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Statement by the President, Committee for Employment & Social Security

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Wednesday 24 November 2021

General Update

Sir,

ESS has bought a number of policy letters to the States in recent months in respect of benefit and contribution rates, the minimum wage, and final policy decisions in respect of phase 1 of the new Discrimination Ordinance.  So today I will focus on some of the other significant developments that the Committee is working on.

Firstly, I have an important announcement to make in respect of the secondary pensions project.  This project was overwhelmingly approved by the last assembly and endorsed by this assembly as a high priority action under the government work plan.

Under the new law, employers will be required to contribute at least minimum levels into either a States-facilitated scheme or an alternative qualifying scheme following automatic enrolment of their employees. The main objective of this initiative is to support more working age people to save for their retirement, enabling them to enjoy a more comfortable retirement and controlling welfare expenditure.

One key work stream for this project is the establishment of 'Your Island Pension', a new States-facilitated pension scheme mandated to accept any employer wishing to use it to meet their obligations under the new law. Smart Pension Limited was selected to provide administration services to the new scheme following a competitive tender exercise in 2018 to 2019.

Unfortunately, I must advise that Smart has now withdrawn their bid to provide the administration of Your Island Pension.  Following changes to the commercial landscape in which the company operates since their selection as the preferred provider in 2019, we accept that it is no longer possible for Smart to proceed on the basis of the terms set out in their tender and approved by the States.

Obviously the Committee is disappointed we won't be able to deliver the secondary pensions solution we had envisaged in partnership with Smart but understand their reasons for having to withdraw and thank them for their engagement to date.

What this does mean is that there is now an opportunity for a locally-based pension provider to play a crucial role in the introduction of secondary pensions in the Bailiwick.

The project board has reviewed its plans for the implementation of Your Island Pension and has held discussions with local industry participants, from which we have determined that there is significant interest in providing the scheme. I'm grateful to Deputy Mahoney for his active involvement in this process.

We've been really encouraged by those discussions and expect to launch an invitation to tender to select a new provider very soon. Within the next couple of weeks.

Although this could be seen as a hiccup, I hope members will welcome this work being kept local and therefore actively supporting Guernsey's pension industry.

It's anticipated that the procurement exercise for a new preferred provider will be completed in the first quarter of 2022, after which we will seek approval from the States to proceed with the new provider.

The Committee remains optimistic that our targeted implementation date of January 2023 will be achievable. However, we will keep this under review as things progress to ensure employers have sufficient time to put in place the necessary arrangements to comply.

Moving on to housing and specifically the current shortage of affordable housing. This is undoubtedly one of the biggest challenges facing our island at the moment.

While ESS does not have the mandate for general housing we are charged with providing social or affordable housing and, given the interconnection of the whole Guernsey housing market, a corporate response is required. That was why the Housing Action Group, or HAG, was formed in June 2021 to act as a cross-committee task force intended to address the growing pressure on the island's housing stock. This update statement is on behalf of ESS - not HAG - so I will limit myself to dealing with those housing issues within our mandate.

That said, I would like to thank the other HAG members for doing their bit - such as the DPA's initiatives encouraging the conversion of low-grade office space and the redevelopment of unneeded former tourism accommodation.

But focussing on the ESS mandate, waiting lists for social rental and partial ownership properties are very long - 541 households at the last count. We know that many people are living in unsuitable accommodation or are unable to find accommodation they can afford.

This is not only a terrible situation at a personal level; it also has potential to really damage the island's economy as young people may feel that they have no option but to leave the island and key workers may be unable to take up essential roles.

By their nature, new housing developments take time to complete so HAG has focused on fast-tracking the creation of a pipeline of land for affordable housing.

Our belief is that by improving the supply of social housing, those people who can least afford accommodation in the private sector will be able to access affordable, good quality social accommodation, which will hopefully in turn ease pressure on the rest of the housing market.

I've previously mentioned my personal belief that we need to get 1,000 new social housing homes in the pipeline - before factoring in any significant increase in our population. Based on the sites we've acquired or identified so far, we're over half-way there.

These are not only on the Kenilworth and Fontaine Vinery sites.  We've also earmarked Les Genats estate for redevelopment, and identified several smaller parcels of States owned land that are suitable for development.

These could produce both additional social housing and - if the plans gain P&R support - some urgently needed key worker housing for healthcare workers. Details will be announced in due course.

I would briefly like to mention the issue of Guernsey's current labour shortage.  Members may be aware that ESS has responded by removing the income ceilings for tenants of social housing. This was very much an emergency measure with an initial timeframe until the end of next year. We understand that tenants need certainty about the longer term and we will be considering the ongoing policy in this respect early in 2022.

In closing, I'd like to promote some key messages aimed at the public at large who I know listen to States meetings in their thousands.

Earlier this month, the Committee launched a temporary Gas Discount Scheme to assist low income households with the substantial increase in the cost of heating their homes with gas this winter. Both those on income support and on low incomes but who are above the thresholds to qualify for that benefit.

I'd like to encourage anyone who feels that they may struggle to meet the additional cost of their gas heating this winter to consider claiming this discount. I don't want anyone to struggle over the colder months due to these extra heating costs.

Householders can apply online through the gov.gg website. Or by paper application available at Edward T Wheadon House, Age Concern, Citizen's Advice and Guernsey Welfare.

P&R have agreed additional funds of up to £300,000 to cover the cost of the scheme and I'm grateful to them for responding so positively and quickly to this issue.

Finally, I'd like to briefly mention the changes to family allowance, which come into effect in January. As Members will know, family allowance will then only be paid to families with a gross annual household income of less than £120,000, and in respect of children under the age of 18.

It's expected that this will generate an annual saving of approximately £1.9m which will be used to fund children's health and education services.

In September, we sent a letter to everyone in receipt of family allowance requesting they return a declaration confirming whether their household income is expected to be less than the £120,000 cap in 2022.

It's not necessary for people in receipt of income support to return a declaration, as we already know that their household income is beneath the cap. However, the office has only received 60% of the declarations back from those who are required to return them, meaning that approximately 2,000 are still outstanding.

I must stress that where declarations are not returned to Social Security, family allowance will stop being paid at the end of the year. So, it is in parents' interests to send back their declarations.

If anyone thinks they should have received that letter in September but didn't, or if anyone has misplaced the letter, they should get in touch with Social Security as soon as possible. Thank you.

 

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