OPINION: We’re pants at planning

YOU have to laugh sometimes. No sooner had the ink dried on Heidi Soulsby’s elegant takedown of ex-banker Peter Rose’s assertion that, despite the weeping and wailing, government has plenty of money but is rubbish at forecasting, than her own committee was cheerfully admitting it had its sums wrong by £46m.

States treasury lead Mark Helyar compounded the confusion by confirming that we actually have loads coming in to pay the day-to-day bills but his colleagues want to plunge Guernsey into deficit by spending more than they currently earn.

This neatly reinforces what islanders know anyway – that government revenues are rather healthy, remarkably resilient under pressures like Covid, but that the real problem is the 39 elected members of the Assembly not having a collective clue about how to manage your money in a sensible fashion.

Now, before anyone objects, that’s not at all that Policy & Resources or Deputy Helyar actually said.

Instead, the point was made that while revenues are better than expected, we’re in a deficit position after allowing for capital expenditure (new Alderney airport anyone?) and old folk generally are a drain on the rest of us. Shame on you, OAPs.

True, we’re not going bust. But the island’s financial position has worsened, with ratings agency Standard and Poor’s revising its outlook for the island from stable to negative. Add to this the deficiencies in the States’ own accounts, so no one really knows what the true state of Guernsey finances are, and the looming cost of living/inflation crisis, and the picture is bleak.

Think tank Gpeg, for instance, says ‘the recent rise in inflation will add hundreds of millions, and maybe billions, to the amounts due to be paid out as pensions to States employees…’

On top of that, the unions are gearing up to demand above-inflation pay rises. If they get their way, wage costs, already at a quarter of a billion a year, could rise by £25m. a year for no benefit to you or me. Accept analyses from Gpeg and others and you start to worry that GST at 8% – for all the damage it will cause – simply enables us to stand still, financially speaking.

So if you agree things are indeed bad, you have to ask why. Putting aside Covid and the conflict in Ukraine, we’ve been discussing – and allegedly planning for – the demographic ‘time-bomb’ for at least two decades, pretending we’re transforming the public sector since around 2009 and, again allegedly, containing costs since the introduction of zero-10 in 2008.

In effect, we’ve been preparing for issues such as these for a long time. Yet when they arrive it triggers a ‘…bless my soul, how did that happen…?’ moment. With, it has to be said from Deputy Soulsby’s comments, a rather underwhelming response.

But that’s unsurprising. We’re rubbish at planning. Government Work Plan? Put to independent scrutiny, it’s pants.

For that assessment, I’m grateful to the research and advisory group Critical Economics and its latest study, State of the Islands – Demise of the Ten-Year Strategy Plan*. It is worded more diplomatically, obviously, but looking across the basket of offshore jurisdictions it monitors, the conclusion is that grand strategies, often costing hundreds of thousands of pounds, are obsolete.

‘…when one examines the rollout of these plans and the progress made, the overwhelming majority are not implemented and shelved after a short space of time following release,’ it says.

Why? ‘The increasing frequency of unpredicted global events and their eventual ramifications are now having to be factored in by island governments as to how they run their affairs and plan for the future. Above all, it is the unknown primary and secondary outcomes of these “game changing” events which make it very challenging indeed for an island to stick to a long-term or even medium-term strategy plan.’

Advances in information technology and artificial intelligence will have profound influences on public and private sector medium- and long-term planning and will affect future employment levels, skills and training. In turn, that will accelerate the speed of obsolescence of capital projects, particularly in health care and education. All particularly relevant to this island.

The UK Office for National Statistics, for instance, looked at the effects of AI on jobs and concluded that the largest employment sectors in small jurisdictions have a vulnerability of 25-50%. ‘This has significant impact on population management over the next 10 to 20 years, particularly in relation to the balance between working and non-working populations. It also has implications on those administrations which rely heavily on income tax as a primary source of government revenue,’ says Critical Economics.

That’s Guernsey.

Here’s another quote: ‘There is an increasing voice of opinion that the rapid advancements in the uptake of IT and AI in the health care and education sectors will fundamentally change the way that schools and hospital facilities are planned, now and in the future. Such assets will become outdated over a much shorter period of time, with projections already indicating that a newly constructed hospital will have an effective life span of just over 10 years.’

That’s Guernsey’s education reforms and Jersey’s faltering new hospital in the crosshairs.

So if you, too, are worried about where the island is headed, that’s because – with the best will in the world – we don’t really know what we’re doing.

*https://www.criticaleconomics.com/reviews.