do not take allowable bringing forward of some capital projects in on long-distance or long-tail commitments, as they say in advance of this very heavy commitment. We will only be the trade, and here is the cleverness in this budget that able to hold that for a very short time because most of the does not seem to have been appreciated by members, that primary schools in the Isle of Man are full to overflowing, what has been granted in extra funding has been very or will be, and certainly we cannot hold for very much welcome indeed but it has been only allowed with the view longer than four or five years, the construction of a new that the services that are going to be so funded will actually secondary school. Both groups of capital expenditure are be able to be funded through into the future. very heavy, they would involve also a considerable increase Now, in my department, as in the Department of Health in personnel. and Social Security, we have had the largest lumps, the So one can reorganise capital programmes in the short largest parts, of that extra funding. Compared with health term but, like having a wage freeze, it may well be followed and social services, of course, the educational part was by a great bulge of further capital expenditure afterwards. relatively small in comparison but it has enabled us to do If I could just finally refer to a matter that obviously quite a number of things that were absolutely essential to concerns a very large number of members and that is the

Budget — Debate Concluded T466 TYNWALD COURT, TUESDAY, 17th MARCH 1998 fact of the third of the population who it is now claimed comment on - it is a bit like a vicar going back to his parish are outside the tax bracket and what are we going to do - having been at the Treasury for seven years you know about it? I have to say this is one thing the Council of the Treasury are not as hard as perhaps it is always made Ministers has realised and has heard and although a lot of out that they perhaps are or could be. They listen also to fun has been poked at another committee, in fact this is departments, they listen to their priorities, but at the end not an issue that is going to go away. This is an issue that of the day I know every department make their case and has got to be faced up to. To start with we have not got their ministers then in Council even reinforce that case, these people outside the tax bracket. This is a complete but at the end of the day someone has to prioritise the whole illusion. These people are very much in a tax bracket, but of government’s priorities and put them in order and it they are paying a tax that is not related to their income and does not always suit everyone. I am quite sure if we all if the United Kingdom budget comes anything up to had had a crack at putting forward the budget today we expectation, that burden will almost certainly have would have slightly changed things here or there, but I increased by this evening. think we would all have to agree that to be able to be here Now, we say we cannot find an answer. There has got in our Tynwald Court today with a set of figures without to be a serious attempt to find the answer and I am sure, bragging or, as it was said, congratulating ourselves, we certainly from the talk that went on within the Council of are not complacent, but to be able to be here in this Court Ministers when we were considering the budget proposals, today with a budget presentation that we have got we are the absolute minimum that was acceptable was the fact without doubt most fortunate. that there should be a working party to attempt to find this I would like to pick up on the one department where it answer. appears, I think, before members came in this morning Now, if we look at these people outside the tax bracket they had already, before hearing the Treasury minister’s but who are still paying tax, the lower the income level the budget speech, made up their mind where they were going less likelihood that these people are actually going to spend and what they were going to ask and what they were going their money on expenditure that involves VAT, until the to comment upon, and I know it has been said we should last few years and of course the last few years has brought not look back, but, you know, I look back to when the the tax on fuel and light and suddenly these people outside hospital all first started and without any doubt at all the the tax bracket are now very definitely taxpayers. easiest way would have been to have gone out to tender There are areas where this sort of change can occur and and the successful tenderer would have built a hospital. what has always worried me is that we congratulate That was the cleanest way, the safest way and probably ourselves and we have done it today because a third of the the best way. But we were persuaded, because at that time population is not paying income tax. That is wonderful. the architects did not have any work, the joiners did not, But directly you mention helping anybody paying indirect the plumbers did not, the brickies did not, we were in that taxation, somehow it is wrong. phase of our construction business in the Isle of Man where So for those members who are worried about what we there was not work. That is when it was introduced, to try are doing to this group, I think we can be assured that to help the trades people of the Isle of Man, it would be within the Council of Ministers, and I know the Chief broken down into packages, and I know it took a lot of Minister is himself supportive of this view, we will get persuasion to the Treasury that in fact this was the way this working party together and try this time round to get that we could actually build a hospital, because I well some sort of answer, and I am sure that is the will of the remember going across, the first time I had ever been over Council of Ministers, it certainly is, as I understand it, the to Northern Ireland, to see a hospital being constructed will of the Chief Minister, and I certainly would support and those people at that time were saying, ‘Get your design that myself. Thank you. right, get your spec right and for goodness’ sake do not change anything because that is when the costs will M r Gelling: Mr President, I rise at this time basically escalate. ’ We took that advice, but then, as I say, when we to lend my support to the Treasury minister and I would got back home we had this situation. like to thank him and his team at the Treasury for the work But the cycle goes round. Now, I was hearing earlier they have put it. But I would also like to thank every this morning about we will not have any construction member of this Court because we all have had an input at business. At the moment the construction business is so some time or other into this preparation of the financial busy that quite honestly you cannot get a tradesperson. It ways that we will be able to actually complete our policy. is extremely difficult. So therefore the situation has What I would like to say is that we do listen and some changed so that quite honestly for the hospital we will members have said we listen and do not take any notice. probably have to have some imported labour, some Well, I can assure members we do listen, we have always imported professionals, whatever. But I would rather our listened and that is in fact how we arrived with a budget own construction people on the Isle of Man to be doing presentation today and a documentation as we see today the bread-and-butter work that is here on the Island that in the form it is today: by listening to members and trying will continue to be there and not take on a huge job like a to incorporate their thinking and their comments. Not hospital and at the end of it everything stops and they have always perhaps are we able to agree wholeheartedly with lost their other everyday customers. We have seen it all perhaps what they are putting forward in their comments before and that is exactly what can happen in a small Island or their suggestions, but I can assure hon. members that like we are here, because you have got to keep your bread we do listen and when I say we do listen, I really wish to and butter stuff coming.

