blog.gov.jeMegan Davies: Jersey’s 2026 budget tries to strike a tricky balance between supporting Islanders and grappling with a public purse under pressure. As the budget debate gets started, I sat down with Social Security Minister Deputy Lindsay Feltham to talk about planning ahead for future generations. Now, one of the budget’s more controversial aspects is that it proposes to take money from the States Grant, which pays into the social security fund. We talked about that and whether the Island can afford it. I’m Megan Davies and you’re listening to Bailiwick Podcasts. Thank you so much for coming in this morning to talk everything budget. Maybe to start with, could you tell me a little bit about your hopes for the budget and maybe one thing that will make a real difference for Islanders? If people look at the household finances, what will they see?
Deputy Lyndsay Feltham: I think one of the things that I always try and keep front of mind when making decisions as a Minister is what the outcomes are going to be for people. And that was something that I have thought very long and hard about as we’ve been having ministerial discussions around this budget. For me, what’s really important is that people see outcomes that are going to make a difference to their day-to-day lives. One of those things I think that is really important in this budget is the universal offer of free childcare for two- to three-year olds. That will make a real saving for a number of families on this Island and they will see the real impact of that. Other things that I think will make a real difference are things like the back-to-school bonus, which we’ll introduce next year, just before the start of the school year, because what I know from conversations that I’ve had with a number of people is that there’s great financial strain and pressure on families just ahead of the beginning of the school year, particularly low income families. I’ve spoken to head teachers and teachers in schools who have been very concerned about people that may not be able to afford school uniform, so we hope that we’ll be able to help with that. But also, one of the things that I was keen to do was to smooth out a cliff edge that exists for pensioners who don’t currently receive benefits aside from their old age pension, because once you reach a certain income bracket, everything kind of falls away. One of the things that I’m pleased to be able to do with this Budget is extend the number of pensioners that will have access to the Pension Plus scheme and that will also give them access to cheaper GP visits as well through the Health Access Scheme.
Megan Davies: If there’s one measure that you don’t want to give away, you don’t want to see changed, What would you pick if you could put kind of a shield on one measure?
Deputy Lyndsay Feltham: If I look at the budget as a whole, one of the things that really swayed my thinking in terms of what we did with the reduction of the States Grant into the Social Security Fund was ensuring that we’ve got provisioning for essential services. So, for example, the money that’s going into children’s services is really important to me. It’s really important that we have a children’s service provision that is fit for purpose and is able to meet the needs of our most vulnerable children. So that for me was incredibly important. Also, the money for emergency services, so the Fire Service, for example. So we start from there because those are essential things that we need to have. But also then we look at things that we need to enable people to have a better life on Island. And that’s where things like free childcare provision and then the extension of Pension Plus come in as well.
Megan Davies: So let’s get into some of the questions that have come up. In particular, you’re proposing using the Social Security Fund to fund a lot of other areas. That’s been quite controversial. You’ve seen quite a lot of criticism. There’s a quote from Deputy Philip Bailhache saying it’s plundering the fund. What’s your response to that criticism?
