More than 1,000 jobs in Jersey hang in the balance: Ministers have informed the fulfilment industry that its days might be numbered.
A new attempt to close the VAT loophole that allows Jersey to ship goods like CDs and DVDs into the UK tax-free is expected in Chancellor George Osborne’s pre-Budget statement in December and the industry is braced for bad news.
Economic development minister Alan Maclean called industry leaders in for a confidential briefing last week to tell them that they should expect to get hit.
Although it is claimed that nothing official has been heard from the UK, a similar briefing was held in Guernsey at exactly the same time as the Jersey meeting.
It is understood that instead of lowering the VAT threshold further – it is already coming down from £18 to £15 next month – ministers are now expecting the UK to close the loophole entirely and start charging VAT on all products shipped in to the country.
That could take effect from June next year and would spell disaster for Jersey’s mail order industry - a key part of the island’s attempts to diversify from finance-dominated economy.
At the same time, industry leaders have not been reassured by an interview with treasury minister Philip Ozouf on a regional BBC show in which he said that Jersey should not be creating business out of “using a kink” in UK tax law.
The head of the States postal and parcel service, Kevin Keen said that the possible loss of the fulfilment industry would be a serious issue for the States-owned utility: it would devastate the company, as mail order fulfilment amounted to more than half of their volume.
Jersey Post employs about 350 people, ten per cent of whom work directly in fulfilment.
The fulfilment industry was already experiencing a downturn before the new problems arose. The most recent statistics for June this year showed that fulfilment employed 770 people in the wholesale and retail sector – 180 down on the previous year.
That downturn has been blamed on general trading conditions as well as big UK companies like Tesco selling CDs and DVDs and the growth of download sales.
If there is a further loss of jobs, it will exacerbate an already significant unemployment problem. The last figures showed that there were 1,350 people out of work – 20 per cent of whom had been unemployed for a year or more.
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