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As I said, I am rising purely to support the Treasury The President: Thank you. Minister. and everyone who has contributed to this the financial package for us to provide what we set out in our policy. Mr Corkill: Thank you, Mr President. Certainly one I think it was predictable that the hon. member of the hon. member has said that if I take three minutes to wind Council, Mr Lowey, would home in on those in the middle up he would support the budget. (Mr Cretney: Hear, hear.) because that is something he has been consistent about for TTiat possibly is not possible but I will certainly try to be years, and that is why I again look back and think to myself, brief. ‘My word, yes, how did we do it before?’ With a great I think the point I would like to put across is that we do deal of difficulty. We did it through electricity surcharges, not just note what is said in here, we do listen and we do we did it through the water department, we did it through try to incorporate the ideas that members come forward all kinds of ways to try to get at these people. We ended up with. I am a firm believer in consensus and this is the place with universality and I well remember it was said, ‘Well, where consensus really crystallises as far as I am universality perhaps we do not agree with, but at least we concerned. know it’s getting to the people that need it most.’ So Now, it has been an interesting debate but I think this therefore you have to take the universality and say, ‘Well, morning we started off with a number of policy issues and there are some getting it that should not.’ there was not actually very much said about the Pink Book But once again when we were discussing this in the before lunch and at that time I took that as a broad Council of Ministers, this was the area. Great that we have acceptance of the budget, and I think I am right in making got them out of the tax net. That is marvellous because the broad assumption that people see the figures, they see before when we first took them out of the tax net, every the good news that is in this budget and in broad terms year some of them came back in again, so we had to approve. And I understand that members come from therefore move the thresholds to make sure that once they different comers on this, they have different backgrounds were out they stayed out. We have been around this one and therefore different issues have a different importance, for quite a long time and I would like to assure everyone but you cannot get away from the fact that this is a budget that, yes, it is another committee and we have lots of which increases spending on government services by nearly committees looking at lots of things, but I hope that hon. 10 per cent for this coming year and which I believe will members, if they have some brainchild of an idea how help many of those at the sharp end of the affair. There are these people can be assisted in some way, if there is a enhancements to family income supplement and disability vehicle, for goodness’ sake let the Treasury or let someone working allowance. in the Council know, so they can have an input into the So this budget is about stability but I also believe it is committee so that we will find perhaps once and for all a about optimism for the future of our Island and we do vehicle that can be used in the future, and I think that is return, I believe, to an enviable position of being able to what it is all about. There is just a great difficulty in reduce the burden of taxation, although I take on board knowing how do you help the people that are already out the comments about those who have to pay indirect taxation of the tax net? and when there are rises there, then they are real rises with I am quite sure hon. members will support what is a tax, but we are able to undertake the essential increasing good budget, it is a sound budget, it is a budget which I of our reserves and yet we are able to allow a significant am quite sure many, many countries would be very, very increase in government spending on services to the public. proud of, (Mrs Hannan: Hear, hear.) but we must not be The hon. member the Chief Minister who has resumed complacent. We must strive and make sure that we can his seat I am sure, with the seven budgets that he presented always be standing up in this Court looking at what really to this hon. Court, would have preferred some of the figures basically is an over-provision this year, as last year, but that we have today to debate compared to some of the that is the way I would rather it be. If we are going to be a figures some years ago when in fact growth was much little bit cautious, I would rather it be that we have got too slower, and so in a way I have an easy job compared to my much than too little. I support the Treasury minister and predecessors whilst the present situation is so buoyant. But the team and if it is called a dull budget I think there are certainly my speech was designed to lay down some many, many budgets in the past which have been called caution and I know the word ‘prudent’ is always one that dull but I think outside the people do not like a lot of creeps in. I think hon. members in this Court have actually movement and I would rather have, I think it was said, a used it more today than I did but I still believe it is the war chest or something like that. If we have got a war right way to undertake a budget. chest we still have that in mind, that if we are going to Now, the hon. member for South Douglas, Mr Duggan, make any decisions in the future we do not want to have to was quick to his feet at the beginning of the debate and make that decision by saying we cannot afford to do it. We quickly pointed out, and the reality is, that there is never must have sufficient there, six months of government enough in a budget for those who are in the community, trading, to be able to make that decision without having to whether they are pensioners or whether they are low paid, say we cannot afford it. Mr President, I support the budget there is never enough that we can do to improve that, and and thank you very much indeed. a number of members have echoed that throughout the debate. But I do hope that the commitment by the Council The President: May I call on the minister to reply? of Ministers to look at this issue is taken seriously because it is certainly one that, apart from the desire to actually Members: Agreed. achieve it, there is an actual almost academic challenge to