Deputy Lyndsay Feltham: I think there’s been a lot of misinformation around what we’re doing. The Social Security Fund is funded via three sources of income. So that’s the employer contributions, the employee contributions, and then that’s topped up as well by a States Grant each year. So the change that we’re making for the four years is changing the amount of money that’s going into the fund via the States Grant. We’re not taking money out of what we have. We’ve got really healthy reserves in the fund and if we weren’t even putting any money in, so no contributions into the fund whatsoever, we’d have reserves enough to pay out for the next six to seven years. That’s far greater than other countries have, much better than our counterparts in Guernsey or the UK, for example. So again, when it comes to decision making about the budget, what I did was I think about the general taxpayer, the challenges that they’re facing right now, What decision would they make? Would they want to put their tax money into a fund that is already in a far better position than we imagined it would be at this point in time? Or would they prefer us to put money into some essential services and things that are going to make their life better? I think another thing in relation to the Social Security Fund is one of the big risks to the fund is if we don’t have a working age population in the Island paying into the fund for the future. So for me it was around us being able to undertake measures in this Budget which help that working age population and we talk about the brain drain, the bean drain a lot. Again, helping people to make the decision to stay on the Island because at the end of the day, I think very often people refer to this Island as a low tax jurisdiction. For many people, particularly middle-income earners, low-income earners, this does not feel like a low tax jurisdiction. I know myself when I lived in Australia for 11 years and I love this island and I was so homesick, I had to come back and raise my daughter here. But when we came back, we did the calculations. We thought that because people say this is a low tax jurisdiction, we’d be better off tax wise, but actually we’re paying about the same as we would do there. I think we need to be careful about that rhetoric, because for many people that’s not the way that they feel. It may well be for the very wealthy of the Island, but for those of us on middle incomes, I don’t think it feels like a low tax jurisdiction. We need to get the most out of the taxation revenue that we can, and we need to make sure that people are seeing outcomes from that, is actually making changes to their day-to-day lives. So that was one of the key drivers to me agreeing to reduce this States Grant for this four-year period. Also, I think it’s important to remember that the Social Security Fund doesn’t just provide provision for people in their old age via the old age pension. It also provides for working age benefits such as the parental allowance, short-term incapacity allowance and the long-term incapacity allowance and also the home carer’s allowance as well. So it’s there as a provision for when people aren’t working for whatever reason. And it’s important that we think about intergenerational fairness when we make decisions. I know that a lot has been said, which to my mind is actually scaremongering the older generation, suggesting that, and that you used that word plundering, suggesting that their pension pot is being plundered or stolen from. I want to make it absolutely clear, and I think the information and advice that we’ve had from actuaries as well as the Treasury make it quite clear that today’s generation of pensioners have nothing to fear from these changes. This is where intergenerational fairness does come in because actually when we look at the fund and where the fund is due to be exhausted, it’s my daughter’s generation that we actually need to be thinking about. So as we make decisions today, we need to be thinking about the future, we need to be thinking about their future, how we make this Island an island that they want to stay, work and live in, and then how we secure the best possible future for them into their pension as well.
Megan Davies: So about that actuarial letter? They also had some estimates about the net migration that would be needed, and then also, I suppose, demographic factors that we talk a lot about the ageing population. What do we actually need in terms of both migration and other measures to sort of counter that?
Deputy Lyndsay Feltham: When we get actuarial reviews done on the fund, it always considers a range of factors, because of course, there are a number of factors that have an effect on the fund. The reason why our fund is in such a healthy state, for example, is because the investments have performed better than expected. So they work on a range of scenarios around how investments may perform. They also look at what would happen if our population stayed the same, what would happen if we had the small increase in population, and what would happen if we had a year-on-year increase in population of, I think it’s 700 people. Those factors are important because we know we’ve got an ageing population. As I said earlier, we need to make sure that we have a working age population and a skilled population to undertake the work that needs to be done. So as much as it being around the forecasts for what may well be in the social security fund in future years, it’s also important that we plan around what a population might look like. So within government we have a cross-ministerial group called the HAWAG Plus, which includes people like myself, the Social Security Minister, the Housing Minister, the Assistant Chief Minister, Deputy Carina Alves, with her hat on, as she’s responsible for the housing control side of things, the Education Minister and the Minister for Sustainable Economic Development. And it’s really important that we think through the factors around what kind of a population we need to sustain our economy into the future, but also what skills we’re going to need into the future as well. For example, with an ageing population, we know that we’re going to need to compete globally in the market for people working in the care sector. We need to have those far-reaching things that we think about, planning for the future and how we do that. That’s the reason why there’s different scenarios in the actuarial report as well, because depending on what happens, and this is why the discussion around the States Grant, it can be a bit of a red herring actually, because there’s so many other factors that can factor into what happens with the funding into the future. And we’re in a very fortunate position today as I said, because the investments have performed so well in previous years.
Megan Davies: I suppose the counter a little bit would be the FPP saying excess money should be going into the strategic reserve. Why not put money in the bank while finances, while economics are okay?
Deputy Lyndsay Feltham: It comes back to ensuring that taxpayers are seeing value for the money that they’re paying in and seeing those outcomes. We could put more money in the Social Security Fund or put the money into the Social Security Fund for clarity. But the people, so my daughter’s generation, the current working population wouldn’t see the benefit from that for very many years to come. What we need to be doing is seeing some outcomes now so that we don’t lose that working age population.
