BREAKFAST CHAT – Why Guernsey needs to court, rather than exploit, wealthier individuals

Below is the latest in our series of talking point pieces under the heading of “Breakfast Chat”, intended to provoke thought and discussion.

 

Why Guernsey needs to court, rather than exploit, wealthier individuals.

 

The States of Guernsey Medium Term Financial Plan 2017 made an estimate of capital expenditure needs for the following four years, and proposed raising some £14M of these by “targeted tax measures”.  A continual emphasis in the Plan is that of “those who can afford to pay more, paying more.” Unfortunately, of course, this phrase carries a built-in judgement which means all things to all men. Everyone tends to subscribe quickly to the stated principle without really translating it into actual measures, because not to agree automatically with it risks looking selfish, cold or greedy – and anyway, people also instinctively feel that those who can “afford to pay more” are simply those who are wealthier than they are themselves. However, the tide underlying this philosophy can lead to a dangerous apparent targeting of, and antipathy towards, the very individuals whom Guernsey ought to be encouraging to come or stay here, and to contribute to the island’s prosperity and well-being.

 

It is not suggested that the general concept of “those who can afford more should pay more” needs to be abandoned, but it does need to be applied with caution. Those who can afford to pay more in fact already pay more in general taxation terms, because the flat rate percentage tax imposed across earnings means that they inevitably pay “more”. Once you follow a policy of distorting this basic effect further, by resort to an increasingly “progressive” approach of imposing a higher proportionate burden on “those who can afford to pay more” as individuals, you risk at least three disadvantageous consequences. These risks therefore need to be balanced against any real gain, as contrasted with an illusory one or simply ideological gratification.

 

First, by pressing this concept too far, you create ever increasing resentment amongst the better off. Most of the more affluent members of society will in fact accept that they can reasonably be expected to pay relatively more than others to some degree towards the common need and good, because the proportionately greater money which is taken from them is money which they would use for luxuries rather than the basic necessities of life. However, most of them will also feel that they have come to be “able to pay more” because they have made energetic or prudent use of their talents, opportunities and resources, and that their fortune is not the product of unmerited good luck, but of care, astuteness, hard work, and risk-taking. They will feel that it is therefore unjust to deprive them very greatly of the ability they have created for themselves, to enjoy life with a high quality of assets and experiences, and an improving standard of living, to the full. Like everyone, they only have one life and they too have a right to be able to make the most of it. They will accept an imposition against this to some extent if it is not too great, and there are compensating advantages such as feeling good or gaining respect, but there will come a point at which their goodwill evaporates.

 

Second – and very importantly leading on from this – at the higher end of the spectrum of “those who can afford to pay more”, are persons who are very mobile. They can vote with their feet. They do not have to base themselves in Guernsey; they choose to do so – and the balance of pros and cons affecting their decision to come or to remain will be under constant review. Despite any vague establishment aspirations to make Guernsey one of the “happiest and healthiest places in the world to live”, living in Guernsey has significant practical disadvantages compared with other places. Travel access is often difficult and unreliable, and is famously expensive. The island is small with consequent limitations on experiences. The cost of housing, at all levels, is breathtakingly high. The cost of living is is also high, being on a par with that of Central London but without the access to London’s facilities and entertainments. Most food is imported, making it both expensive (even absent VAT or GST), and less fresh in quality. It is very difficult to get things done promptly and affordably. Therefore, to induce the better off to come and give their support to the island’s economy, it is necessary to make them feel that there are advantages which more than compensate for these downsides.

 

Third, repetition of the mantra that “those who can afford to pay more should pay more” simply encourages law-makers to press this approach, because they see it as a good, popular way to garner votes from those who see themselves as amongst the less able to pay – whose number is, naturally, far greater in vote terms than the wealthier end of the spectrum. The vital point here, though, is that the actual financial gain to be made for the States coffers from from heaping progressive taxation obligations on to individuals who are perceived to be able to “afford to pay more” does not, in practice, bring in a significant amount of revenue, and almost certainly insufficient to have any discernible effect in reducing the necessary burden of tax on others at middle or lower income levels. Its real point then just becomes that of appeasing the less well off by penalising the better off. That is an unworthy approach and should not be allowed to drive policy decisions on progressive taxation.