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actually deal with the subject within the framework of all But of course regarding the issue of the UK budget today the financial situation that we have in a budget, and I hope and the fact that we are dependent or at the mercy, as the that with all that energy we will actually come up with hon. member said, of the tax changes that he would some answers, and I take on board the criticism that perhaps introduce, well I think other members have said it is our this was mentioned last year and this year here we are again choice. It is our choice, it is a present policy choice to do debating the same issue, but I would point to those figures that, and I think it is the right one for the moment and of improved government services, improvements in family certainly with regard to our customs and excise, when on income supplement and disability working allowance. the horizon we have threats to our direct taxation, which Now, I do hope hon. members will forgive me if I do is where the storm clouds have been talked about, these not go through each hon. member’s contribution. I think are threats to direct taxation as much as to some extent to that would be counterproductive but I do want members indirect taxation, I think it is very good to have less of a to realise that each member’s contribution has been noted. dependence on one particular form of taxation, and that is Now, the hon. member for Garff came up with his of course the situation in the Channel Islands where 80 or description of a canny Aberdonian bank manager and I 90 per cent of their revenues come from direct tax, and can honestly say that I can actually verify back to about they are concerned on the other side, the flip side of the 1640 that I do not have any Scottish blood whatsoever coin, that their revenues might get hurt if anti-avoidance and I have never actually been to Aberdeen, although I becomes a big issue. have enjoyed many holidays in Scotland and the hospitality The hon. member of the Council, my colleague from there. Perhaps with the hon. member’s description of Onchan, Mr Kniveton, wondered if the budget could be a Aberdeen I never ever want to go there. But of course one month earlier, and this obviously can be discussed. From does not have to be canny to guess that the hon. member what I understand, it would not actually cause too much for Garff would waste few words before lurching us into of a problem from Treasury’s point of view. We could cope an abrogation debate, and I think this year, obviously with with the timescale and so that may be something certainly developments on the international and European scene, worth looking at for the future, bearing in mind that I realise his contribution in that respect was more to do with duty­ that we only had the presentation to members a few days free and the opportunities that that may or may not give ago, there is the impact of the UK budget, our own budget, us. and it is a lot really to embrace all at one time. Now, it is quite clear to me that it is not an opportunity The hon. member for Douglas East, Mr Braidwood, also that I think the Island should even try and attempt because talked about duty-free, but I do believe he missed the point, whilst duty-free is an attraction to people travelling, it has and I would certainly be very pleased to supply members to be put in context. I do not believe it is a panacea for with information that I have regarding this particular economic development, and once 1999 arrives you will still have cross-border shopping and in fact the shopping situation, and I also think it would be worthwhile if that goes on in Belgium and France is actually duty-paid. Treasury was to arrange some sort of presentation and It is not duty-free. It is up to the minute duty-paid shopping, explanation to all members of Tynwald with regard to the but it is still so cheap and the real aspect of it is of course customs and excise situation because I do not believe it because shoppers can actually fill their car up with cheap would do any harm to explain it in more and more detail booze and cheap cigarettes because the quantities are that because it is a complex situation and certainly when we much greater. You can actually go to France and bring back debate in Treasury the outcome of this budget I will be 10 litres of spirits, 11 cases of wine, 10 cases of beer and debating this with my colleagues, and I, incidentally, would 800 cigarettes. That is cross-border shopping. That would thank all the members of Treasury for their hard work in fill the average car, I would say. producing this budget and the support that they have given Now, it is highly unlikely that residents of the United me today. Kingdom, I would believe, would come to the Isle of Man The hon. member for Douglas North, Mr Crowe, I think just to purchase three litres of wine and spirits when they really was the first member to comment on the international can still do the short trip to Dover and Calais and in fact issues, and I thank him for that because these are the long­ they would still then have to pay duty on the return back term issues and this budget this year is framed with those to the UK. So I think we have to be very careful that we do long-term issues very much in mind. not start to create the perception that there is a panacea Now then, it is difficult to make sure we cover the points with duty-free. I just do not believe it. without actually delaying members too much, but the hon. Now, another comment that the hon. member mentioned member for Douglas East, Mrs Cannell, was very critical, was with regard to our dependence on the customs and and I suspect I almost expect that, and I think that is excise revenue and he made comment that it was up every unfortunate because we do, as I said earlier, try to listen year. Well, during the lunch-time I looked at some figures, and we do try to learn. going back through the years, and going back to 1975-76 The hon. member of the Council, Mr Waft, mentioned customs produced nearly 57 per cent of our revenues. This the comparison and he has kindly provided me with a year we are talking about 54.57 and all the way through comparison with regard to overseas aid and we certainly the years the figures have not changed greatly but there are at the bottom of the league table, but I would point out has been a downward trend in terms of customs and excise that this year we have made a meaningful increase, but it receipts as a percentage of the total. So I would wish to may well be something that members would wish to take make that point clear, that it is not an increase every year, note of for the future where other developed countries do in fact it has been a decrease most years. contribute quite a bit more of their GNP than we do.

