Tax: Warning from the PM
Tuesday 14th April 2009, 3:00PM BST.
UK Prime Minister Gordon Brown has warned Jersey’s finance industry that it needs to continue to adopt higher tax transparency standards and prepare for new moves against tax avoidance.
In a strongly worded letter that was sent to Chief Minister Terry Le Sueur at the end of last week, Mr Brown told the Crown dependencies of Jersey, Guernsey and the Isle of Man that their place on the G20 ‘white list’ did not mean that they were out of the woods.
He added that the focus on tax transparency would soon evolve into a move against tax avoidance, and that Jersey would have to meet any ‘new challenges’ as they emerged.
A personal letter from a UK Prime Minister to Jersey’s States is unusual in itself, but Mr Brown’s challenge that if ‘genuine progress’ was not made he would bring the matter back to the G20 for more discussions will not have made comfortable reading for Jersey’s Chief Minister. However, Senator Le Sueur (pictured) did not seem fazed by the letter. He described it as ‘fairly non-committal’.
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TLe S should tell McBroon to keep his nose out of our affairs but then Brown, the unelected Prime Minister, ought not to be around for too much longer. As for your comment that TLe S ‘did not seem fazed by the letter’ if he has any sense, which is a somewhat arguable point of view, then he should already be in discussion with the Conservative Party who will undoubtedly form the next UK government.
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If I were Terry le Sueur I would take this letter as a shot over the bows.
David Cameron is highly likely to be the new Prime Minister after the next UK General Election and he is even hotter on getting the tax in to fill the looming public deficit.
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Tell Mr B where to go. Its not for him to tell Jersey how to run itself. Not only is it not his place, but why should we listen to a man that has all but bankrupted the UK. If the UK doesn’t want to do business with us, there’ll plenty of other places that will.
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Fair enough that they should want to target tax avoidance. Shame it takes a crunch to get them to think about it though.
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Givemeabreak,
It’s a global economy and you know this. Every country affects another. Are you saying that it is ok for Jersey to provide a place where people can avoid paying regular taxes in the country of business/residence?
This is a self-centred rich individualist point of view. And I’m not saying GB is much better.
It’s a shame we can’t come to a moral conclusion ourselves, and sacrifice a bit of wealth for a bit of sustainable equality.
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Tezza wasn’t fazed by the letter, give him a chance, as soon as someone has explained what it means he’ll be worried.
Of course Jersey will jump through any hoops it has to in order to retain finance.
El Gordo is stating the obvious, unusual for him to send a letter though, his mate Damian usually e mails!
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Here we go again,the chief minister,who seems to live in a different world to eveyone else.states.i am not fazed,and its only fairly non-committal.this is the man who said,jersey will not be hit by the recession.when all around are losing there jobs,shops/builders.banks all laying off staff.but no,we can ride this so called recession.if there is a major change to banking,people with move away from jersey,and the island cannot now survive without the banking revenue that it brings in.that is a fact.as it is lots of people are finding it very hard to cope,i often wonder,is the chief minister related to the late neville chamberlain. [ ex pm of england died 1940 ]they seem to think the same.remember those famouse words.peace in our time.oh yes,a few days later we are at war.yes,the ostrich syndrome.what is it like on your planet chief minister.and yes i am jersey born,and i do vote.a very concerned jerseyman;;;
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Interesting isn’t it. This supremely spendthrift PM who having had a warning from the Govenor of the Bank of England and after draining the once vast resources of the UK Treasury now wants in effect to inflict the same on Jersey and others.
There was once another man who used to threaten little countries with specious arguments.
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This should not be a surprise as at the G20 party the lists were the first step in removing tax havens.
The news suggested we were safe as we were on the white list.
But again TLS will flog words like “well regulated offshore financial centre” at us whilst he should be preparing for the end/demise of the finance industry which may or may not come but is certainly likely to have problems.
It’s best to prepare, maybe if the world had kept a closer eye on Germany after WW1 WW2 mite have not happened, maybe if governments act now on climate change hundreds of millions of homes will escape flooding.