 

Guernsey in fact needs to cherish and encourage the presence of high net worth individuals on the island. Because such persons are looking for support, in both business and domestic matters, they create jobs – although it does seem that, as many indigenous islanders regard these as unduly menial and Guernsey has enviably full employment, such jobs often go to incomers from the Latvian or Madeiran communities. The more affluent impose less of a burden on States resources because they have private resources which they find it more convenient to resort to, even though at greater cost to themselves. Where they feel welcome, they will use their own resources voluntarily in charitable and other beneficial works for the community. Their contribution to the good of the island is largely underestimated and is ignored by those who see them only in the abstract stereotype of “rich toffs”, or on an “us and them” basis. Facts and figures showing this underestimated contribution were demonstrated last year by the survey carried out by the Open Market Forum, which set out to improve the “image” of the Open Market, following justifiable anger that their property rights and interests had been ignored and overridden by the States when amending the Housing Laws.

 

Guernsey really cannot afford to alienate either the Open Market community, or the more affluent local market community, by making them feel that they are seen simply as a milch cow by politicians with a socialist agenda.

 

An example of this last, mean-spirited attitude has already been implemented by the States in the disgraceful “rolled up” proposal to make rates of TRP on residential properties (ie people’s homes) more “progressive”. The proposal was to impose increased “progressive” rates of TRP in bands, rising according to the increased floor size of the property, but it was claimed that it was “too complicated” to introduce the entire hierarchy of these rising band rates at one time. So in a particularly nasty move, it was enacted, not merely to increase TRP rates generally, but in the same provision, to impose what was ultimately to be the very highest band rate, payable only on the largest properties, alone and in full at the very outset, thereby raising TRP on such properties by an eye-watering 76%. The proposed lower tiers of increased rates for less large properties were to be deferred.

 

It may well have been appropriate to increase TRP rates generally because of inflation. There may also be an argument for progressive rates of TRP for larger properties, – although once again, those individuals who inhabit larger properties are inevitably “paying more” even though their consumption of public services is no greater, and very often less, than those who inhabit smaller properties. But the appropriate approach would have been to bring in the higher bands gradually from the lower levels upwards, over successive years, rather than just to “soak” the theoretically better off at one fell swoop, achieving very little financial gain, just because it was easy to do so, and would doubtless help appease the complaints from the majority of the populace facing a general increase in rates of TRP.

 

The message this discrimination sends to better off individuals is that their assets and wealth are the subject of envy, and that the States will take advantage of any opportunity to try to extract more money out of them, and make them pay extra for their good fortune. Such an attitude will deter from our island just the kind of individuals whom we should be seeking to encourage to join us, and to contribute – by investment, energy, goodwill, job creation and voluntary contributions, – to our society and its prosperity.

 

At present, one of the attractions of Guernsey to the well off is that it still appears to believe that an individual’s money is, in principle, his own to do what he likes with, and government should take in taxation only that which is required to ensure the security of the population, to provide necessary infrastructure and services as required by all, to support those who, through no fault of their own (the young, the old, the infirm, the temporarily jobless) need financial support from the community in general, and otherwise to facilitate individual enterprise and responsibility. It has not yet fallen into the mind-set that an individual’s money really belongs to society at large, and government is entitled to decide how much it will graciously allow the individual to spend on himself. Guernsey needs the well-off and it must think of means to attract them – although this of course extends beyond the purely financial, to matters such as a high quality education system, attractive environment and general quality of life. Guernsey cannot, however, afford to appear to have a socialist agenda.

 

Bemused of Torteval

© 2019 The 2020 Association

BREAKFAST CHAT – A medical consultant’s thoughts on the Guernsey health system

Below is the latest in our series of talking point pieces under the heading of “Breakfast Chat”, intended to provoke thought and discussion.

A medical consultant’s thoughts on the Guernsey health system

First some history. Forty years ago in Guernsey, primary and secondary healthcare (ie general practitioners and specialists) were combined in several private medical practices. This was perhaps an unusual solution, in view of the size and remoteness of Guernsey.

 

It was an entirely private system funded by the patients themselves, often through various health insurances such as Oddfellows, and Foresters, and the more usual commercial insurers, such as BUPA. The States of Guernsey helped those on social benefits.

 

All private practising doctors covered the emergencies at the Hospital by a rota system through what was then called the Receiving Room – which went on to be called “A and E”.  

