Wednesday 24 May 2023
General Update
Madam,
To most people's minds the introduction of secondary pensions probably isn't the sexiest project ESS are involved in. But it's certainly one of the most important for the long-term welfare of our island community. Even though I suspect few current members will still be in this Assembly when those benefits are fully recognised.
I'm glad to report that the secondary pensions project is moving forward well, and we're delighted that Alderney has decided it wants to participate fully.
The States' contract with provider Sovereign is expected to be signed within the next couple of months and the Your Island Pension Scheme (or YIP) is due to be launched on 1st January 2024.
At first it will be an entirely voluntary scheme. Then, from July 2024, employers with 26 or more employees will have to auto-enrol their employees into an approved pension scheme - either YIP, or another approved scheme. Those employees will, of course, then have the right to opt out if they wish. Auto-enrolment will then be rolled out to all employers over a 15-month period.
The minimum contribution rates for employees and employers will gradually increase over the next seven years, but the minimum employer contribution will remain very modest compared to the amount that many employers choose to contribute to their workers' occupational pensions. So, it is hoped that many employers will choose to pay in more than just the required minimum to enhance the employment package they offer, in order to attract and retain staff.
One law which is due to come into operation even earlier than secondary pensions is the Prevention of Discrimination Ordinance which goes live on 1st October 2023. This too is making steady progress. ESS will soon be submitting a policy letter proposing the appointment of the first Director of the Employment and Equal Opportunities Service.
Since last autumn, a great deal of training has been offered to allow all employers, service providers, and others affected by the new law to fully understand it. Anybody still wanting to take advantage of the free training on offer can access it at www.consortium.gg under the training tab. There are five courses and the recording is available at the bottom of the respective page for each course. We are looking at trying to arrange some extra in-person sessions in September.
One live issue at the moment is the revision of Guernsey's minimum wage. In keeping with the States direction to move the minimum wage to 60% of median earnings - based on a 40-hour working week - ESS is currently consulting on a proposal to increase the minimum wage from £9.55 per hour to £10.65 per hour.
Subject to the results of that consultation, we plan to ask the States to implement such an increase from 1st October 2023. The States meeting we're targeting for debate of that Policy Letter is the early July meeting.
This will leave just one more year of the States medium-term plan on the minimum wage to be implemented, so next summer we may well be asking the States what, if anything, it wants to do next.
The Affordable Housing Development Programme (or AHDP) is always a top priority for ESS and it's been a source of deep frustration that a lacuna in available sites led to the AHDP slowing right down over the past few years. It must now become supercharged.
To do that, we are going to need a lot more money.
The current allocation of £36.2m, agreed in 2021, will enable us to deliver around 415 homes. This falls far short of being sufficient to deliver even the old targets for the number of new affordable homes. This is mostly due to building inflation, which members don't need me to tell them about.
On top of that, the States recently set a new Affordable Housing Indicator, which identified that, if the projected housing needs within the social rental and partial ownership tenures over the next five years are to be met, an additional 721 units of accommodation, for these two tenures alone, must be delivered. Once you factor in urgently needed key worker housing and specialised accommodation needs as well, the number of homes we need to build is close to one thousand.
Heaven knows if we can even grow the capacity of the local construction industry sufficiently to deliver that. Or if we can find sufficient sites to build on. But one thing is certain; without a lot more capital funding, we stand absolutely no chance at all.
Without that additional allocation we will not only fail, but fail badly, delivering only 40% of what the Island needs over the next five years. That would be tragic, not only for the issue of housing, but for just about every other priority facing this assembly. Because Guernsey's current lack of affordable housing is a major aggravating factor in nearly every challenge the States needs to address.
So, it is not just a question of a crude decision between hospitals and schools that members will have to address in July. The AHDP is just as crucial, if not more so, as it underpins government's ability to deliver its critical services.
How much more money does it need to deliver on the agreed targets? Probably round about £45M to £50M. The good news is that we don't need it right now. We have sufficient funds allocated for the seven developments that we have prioritised to be carried out over the next couple of years.
But it is absolutely crucial that we know that more capital is coming. Unless this happens, we will not be able to commit any funding to things like buying new sites, or paying for architects' plans, for medium-term pipeline developments.
Such expenditure would be reckless if we didn't know whether such projects could ever be brought to fruition. So, unless a medium- to long-term funding programme is agreed there is a real risk that the AHDP could become briefly very active, only to then sink back into a semi-dormant state. That would be a complete disaster for Guernsey, its community, and its economy.
I will now focus briefly on some of the projects which will be going forward soon within the existing funding.
Firstly, the former C.I. Tyres site, now renamed Domaine des Moulins in recognition of the area's historic use. The site was bought to deliver much needed key worker housing, not too far from the hospital, and its initial attraction was the speed at which this could be delivered, because it already had planning permission for a residential development.
