FIRST I have a confession to make. I’m a hypocrite. Not a particularly nasty one, I hope, but a hypocrite nonetheless.

My hypocrisy stems from my shopping habits. Being the husband of one of those featherbedded public servants we hear so much about, I am often the only one in the house at seven o’clock to prepare the dinner. As I don’t have much time either, I frequently join the Chelsea Tractor brigade and shop at the convenient small supermarket just around the corner which doesn’t close at 5 pm.

I simply hate shopping there because I know I’m paying a small fortune for someone to wash and pack a few carrots and bring them in from the UK. Although I’m a typical Channel Islander and therefore a bit of a miser, I still shop there because it saves me time. Hence I’m a hypocrite.

However, my salvation could be at hand, because the Economic Development department has a policy.

It’s known as the Retail Framework Policy, and while it deals with an important issue, I’m not so sure it’s worth all the fuss that’s been given it, and I certainly doubt that it will have any impact on the price of my carrots.

The Retail Framework is an attempt by Economic Development to ‘manage’ the retail sector, which is the largest part of the economy after finance in terms of national income and employment. The problem, according to Economic Development, is that there is insufficient competition, particularly in the retail sector, hence my expensive carrots.

With only two supermarket companies, the market structure is ‘not conducive to maximising productivity’, so prices are higher than in the UK and choice is more restricted.

So, after identifying the problem and putting forward what they obviously believe is a good argument for more competition, what is Economic Development planning to do about it? Well not a lot it would seem.

The Retail Framework is all about removing barriers to competition, because basically the States suffers from a little of the hypocrisy that afflicts me. Economic Development doesn’t very much like what a free market has produced in Jersey, but they say they don’t want to interfere because they are good ‘free market’ proponents.

So there might well be a duopoly of supermarket companies which they claim keeps prices high and choice low, but they won’t be going out to find a third supermarket operator and try to attract them to the Island. That’s a step too far for politicians who believe the free market is sacrosanct and the States should only interfere when there is a market failure.

There are two things to be said about this attitude. The first is that the Economic Development itself has produced evidence which, they say, shows that a free market is apparently not working, because prices are high, choice is low and the market is inefficient. So why isn’t interference justified?

Secondly, a failure to intervene in free markets may sound reasonable to those who are of a more right wing persuasion, but in a small island it can be very risky. You could say that we have a dangerously unbalanced economy, precisely because of the States reluctance to intervene. You only have to look at our cousins in the Isle of Man.

If their government had adopted the same hands-off policy as ours, they would not have produced the diversified and growing economy that they now have. Yes, I know that our economy is bigger than theirs and we are considerably better off, but that’s largely because the Golden Goose stopped off here and didn’t get that far north until recently. It had little to do with States laissez faire attitudes.

In any case it’s well known that the States control practically everything that a business needs to prosper, from the availability of premises to the ability to employ staff they want. So the free market argument wears a bit thin in Jersey.

Of course it’s precisely because of these barriers to competition that Economic Development has come out with a new policy. They want to make it easier for a competitor supermarket to set up in Jersey. In particular they want to make sure that planning restrictions do not deter a new entrant, and that they are treated in exactly the same way as existing supermarket companies. That’s of course an improvement on the previous policy which appeared to give preferential treatment to new entrants. But hang on, if the problem is as serious as Economic Development claims, why not give a new entrant special treatment?

The truth of the matter is that Economic Development appears to be keen to promote competition, without actually wanting to do a lot about it. They were not even prepared to devote the time and resources for some original research into the Island’s retail sector. They relied on a trawl of the academic literature, so we have research from the US, Canada, Germany and the UK used to support policy in tiny Jersey which, in case anyone hasn’t noticed, is an island.

They did take the trouble to conduct a public opinion poll, which is not quite the same as economic research. As the Economic Development Minister pointed out with some enthusiasm, this poll showed that 84% of Islanders are in favour of having a third supermarket. Well to my mind, what’s amazing about this is that 16% of Islanders said they do not want a third supermarket. If I had been asked the same question while I was buying my carrots, I would have said, of course I want a third supermarket, and perhaps a fourth and a fifth. In fact I would like my own patch of freshly grown carrots that cost me next to nothing, but I guess that’s not sufficient evidence on which to base States policy.

So what are we left with? Well we’ve got a new policy to manage a very important sector of the Island’s economy, but we are not going to spend money to research it properly. We’ve got a policy that calls for more competition, but we’re not going to do much about that either. And we’ve raised the hopes of islanders that easing planning restrictions will attract a competitor, but we won’t do anything about the other barriers, particularly the cost of property, staff and freight.

Now there is a slim possibility that a large UK supermarket will open on my doorstep selling carrots at half the price I pay now, but I’m not holding my breath. There is certainly no sign of anyone being interested in taking on the existing supermarkets who do a good job in a difficult market which they know very well.

I have to accept that expensive carrots are partly the price I pay for living on a small island and partly the price I’m prepared to pay for convenience. If I really couldn’t afford it I could always buy cheaper carrots elsewhere and existing supermarkets have made big strides in bringing in better value brands, despite the perceived lack of competition.

The carrots might not be as cheap as I could find in a large supermarket on the mainland, but then I don’t live on the mainland (or the US or Germany).
If there is a problem, more evidence is needed about the extent and the causes of the problem and simply saying that there isn’t enough competition, is not much help.

It’s not proven, but if they do find that there really is a problem, then Economic Development should actually be prepared to do something about it.

Peter Body is the editor of Business Brief magazine