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A number of members have mentioned the people, and I make no bones about my warnings on the capital I tried to raise this in the initial speech, those people who programme. It is a very big undertaking. But I think perhaps are outside of the tax net and yet are outside of the benefit my caution may have been overplayed, I do not know, but net as well, and I think that has been well debated and the at the end of die day we do not actually deliver it. My Chief Minister has supported this view that the Council is main concern is that we deliver what we set out to deliver going to look at it. in the capital programme and that is something that all Mention was also made of fund management and I think departments must strive to do. the hon. member for Glenfaba, Mr Gilbey, perhaps put The hon. member for Douglas East made reference to some confidence back into that situation. Our fund some arithmetical errors on page 47, but I do believe they management industry in the Isle of Man is doing are correct. I certainly added some of them up myself and exceedingly well and I do believe that some of the I have been advised that they do add up correctly. initiatives that were taken before my time in Treasury with My hon. colleague from Onchan, Mr Karran, certainly regard to VAT relief and with regard to marketing are concerned me when we said that we should have a sinking actually now beginning to pay dividends and I am aware fund to fund a shipping line. That really perhaps brightened of certain funds that are coming to this Island in the not- up what has been described as a boring budget. I think the too-distant future and of some that are happening at the headline last year was ‘Boring, and well done, Richard’ or moment which prove the point, I believe, but of course the something to that effect and perhaps the headlines are going point was made that it is easy to reduce tax but of course, to be the same again this year. having done that, it is very difficult if you wish to put it up But there again the hon. member made reference to a again. number of issues, particularly with regard to the hospital, Mention was also made of non-resident companies, and and this without doubt has been a common denominator certainly this is an area that I know concerns a great number through a lot of members’ contributions, and I too share of members and the question was really what was the policy the great concern about the overall cost, but I think the in this budget with regard to non-resident companies? Now, Chief Minister has explained where we have come from certainly from a reputational point of view the Isle of Man on that basis and without doubt the straightforward has a lot to lose with non-resident companies not Treasury line would be go for a competitive tender, get six performing as they should and there have been incidents or maybe eight really big contractors, nail them to the floor of bad reputational risk as a result and references made to and get the lowest possible price, and of course that would the same problem in Ireland where they are having this have maximised probably the import of materials and very same debate. What we have done of course is have a labour and skills but we would have got our hospital consultation exercise which finished at the end of February perhaps at a lower cost. But Tynwald made the decision. regarding the corporate service providers and therefore this In the same way that Tynwald decided where the hospital budget was really neutral with regard to the way it has should be, Tynwald also approved the management dealt with non-resident companies because it would be contracting situation. Whether we like it or not that is the wrong to pre-empt that consultation exercise, but of course road we have gone down and it may well be that that has there are other pressures now and it may well be that been an expensive decision, but as the economic cycle comments from Mr Edwards and his review of the Island’s turns, and I referred to that in my speech, it may well be, regulatory framework may put added pressure in this area in three to four years’ time when we are well in or perhaps and it is a debate that will continue. two-thirds of the way through the hospital construction Now, other members made mention of the size of the project, that the construction industry may have a different capital programme and certainly I think what I said with view on the reality of what government did. It was done regard to the capital programme at the members’ briefing with all the best of intentions to make sure that the packages was that the hospital and the incinerator were priorities suited and therefore encouraged local participation and I and they had to go ahead and as a result other schemes believe by and large that is what was behind the spirit of might have to be restricted. They certainly are my priorities. the management contracting situation. But at the end of They are the priorities in the capital programme, as in the the day of course we have had delays. We have had policy document. planning delays, we have had a number of delays and they There was also discussion about nurses’ pay, and I think have added to the cost, and I make no bones about it: it is that was answered in as much as it is not a function of me a prudent thing to do to put money into that hospitals estate as Treasury minister to negotiate nurses’ pay, but I do development fund. (Mrs Hannan: Hear, hear.) It is a way believe, with the emergency service linkage that they now of putting money in reserves but I believe it is going to the have - when I say linkage it is a formula linkage - the right reserve. At the end of the day that fund pays the loan increase was 4.4 per cent this year, whereas in the UK the charges on the capital cost of the new hospital and it will pay rise was 2 per cent with a 0.9 per cent locally settled do that whether we put money in it or not, but it will not issue, and of course pay where we have a UK linkage is do it for as long and it may be that if we did not put the probably easier for us to deal with but where in the United money in, by the time we get to 2015 it is somebody else’s Kingdom local pay bargaining has occurred, that creates a decision to decide how we then pay those loan charges. problem for us here on the Island because we have to make But I think whilst the revenues are buoyant it is prudent our own minds up about things and that certainly had and it is correct that this generation make sure that we accelerated, but maybe with the new administration in the properly fund the whole capital cost of the hospital so that United Kingdom that local pay bargaining may well not we do not leave a legacy for the next generation, and I be such a rapid change now. firmly believe that what we are doing is right and proper.

