Ministers defend health charge and new hospital costs

Sunday 03 July 2016

Ministers say Jersey’s new hospital, due for completion in 2025, is long overdue and must be financed in order to meet the needs of an ageing population.

The Medium Term Financial Plan (MTFP) outlined plans for a feasibility study into the new hospital, with Ministers hoping work will start on the site in 2019.

But other States members say a proposed health charge is a ‘stealth tax’ which will add £320 to the annual bill for a person earning £40,000 a year. 

Chief Minister Ian Gorst defended the health charge, saying the States has no option other than to find extra cash due to people living longer and the urgent need for a new hospital.

He said: “We have got to the point now, after some difficulty, of having an approved site for a new hospital. We put money aside in the last MTFP for a feasibility study on a new hospital and we are going to ask the States over the next few months to agree the new site and to give us the green light. 

“Over the next period we are going to work on a funding route for the new hospital, but it is going to take a number of years and we won’t need all the money at once. It will be a blended approach using some of the excess income from our reserves and perhaps a bond, although we don’t know what size that will be. 

“We definitely need the new hospital. When you go to a modern hospital elsewhere in the world, you realise what we are missing. We have a first class staff but the facilities are long past their sell by date.”

Health Minister Andrew Green also backed plans for the new hospital, saying other departments have been forced to take a hit in order to fund the new venture. 

He said: “Other ministers have made huge sacrifices in order for us to invest in health and education and I’m very grateful for that. 

“It’s simple demographics, people are living older. There will be something like a 60% increase in retired folk in Jersey in 20 years time. We need to plan for that and this is a long term plan, not for me or my children, but for my grandchildren, when living to 80 will be the norm.

“I will talk to States members in around mid-July, bringing forward a proposition to approve the site. The first investment will be required in the 2017 budget and that will be where the real planning starts. 

“Two years after that, we will start building and that will be a six-year build. You don’t need all the money required on day one, but we do need a plan to make sure we can get it. 

“Parts of the current hospital foundations go back to 1700, and the 1960s parts are what they are. The 1980s parts are structurally sound, they are just not big enough to deliver today’s services.”

But Deputy John Le Fondre says the health charge is, in effect, a stealth tax - allowing Jersey to still proclaim a top level of 20% income tax, while increasing the tax burden through the use of ‘charges.’

He said: “We need to properly understand the impact of the proposals on tax payers. It looks as if a single working person earning £40,000 will be paying an extra £320 per year as a result of the health care charge alone.

“That’s before the introduction for a charge for a new hospital which we were informed would be likely to look like the health care charge. On that basis then this would be a further £320 per year for that individual earning £40,000, making a total of £640 per year. That is also before any other tax changes which might be under consideration.

“Islanders will assess whether they consider what they now pay, and what they are going to pay,  is appropriate.”

Deputy Sam Mezec has also questioned the use of the health charge, saying extra funding should instead be generated through income tax. 

“It is taxing the population by another name and that is dishonest,” he said. “There is also the added bureaucracy of bringing in a health charge, instead of a simpler system of just putting an extra percentage onto income tax. The devil is in the detail and I will be trying to get various aspects of the MTFP amended.”

Reform Jersey will be hosting a public meeting to discuss the MTFP on Wednesday at 7.30pm at the Town Hall.