'Off-budget' spending by Social Security clouds fiscal picture
SO THE States has had its first independent assessment of whether it is living within its own spending and saving rules.
SO THE States has had its first independent assessment of whether it is living within its own spending and saving rules.
And the outcome?
Well, as is typical of economists, it gives both the critics and apologists something.
The message seems to be well done, but do not kid yourself you are in the clear.
There are some stand-out headlines, especially that the current economic strategy will not return the island to a long-run balanced budget - there remains a gap of some £20m. to fill.
That does not panic those in Frossard House, it requires tweaks rather than a revolution, but to the man on the street is probably much more stark.
The independent Fiscal Policy Panel failed to make it to the island last week to explain its findings because of the bad weather.
But a press release said its tentative assessment was that the States is making commendable efforts to meet the targets of the fiscal framework.
Included in the framework are targets for revenue and capital spending and a desire for a long-run permanent balance in the budget.
'Ambitious expenditure restraint and efficient gain measures have been proposed and considerable efforts have already been made to make up for the revenue lost by the introduction of zero-10,' the panel said.
'However, more remains to be done and many questions remain about sustainability.'
Read between the lines of the report and not only do you get a sense that the data available is somewhat sparser than it should be, but also that much has been promised by this States as far as efficiency measures go, but those promises need to be turned into reality.
The panel also flags up an issue that makes for an inconvenient truth.
Only 75% of States spending has to live within the limits set by the framework. A quarter of the money is outside the rule freezing public sector revenue expenditure in real terms.
There is a magic element that is described as 'off-budget' - Social Security-controlled contributory benefits. These benefits are those where the receipt of the benefit and the amount paid is dependent on the number of contributions paid into the scheme by the recipient - they include unemployment and sickness benefits.
This report should be the catalyst to a debate some do not want to have. There is a strong argument that states that you cannot have a policy of restraint with three-quarters of the money subject to tight rules and a quarter of it outside those rules.
The report shows that 'off budget' expenditure by Social Security was £132m. in 2009, up from £93m. in 2007 - an increase of 30% as more of the department's spending was moved 'off budget'.
So it is an area that deserves closer examination.
Excluding the effects of the changes to the department's funding, the underlying increase was 19%.
Tomorrow, the Budget debate will also focus on the other area of Social Security's spending as Treasury and Resources attempts to bring formula-led, non-contributory spending within the restraint rule - this includes supplementary benefit and family allowances.
Some view even this as a power grab and fear what it means for those on the margins receiving benefit, as well as the knock-on impact it could have on spending all round.
And what of the States' capital spending plans?
For an Assembly that so often crows about the criminal lack of spending on things such as schools when the times were good, how does it feel about the message that it is not meeting its own goal in this area?
The fiscal framework states that 3% of GDP should be spent on capital projects.
Allocations are 'significantly below' this norm, according to the panel.
'The States budget has rarely put aside sufficient to fund capital spending at or above 3% of GDP, nor are future plans sufficient. An additional £10m. to £15m. per annum in today's prices, close to 1% of GDP, would be required to meet the fiscal framework's 3% norm,' the panel's report states.
Deputies will no doubt ask themselves whether it is the rules or the spending that needs to change.
