WITHOUT intending any disrespect by drawing attention to it, it may seem strange that the word cropping up most frequently in conversation with Tom Holvey is actually ‘culture’.

True, it may be up there with ‘growth’ in the chief economic adviser’s lexicon but his insistence on the importance of cultural change gets right to the heart of his department’s work on the future economy programme.

That work is all about looking ahead to the Island’s needs in 2040 but considering what needs to be done now to ensure our economy generates returns sufficient to sustain a good standard of living, while also allowing us to enjoy the things that make Jersey distinctive. To complicate matters, we are all living longer and the ratio of economically active Islanders to those of non-working age is falling: more pensions and extra health care costs. Even non-economists can grasp the dilemma.

It’s a problem facing every democracy in the western world, Mr Holvey points out quickly, although he also concedes that Jersey’s ageing population profile is slightly worse than that of the UK. But in many respects he says we are better-placed than our neighbours: we have no debt – indeed, we actually have reserves – and we also have an economy with the potential for growth, the key to our future, he believes.

Later this year Mr Holvey’s department ‘‘ will publish more details about all this in a document badged under the future economy programme. Today he is more than a little coy about revealing any figures it might contain but its direction is clear enough: without action, a gap will open up that we should all be concerned about.

And that’s where the cultural bit comes grow the economy. If you can start to grow in because Mr Holvey wants to stress not the extent of any forecast shortfall but rather the potential to ensure that it does not emerge at all – as long as we all start to think about things a bit differently.

He explains: ‘The cultural change is a change in mindset in the Island that growth is achievable; that it’s a thing that we need; that it’s not a bad thing; and that actually we need to work at it and ensure that government is a part of it. We need to ensure the Island thinks those things. It might sound a bit weak but to me it’s absolutely essential because if people don’t buy into it, you don’t end up being able to deliver what you need.

‘We are a wealthy place with a good standard of living for a lot of people. They might not see the necessity that we do need these things to ensure that living standards do not fall back over the next 15 years because of the ageing-population threat. That’s the shift in culture that we need,’ he said.

Previously chief economist and chief impact officer with the UK Infrastructure Bank, Mr Holvey took up his appointment in Jersey a year ago. Since then, his department has been balancing its regular work – part of which entails producing the raw data that allows the government’s independent fiscal policy panel to produce its periodic analysis and forecasts – with looking much further into the future and providing advice to ministers on how they might encourage that precious economic growth.

Of course, this is a tricky time for looking into the future. A day is a long time in economics. Two weeks ago the department factored in further interest rate increases which then did not materialise because of the recent banking issues. Then, this week, changes to the Federal Reserve’s rates and rising inflation figures in the UK meant that they did. Here those interest rate increases constitute something of a double-edged sword.

‘For the macro economy, it is undoubtedly positive because the financial-services industry is largely banking-led. They make more money when interest rates go up. Bigger revenues, profits and salaries are a good thing for the Island. The downside is housing costs for mortgage holders but there are a lot of medium fixed-term mortgages with time to plan and the economy might have changed by then,’ he said, adding that extensive inquiries with local banks suggested that the immediate impact on local borrowers would not be widespread.

The underlying causes of such volatility – Ukraine, Covid and Brexit – constitute what the chief economic adviser describes as ‘existential factors that knock you from the side’: we must be resilient to them and adapt with the times. But where does all this put those aspirations to ensure that the Island can meet the economic challenges of the future?

‘My fundamental point of view would be to grow the economy. If you can start to grow the economy – we’ve done OK-ish over the last five to ten years but living standards haven’t particularly risen and we do have this problem coming down the road – but if we can grow the economy to suitable levels through a variety of routes, then we could perhaps see some of the issues off.

‘We know what the problem is and we’ve done a lot of modelling about what those costs might look like in the future and how we might be able to work with them and what kind of growth we might want to do that. There are a number of options but we want living standards to improve for all Islanders over that period; we want to ensure we can fund that healthcare and ageing population extra expenditure without having to make difficult decisions. We’ve got a period of time where if we do start growing the economy – good growth, in a sustainable way – that does look achievable,’ he explained.