Megan Davies: Are you worried about the economy looking into the future? Are you worried about an AI bubble bursting and potentially needing to have a bit more of a financial cushion in the bank?
Deputy Lyndsay Feltham: I think that’s why the Strategic Reserve is important for the Island. That’s why I don’t understand the logic behind Deputy Bailhache’s amendment, take money from the Strategic Reserve rather than the Social Security Fund. That doesn’t seem logical at this point in time. We saw the importance of having strong reserves when we had COVID, where we were able to use that to do what the Island required at the time. And now we’re in a situation where it’s that recovery and build up following COVID. But it is hard when people are feeling financial strain. And like I said earlier, one of the biggest risks to the Island is not having that working age population. People not feeling like we’re delivering for them and people feeling like it’s too expensive and too hard to live and work here. We do need a diverse economy. We are reliant on certain sectors, so we do need, as an Island, to look at how we can diversify as well. We need to keep our skills up and make sure that we are able to compete in environments that are changing due to things like AI, but that’s an opportunity as well as a possible threat, and I think we should be grasping those opportunities.
Megan Davies: And then back to the FPP, they also use the phrase saying you’re not prudent, or what you’re doing isn’t prudent, and they want you to have an extra view from the actuaries. They’re not known for using strong language, so that’s quite a statement. What’s your response to that? You have had an actuary response and yet there’s a little bit of disquiet there.
Deputy Lyndsay Feltham: My understanding is the FPP hadn’t understood that we had requested that advice from actuaries at the time and they hadn’t seen the advice that we had received. So, I am confident that the short-term measure that we are taking within this budget doesn’t have a long-term impact on the fund and we can see that from the charts that we’ve been provided from the actuaries. I have requested another piece of work to be undertaken by the actuaries in addition to the already planned actuarial review that was due next year. I’ve requested additional work to be undertaken around the purpose of the States Grant, whether or not that formula that we currently use that we’re changing now is still fit for purpose because that formula was done decades ago. We need to make sure that what was right for the population then and has served us well is still right for the population now and that’s why that piece of work is so important.
Megan Davies: Where did that idea originally come from, going to the Social Security Fund? Was it from politicians? Was it from officers? Is there a bit of a backstory to it?
Deputy Lyndsay Feltham: We always obviously work on advice from officers. Treasury will give you different options. When we look at those options, then we make political decisions around what is the correct thing to do. But this was very much based on advice that we got, information from Treasury and then what I said as Social Security Minister responsible for ensuring that the Fund is stable, that we need to ensure that we get objective advice from the actuaries as well around what the possible outcome following this temporary measure will be. And what that shows is that in years, very many decades to come, we’ve got a very small timeframe in which the Fund will be exhausted sooner than it would have been otherwise. But as I said, I think we need to look at the outcomes for that generation of people. We need to ensure that they are able to build their lives here. And what’s right for that generation is likely to be different to what has been right for our generations in the past.
Megan Davies: Changing topics a little bit, the Chief Minister has spoken about how he wants to curb growth in the public sector, but we’re also talking about the ageing population, there’ll be a rising demand for social care. You talked about measures for childcare, for example. How do those two things work together?
Deputy Lyndsay Feltham: It’s really interesting and it particularly interests me because I used to chair the civil service branch of Unite the Union and be a trade union representative in the civil service. What we’ve seen in recent years and around the time of the Charlie Parker era was growth in some areas of the public sector that shouldn’t have grown and that weren’t necessarily delivering services in an efficient and effective way for Islanders. I think we need to be very careful when we look at headcounts. So, for example, where we see headcounts growing in children’s services, education and health, that could be a good thing because that’s around providing direct services to islanders and also about making sure that we’re solving problems that were costly to the island. So for example, not having full-time people in permanent posts and instead using people on contracts which were far more expensive. So I don’t think that you can look at this as a purely headcount issue. I’m pleased that my department, so that’s the Employment, Social Security and Housing Department, has already met its savings targets and we’ve reduced our headcount. But one thing I do have conversations with my Chief Officer about is ensuring that when we are making those savings, it’s not at the detriment to the services that we’re providing.