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Oh be fair! Like other politicians he is having a great deal of problems with e mails, blogs and other internetty problems. why shouldn’t he follow the example and take it out on the States?
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Agreed Annie,
We need to act now on climate change and Jersey can be the beneficiary of green energy investment. Diversity is key right now. What will happen when more jobs go and labour moves away from Jersey? We will develop a black hole and be unable to support the elderly.
I have emailed TLS warning of the clampdown on tax avoidance. He dismissed my concerns and eventually ignored my emails. Whoops.
What we need is a government that is outspoken and not coaxed into believing the rubbish that comes out of ‘professionals” mouths regarding the safety of the finance industry.
I suggest a government funded initiative to mass farm mini Stuart Syvrets. At least they would question and act in the best interests of Jersey in the long term.
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Whoops-a-daisey the pro-finance lot will be chocking in their drinks over this. Whiter than white what!
Maybe a lighter shade of grey is more appropriate then?
As I keep saying diversify before it is too late!
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Alan and Givemeabreak, GB will keep his nose out of our affairs, when we give him back his money. Money that was earned in the UK and on which UK tax should be paid.
Simple really.
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I wouldn’t worry about it. Next year the Tories will be back in power and sensibility will rule the UK once again!
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Funnily enough David Cameron who leads the Conservative party seems a lot more hard line than Gordon Brown on the issues of offshore tax centres and banking regulation.
I read the Financial Times daily and either he is lying through his teeth to court electoral popularity or Cameron is planning on a serious clamp down on every tax loop hole he can find.
Hi economic plans seem to include continuing a Brown style boost while cutting the deficit and that means finding new tax revenue.
All governments of whatever political colour have to raise revenue.
The Tories under Mrs Thatcher did us no favours, why do you expect Cameron who will be in a deeper economic hole to come over all sweetness and light towards the island?
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James 14 – “I wouldn’t worry about it. Next year the Tories will be back in power and sensibility will rule the UK once again!”
Yeah I remember them, 4 million on the dole, hospitals closed and rich getting richer – can’t wait.
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#5 Fair enough, #13 Gross Misconduct
In fact, by seeking to abolish ‘non-doms’ GB is looking to tax people on their worldwide income as well as their UK-source income. You might be in favour but it would certainly put off people like doctors and nurses who support the NHS, etc by working in the UK for a few years before returning home. Most non-doms aren’t highly paid bankers.
My opinion is it’s just sabre-rattling anyway. However, there is a slight risk that Jersey’s position could be changed as a concession over some bigger deal, particularly with France and Germany losing collosal revenues to tax havens. Time will tell…
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Mr Kipling – “I wouldn’t worry about it. Next year the Tories will be back in power and sensibility will rule the UK once again!”
Yeah I remember them, 4 million on the dole, hospitals closed and rich getting richer – can’t wait.
Errr, wasn’t it 3 million out of work? And is this labour government doing any better? Tax tax tax, e-mail scandals (what a surprise from the left) and lower in the polls than the good ole Tories!
We need the blues back in power, the public are crying out for it!
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4. Fair enough: “Are you saying that it is ok for Jersey to provide a place where people can avoid paying regular taxes in the country of business/residence?”
Yes
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13. Gross Misconduct. You’re missing the point. Its for Brown to manage the UK’s affairs in a such a way that residents can’t take advantage of a place like Jersey. Its not for him to manage us.
“Fair enough” is right, it is a gloabl economy and every country does affect another. This is why GB won’t do anything, because he knows that tax competition between nations is a good thing for economies.
If he managed the UK in such a way that it was no longer a place that businesses could reside whilst taking advantage of offshore efficiencies, the UK would suffer badly as those businesses would go elsewhere taking their jobs and the tax they do pay with them.