 

That system made life very varied  and interesting for practitioners and it worked well. It was also relatively cheap to run, with sharing of costs and overheads. Patients were also seen much more quickly, because referrals were within the same structure. The only real difficulty with this model was the expense of major surgical procedures for people who chose not to take out insurance (or were unable to do so and yet not on incomes low enough to entitle them to states benefits). They were in a minority, though, and of course could make arrangements with their practice to pay the bill over time, or the bill would sometimes be waived, and thus the losses were shared.

 

In the early 1990s, the States then effectively intervened and insisted that specialists and GPs should separate, and that the specialists should form their own private practice. They said that their aim was to provide a “more balanced” service. They were also concerned to limit the number of consultants who could practise.

 

The Medical Specialist Group was therefore formed, in effect, at the behest and the insistence of the States, with the agreement (although reluctantly in some instances) of the specialists of each practice. The States did not, however, provide land or accommodation for the new specialist group, and the doctors themselves, therefore built the specially designed MSG building.

 

Approximately two years after the MSG was formed, the States resolved to introduce a compulsory insurance scheme for secondary care.  However, they were unable to find a reasonably priced, inclusive, insurance company provider and so they chose to fund the system themselves, as they have been doing ever since.

 

This was arguably a mistake; the Board of Health lost the chance of a better system when they concentrated only on secondary care, and making that free at source.   

 

A contract was concluded between the Board of Health and the MSG, renewable at regular intervals with reviews on performance criteria as to waiting times for appointments/operations etc. However, within the contract there was no consideration given to criteria to monitor the clinical outcomes of this system. This seemed strange. However, this contract has soldiered on over the years. It is now past its sell-by date and there needs to be a total review of both primary and secondary care systems.  

 

Primary care has been largely ignored by politicians to date, and the GPs have been able to develop their practices, largely without any States involvement. The current contribution made by the States to each patient consultation fee is now wholly unrelated to the actual cost, so that the actual patient contribution is way above that of the States contribution.

 

The initial MSG contract put extreme pressure on the consultants to see new patients speedily and within set time frames. However the GPs did not act as efficient gatekeepers, and there was no real incentive to them to do so.It was probably easier for them to pass patients over to a specialist, even though their treatment was well within the GPs’ own capabilities. The GPs were no doubt also under pressure from the patients themselves to be referred to specialists, as that was entirely free to the patient. The actual referral rates were therefore extremely high, compared to other systems like the NHS. This also, would tend to lead to some GPs becoming de-skilled in the management of conditions that would, historically, have been managed by them – as they were and have continued to be in the UK.  

 

The time is long past to get to grips with the entire system of primary and secondary care.  

 

The States of Guernsey, through the Board of Health, gradually became increasingly directive of the MSG, and this has gradually eroded the consultants’ incomes. This has led to the extraordinary situation under which primary care doctors, remaining entirely private, have been left alone to charge what fees they want, whilst consultants have been subject to constraints. It is believed that the result has been that GPs now earn significantly more than consultants.

 

The States appears to have been trying to develop a system which resembles the NHS. This is sad and misguided, as the NHS system itself has real problems, and is deeply flawed. There is a common pattern in Guernsey, to follow many years behind trends in the UK, but then to ignore the flaws which have come to light through experience, and blindly just decide to follow in the UK’s footsteps. The way in which the education system has been changed is yet another example of the States failing to take into account the outcomes and demonstrated problems of systems tried by others, and from which they have the opportunity to learn.

 

Sadly, and in the same vein, there has been a vast increase in the number of administrators in the health system in Guernsey over last 40 years, with all the attendant bureaucracy, resulting in decision-making being slow and unwieldy. Members of the medical profession who were dealing with States officials came to spend an inordinate amount of time in committees, discussing the same thing month after month, without leadership or effectiveness from the Department of Health. One example is that specialist obstetricians tried to discuss the problems which they saw in the midwifery service with States officials, but were firmly reminded that this was not their business, as the system was run by the civil servants. Scant regard was paid to the views of the specialists; the officials seemed uninterested in the views of the actual professionals. We all know what happened, then. A predictable and avoidable incident caused the Department of Health much heartache, expense, resignations and political upheaval.   

 

The result of that incident sadly being the death of a baby, the States then decided to introduce a very expensive, UK type system of overarching regulation, when, frankly, a simpler, more appropriate, less expensive and “Guernsey friendly” solution should have been introduced.  This has arisen because the people who were engaged by the States to look into the problem and come up with a remedy, were commissioned from the UK, and therefore, having only the experience of the NHS, they come with both a lack of wider imagination and a predisposition to think that only the NHS systems, which they are used to, provide the answer. They ignore and overlook the different needs of a small island, and what is really appropriate here.

