Andy Sloan: Anyone for a bit of nuance?

Ten Years to Save the West… by Liz Truss, the only conservative in the room.

It is a) ‘a whingeing, unintentionally hilarious and scapegoating rant about the economy-crashing disaster of her time in No 10, best read as a cautionary tale of hubristic zeal’ or b) ‘a riotous romp of a memoir that proves she never stood a chance’. The correct response being clearly a function of whether you’re a Guardianista or a Torygraph reader.

Probably, the real answer is not quite either of these two extremes. For me, history has demonstrated that she and Kwasi Kwarteng weren’t far off with their analysis of the problems of the UK economy even as we all tend to agree that they took a bit of a mad headbanger approach to solving them.

I haven’t read the autobiography and, frankly, I have no plans to, but the title reminds me of the tone of several of my columns from a couple of years back, not least ‘Beware the global policy consensus’ from October 2022. It’s giving me an idea for my own book. ‘Fifteen years to save the Guernsey economy’ by Dr Andy Sloan, the only economist in the room. Spoiler alert, not really, it’s a self-serving jest.

I refer to Liz Truss because, especially with hindsight, the episode serves as a textbook example of things being a bit more balanced than either side of the argument admits.

But I won’t dwell, there’s a memo on the desk this month. Positive news stories only.

So let me through, give me an audience with P&R now, for I bring glad tidings.

I am pleased to report that house prices in real terms have fallen more than 10% from their 2022 post-Covid highs. The impact of the Bank of England’s ‘too much too late’ interest rate policy has kicked in. Hurrah! Affordability, here we come!

OK, I’m being ridiculously tongue-in-cheek, but with the question to GP11 or not GP11 being the issue of the week, a recent social media post about house prices from Richard Digard had got me looking at the data for myself. Always a good idea and I came away with a couple of points of interest.

The first is that, after the recent fall, in real terms prices aren’t a million miles away from what they were since just after the global financial crisis. Second is just how much the current affordability issue is obviously the result of the impact of Covid – and that has me wondering whether any of that might be transitory.

In nominal terms, prices just ran away with themselves post-Covid – I even called it a bubble last summer on Radio Guernsey – but it’s the other line, where I’ve plotted the real house price level as an index (that is, removing the effects of retail price inflation and setting the starting value to 100 in 2008) which better demonstrates that real prices over the longer run have been much better behaved. There’s a couple of trends evident. They rose post-global financial crisis, peaking around 2011, then declined by as much as 20% in real terms leading up to Covid.

For those with good memories, our economy did well through the financial crisis, only hitting the buffers around the time of the Euro crisis and then having a bit of a moribund time for the rest of the decade. Quite likely, house prices were a little overvalued (compared to their long run position) by 2011/2012 and the subsequent gentle fall arising from the impact of general economic conditions. And then Covid.

The overall level of private house-building, which common consensus has that it was too low, would have been impacted by those weaker market conditions. A step increase in housing stock to accommodate the abrupt and recent increase in population is welcome, but irrespective of what happens to GP11 this week, my point is, similar to Truss, it’s a bit more nuanced than that. What’s going to be the critical factor driving the level of private sector development going forward is still going to be underlying market conditions – once the Covid impact is fully washed out of the system – like someone once said, it’s the economy, stupid.

Speaking of campaign slogans, given the last few years, the economy ought to be a central issue of a 2025 general election campaign. I still don’t really get Guernsey politics after 16 years here, but I’d be surprised. Frankly, there’s more chance that the machinery of government becomes an election issue. And I’d be surprised at that too. But it certainly would if the efforts of local campaigners and Guernsey Press columnists got their way.

In the inimitable words of Jimmy Tarbuck, we have a difference of opinion, with Gpeg, the Statler and Waldorf of local political commentary, suggesting our government system is broken beyond repair and we need an executive dictatorship now, and in the other corner, GP staffer Matt Fallaize and GP columnist Horace Camp suggesting that the States is as close to the Athenian Republic as you get in the modern world, it’s just the politicians that are the problem.

I’m taking poetic licence obviously, but again, like the Truss issue, I suggest the real answer is somewhere between the two. For what it’s worth, in my more optimistic moments, my thoughts are that we’re just a couple of tweaks away from getting the system to work. Personalities aside, which I always keep well away from, in process terms, the key problem, in my opinion, is the Government Work Plan.

It’s a ludicrous celebration of Soviet-style bureaucracy to try and bring together all government strategy and policy development into one planning document the way it does. Madness to try and micromanage the whole of government business in such a way. Big cross-cutting issues for the States yes, agree collective policy principles yes, but outside those areas be mature and grown up and by and large let departments (committees) run their own areas. Keep control down to the annual budget process. Subsidiarity is a concept even the EU gets.

Memo to self, I must find a restaurant napkin on which to write all that down. Someone somewhere is one day going to want to take note. After all, this column has real impact, it seems. After last month bemoaning that the seemingly never-ending roadworks were unaccompanied by any official communication, despite being a more common topic of conversation than the weather in polite circles, this month I got a very courteous couple of emails from Guernsey Electricity providing updates on the latest road closures. They helpfully explained that what’s behind it all is the jolly good work that they’re doing upgrading our energy infrastructure. Some of which apparently was laid as far back as 1949.

I assume, if like me you’re saving the environment and getting your bills online, then you too will have had the emails. Frankly, it’s very good of GE to explain and it does temper one’s irritation trying to drive around Town, but I couldn’t help but notice they can’t resist just pointing the finger a little at the door of the States by explaining that all this work they are undertaking is ‘following approval by the States to implement the island-wide electricity strategy’. Seems ‘I blame the government’ is just in everyone’s DNA.

But that’s not fair, the answer’s clearly a bit more nuanced than at first glance. I should appreciate and recognise that. Perhaps we all should give it a go.