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Being on the “white” list is more akin to necessary but not sufficient. The US, UK and other big industrialised countries are looking to take co-ordinated action to role back the scale of tax leakage from tax avoidance schemes used by corporates and individuals. I don’t think the Tories will be that different as there is a lot of momentum building on this one and the budget deficits will still be there after the election. Besides the Tories have already stated that they will not be looking to roll back the higher rate tax rise that Labour has proposed.
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Pip #15
If you’re right about Cameron then he and his party have made a complete U-turn on traditional Tory values which has always been stimulating the economy through low taxes and protecting the well off. I’d be more inclined to believe that Cameron is taking advantage of the current situation and won’t practice what he preaches – never know a politician to do that yet.
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James 18 – “Errr, wasn’t it 3 million out of work? And is this labour government doing any better? Tax tax tax”
3 million was the official figure which didn’t include those on various schemes for the long term unemployed such as community programme and work experience. Everyone knew it was more like 4 million, I was unemployed for over 8 years under Mrs T’s dictatorship.
More tax – why is that so bad if it means that hospitals stay open and are properly funded and education has the funding it needs. The Tory view is that you don’t need hospitals cos you have private healthcare, your kids are in private schools ditto.
I’d rather pay more tax and have those in need catered for.
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Everyone knows Cameron is Tory-lite, so I’m not surprised by his gallivanting. The party faithful will end up reining him in though, for the same reason Gordy sent that letter – to keep the backbenchers, donors and whips content that his glorious world-saving operation will go forwards.
“More tax – why is that so bad if it means that hospitals stay open and are properly funded and education has the funding it needs.”
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Hi Joker,
Obviously your political memory only extends back to the 1980′s and Thatcherism.
The Tories were great promoters of Butskellism in the 1950′s that revolved around regulation and Keynsian style demand management.
Anyway practical politicians do not care much for ideology, Mrs Thatcher was a free marketer when it suited her and in favour of regulation when it didn’t.
If higher taxation and regulation of banks looks like digging Cameron out of the curent hole he will be all for them.
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so if we are convinced we are going to lose finance lets have some ideas what our great government should be doing that we would be happy with rather than giving them a hard time for trying to keep hold of what we have!
If we are a tax haven we wouldn’t be on the white list to start with, so all is not lost yet I would suggest!
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My honest views are that for Jersey to move forward constructively we need to sack the CoM and get some people in with some common sense.
How long does a losing manager last in football not very long. How many chances do you want to give these people? Anyone who supports these types is in my opinion only interested in personal gain at the expense of others. This would be known as the Tory brand in the good old days of toffs and plebs.
As I’ve said before diversify before it is too late.
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Adrian.
Your sugestions for those with common sense are ?
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People who are compassionate to others and represent the whole island, not just big business and the rich. Is this not what living in a community is all about, or is it about getting as much for yourself out of the stystem as you can and s**** everyone else?
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I said before that France and Germany had probably compromised purely for the sake of the G20 itself. There would have been potentially devastating consequences to the G20 not coming to some form of aqreement. So France and Germany compromised for the moment, doesn’t mean they won’t raise the issue again!
Personally I have no issue with more tax if it is better spent. That means that non-essential medical ‘treatment’ would be curtailed. All the money spent on drafting law after law covering the rights of one minority group then another would simply be covered by one law where we ALL have equal rights and all that would affect our rights is lack of obedience to the law and our ability and effort as regards our employment.
Also, having an overview of payroll within an organisaton I deal with I would be keen to see a much more structured allocation of Tax Codes in Jersey. With the amount of information available to me I should be able to take an educated guess at what someone’s tax code is likely to be but that doesn’t seem to be possible, it seems a bit hit and miss.
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well judging by these posts Jersey has now moved away from finance, tourism and potatoes and moved into the ostrich farming business on a grand scale
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Gary 26. Some ideas:
The government should install renewable energy sources starting with wind followed by tide. There are many different estimates but tidal energy in Jersey is expected to be able to produce a few gigawatt’s the same as a large nuclear power station. Offshore wind energy could provide a few gigawatt’s also.
Farming should be supported rather than glasshouses knocked down to ensure our food security.
