Billet Blog: 12 October 2016


Billet Blog: 12 October 2016

The October States Meeting will be dominated by the Island Development Plan – which I have blogged about separately here. There are a few other items of business, which I have covered briefly below.

Billet d’Etat XXV – 12 October 2016 (read it online here)

Part One: Elections and Appointments

Part Two: Legislation Laid Before the States

The items in this section are statutory instruments (orders and regulations) which are agreed and put into action by individual Committees of the States, in line with their powers and duties. The States do not have to approve these (they are in force from the moment the relevant Committee decides) but we do have the power to annul a statutory instrument if we don’t agree with it. This would be quite an unusual move. There won’t be any debate about these items unless there is a motion to annul one of them.

This month there are two regulations made by the Committee for Economic Development under the Companies (Guernsey) Law, 2008, which permit up to 100% of a company’s issued shares to be held as treasury shares and which allow the share(s) held by people outside the company to be redeemable.

Part Three: Propositions

Item 3.1 – The Social Insurance (Guernsey) Law (Amendment) Ordinance, 2016 (link) Responsible Committee: Employment and Social Security

In February 2016, the States finally agreed to introduce an up-to-date set of benefits for the parents of newborn or newly-adopted children.

Under the current system, benefits are only available to the mother of a newborn child. Recognising that a father may equally be the main care-giver of his child, the new system allows the benefit (to be known as “newborn care allowance” rather than “maternity allowance”) to be awarded to either parent, or shared between both for back-to-back periods of time. There is still a mandatory two-week period after the birth of the child where the benefit can only be paid to the mother, as it was felt she would require at least a minimum period to recuperate from the birth. The benefit paid during this period will be known as the “maternal health allowance”. The two benefits will be payable for a combined total of up to 26 weeks (whether to one parent, or split between both).

Parents who have adopted a child will be entitled to a “parental allowance” on exactly the same basis – that is, for a period of up to 26 weeks, which can be split between both parents if desired. Until this is introduced, there is no financial support in place for adoptive parents who choose to take time off work at the time of adoption in order to bond with and look after their child.

These allowances are contributory benefits – that is, income-replacement benefits, payable while a person is not in work, on the basis of their contribution record to date. There are also non-contributory benefits – “maternity / adoption grants” – which are one-off payments at the birth or adoption of a child, in recognition of the costs all families face when they are joined by a new addition, and are paid regardless of the parents’ contribution record.

This amendment to the Social Insurance (Guernsey) Law, 1978 will implement the decisions of the States with effect from 1 January 2017. It includes transition provisions for mothers whose babies are born on or around the start of the new year, where it might be unclear which benefit rules apply. It also makes minor amendments to the Law to permit information sharing between different parts of the Committee for Employment and Social Security when an employer is suspected of breaching the Minimum Wage Law, in keeping with an earlier resolution.

This is part of a welcome set of developments in Guernsey’s support for new parents, including the introduction of 12-26 weeks of statutory maternity or adoption leave (albeit unpaid) for employees who have children. These help to create a community which values families and recognises them as the place where children are best nurtured and raised, in the spirit of our Children and Young People’s Plan. The more balanced provisions of the new benefits, in relation to gender, help to bring Guernsey closer to compliance with the Convention for the Elimination of all forms of Discrimination Against Women (CEDAW), while also benefiting men, who will at last have access to financial support if they, as fathers, are the primary care-giver for their newborn or newly-adopted child; and adoptive parents, who will be recognised on equal terms by the benefit system for the first time.

Item 3.2 – The Income Tax (Guernsey) (Employees Tax Instalment Scheme) (Amendment) Regulations, 2016 (link) Responsible Committee: Policy and Resources

Last year, the States agreed that communication between the Director of Income Tax and any employers, in respect of the Employees Tax Instalment (ETI) Scheme, should take place electronically unless otherwise agreed. These Regulations put that decision into effect. An amendment has been laid by the President and Vice-President of P&R, because the proposition in the policy letter mistakenly described the changes as a Projet de Loi – which would require a much more cumbersome approval process! – when they are in fact only Regulations, which should be straightforward to approve.

Item 3.3 – The Island Development Plan – Development & Planning Authority Recommendations (link) Responsible Committee: Development and Planning Authority

The Island Development Plan is a huge and complex document, against which a considerable number of amendments have been laid. I have blogged on it separately at this link.

Item 3.4 – Revision of the Double Taxation Arrangement with the United Kingdom (link) Responsible Committee: Policy and Resources

Guernsey and the UK have had a Double Taxation Agreement in place for over sixty years, to guard against double taxation and tax evasion across the two jurisdictions. This policy letter makes a small amendment to the Agreement, in relation to tax on income which arises from immovable property owned in one place by a resident of the other. The change was agreed by representatives of the States and the UK government earlier in 2016, and this would confirm it in law. The policy letter also alerts us to the fact that a wider review of the Double Taxation Agreement will take place over the coming months or years – no doubt, this is an issue that the States will revisit in due course.

Item 3.5 – Amendments to Statutory Minimum Wage Arrangements to come into force on 1 January 2017 (link) Responsible Committee: Employment and Social Security

Every year, the States is asked to approve the level of the hourly Minimum Wage for the year ahead. These proposals would increase the adult Minimum Wage (for people aged 18 and over) to £7.20 per hour, from £6.85. The young person’s Minimum Wage would increase to £6.50 per hour, from £6.10.

For an adult working a 40-hour week, the Minimum Wage would amount to £288 a week, or £14,976 a year – less than 50% of median earnings. At £7.20 an hour, it would match the current adult rate in the UK – a position which is still less than competitive, given our generally higher costs of living. It is likely that the majority of people earning Minimum Wage would be entitled to claim Supplementary Benefit, especially if they have any dependent children – meaning that the taxpayer funds the gap between wages and the basic cost of living.

The States has agreed in principle that the gap between the young person’s Minimum Wage and the adult Minimum Wage should be closed over time. While this update only shrinks the gap by 5p, from 75p to 70p, the Committee has accepted the need to equalise the two rates as soon as possible. (In my view, this will become even more relevant as the workforce ages – a rate which allows younger workers to undercut their older counterparts can’t really be said to encourage longer working lives.)

The policy letter also notes that the Committee has increased the maximum offsets to £95 a week for food and accommodation (was £92), or £66 a week for accommodation only (was £64). These offsets are the amount an employer can deduct from an employee’s wage if they provide food or housing, under certain conditions. For an adult working 40 hours on minimum wage, the maximum food & accommodation offset has effectively increased from £2.30 to £2.38 per hour – meaning their take-home pay, if the new rate is approved, will have gone from £4.55 to £4.82 an hour.

Unlike the Minimum Wage rate itself, the offsets do not need to be approved by the States. The whole set-up is pretty odd – the States have the right to accept or reject the proposed Minimum Wage rate, but do not have the power to propose an alternative. The Committee has accepted that this is not a sensible way to do things, and intends to bring forward a policy letter to change the Law, and give the States more power, as soon as it can.

Part Four: Appendix Reports

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