Wednesday 27 November 2019
General Update
Sir, in the unavoidable absence of the Committee President, Deputy Michelle Le Clerc, I'm pleased to provide the update on the activities of the Committee for Employment & Social Security.
I would first like to summarise the Committee's financial position on its General Revenue account and on the Contributory Funds.
Based on 3rd quarter financial information, the indications are that we will finish the year within budget on our £88m General Revenue account. If that proves to be the case, it will be very satisfactory, particularly as this is the first full year of the income support scheme, around which there was bound to be some uncertainty with the initial budget forecasts.
On the Guernsey Insurance Fund, financed mostly by contributions, we are expecting full-year expenditure of £156m, which is £1.5m over budget. The additional expenditure is mostly in the areas of pensions, sickness and incapacity. This extra expenditure will increase the operating deficit, before investment income, to £25m for the year. Members of the States may recall that a drawdown from reserves down to a minimum buffer of two years' annual expenditure is a planned strategy for the Fund. But we do need to keep a close watch on the rate of depletion and on any variances from projections due to changing circumstances.
On the Guernsey Health Service Fund, now financed wholly from contributions, we are expecting full year expenditure of £45.5m, which is £1.4m over budget. The additional expenditure is being driven mostly by drug costs. There is an increase in the number of prescriptions as well as the cost of the drugs themselves. This will increase the operating deficit, before investment income, to £3.3m for the year.
It's better news on the Long-term Care Insurance Fund, financed wholly from contributions, where we're expecting full year expenditure of £20.8m, which is just under budget. Largely due to the extra 0.5% that was put on contribution rates from 2017, as an early provision for future pressures to come, the fund is currently running an operating surplus, which is expected to be £8.1m this year, before investment income.
That concludes my summary of the finances.
In the course of the States meetings in October and November, the States have debated and approved the annual benefit uprating reports for contributory and non-contributory benefits. Those reports and the debates covered much of our business as usual, which I think it would be unnecessary to repeat in this statement.
Instead, I'll concentrate this statement on the 3 top priorities for Employment & Social Security for completion before next year's election. These are:
- firstly, the Discrimination Legislation Proposals
- secondly, the detailed proposals for Secondary Pensions, and
- thirdly, the necessary reporting back to the States on the funding of long-term care, as part of the Supported Living and Aging Well Strategy
The Committee is devoting a huge amount of time to progressing the discrimination legislation proposals. We're meeting on average weekly or more frequently to review and make decisions on extensive detailed reports and expert advice. As reported by Deputy Le Clerc during the budget debate, and a subsequent media release, the size of the response that we received to our consultation exercise, and the polarised views that have become so evident, have caused the Committee to rethink the scope of the discrimination proposals, as well as the detail.
Without question, our refocus has to be primarily on disability discrimination proposals. That is what the States first resolved in 2013 and what the States further endorsed in 2015 under the stewardship of the Policy Council. With the Committee restructures, the baton was passed to Employment & Social Security from 2016, and we have run with it throughout this political term. We're determined to deliver proposals to the States on disability discrimination before the election next year. We are hearing some calls for us to slow down and get it right, rather than be driven by the closure of the political term. But we know we can get it right in the time available and that any further handing over of the baton would risk substantial delay as a new Committee familiarised itself with the material and inevitably retraced steps over very well-trodden ground.
We do recognise that we have to refine our definition of disability, and we're working very actively on that. Many people, but in particular the business lobby, don't like the definition that we consulted on, saying that it's far too open ended. Taking account of the consultation, we're confident that we can return with a definition of disability which will find more support. But we can be sure that it, too, will have critics. Among the many things that we have learned in this exercise is that there are very few issues on which even the experts agree. We are going to need the support of this outgoing assembly in order to deliver on the States long overdue commitment to people with disabilities and their families.
As said, our focus will be on disability discrimination legislation and carers of people with disabilities, but if time allows we will also include proposals for protection of other grounds, currently race, religious belief and sexual orientation.
I turn now to our second priority for completion, and that is secondary pensions. Members may recall that the last Assembly gave overwhelming support to an outline proposal for a system of second pillar pensions akin to the automatic enrolment system that applies in the UK. This means that, subject to various conditions, an employer will have to enrol employees into an approved pension scheme. The pension scheme may be the employer's own scheme, if it meets the necessary standards, or it may be a default scheme initially arranged by the States but governed and administered at arm's length. The Committee has made very good progress with this work and has a Policy Letter ready for submission for the February meeting of the States. The Committee just needs to finalise a very brief accompanying Policy Letter addressing the uprating policy for the first pillar, the basic States pension.
And thirdly, there's the work that we have been doing on addressing some of the financing issues within the Supported Living and Aging Well Strategy. This concerns the re-examination of the grants from the long-term care fund, the amounts paid by the people in care from their own funds and the rates of contributions necessary to keep the scheme financially sustainable.
The Committee has found the development of proposals in this area very challenging.
In addition to keeping the scheme sustainable, the financial support system needs to ensure the continuing viability of care homes in the private and third sector. Two residential homes have closed in the past year. The closures caused considerable problems for Health & Social Care in assisting the residents to find alternative accommodation in a sector of reduced size and nearly fully occupied.
Again, it is important that the Committee reports back to the States before the election with its findings and recommendations. The Committee recognises that the care home owners and trustees are currently in a position of great uncertainty, pending the Committee's report and its subsequent consideration by the States.
The 3 priorities that I have mentioned are by no means the only matters on the Committee's agenda, but they are the most urgent.