Population should not grow and reduce slowly if possible.
Do everything possible to encourage tourism, cruise ships would be hard to attract due to poor anchorages but if possible they could bring huge income.
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Bring back the Tories!!!! I agree. It is time for decent change!
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who cares as long as it kills off all the greedy gobble gannets this side of the channel!! money money money all you think about in jersey!!!
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Not all of us sean, some do care about others even if they get castigated for it!
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Adrian
I’m interested to know how you propose to achieve diversification at present when the finance industry is still strong? Do you force people into agriculture and tourism? Do you pay them a lot less or do you subsidise their salary so that it is comparable with other sectors such as finance, e-commerce, service sector etc? If it’s the latter where does the subsidy money come from? What about the agriculture jobs already taken by immigrants – do you sack them all and send them home? (Is that even legal?) Or do you increase capacity (despite their being no demand) thereby increasing the population – sort of a J Cat Farmer type role.
What do you do with all the empty offices in town now that 50% of the finance working population are now in the fields or milking cows? More to the point how do you adjust for the massive drop in tax revenue and deflation that will occur? What about the closing of businesses because no one can afford to pay for imported goods any more? Who’s going to pay for all this?
Have you thought this through properly?
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#23 Mr Kipling ‘More tax – why is that so bad if it means that hospitals stay open and are properly funded and education has the funding it needs.’
Because hospitals are well funded (£47 bn in 197 versus nearly £110 bn now) but they’re poorly run. No one would mind paying tax if it wasn’t wasted. Another example: according to a recent Panorama documentary, the Department of Work and Pensions loses £470m per week in benefit fraud.
We can all pay less tax and have decent public services provided the latter are reformed.
#30 Leah Holmes
ITIS is not the same as having a PAYE tax code. If someone has underpaid their ITIS, they’re required to make a balancing payment the following year. They still pay the same amount of tax irrespective of what their ITIS rate is.
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Lets face it the finance industry in Jersey is entering the beginning of the end (to paraphrase Churchill) – not only will Jersey lose it’s greatest source of income it will also lose the brain power that has come with it. Goodness knows what Jersey will be like ten years after the finance industry have gone and the local yokels will be back in the majority.
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joker a more pertinent question to ask is, have the CoM thought this through proper? I believe they haven’t.
Alternative energy is a big area that could employ many however those in charge have all but ignored it!
I don’t know about you but virtually free electricity sounds good to me. Maybe you like being beholdent to nuclear energy and the value of the Euro?
I could think of quite a few areas to diversify into but this is irrelevent if the powers that be don’t want vested interests upset.
As per your comment of reducing tax revenues. As this happens you cut your cloth accordingly don’t you? No more waste on stupid projects that no one wants. No more expensive experts that charge a fortune to state the obvious. Get ride of tiers of pen pushing civil servents employed to look after the confetti that is red tape and bureacracy over here.
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As for the supposed brain power of the local finance industry…
Failed in London, try it on in Jersey!
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Having read the letter on the government web site I would say that all Gordon Brown is saying is that you currently comply, make sure you continue to do so as regulations are likely to get tougher or I will go back to the G20
So I still don’t see how this is the end of the finance industry, Jersey does not make its money on laundering etc the doom mongerers will always be there, but having now read it as oppossed to th epersepctive taken by many I think we will be ok! (and I am not in finance but do realise how dependant on it we are)
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Gary it might not do now but it did in the past.
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Adrain, I am sure we have had laundered money here but what I am saying is we are now well regulated and if it still happens its on a much much smaller scale and will not cause the death of the industry!
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Adrian
The COM don’t need to waste tax payers time and money looking into it because they already know that every person in finance generates 10 times more for the economy than in agriculture or tourism and removing choice means we become the ‘North Korean State’ that SS is banging on about. Anyway the question was directed at you and not the COM – you’ve avoided my question again… are you a politician?