 

As regards the future, it would be good to see:

 

  1.  More input from the medical professionals into health care, and less micro-management from politicians. This has been a common negative feature of various committees over the years.

 

  1.  More investment into private care (eg expansion of facilities for private patients/more private rooms and care/separate theatres  for private patients). This could be be funded either by the States, or by private  investment – and it could surely be a very good income generator for the island.

 

  1.  The encouragement of private health insurance by giving tax breaks for premiums and to reduce cost to the States.

 

  1.  A recognition that if the system continues to erode the standard of living of consultants, there will inevitably be more problems with recruitment and the standard of service and the calibre of consultants will fall.  

 

  1. Consideration being given to a method of taking more control of GP practices to bring down costs and to save States money by ensuring that there are no inappropriate referrals to “free” specialists.

© 2019 The 2020 Association

BREAKFAST CHAT – Challenging States’ decisions

Certain recent controversial decisions of the States, (and in particular their bemusing decision to give the go-ahead to the ever loss-making States Airline to purchase three new ATR aircraft to replace its perfectly serviceable current fleet) have understandably provoked wider questions as to whether there is anything that can be done to challenge States decisions of questionable sense.

The general reactions of ordinary people seem to polarise between an incredulous and frustrated cry “Surely it must be possible to get this decision judicially reviewed?!?” and the equally frustrated but resigned comment that “There’s nothing to be done: the States is Parliament.”

The actual legal position is probably neither clear nor simple. This piece is therefore intended to provide some material for thought and discussion. There is an executive summary of its general tenor, followed, for those who are interested, by more detailed reasoning.

It should be noted that this article is, emphatically, not intended as legal advice, nor should the views expressed be in any way relied upon, or used other than as a subject for thought and discussion. The views expressed are not necessarily the views of the 2020 Association.

Executive summary

  • Where the States makes a decision of an executive or administrative nature, the Royal Court probably has jurisdiction to entertain a challenge by way of Judicial Review.
  • To challenge such a decision on its merits (ie apart from procedural errors) it would be necessary to show either that it was flawed for having been made on a false basis, ie without regard from some matter which should have been taken into account, or taking into account some matter which should not have been, or else that, objectively viewed, it was so unreasonable as to be outside the range of decisions which could rationally or reasonably have been made.
  • Where such a decision involved a disposition of States (ie taxpayers’) assets, even an ordinary person would have the status to bring such a challenge.
  • However, the exercise would be potentially expensive, and if the decision had been acted upon then even if the court pronounced the decision invalid, that would not necessarily undo its consequences.

Judicial review of States decisions?

For those interested in further analysis, first, a little background.

“Judicial review” is a relatively new concept in Guernsey law. Its availability was first recognised only in 1998 in the case of Bassington v H M Procureur. Its development has been slow, but has generally followed English practice.

In England the remedy was the product of judicial law-making which established such a jurisdiction during, in particular, the 25 years following World War II. The availability of some form of judicial review as a legal remedy for the citizen is regarded as a hallmark of a modern civilised and democratic state with an accountable system of government.

The scope of the concept of judicial review is, though, indicated by its full title, which is is “Judicial Review of Administrative Action” Therein lies the clue to its application, or lack of it, with regard to Parliament. Parliament is a legislature and, as such it is sovereign and not amenable to judicial review of its acts.

Judicial review operates in two distinct situations. The first is where a body acts outside the scope of its powers, as correctly interpreted. This simply involves the court deciding, authoritatively, what the legal scope of the particular power is, and whether the decision or action of the body in question is within that power, or outside it (ie ultra vires). This illustrates why the decisions of the UK Parliament enacting law are not subject to judicial review. As Parliament is sovereign, its lawmaking powers are not limited. However, where Parliament has delegated law-making powers to lesser bodies, entitling them to make subordinate legislation such as Statutory Instruments or bye-laws, then even the law-making decisions of those bodies can be challenged on the grounds of being outside the powers delegated to them.

