Guernsey Press

‘Cuts to essential services is the reality without GST’

The presidents of the three top-spending committees in the States – Al Brouard at Health, Andrea Dudley-Owen at Education, and Rob Prow at Home Affairs – have teamed up to write an open letter explaining why a goods and services tax will be essential to continue to provide the services that islanders want

(Picture by Shutterstock)

IT IS important that we set out clearly from the outset that we write about the impending debate on securing Guernsey’s financial future as three individual States members, albeit with a special interest as the presidents of the States’ three largest-spending committees.

And we’ll get right to the point.

We do not want to cut services that we think are essential. And we don’t think you want us to either.

In fact, based on what we hear from members of the community who contact us daily, you actually want more services. Our phones and emails are constantly buzzing with islanders who challenge us on the services that our committees deliver, and the number of those messages calling for us to provide less for the community is next-to-none. People want more from the States, not less.

In Health, people want us to provide more services on-island and shorter waiting times for the services we already provide. They want to access all available drugs. They want more nurses, more carers and more support for elderly islanders who need care packages, and people want us to reduce or remove charges.

In Education, islanders tell us they want more teachers, small schools and smaller class sizes. They want all schools to be able to access everything their children and young people need and make the best use of modern technology to deliver quality education.

In Home Affairs, people tell us they want more police officers to enable increased community policing, more resources to address sexual abuse and violence against women and girls, reforms to justice policy, and increased capacity to fight financial crime to safeguard our main industry.

Managing budgets and identifying savings are bread-and-butter committee responsibilities and something we all focus on, all the time – striving to get more bang for each taxpayer buck. But demands are ever-increasing, often due to external factors. Events such as Covid, Brexit, the war in Ukraine and global requirements such as those imposed by Moneyval, the EU (data protection et al) and the OECD, increased regulation and improvements in best practice. These all bite hard on our very limited resources in addition to the immediate needs of islanders.

It is important to understand that the three committees we lead are intrinsically linked and that cutting services in one can exponentially increase costs in another or both in the immediate and long term.

For example, in Education, a reduction in pastoral and educational support within school for a vulnerable teenager, might impact their ability to achieve and see success. If this young person doesn’t see school as a place of success and aspiration where they’re nurtured, and they become involved in anti-social behaviour, this could result in them having an interrupted education and result in additional costs for Home dealing with a justice matter.

Low achievement and involvement with the criminal justice system could lead to poor outcomes for that young person and a longer-term impact on their health and wellbeing and their ability to contribute positively to society. It’s a sad situation, but also a costly one.

Our experience shows us the States cannot currently keep up with the demand for the services that islanders want and expect. And we’re not talking about raising money so that the States can get bigger and provide all things, to all people – we’re largely talking about maintaining services as they become more expensive, because more people need them, particularly in Health as our population ages.

Nobody wants to put up tax or introduce new taxes but the huge deficit in public finances is undeniable and, with an ageing demographic, it’s only going to grow. We hope you didn’t elect us to simply tell you what you want to hear. We believe States members are elected to examine the facts and make the best decisions possible on behalf of the community, for the long-term benefit of the community, even if they’re deeply unpopular.

We recognise that ‘No to GST’ has a certain allure. But it’s just a slogan. If P&R were simply proposing to introduce GST, none of us would support it. We suspect you’d struggle to find a single States member who would. As a standalone tax GST is regressive and disproportionately impacts the poorest members of the community, but that’s not what is on the table.

The committee is proposing a package of measures, including:

. A new 15% tax band on everyone’s income up to £30,000 which benefits the lowest-paid the most.

. An increase in the personal income tax allowance of £600 which will reduce people’s bill by £120 a year.

. A complete restructure of social security contributions to give everyone an allowance. This makes the system more progressive and would mean an employed individual on median earnings taking home about £600 more a year.

. Increases to pensions and benefits to anticipate the impact of inflation.

Granted, this isn’t as catchy as ‘No to GST’ but that doesn’t make the measures any less important to consider – and make sure the public is fully aware of. This package of measures would result in lower-paid islanders being better off than they are now, even after paying a 5% GST on goods and services. We can raise the revenue we need from a wider range of sources meaning a fairer distribution, and provide services for islanders too.

We’re going to tell it like it is – there has been a lack of understanding of the package on offer and the benefits that will bring. The anti-GST campaign is largely based on soundbite, not fact. And its success will mean many of the poorest in our community will be both worse off than they are now and miss out on the package of measures that would in reality improve their financial position.

GST has become taboo in Guernsey – that which must not be discussed. Yet Guernsey has had a GST post-war and is now one of the few jurisdictions that doesn’t have a tax on consumption. Jersey has had a low-rate GST for some 14 years and collected £109m. in 2021. The Isle of Man has a 20% VAT and collected £390m.

We collect nothing and yet are expected to provide the same standard of public services as our neighbouring jurisdictions.

P&R was accused of scaremongering when it set out the reality of the cuts to services if the States ultimately decided against raising additional revenue to fund the public services we believe the community wants and expects. The width and breadth of potential cuts actually came from committees themselves, albeit at the request of P&R.

There was no intention to frighten – it is an inescapable truth that we have a massive shortfall in public finances. The fact is that anyone who tells you that the States can save £31m. a year (Option C in P&R’s alternatives) without a ‘slash and burn’ approach to services is either incredibly misinformed or being economical with the truth.

For example, it is true that staff costs account for more than half of all States expenditure.

It’s a fact that political commentators often highlight to try and illustrate that the States spends too much on staff.

However, what is always missed out is that of the approximate 5,000 staff employed by the States, about three-quarters of them work in health and care, education and Home Affairs. And we’ve never heard anyone advocate for getting rid of nurses, carers, teachers or police officers.

Likewise, it’s not as simple as saying let’s stop all capital projects – another misnomer we’ve seen regularly in recent weeks. Irrespective of those being one-off capital costs when we’re talking about year-on-year structural deficits in revenue, the States has woefully under-invested in infrastructure for years and years.

It’s why we need the large project to modernise the hospital, why the police station is not fit for purpose, and why The Guernsey Institute desperately needs a purpose-built facility.

No one is saying it’s impossible to save £31m. a year if the States decides against introducing measures to raise more money.

What we are saying is it’s impossible to raise that kind of money without cutting services that we believe the community holds dear, but ask yourself these questions:

. Would you be willing to pay for secondary health care rather than have GST?

. Would you be willing to close more schools and have bigger class sizes to avoid GST?

. Would you be willing to compromise access to publicly-funded drugs and treatments to avoid GST?

. Would you be willing to withdraw all grants to libraries, arts and sports to avoid GST?

. Would you be willing to have longer waiting times for key services?

. Would you be willing to cut funding to police, customs, and fire services to avoid GST?

. Would you be willing to stop work on justice reforms or better services for victims of sexual assault to avoid GST?

Yes, these are highly emotive issues and we’re not trying to either scare, or offend, or even threaten.

We are, however, resolute in our views that conversations around these types of services are the realities of the coming years if the States cannot agree measures to raise revenue.

Our three committees are likely to bear the brunt of such significant spending cuts and we, as the presidents, will be tasked with explaining to the community which services we are having to cut in order to reduce the deficit.

We will make those tough decisions if we must, but we believe it would be dereliction of our duty to islanders if we did not highlight the stark realities in advance of next week’s debate.

This States Assembly is faced with the toughest decision any has had to make for many years.

The debate cannot be about personalities, election sights, catchy slogans or burying our heads in the sand.