Everyone keeps harping on about tidal energy like it’s as simple as ploughing a field! You are probably more critical of capitalism than anyone on this site, yet you fail to understand how it works; Surely if there were money to be made from such a project then investors from all over the world would be jumping down our throats at the opportunity to build one! Why haven’t they? I suspect the reality is that the initial outlay and maintenance of such a project would not see a decent enough return in a time scale for anyone to bother. We’re not talking the £150m development down the Water Front to dig a hole and erect a tower. We would be talking one of the great engineering wonders of the world costing hundreds of bns. Don’t even think about asking the tax payer to pay for it. It would cost the states their entire reserves… so hopefully they’ll go by your rule and not squander.
People were saying it was the end of the finance industry more than 10 years ago…. Guess what, it’s still here. The human primeval protection system of cynicism is still as strong now as it was 100,000 years ago in some people.
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Adrian
As for cutting cloth, you’d be happy to turn up to A&E to find it closed on the day you go as it’s only open 3 days a week? Or happy that the sewer system has failed because we can’t afford to pay the staff to maintain it? Or that our children are 100 to a school class like some third world country? You’d cut your nose to spite your face just to see the end of the finance industry.
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joker 45. Why would a poorer island mean the hospitalonly works three days a week?
The sewer system won’t have an effect on me because I am not on it, even though I have asked on numerous occassions and am prepared to pay for costs to connect into the road. They might espouse green ways but when it comes to it they aren’t interested as money wins hands down. In my opinion the States prefered to waste the money on Steam Clocks, brass trees, paying off some salvage rights etc etc.
If people paid for their kids education this wouldn’t be an issue would? Or are you expecting a free lunch for your kids here?
As per the finance industry it doesn’t matter what I think, however the outside world will shut it down when they want. This is what I keep talking about. Diversify before it is too late. You and people like you are blinkered you can’t see what is around the corner.
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joker 44. you fail to understnad the effect of vested interests on alternative energy. Why do you think BNF British Nuclear Fuels controls research and input into alternative energy in the UK?
I myself would put our resources into renewable energy as I would prefer an environmental and sustainable future, as what we have at present is a one way ticket to oblivion. You might prefer the short term gain scenerio, however I prefer a short term loss to enable a long term sustainable future.
I would ask you the simple question what happens when finance goes? Does everyone just cry and beg for mercy from their bank managers?
It is up to those in charge to diversify before it is too late. I myself have the intelligence to realise every business has its day. For evidence of this just look back into Jersey’s, or any other country’s past and you will find it. Why should the present and the future be any different from the past? If you think it will be I think you will be disappointed. Sorry but there’s sensible talking for you. You are of cause free to bury your head in the sand and hope for the best.
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Simon, twice this week on this website I’ve seen you use the phrase “local yokels” as a derogatory term.
I’m saddened the JEP haven’t picked up on your racist attitude and moderated your comments accordingly.
I assume that if I start routinely referring to non-local members of the local finance industry as “wetback parasites” that will be equally as acceptable to both you and the JEP?
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Adrian,
I think you are kidding yourself if you believe that sustainable energy will in any form to able to replace a fraction of the wealth that the finance industry contributes to Jersey’s well being. Almost 50% of employed islanders work directly in finance with a further sizeable number being dependent on the salaries these people earn. Even the most efficient tidal powered generator will fall short of providing the consumption levels of the island let alone making a profit by selling additional electricity to anyone else. Although I do agree with your point that Jersey should start to look at other forms of income I don’t think sustainable energy will ever be a great contributor.
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craig unfortunately I have seen this “we are English, don’t you know? and better than you attitude,” to other racesand it isn’t perculiar to Jersey.
Simon said, what happens when there is no oil left? Alternative energy is the future. Anyone who doubts this is back in the dark ages. Tidal schemes will more than pay their way. Why would the French have wanted our reefs if there wasn’t any potential in them?
Anyone who thinks nuclear is good doesn’t appreciate the inherent costs in running these power stations. Maybe another Chernobil will make people finally see sense, or is it carry on as normal? How much to decomission a nuclear power station and store all the toxic waste for hundreds of generations? Maybe you wouldn’t mind toxic waste in your back yard I sure would!