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The aspect of the national insurance fund or account if the issue is personnel, I would hope that all hon. members was also covered by other members. That fund does not in this Court, who are all attached to different departments, have the capacity for long-term extractions of further perhaps look at the situation where their personnel in their moneys. Initially we took the £44 million and put it in department may be perhaps better or better focused or another fund but the increases to pension supplement and targeted in another department. But having been in a other benefits that are paid out of that account now account department myself, the Department of Home Affairs, I for the ability of those moneys to be delivered, even with know how difficult it is to let go of staff. prudent investment, which is what happens. At the end of the day I would bring hon. members back Now, I do believe that the minister, the chancellor in to the actual policy on manpower and this is something the United Kingdom, has announced changes in the that we really have to keep at the background and national insurance contributions and I do believe that that government’s policy has been clearly set out. It is that the may well have an impact on the low paid, likewise here as government workforce will not be allowed to exceed the perhaps there, but I hesitate to say too much until we have rate of growth in employment in the private sector or the properly analysed the result of what has been announced. rate of increase in real terms in government's income. It But this partly answers perhaps some of the criticism that may well be that the private sector is employing more and my hon. colleague for Onchan, Mr Karran, has said in as more people, in which case if that policy holds, that will much as he has been in favour of dealing with the low pay allow for further personnel increases to government in the and low income situation through the NI for some time to future and we need to keep a very careful watch on what is come. Can I also say that that has been the view of Treasury happening in the private sector to make sure we have got a as well for some time, but it is the practicality of how the true comparator in that situation. DHSS deals with it that has probably created the issue of With regard to the personnel that have been allocated whether we can or we cannot. this year, a lot of them have gone, as Dr Mann said, with I hope I have not left anyone out in terms of what has regard to teaching, and I do understand that there all the been contributed. I have taken pages and pages of notes other departments, all have demands and in fact they have here. I have virtually filled an A4 pad and I do appreciate not totally been satisfied. the contributions. The Chief Minister talked about prioritisation. That is The hon. member of the Council, Dr Mann, said there all that this budget is about. It has been a long haul since was a cleverness within the budget. I did not quite know last November when departments first started to come how to take that, whether it was meant to be a compliment or the Treasury minister with a sleight of hand. through the door of Treasury. I thank everybody who took part in that process. I think everybody did. It was certainly But two departments, the DHSS and the Department of Education, have both raised the issue of personnel and I a learning curve. I hope I have been able to present a budget think it would be wrong in my summing up not to mention which satisfies the majority of members, but I do appreciate the issue of personnel because during the preparatory run­ there will always be gaps and all I can do is to pledge to up to the budget a number of departments said, ‘Well, try and find the answers to those areas where there is you’re giving us the money but in fact you’re not giving criticism. us the personnel, and this is a usual Treasury trick’, and Mr President, it is seven o’clock now. It has been a long certainly that was raised perhaps towards the end of the day. I beg to move the budget for this coming year. debate when I expected it to be picked up on, I have to say, sooner in the debate. The President: The resolution, hon. members, is set Now, it is not a sleight of hand. If you look at the out at item 2 on order paper no. 2 and reads, ‘That the personnel sub-committee’s allocation of 112 personnel this budget proposals for the year ending 31 st March 1999 be year I think in my own view that that goes very close to received and necessary action be taken to give effect the edge of the personnel policy that is endorsed, and we thereto.’ Will those in favour of that resolution please say have to look at the whole situation in the round and it is aye; against, no. The ayes have it. not a pressure to create privatisation, and I hope that is not what may well have perhaps crossed the hon. member of A division was called for and voting resulted as follows: the Council, Mr Lowey’s, mind. That is not on my agenda. If I was in the UK I would probably perhaps lean a bit that In the Keys - way, but in the Isle of Man privatisation issues are far more sensitive and far, far less practical at the end of the day For: Messrs Gilbey, Cannan, Quine, Rodan, North, because all you do is create private monopolies and I do Sir Miles Walker, Mrs Crowe, Messrs Brown, Crowe, not believe in private monopolies. I do believe in Cretney, Duggan, Braidwood, Mrs Cannell, Messrs government control. Shimmin, Downie, Mrs Hannan, Messrs Singer, Bell, What I do hope it causes is a breakdown of barriers Karran, Corkill, Gelling and the Speaker - 22 between departments so that personnel numbers and allocations are more fluid so that we utilise our resource Against: None more efficiently. At the end of the day there is the option for departments to buy in services and hopefully that money The Speaker: Mr President, the motion carries in the is there for them to do that, if that is required. But certainly House with 22 votes being cast for, none against, sir.