The latest growth figure for Jersey’s economy was 3.9%, but it follows the shrinkage that took place after the pandemic, so it would be a mistake to set much store by it. More relevant, perhaps, is the view of the fiscal policy panel, which puts likely growth at 0.5%. Mr Holvey thinks Jersey should be aiming for growth of 2%.

What is it that explains that 1.5% gap between the three independent experts and the government’s chief adviser?

‘They are assuming we won’t do anything – if everything remains equal. What we need to do is something extra to get to the 2%. If we talk through the plans, they think that some of what we are doing is really exciting and there is real potential there.

‘It’s not a difference of opinion: it’s what I would term the difference between policy-on and policy-off. Policy-on is about doing something about it, about making active changes and pulling on different levers to do something differently. Policy-off is what you expect to happen without any changes. We are not projecting that we are going to grow at 2% in ten years’ time: we are saying that we can do it if we get things right,’ he said.

The forthcoming policy document will start to build the case for economic change but what might that entail?

‘We’re not talking about one thing. We’re talking about probably 50 things, some of which will be big and some of which won’t feel like that. We are talking about messaging, making sure people think Jersey is open for business and that we are a jurisdiction people would want to invest in.

‘That’s the shift in culture that we need. We need more investment in the Island; we need to ensure we improve skills in the Island; we need to adapt to new sectors and changes within sectors; we need to be at the forefront and leading the way for the Island. I think that’s all achievable and that’s the cultural change that we need. Alongside that, we need some projects and programmes that might help us develop – renewable energy being one – but we’re also looking at things around data and digital, and at all different elements of growth in all our existing sectors and how you can diversify within sectors and increase productivity. We are looking at everything,’ he said.

Mr Holvey acknowledges that some will be sceptical about sustained growth, many concerned about its impact on the environment.

‘I don’t agree with that, particularly as we decouple from carbon, so that growth is not now definitely equated to carbon all the time. That’s happening and we should be at the forefront of it, in my opinion.’

But he accepts a certain ‘healthy tension’ between some aspects of the growth agenda and the environment. ‘Just because I’m saying that growth is not bad for the environment in terms of carbon any more, that doesn’t mean it doesn’t have any environmental impact – houses on fields, extra fishing, whatever it happens to be. What we need to ensure is that it has as little impact as possible.

‘I am not just about growth. It’s got to be growth with a purpose – to improve people’s lives and to protect the environment we have.

‘No one wants to do away with what makes Jersey fantastic. We work very closely with housing and environment colleagues, and I think there’s a really good cross-government culture of working to solve these issues. Understanding risk and impact is really essential and we are building a strong team within the economics unit and across government to do that.’

Building the case for a new approach to the economy entails grasping a more nuanced argument about the environment, in Mr Holvey’s view. The alternative to enhanced economic productivity is the need to grow the population significantly, something he acknowledges that the majority of Islanders would not support.

While he will not make population fore- ‘‘ casts – and, he points out swiftly, it is not for him to decide on those levels anyway – he does offer some reassurance for those growth sceptics. ‘What we want to do is try to ensure growth is at the centre of everything we are doing but it doesn’t necessarily need population growth to do a significant amount of what we want to do,’ he said.

For many, policy documents and strategies do not generate much enthusiasm these days. Mr Holvey is well aware that many sit on shelves gathering dust but he is determined that the future economy programme will not be one of those.

‘It’s all about people at the end of the day and making sure their living standards don’t fall back; whether it’s the care they need as they get older, the salaries they receive, the housing they live in, their food, or the environment they have access to. There’s a really good vision to achieve that and if we get there we’ll be doing some good things for the Island. If we get even part of the way, the Island will be a better place for people,’ he said.

We need some projects and programmes that might help us develop – renewable energy being one – but we’re also looking at things around data and digital, and at all different elements of growth in all our existing sectors and how you can diversify within sectors and increase productivity. We are looking at everything 

‘‘ We need more investment in the Island; we need to ensure we improve skills in the Island; we need to adapt to new sectors and changes within sectors; we need to be at the forefront and leading the way for the Island. I think that’s all achievable and that’s the cultural change that we need 

My fundamental point of view would be to grow the economy – we’ve done OK-ish over the last five to ten years but living standards haven’t particularly risen and we do have this problem coming down the road – but if we can grow the economy to suitable levels through a variety of routes, then we could perhaps see some of the issues off