OPINION: No trust in the process

I HAD an interesting call from a journalist last week. They wanted to know how the States was spending £1.1m. on Moneyval preparations. They’d read the report in the Guernsey Press. So had I and I’ll be frank, I didn’t have a clue.

I thought the point of having our man Richard Walker as vice-chairman of Moneyval meant that we were as informed as we needed to be on the process. Apparently not.

Go to Moneyval’s website and they announced that recently more than 50 representatives of Guernsey’s ‘Government Ministries, the financial intelligence unit, law enforcement, prosecutors, judiciary, supervisors, tax authority, registries and customs’ attended training to ‘familiarise themselves with the underlying standards and methodology of the Financial Action Task Force (FATF) and the evaluation approach of Moneyval’.

In the Press story, it was revealed that we’d be spending a quarter of a million alone on previous Moneyval assessors to give us tips on how to pass the test. Nice little earner, eh? But try as I might, I struggled to even guess where the rest is going.

I was involved in the original decision to appoint Moneyval as the external assessors of the effectiveness of our AML regime when the IMF said they weren’t coming again. In my opinion, and to put it very politely, I think we’d have guffawed very loudly if anyone has suggested that in a few years we’d be spending more than a million quid getting ready for such an assessment.

How times change. Back in 2008, attending my first IoD convention I made the faux pas of chastising the business audience then present, suggesting they ought to give politicians a break because running a government is somewhat more difficult that running a company. A fact I suggest many of our deputies have painfully discovered first-hand.

I try to ensure this column isn’t just a rant about the States. In fact its supposed to be about international sustainability. I’m not saying I’m not averse to subtle (and not so subtle) digs, but I keep it impersonal. Well, I think so anyway. Truth be told States-bashing is an easy pastime, as there’s so much raw material. This week I’m exerting all my self-control not to make snide remarks about the circumstances of the buying of Condor’s new boat. But it would be a tad hypocritical. Last month I suggested an emergency was anything the CCA wanted it to be and, with a literal shrug of the shoulders, said I didn’t really care.

So this month I’m going out on a limb and suggesting a positive change. I’ve read in these pages in recent days two sitting deputies imply that treading water for the next two years is the likeliest outcome for the States policy-wise, both suggesting the tax review hitting the buffers as the primary reason for the likely lack of progress. Two years is a long a time to waste. Particularly when there are so many issues to address. I’ve wittered on these pages about some of the macroeconomic issues.

The lack of growth, our worsening competitiveness, the recent banking crisis and my concern about changing global economic fundamentals. Now there’s a US debt default looming, it’s like 2008-2011 condensed into a few months, but no one seems to be care.

We seem only to be able to grasp less conceptual issues. Those easier to get one’s head around. So how about the ‘housing crisis’?

To recap, we live on a small island and the supply of housing is pretty much fixed in the short term, so sudden large increases in demand will lead to large changes in price. Our post-Covid bounce in population rapidly resulted in higher prices. Worsening affordability issues. The Bank of England’s calamitous conduct of monetary policy and a rise in interest rates of 4.5% in a year will ensure the housing market hits the buffers. Demand and prices will fall, affordability will improve, but there’ll be a lot of pain in the process. Let’s not be surprised when this plays out. In fact, it’s already happening. It might sound heartless, but it’s not, it’s just economics.

Now in the long run, the supply of housing needs to match any increase in household numbers, else the same thing happens to prices. They go up. We had that too. Over the last 10 years supply didn’t increase much. Easy to forget now, but Guernsey’s property market was in the doldrums for the best part of the last decade, so conditions were not propitious to new development. With short supply of suitable land, even in a flat market, the few policy changes that were made, GP11 for example, worsened the economics, and further reduced supply.

So a double whammy, and the net result is that prices are way too high, and we lack homes. The Guernsey Housing Association’s longer waiting list is a function of a shortage of affordable private housing, not just ‘affordable housing’. Policy needs to be directed towards increasing the supply of cheap private housing. But it’s been skewed to supplying more social housing by the policy of gifting the GHA land. In the long run, increasing the supply of affordable private housing is the only sustainable solution. As land is short, we’re likely talking flats. Lots of them. And the cheaper the better. So high(er) rise would be preferable. Don’t shoot the messenger.

But we await signs of a considered comprehensive policy approach to the problem. Don’t hold your breath. There’s a problem with the process of policy development in Guernsey.

First off it takes an age. Long policy letters are developed over many months, sometimes years even, expensive consultants’ reports are commissioned, the drafting process and selected stakeholder consultations takes place in private and only final proposals are published and then just weeks before political decisions.

This process and lack of transparency is far removed from accepted codes of practice. These recommend preliminary proposals, evidence and analysis are presented in good time for consultation to enable the public to have an influence on policy outcomes before final proposals are published.

Some might say that such an approach is redundant in Guernsey. After all, who is there to consult? Where is the vibrant community of policy experts to contribute to such a process? We don’t have political parties funding policy development, directly or indirectly, like the UK. There are no think tanks supporting the process. Jersey is having a go with the establishment this year of the Jersey Policy Forum. Over here, the Guernsey Policy and Economic Group hasn’t managed yet to fill the void with considered content. Guernsey Matters had a go a few years back. But policy officers are starting to pop up in the charitable sector and business associations have been known in the past to pay for policy papers to be developed. There’s potential to nurture but in my opinion due and proper process is needed to catalyse and encourage much needed active participation in policy development and debate.

The States machinery of government is also unhelpful. All deputies are members of the same executive, i.e. the States, so there is only one version of the truth in terms of policy development. Policy resources are centralised and this, by construction, restricts thinking and ensures policy develops along limited lines. The lack of plurality being the reason some deputies have started to do it themselves.

But most deputies, truth be told, have limited policy expertise. This isn’t to exert corrosive influence from afar but a statement of fact. Manifestos of new (and old) candidates are generally stuffed with platitudes, containing little in the way of considered policy proposals. Once elected, politicians then ‘learn the ropes’, which often includes, as many in this Assembly have admitted, learning basic facts of life. Thus, we have a government culture of learning on the job which wastes time and resources.

And our system gives deputies no support. When I was a councillor at a unitary authority in the UK, I had access to a members’ library and research staff funded by the council. That being on top of anything my party might provide either locally or at a regional level.

A central resource supporting policy development independent of the civil service would be a positive development and a true public good. I’m thinking a small staff and small budget to fund short papers and small-scale research to provide fresh thinking. Producing a myriad of papers to catalyse an organic policy development process, encouraging third parties’ contributions by a transparent and energised policy process. Better than treading water every two years.

We could divert the quarter of a million that we’re spending on consultants cramming for Moneyval to pay for it. Once they’ve been and gone and given us a clean sheet obviously.