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In the Council - (c) That, upon Tynwald approval to such projects being obtained, the Treasury be authorised to For: The Lord Bishop, Messrs Lowey, Waft, Dr Mann, expend during the year ending 31st March Messrs Kniveton, Radcliffe and Mrs Christian - 7 1999, from capital transactions account, sums not exceeding those set out in column 3 of the Against: None capital estimates of government departments and other bodies on pages 8 to 11 o f the Isle of The President: In the Council, hon. members, 7 votes Man Budget, totalling £16,710,540. have been cast in favour of the resolution, no votes against. I declare the resolution carried. (d) That Tynwald sanctions borrowings not exceeding those set out in column 4 of the capital estimates of government departments GENERAL REVENUE AND CAPITAL and other bodies on pages 8 to 11 of the Isle of Man Budget, totalling £36,990,000, being made PAYMENTS 1998-99 — MOTION CARRIED by government, such borrowings to be repaid The President: Item 3, the Minister for the Treasury. within the appropriate period as set out in column 5. Mr Corkill: Mr President, I beg to move: Mr Radcliffe: I beg to second, sir. (1) That the Treasury be authorised to expend during the year ending 31st March 1999 sums not The President: I will put the resolution set out at item exceeding those set out in column 3 of pages 2 to 5 3 on the order paper. Will those in favour please say aye; of the Isle of Man Budget, being the amounts against, no. The ayes have it. The ayes have it. required by the revenue-funded government departments and other bodies after deduction of the receipts of the said government departments and INCOME TAX ACT 1970 — MOTION CARRIED other bodies (estimated at the sums set out opposite their names in column 2) to enable those The President: Item 4, sir, the Minister for the Treasury. departments and other bodies to expend sums not exceeding those set out in column 1 totalling Mr Corkill: Mr President, I beg to move: £413,637,490for the purpose of carrying into effect the services approved by Tynwald. That, in accordance with section 119 of the Income Tax Act 1970, it is hereby resolved - Provided that a department or other body, having the duty’ to administer expenditure out o f moneys (1) That in accordance with section 1(2A) o f the Income provided by Tynwald, may transfer savings on any main heads to meet additional anticipated Tax Act 1970 - expenditure to be incurred on any other main heads of its vote, subject to the conditions set out in (a) the standard rate of income tax shall be 15 per Financial Regulation FD15 - Virements, issued by cent on every pound of taxable income: the Treasury in July 1996. (b) the higher rate o f income tax shall be 20 per (2) (a) That the Treasury be authorised to expend cent on every pound of taxable income. during the year ending 31st March 1999, from capital transactions account, sums not (2) That the income tax payable on every pound of exceeding those set out in column 1 of the taxable income derived by any person not residing capital estimates of government departments in this Island, or any association not registered in and other bodies on pages 8 to 11 o f the Isle of this Island, from any trade, profession, employment Man Budget, totalling £24,971,570 (being or vocation carried on by such person or association expenditure on projects already approved by in this Island and from any other source within this Tynwald). Island, shall be at the rate o f 20 per cent.

(b) That Tynwald approves of the expenditure (3) That the personal allowance - detailed in column 2 o f the capital estimates of government departments and other bodies on (a) in respect of married men under subsection ( 1) pages 8 to 11 of the Isle of Man Budget and of section 35 of that Act shall be £14,140; authorises the Treasury to expend during the year ending 31st March 1999, from capital (b) in respect of individuals under each of transactions account, sums not exceeding those paragraphs (a), (b), (c) and (d) o f subsection set out in column 2, totalling £20,611,650. (3) of that section shall be £7,070;

General Revenue and Capital Payments 1998-99 — Motion Carried Income Tax Act 1970 — Motion Carried T472 TYNWALD COURT, TUESDAY, 17th MARCH 1998

(4) That, in accordance with Section 1(2A) o f that Act, Mr Corkill: Mr President, I beg to move: the threshold fo r the payment of the higher rate of income tax shall be - That the Income Tax (Car Fuel Benefits) Order 1998 be approved. 1. (a) for a single person £9,500; Section 2 of the Income Tax 1970 requires that where (b) for a married person who for that year of in any year, by reason of a person’s employment, fuel is assessment is not living with his or her spouse £9,500; provided for a car which is made available for private use, the employee concerned is deemed to have received an (c) for a married man who for that year of amount of income calculated in accordance with the cash assessment is not living with his wife £9,500; equivalent tables A and B contained within the section. This order revises the existing tables and increases the (d) for a married woman who for that year of cash equivalent figures to take account of changes in the assessment is living with her husband value of fuel and retain parity with the private use figures £9,500; used for value added tax purposes. The revised tables will come into operation on 6th April 2. For the purposes of paragraph 1, a husband and 1998.1 beg to move. wife shall be treated as living together unless -

(a) they are separated under an order of a court Mr Radcliffe: I beg to second. of competent jurisdiction, or by deed of separation; or The President: I will put the resolution, hon. members, set out at item 5 on the order paper. Will those in favour (b) they are in fact separated in such please say aye; against, no. The ayes have it. The ayes circumstances that the separation is likely have it. to be permanent.