Megan Davies: So when you see reduced headcount, what does that translate to? Is this people retiring not being replaced or leaving not being replaced? Are there any particular services?
Deputy Lyndsay Feltham: So that’s where we would start out is when you’ve got vacancies, it’s managing those vacancies, double-checking whether you need to replace somebody, whether you need to do some moving within the department. So it’s checking that you’ve got the right balance of people in order to provide the services that you’ve got, managers managing the right number of staff, for example, and making sure that that’s fair across the board, across the department. So those are the types of things that we’ve been doing within our department. And of course, that’s the responsibility of the chief officer as the accountable officer that’s responsible for that budget. But I do think that a lot of the rhetoric about public sector headcount is damaging. I think that a lot of the comment around public sector pay can be damaging as well. And only this week we saw a column in the JEP that was talking about how much firefighters were getting paid. Who questions the salary of a firefighter, an essential service to the Island? And that’s where I think we can’t just have a simple rhetoric around cost of the public sector, because what would be the cost of not being able to attract firefighters to this Island? We know that the cost of living is higher than most of the UK, probably aside from London. So, of course we’re going to need to attract people with the right level of salary to be able to live on the Island. So we need to be very careful of damaging conversations as well, because it’s really important that those people fulfilling essential functions for our Island feel valued by the Island. Because as I said earlier, we’re in a global marketplace when it comes to essential workers.
Megan Davies: I have a suspicion that firefighters aren’t really the issue. Should we talk about pensions a little bit? Is the current pension system sustainable? Do we need a policy shift?
Deputy Lyndsay Feltham: So the actuarial reviews will have already taken those factors into account. They take the changing demographics into account. And that’s important. I was asked, why we didn’t bring forward the planned actuarial review. Actuarial reviews take time to do. And it’s important that time is given because it does factor in all of the scenarios. The figures that we’ve got at the moment factor in what we know already about future population change as well. The information and the advice that we’ve got, is always current. When it comes to things like pensions, we always, and you mentioned policy officers, that’s the work that policy officers, the important work that policy officers do is to check that things continue to be fit for purpose. So one of the pieces of work that I’ve asked policy officers to do, for example, is looking at flexibility in pensions when people come to near retirement age. We’ve got policy work undergoing which will underpin the work on the secondary pension scheme as well. So we know that we do have a cohort of people in Jersey that don’t currently have access to a workplace pension. We know that Guernsey has already put in place its auto-enrolment pension scheme as that secondary pension. I paused that piece of work so that we could move forward in the first instance with the transition forwards to the living wage and getting our minimum wage higher. My view at the time and still is, that if somebody’s struggling to afford a loaf of bread on their table, they are not going to want me telling them that they should be also then saving for their future retirement. So that’s why I wanted to adjust that and have that as have minimum wages dealt with first. But back to that piece of policy work on pensions. We are now looking at what might be a fit for purpose secondary pension scheme for Jersey, one that’s aimed at making it easier for employers to offer that pension scheme to their employees. Again, and I keep on repeating myself, we cannot forget that we are in that global marketplace for employees and employees will look at what additional benefits their employers are giving them when they’re choosing where to go and live and work. So that’s one reason why helping people to plan for retirement and helping employers to offer that pension scheme to their employees is really important. So yes, we need to be looking at the way things might work in the future, retaining our well-run pension scheme, but also remembering that the States pension wasn’t designed to be a sole source of income in retirement, enabling people to plan for that as well. But also people are living longer and hopefully ageing better, so helping people to make choices that they want to make as they get older, whether that be that they wish to continue working for longer and see benefits associated with that. Also, we know that lots of retired people look after grandchildren and have such an important role to play in our community as well.
Megan Davies: Let’s talk about Income Support a little bit. It’s set to go up by 4% in January. Is that enough to keep families who are maybe struggling with the real cost of living, with inflation, is that enough to help them?