The second situation in which judicial review operates is in relation to the administrative or executive decisions of an authority. There, in addition to the question whether the decision is within the scope of the powers conferred on that body, there is the additional point that, because the body can only use its powers for the purposes for which they are conferred, it is required to take executive or administrative decisions on a proper basis. This means: having regard to material considerations and only to material considerations, and making a decision which is not arbitrary, capricious or irrational, but is within the range of decisions which a reasonable and properly informed decision-maker could reasonably make in all the material circumstances. Offending against this lengthy rubric is referred to, in legal shorthand as being “Wednesbury unreasonable” (a reference to the case in which the principle was first stated). The principle embodies the law’s recognition of the fact that the decision in question has been lawfully confided to the judgement of the particular decision-making body and not to the court, but that, at the same time, there needs to be an ultimate oversight to set aside any flawed or extreme decision which is so capricious or unreasonable that it ought not to be allowed to stand, by any reasonably objective assessment.

How, then, does this all apply to decisions made by the States of Guernsey? Whilst the States is a legislature, it is not a legislature which operates in exactly the same way as the UK Parliament. In particular, it makes many decisions, particular those involving the disposition of States’ assets or funds, which are not the laying down of law, but are in the nature of executive or administrative decisions. In fact, the ATR decision, referred to at the outset, would seem to have been just such a decision.

On that basis, there is no need to think, or to assume, that the Royal Court would have no jurisdiction to entertain a challenge because States decisions were simply not amenable to judicial review at all. If any such decision is apparently taken on a flawed basis, or is so outrageous that it could be described as arbitrary, capricious or irrational, then there seems to be no ground for preventing it from being subject to remedy by judicial review. True, the Court might initially require some persuasion, as the notion of judicially reviewing the States appears rather bold, but it is the nature of the decision under scrutiny which decides, or ought to decide, whether there is any jurisdiction to subject it to judicial review.

As regards who could bring such an application, it is necessary to show a sufficient interest in the subject matter of the case, so as to prevent merely officious complaints. However, if a decision involved the disposition of States’ (ie taxpayers’) assets, then it would seem that any citizen of full age and capacity should be able to assert a sufficient such interest, especially if a taxpayer.

Any such application would naturally have to be made promptly; the courts look with disfavour on applications for judicial review which are made tardily, and this is likely to mean within weeks or, at the most, a very few months, of the decision being made. The exercise would, of course, be likely to be costly. (The costs of litigation generally are probably a whole new and separate subject).

And finally there would be the question whether the court would be prepared to exercise its discretion to grant the remedy and quash the decision under challenge. The court might not do so if it came to the conclusion that the material considered had been incomplete or inaccurate but that the decision would have been the same even without this flaw. More important, perhaps, would be the likely constraints of time. If the decision were to be acted on quickly, then it would be necessary to get the matter before the court urgently, before any consequences became a fait accompli. The court would likely be reluctant to set aside even a defective decision when major transactional consequences had already ensued in reliance upon it.

But the real point, for present purposes, is that there must surely be a mechanism by which the ordinary citizen can seek protection against States decisions involving outrageous and questionable expenditure, and effectively the waste, of taxpayers’ funds.

Let us imagine that our good friends, the Deputies, in a flush of goodwill or general virtue-signalling, decided by a small majority to spend £21Mn of this Island’s financial reserves (enough to buy another new ATR!) on sending overseas aid to Africa, with the justification being that this would enhance Guernsey’s reputation as a “good world citizen”. Can it really be the case that those who took the view that such a decision would be a gross breach of the government’s first duty, that of protecting and improving the lot of its own citizenry and of exercising responsibility akin to the duties of trustees in respect of States assets, and that charity begins at home, would have to sit by and accept, in effect, the giving away of Guernsey’s resources, on the grounds that this was a decision of the States, and was therefore immune from any effective form of review or challenge? Can it really be the case that the populace’s only sanction would be that of forlornly voting the offending Deputies out of office months or even years later, at the next election?

This extreme example surely illustrates that the Royal Court must have some power of review which can be invoked as, at least, a last ditch protection for Islanders against the dissipation or waste of their taxes. And come to think of it, the suggested example may not be as extreme as all that.

Bemused of Torteval.

© 2018 – The 2020 Association

BREAKFAST CHAT

By request, we are providing an irregular series of “talking point” pieces, under the heading of Breakfast Chat.

The intention is to provide talking points to provoke and stimulate discussion amongst our members and like-minded family, associates and friends, and, hopefully even produce a general “conversation”, and the airing of views. Suggestions and contributions are welcome.