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Deputy Gavin St Pier asks us all to "spare a thought for the Helyar family" after what may have been an uncomfortable Christmas with the differing views on GST around their family dinner table.
In his own words, Deputy St Pier explains:
"Spare a thought for the Helyar family. One can imagine that conversation over the Christmas table might not have been entirely comfortable.
On one side, the matriarch, Connie Helyar-Wilkinson, former jurat, founder and director of the political lobby group, Guernsey Policy & Economic Group (Gpeg) forcefully arguing that Gpeg’s cause (“seeking opportunity for all”) means that a goods and services tax (GST) should never be levied on the Christmas goose.
On the other, the dauphin, Mark Helyar, treasury lead for the Policy & Resources Committee, founder, former chair and leader of the Guernsey Party, explaining why his one-time party’s unequivocal 2020 election “no GST” manifesto commitment needed to be shredded, and why levying 5% on 2025’s Brussel sprouts really is the best option for the community.
Pictured: Deputy Mark Helyar was against GST, until he saw the books and now he's for it.
If Mark wanted to score a point, he might have noted that Gpeg’s own position was pretty confused. One founder and director Susie Crowder had Tweeted “if GST is one of the solutions” then exemptions would be needed. Gpeg’s Chairman, Lord Digby Jones, wrote in this newspaper that if “you want to diminish the long-term chances of Guernsey competing in the world’s race for success, just introduce GST.” Connie might have retorted that Mark had used almost identical language in his personal manifesto when he said, “I believe if we start down the path to higher taxation we will see business opportunity reduce and costs rise in all areas.”
To be honest, for their sake, I hope this imaginary argument, if it ever happened, will have stopped there. Mark could have used all his training as an advocate to dissect the contents of Gpeg’s paper, ‘Guernsey Taxation – the way forward.’ It has a chatty style, is short on evidence, analysis and full sentences, but long on rhetoric, exclamation marks and ellipses… It invents something it calls “Crunch Day,” and references a lot of can kicking. It slides to the strangely personal: “Would you rather your wallet was under your control or spent as directed by Mr Ferbrache or Mr Roffey?” It culminates in a slightly odd rallying cry that “we should not be selling the fire extinguishers!” But the paper as a whole does little to build the group’s reputation as a credible policy think tank.
The starting point for every Gpeg commentary is an accounting deficit on the public sector pension fund – with which it has an apparent obsession. This deficit is a big number which produces shocking headlines every year, but that big number is something of an accounting accident. It materialises when a rigid set of accounting standards are applied. These standards are useful in comparing big publicly quoted companies to each other but are not remotely relevant to a government, like the States of Guernsey. The more relevant valuation is that prepared every three years by actuaries. This looks at the actual experience of the pension fund, in particular the fund’s investment performance and how long pensioners receive a pension before they die. The last actuarial valuation published in June 2022, showed the scheme was 107.7% funded as at 31st December 2020. In other words, the fund was in surplus, not deficit, to the tune of £115.2m. Gpeg are either unaware of this or they have ignored it entirely, but the actuarial valuation seriously undermines their case: their entire paper is premised on a structural deficit which includes a thumping £50m a year to fund this imaginary pension deficit.
Another component of Gpeg’s miscalculated structural deficit of £220m a year is £60m a year to transfer into the States’ Core Investment Reserve (the old ‘rainy day fund’) to ensure it equates to 100% of annual States’ spending. This is not (and never has been) States policy, and for good reason: it is not remotely common practice. Only a handful of jurisdictions in the world, which have benefitted from years of oil and gas tax revenues, can afford to have reserves at that level. Guernsey’s policy has only ever been to transfer funds into the reserve if and when budget surpluses are generated. To be fair to Gpeg, having creatively imagined this £60m a year part of their structural deficit calculation, they magically solve the non-existent problem by recommending that the abandonment of a non-existent policy.
The biggest weakness of Gpeg’s paper is that there isn’t a single recommendation on taxation. There is a hint, but little more, that the group likes the look of Estonia’s tax regime. The advice is generic and boils down to the States need to deal with the issues sooner rather than later, that savings should be found, capital expenditure should be reviewed, and projects should only go ahead if essential. Perhaps inevitably, there is also a suggestion that smaller government should do less. All this is offered without any specific policy suggestions, which is curious for a group with ‘policy’ in its name.
In fact, it’s hard to discern how Gpeg’s paper has offered anything at all to the debate on taxation – a conclusion that will not of course be welcomed either by Gpeg or those who fund its work. It created a sensational but factually flawed headline that a structural deficit of £220m exists, which – together with its glaring absence of practical solutions to the real-life structural deficit – helps no one, least of all policy makers who need to make some decisions at the end of the month."
