Paying lip service to restraint

WITH Guernsey's RPI at an all-time low, islanders might have anticipated that the steadily increasing cost of government which they have to fund might, finally, start to slow. Zero-10 and the Government Business Plan have seen firm commitments on restraining the public sector burden and the 1.2% RPI figure released yesterday should have helped significantly.

That is especially so since 2,500 States employees accepted only in December that they needed to show some restraint.

However, it is now clear that their representatives were only paying lip service to that because they realised that the credit crunch would drag down inflation. The Public Sector Remuneration Committee, which is supposed to look after taxpayers' interests, didn't and happily agreed to guarantee a minimum increase of 3% whatever happened to inflation.

That will cost the taxpayer more than £3m. and is on top of enviable job security, annual increments in addition to the yearly pay rise and a pension no private employer could even contemplate providing. The damage caused by this settlement - or, perhaps more accurately, give-away - goes beyond creating a privileged tier of States employees. It actually creates a ticking time bomb at the heart of the island's essential public services.

The reason is that unless the restraint agreed in the Government Business Plan is to be completely ignored, the budgets of the employing departments will go up by only about 1% in the next budget. How else to keep increases in public spending to RPI or less?

This may not have a big impact this year, because budgets have already been set, but it is a real funding horror for 2010.

With staff costs amounting to about 70% of the expenditure of the Health and Social Services Department and Education, the impact of pay rises some 2% over RPI will be significant.

The deal has been done and can't be unpicked - unless States employees really meant what they said about restraint - but it really puts the need to cut out any unnecessary government expenditure into sharp relief.

But can anyone rely on this States to start spending less?