However, while ESS is chomping at the bit to deliver this site, and many others, as quickly as possible, it was important to take a step back and consider whether it was possible to increase the density of units to maximise the development potential of the site.
This was supported, and encouraged, by colleagues on the DPA. And while a planning application will need to be submitted and considered formally, early indications are that a larger scheme will be agreed.
We're now looking at delivering around 54 units on the site, more than double what the original plans would have provided. We believe that this outweighs the impact of the delay of around 12 months in delivering the completed scheme.
ESS understands the importance of delivering key worker housing urgently. With our development partner, the Guernsey Housing Association, we are also pursuing another site that will be perfect for key workers, and I hope to be able to say more on this very soon.
Another key scheme is La Vieille Plage, a small development of 14 units of specialised housing for adults with learning disabilities. The capital grant requirements for this scheme have increased substantially since the original business case was prepared, due to build cost inflation, but it is hoped that work can start on this site in the next few months.
It's very important to ESS that we recognise the needs of all Islanders, and ensure we deliver new homes across all affordable housing tenures, so we're delighted building work on this project will be underway soon.
Finally, I wanted to mention Fontaine Vinery and Parc Le Lacheur, two of our largest sites that are prioritised for development as soon as possible. Members may be aware that the consideration of planning applications in respect of these sites at Open Planning Meetings has been delayed.
This is to ensure that the tenure mix and design of the site are reconsidered following the States decision to set a net migration target of +300 which fed into the SSHI figures, and the impact of build cost inflation reducing the number of large mixed tenure sites that can be delivered within the current capital allocation. I cannot stress enough how critical it is that we get this right and ensure that the North of the Island remains a pleasant place to live.
I also want to reassure members that this short planning delay won't impact on when building work will start on the two sites. This is because they are both planned to start in
Quarter 1 2025. This aligns these large building projects with construction industry capacity alongside the States other planned large building projects.
While on the subject of housing, members will be aware that P&R and ESS have agreed that stock transfer of States-owned social housing to the GHA will not go ahead. This is because P&R deemed the capital gain to the States insufficient to compensate for the loss of rent roll.
ESS can fully understand that, but it does leave one elephant in the room. The firm that carried out the valuation of our stock reported that it was generally well maintained but that much of it was of an age where things like its thermal insulation was very much in need of upgrading.
This came as no surprise to ESS. We had hoped that such work could be expedited through stock transfer. Now we will have to find another way forward as we are sure no one in this Assembly would want us to neglect our duty as a good landlord.
So, we will be bringing a policy letter to the States addressing this matter before too long, but it is bound to involve retaining more of the rent roll for a number of years, in order to invest in the stock.
Before leaving this subject, I would just observe that the last year or two has been a very unsettling time for our superb teams in the tenancy and property sections and the key worker accommodation service. They have maintained their usual professionalism throughout and I thank them for their tireless service in what can be quite fraught departments during the current housing crisis.
Moving on, ESS is fully engaged in the multi committee SLAWS investigation into how to both provide and fund the growing amount of social care needed in an ageing population. Good progress is being made but it is inevitable that the choices the States will be presented with will not be either easy or popular ones.
Members will know that ESS are leading on the Supporting Occupational Health & Wellbeing Programme (SOHWELL) and will be fully aware of the significant challenges for Guernsey and Alderney in maintaining and growing a healthy and sustainable workforce for the future.
We know incapacity related absence is expensive and can be detrimental to a person's wellbeing. Only recently, it's been reported in the UK news there are record numbers of people who are not working due to ill health.
Thankfully, our numbers are nothing like those in the UK, but in the current environment, it's even more important that we continue to focus on this key area to help prevent people falling out of the workplace and, where appropriate, to provide the support that gets them back into work and increases our own participation rates.
This isn't an ESS standalone project. We're conscious of how the SOHWELL Programme also fits alongside other Government priorities, and Members will be pleased to learn that we're actively engaging with colleagues across HSC, P&R and ED to ensure that the programme is properly aligned to other key strategies.
I hate to remind members, but we didn't really agree on a tax strategy in February.
However, ESS was greatly encouraged that there seemed to be universal support for moving to a reformed and fairer system of social security contributions.
As a result, we are going to be bringing forward proposals on this matter - quite possibly as part of the October uprating report.
ESS is completely committed to the work on ensuring we maximise the economic participation of our existing population. We look forward to working closely with P&R on this matter as it is vital to Guernsey's economic prospects.
Finally, we have commissioned a full review of Guernsey's Legal Aid System. Indeed, this is the first such review since the current system was first set up, and is due to commence very shortly.
I have only been able to touch on a few aspects on ESS's massive mandate in this statement, but of course I greatly look forward to fielding questions on whatever aspect of our mandate may be of interest to members.
