IN just a few months Jersey Enterprise has become a very slick organisation able to help new and existing Island businesses with a range of support packages, advice and encouragement. It’s a pity that it’s about five to ten years too late.

That’s not just a cynical journalist talking. I’m not just trying to find fault with everything the States do or do not do. It’s a long-standing observation about the lack of States effort in promoting and fostering economic growth.

Just imagine what the Island economy would be like now if Jersey Enterprise had been in existence five years ago?

How much more diversified an economy we would now have had they been able to support fledgling businesses and young Island entrepreneurs in the 90s. Instead the States seem to have done everything they could to stifle any entrepreneurial spirit by imposing more and more restrictions and generally being unfriendly to business.

There’s one big exception, of course, and that’s the financial services industry, for which the States have bent over backwards or done somersaults more or less on demand.

The difference now is obviously that the Island needs more jobs to be created, whereas a few years ago – thanks to the extraordinary success of the finance sector – the economy was overheating and the States needed to put a lid on job creation.

A decade ago the only criterion for judging whether a business was worthwhile or not was how much tax it produced per employee. Using that yardstick, it was obvious that no other industry could even come close to the highly profitable finance sector.

This is still the principal way in which Island businesses are judged because it’s obvious that we need to get the most benefit out of scarce resources, and the scarcest of resources – at least until very recently – was manpower. But profit per employee shouldn’t have been the only criterion then and it shouldn’t be the only criterion now. What about innovation, import substitution and diversity? – to name just a few other factors that should be born in mind.

States Members have paid lip service to the advantages of having a more diversified economy. They would often trot out the hackneyed phrase about eggs and baskets, and the need to provide a variety of jobs for school leavers who don’t all want to work in a bank. But they didn’t do anything about it.

When faced with giving a business permission to survive (which is basically what the Regulation of Undertakings Law does) they inevitably went for the financial institution looking for more staff rather than the company branching out into a totally new enterprise that could take years to become profitable and then might never match the tax paid by the finance sector.

It’s just as well Bill Gates wasn’t a Jerseyman. He would never have got permission to start Microsoft.

What the States should have done is taken into account a much wider range of factors to ensure economic activity fitted in with the best long-term interests of the Island, not just short-term gain. The use of scarce resources is obviously important, but so too is an insurance policy against the risk of anything going wrong with the principal industry. The advantages of diversification are obvious.

Mind you, it wouldn’t have made much of a difference because the only decision the States had to make was whether a business was allowed to start up or expand. They certainly weren’t going to provide any other help in either case.

That was partly due to the belief prevalent in the States at the time that it’s not the government’s job to intervene in a free market economy and to try to pick winners to support. And that view is still held in some quarters.

It’s a good argument if you believe that Jersey has a free market economy, but obviously it doesn’t. The government can pick and choose who can start up in business or take on more staff, and if deciding to approve or reject a Regulation of Undertakings application isn’t trying to pick winners, I don’t know what is.

That doesn’t mean that the Reg of Ungs is wrong and should be scrapped. Unfortunately it is probably the best way for a small community to balance the needs of the economy and the needs of the environment. But with such a law in place, the States should not have shirked intervening even more strenuously in the economy by actively promoting diversification.

If they felt it necessary to intervene to try to determine the size of the economy, they should also have been prepared to intervene to try to determine the shape of the economy. That’s not entirely in their control, of course, but had they tried harder, we wouldn’t now have such a lop-sided economic setup.

Hopefully, it’s not too late, although now of course we’re facing an economic crisis and the priorities are different. It’s not just a question of picking and choosing which businesses should be encouraged and supported. It’s a case of finding jobs wherever we can.

Thanks partly to lack of diversification, the job is even more difficult because now we have to find the skills or retrain to accommodate the new jobs. So the Skills Executive is hard at work trying to produce miracles in a vey short space of time.

Now there’s another organisation that’s five to ten years too late.

• Peter Body is editor of Business Brief magazine