3. If the threshold of a married person under paragraph 1(c) or as the case may be 1(d) is not INCOME TAX (BENEFITS IN KIND) exhausted, the threshold of that person’s spouse (EXEMPTIONS) (AMENDMENT) ORDER shall be increased by the unused balance. 1998— APPROVED

4. Any increase under paragraph 3 shall be made The President: Item 6, the Minister for the Treasury. by the Assessor. Mr Corkill: Mr President, I beg to move: (5) That the allowance in respect of registered blind persons under subsection (1) of section 35A of that That the Income Tax (Benefits in Kind) (Exemptions) Act shall be £1,940 and the further deduction under (Amendment) Order 1998 be approved. subsection (2) of that section shall be £1,940. Section 2G of the Income Tax Act 1970 brings into (6) That the additional deduction in respect of single charge to tax any benefits in kind, other than car and car parents under section 39A( 1) of that Act shall be £4,840. fuel benefits, provided by reason of a person’s employment. Subsection 2G(4), however, permits Treasury by order to (7) That this resolution shall have effect in respect of provide for exemptions to the charge. the income tax year commencing on 6th April 1998 This amendment order increases the present exemption and subsequent years. limits from £50 to £100 in respect of the provision of Christmas parties and from £100 to £400 in respect of any Mr Radcliffe: I beg to second. other benefits not otherwise partly or wholly exempted to charge under subsection 2G(4). The President: I will put the resolution, hon. members, The increased exemption limits will apply for the set out at item 4 on the order paper. Will those in favour income tax year commencing 6th April 1998. I beg to please say aye; against, no. The ayes have it. The ayes move, Mr President. have it. Mr Radcliffe: I second, sir.

INCOME TAX (CAR FUEL BENEFITS) ORDER The President: I will put the resolution, hon. members, 1998 — APPROVED set out at item 6 on the order paper. Will those in favour please say aye; against, no. The ayes have it. The ayes The President: Item 5, the Minister for the Treasury. have it.

Income Tax (Car Fuel Benefits) Order 1998 — Approved Income Tax (Benefits in Kind) (Exemptions) (Amendment) Order 1998 — Approved TYNWALD COURT TUESDAY, 17th MARCH 1998 T473

INTERNATIONAL BUSINESS (FEES, ETC.) INCOME TAX (PAYMENTS ON REGULATIONS 1998 — APPROVED RETIREMENT) ORDER 1998 — APPROVED

The President: Item 7, the Minister for the Treasury. The President:Item 9, the Minister for the Treasury.

Mr Corkill: Mr President, I beg to move: Mr Corkill: Mr President, I beg to move:

That the International Business (Fees, etc.) That the Income Tax (Payments on Retirement) Order 1998 be approved. Regulations 1998 be approved. Section 48A of the Income Tax Act 1970 granted tax Section 13 (1) of the International Business Act 1994 relief to a maximum of £20,000 with effect from 6th April grants Treasury the power to make all regulations necessary 1986 in respect of a qualifying termination payment to carry into effect the provisions of the Act, including the received by an employee. The effect of this order is to prescribing of fees and minimum tax charges. increase the maximum permitted deduction to £30,000.1 These regulations revoke regulations 7 and 8 of the beg to move. International Business (General) Regulations 1994 and prescribe an increased fee of £400 for an application by a Mr Radcliffe: I beg to second, Mr President. limited partnership under section 9 of the Act and increase minimum tax charges of £1200, £2,400 and £3,600 for The President: I will put the resolution set out at item international companies making applications under section 9 on the order paper, hon. members. Will those in favour 3. The charges currently applying under the Act to be please say aye; against, no. The ayes have it. The ayes replaced are, in the case of the former, £300 and, in the have it. case of the latter, £300, £600 and £1200. These new charges will apply from 6th April 1998. I beg to move. HYDROCARBON OIL DUTIES (SUPPLEMENTARY REBATE) ORDER Mr Radcliffe: I second, sir. 1998 — APPROVED