As per finance, any economy which is reliant on one industry is asking for problems aren’t they? It is irrelevant how many people work in it, what is relevant is the viability of it. I don’t see it as viable longer term. If the outside world becomes of the same opinion it is good bye finance. What will everyone do then? I should image there will be a lot of headless chickens running around panicing and blaming others for their self inflicted situation of over dependence on one industry.
I would suggest taking corrective action because the train hits the buffers as every journey has an eventual end even if it is 40-50 years long! Jersey and the Channel Islands has had an excellent run unparrallel around the world. No where else has been so unaffected by outside influences like we have since the end of WW2. What are the odds of it continuing of rmuch longer?
Those running the place appear very insular in their views coming out with comments like, well postioned to met the future etc. I do hope they don’t get a rude awakening soon. However if they do it is their fault as they should have seen the writing on the wall. They have been warned. They cannot plead ignorance to these unfolding events anymore.
I hope for the best but have prepared for the worst. I suggest others do the same, unless they prefer to take a risk with their future well being, and trust the government to look after them?
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Sean – 34 Your Government lost all your money – don’t blame us. If our new breed of political clowns finally get to take over we will very soon be in the sane position.
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Craig – 48 I hope that the term “local yokels” would be removed by the moderators of the JEP as being an inflammatory and derogatory term and replaced with Crapaud [a big warty frog] which being the official derogatory term for a local is perfectly acceptable. What most Crapauds do object to is that our Government places a special stamp in our passports stating that Jersey people have no rights in the rest of Europe – then us the excuse of human rights to ensure that every European has full rights in Jersey.
Like most banana fascist states “Human rights” is only applicable to foreign nationals so as to make us look good on the international stage and protect our finance industry.
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Adrian
The hospital would be open 3 days a week because the government would couldn’t afford the running costs. You think you can get skilled nurses for free? There’s a world wide shortage – they’ll migrate to the highest bidder and fair play to them. You think the hospital gets drugs for free – they going to trade some Jersey Royals for penicillin?
Interesting you feel people should pay for their child’s education when you discourage all forms of wealth – what of those who can’t afford – I thought you stuck up for these people? I’m a ‘can’t feed them don’t breed them’ believer but I think education is a right to all children no matter their parents wealth and the free option should remain. Jersey’s future is dependant on the quality of the education, no finance means no decent teachers or equipment – think about it.
I agree with you on the green issue but tidal power is not without it’s eco drawbacks. To have an industry and produce enough wattage to sell hydro electricity to Europe or the UK Jersey would need to be surrounded by generators. This would remove the energy from the sea meaning we would no longer have surf and the coast line would be adversely affected probably destroying much of our marine life and tourism.
Most experts reckon nuclear fusion is only 10 to 20 years away from reality. In the mean time we’ll have to make do with oil and non invasive renewable where possible. I’m up for a tidal generator but one that powers say 10,000 homes and not 50 million.
If you use Chernobyl as an example you’d never get on a plane, or in a car in fear of it crashing. Cars have killed far more people than Chernobyl but manufactures continue to make them safer – same applies to nuclear.
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Adrian
As for diversification, it will happen naturally over time. The finance industry isn’t going to be here today and gone tomorrow. There will be years of transition giving the Island time to adapt. If we’re struggling the EU will help out and we can remove that stamp everyone is so annoyed about in our passports.
Over the centuries Jersey has made it’s money many different ways, it adapted then, it will adapt again. There will be a few years of hardship and we will never have it as good as we do now in terms of financial return but we will survive. Pumping money into alternatives and forcing people to work in them today when finance is still strong is not the answer and will not change anything.
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it makes me giggle a bit this Jersey as always wants everything but gives nothing. Are you surprised the free healthcare in the UK was removed?
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Adrian, How are people going to pay to educate their children if they are living on low incomes in low paid industries?
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