Deputy Lyndsay Feltham: So it’s just above the RPI increase, the RPI low income increase at the moment. I also have another piece of work which is being led by the Minister for Sustainable Economic Development and being overseen by the Cost of Living Ministerial Group, which I sit on, which is around identifying what a minimum income standard for the Island should be. To my mind, that’s a really important piece of work, because when I sit and have a look at the Income Support components, how do I know that those components are fit for purpose and doing what we need to do? I’m looking forward to seeing the results of that piece of work, which will be available mid next year. And it will look at a variety of households and what those people, what it’s considered appropriate for those people to need. It will look at pensioner households, single income households, households with children. That will then enable us to see and have a much better understanding about whether our current Income Support components are meeting the needs. I like myth busting and one of the common myths around Income Support is people think that it’s people that aren’t working that are claiming. That’s really sad. It’s really sad because it leads people to not want to claim Income Support because they feel like they shouldn’t. It’s also sad because people very often don’t know that they can claim Income Support and I really worry that people aren’t claiming benefits that they’re entitled to and that’s one thing that I’ve been keen to do as Minister is ensure that we put out communications, we’ve got some leaflets being produced so that we move away from always relying on people having to find information on the website. Back to your question around the increase, I’m pleased to be able to increase it by just above the RPI low income. I would like to have more assurance and certainty that we’re meeting the needs of people today through our Income Support components. So that’s a really important piece of work through that minimum income standard so that we can have a look at the types and levels of income. And that will also inform future decisions around things like minimum wage, taxation policy, all sorts.
Megan Davies: You’ve got me a bit curious about people who are hard to reach and maybe who don’t know that they’re eligible for Income Support. Who’s hardest to reach? Who do you just, you don’t know how you’re going to convince them that they are actually able to claim Income Support and that they should do it.
Deputy Lyndsay Feltham: So I think firstly it’s working people. People assume very often that I’m working so therefore I’m not going to be eligible. Perhaps people who have applied in the past and been ineligible and then maybe had a change in circumstances that maybe has tipped them into the Income Support bracket. And then we’ve also got pensioners. So very often we read online, well, you can’t survive on the state pension alone. Nobody on this Island should be surviving on the state pension alone. I want to make that clear. If somebody’s only single source of income is the States pension and they’re not currently getting Income Support, they should be coming into the department and checking eligibility. I’ve got a good example of this. I have a constituency surgery every Monday at the Town Hall and a pensioner came in to see me about their tax and I looked at their information that they gave me around their tax and I said well are you claiming Income Support because from your tax statement I can see that I think you’d be eligible. They’d assumed that they wouldn’t be eligible because they owned their own home. So again, it’s people making assumptions about what Income Support is and isn’t. That person came back to me the following week, told me that they’d been into the department and they were indeed eligible for Income Support and now receiving their payments. So that kind of story just shows where misunderstandings come around. So that’s why I’ve kind of set the challenge as well to my communications team to do a bit of myth busting, to get out there, get some leaflets that are specifically aimed at the pensioner population that may well not be online, but also do some social media to get the younger generation or the generation that is online as well thinking around if their circumstances change, if you’ve just had a baby, for example, just check in. Check in with the department to see if you think that you may be on a low income. We’ve also got the online calculator, so you can check that. Soit is around very much that myth busting, ensuring that people have the right information at the right time, and making sure that people are claiming what they’re entitled to. And that’s a really important line. It’s an entitlement. It’s not a handout.
Megan Davies: Just to round things off. The budget stresses things like balance, financial discipline, but islanders keep saying life is more expensive. I’m sure you see it, I see it. What does the budget change?
Deputy Lyndsay Feltham: So, for families, there’s some very real changes. There’ll be money back in the pockets of people that have two to three-year olds. I am pleased, like I said earlier, around being able to deliver that back-to-school bonus, which I think for low-income families that will receive that will make a real difference. I think that what we will see is great things with regard to our capital investments as well. It is really important that we continue to invest in Jersey. It is really sad to go up to Fort Regent. I used to work at Fort Regent. I started there when I graduated. And to see the state that it’s in due to underinvestment of previous governments is really sad. It’s important that we start that investment as well, as well as investing in our schools. And improving things for pensioners as well in terms of that Pension Plus enhancement. So, there’s lots in the budget and I think we need to be really outcomes focused and look at how we can improve people’s lives.
Listen to the Politics Disassembled Podcast with the Minister for Social Security