The President: I will put the resolution, hon. members, The President: Item 10, the Minister for the Treasury. standing at item 7 on the order paper. Will those in favour please say aye; against, no. The ayes have it. The ayes Mr Corkill: Mr President, I beg to move: have it. That the Hydrocarbon Oil Duties (Supplementary’ Rebate) Order 1998 be approved. INCOME TAX (NURSING EXPENSES) ORDER This order reduces the 1.1 pence per litre rebate on 1998 — APPROVED unleaded petrol to 0.5 pence per litre with effect from tomorrow and removes the 1.1 pence per litre rebate on The President: Item 8, the Minister for the Treasury. diesel in total also from tomorrow. It further provides that the remaining 0.5 pence per litre rebate on unleaded petrol Mr Corkill: Mr President, I beg to move: will be removed in one year’s time, that is, 17th March 1999. That the Income Tax (Nursing Expenses) Order The rebates were introduced in 1990 in respect of 1998 be approved. unleaded petrol and 1991 in respect of diesel, at a time when vehicles using those types of fuel were in a minority, Section 39B of the Income Tax Act 1970 granted tax with a view to encourage the use of more environmentally relief on a maximum of £5,000 in respect of the qualifying acceptable types of fuel. Unleaded petrol was then, and expenses of nursing attendance with effect from 6th April still is now, subject to a lower rate of excise duty than 1998 and nursing home fees with effect from 6th April leaded petrol. 1994. The effect of this order is to increase the maximum Since the introduction of the rebates the situation has permitted deduction to £6,000 per annum with effect from changed through the requirement of all new cars fitted with 6th April 1998.1 beg to move. catalytic convertors to use unleaded petrol, and the wider availability of diesel engined cars, so that unleaded petrol Mr Radcliffe: I second, sir. now accounts for 67 per cent of petrol sales as of December 1997, compared with 24 per cent in 1990, and diesel sales The President: Hon. members, I will put the resolution have risen as a percentage of total road fuels from 14 per standing at item 8 on the order paper. Will those in favour cent in 1990-91 to 27 per cent in December 1997. It can please say aye; against, no. The ayes have it. The ayes be said, therefore, that the rebate on unleaded petrol and have it. diesel has achieved its aim.

International Business (Fees, etc.) Regulations 1998 — Approved Income Tax (Nursing Expenses) Order 1998 — Approved Income Tax (Payments on Retirement) Order 1998 — Approved Hydrocarbon Oil Duties (Supplementary Rebate) Order 1998 — Approved T474 TYNWALD COURT, TUESDAY, 17th MARCH 1998

However, Treasury has also been mindful of the These regulations will increase the fee charged to non­ recommendations contained in the Report of the resident companies from £660 to £750 with effect from Commission of Inquiry into the Prices of Petrol and Diesel 1st June 1998. Fuels which was laid before this hon. Court. The report It is government policy to encourage non-resident included the recommendation that the commission believes business to move to exempt company or international that the rebate on unleaded petrol and diesel was no longer limited partnership status and as such this new fee justified and that Treasury should consider whether the represents a 13.6 per cent increase over the current charge. rebate should be removed. I am conscious, too, of the Further such increases may be anticipated in future years. debate during the budget speech and subsequently in the Taken in account with last year’s increase, this will give debate with regard to the members’ comments. What I an increase in fees of 25 per cent over a two-year period. I would say is that there has been debate as to whether this beg to move, Mr President. has been passed on to the consumer or not, and certainly the information I have is that in fact there is some doubt as Mr Radcliffe: I beg to second, sir. to whether the consumer has benefited from the rebate and therefore that is why this order is before this hon. Court The President: Hon. members, I will put the resolution set out at item 11 on the order paper. Will those in favour today. Therefore I beg to move, Mr President. please say aye; against, no. The ayes have it. The ayes have it. Mr Radcliffe: I beg to second, sir. That, I think, hon. members, might well conclude the business for the day and with your agreement we will now The President: I will put the resolution, hon. members, adjourn and the adjournment will be until 10.30 tomorrow set out at item 10 on the order paper. Will those in favour morning. Thank you, hon. members. please say aye; against, no. The Court adjourned at 7.13 p.m. A division was called for and voting resulted as follows:

In the Keys -

For: Messrs Gilbey, Quine, North, Sir Miles Walker, Mrs Crowe, Messrs Brown, Cretney, Shimmin, Downie, Mrs Hannan, Messrs Bell, Corkill and Gelling -13

Against: Messrs Cannan, Rodan, Duggan, Braidwood, Mrs Cannell, Mr Singer and the Speaker - 7

The Speaker: Mr President, the motion carries in the House with 13 votes being cast for and 7 against, sir.

In the Council -

For: The Lord Bishop, Messrs Lowey, Waft, Dr Mann, Mr Radcliffe and Mrs Christian - 6

Against: Mr Kniveton -1

The President: In the Council, hon. members, 6 votes have been cast in favour of the resolution, 1 vote against. I declare the resolution carried.

NON-RESIDENT COMPANY DUTY (AMENDMENT) REGULATIONS 1998 — APPROVED

The President: Item 11, the Minister for the Treasury.

Mr Corkill: Thank you, Mr President. I beg to move:

That the Non-Resident Company Duty (Amendment) Regulations 1998 be approved.

Non-Resident Company Duty (Amendment) Regulations 1998 — Approved