States could look at means testing universal benefits

The States senior committee is questioning the affordability of benefits for all while there is a forecast annual £87m. black hole between government spending and revenues.

No specific universal benefit has been singled out at this stage, but currently the one-size-fits-all approach includes the basic States pension, long-term care in a residential or nursing home, family allowance, and unemployment benefit.

Other options on the table to save money are more outsourcing, and restricting the entitlement to some services on the basis of residency record or contribution record.

Another possibility is a review of the minimum contribution requirements attached to the long-term care scheme.

The senior committee is proposing to set up a new committee so that the States is ‘collectively responsible and accountable’ for ensuring that public spending is proportionate to the island’s size.

‘The Policy & Resources committee considers that it is now vital that such options are properly explored and therefore wishes to co-ordinate an exercise to identify and scope opportunities which might materially reduce expenditure or mitigate expected cost increases.

‘It is proposed that a sub-committee, comprising a member from each principal committee is formed, and charged with the identification and development of options to reduce expenditure or mitigate the anticipated increase in the cost of public services.’

The suggestions on savings were published in P&R’s policy letter on tax, which also recommended that a GST would be the ‘most practical way’ of raising revenues, if they are needed.

An earlier idea of an income-based health tax was ruled out because it would ‘exacerbate’ the pressure on the working population.

P&R is keen to stress that it is not looking at tax rises in isolation, and that efficiencies and savings are also part of the picture.

However, the clear message in the policy letter is that anyone who thinks tax rises are not necessary may be in denial.

Deputy Mark Helyar, the Treasury lead for P&R, said tough choices were ahead.

‘We also need to be realistic and recognise that keeping any tax increase to a minimum will take a lot more than simply improving efficiency. It would require some quite radical reductions in service provision. Growing the economy should be a central part of the solution too, but again it would be unrealistic to think we could do that to an extent where tax rises or service cuts aren’t needed.’

Deputies will debate the policy letter at the end of next month, and more detailed plans are likely to be drawn up by next summer.