Guernsey Press

OPINION: Plucking the goose

With politicians struggling to agree on an effective tax strategy for Guernsey, Lord Digby Jones, chairman of the Guernsey Policy and economic Group, suggests a way forward.

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Lord Digby Jones, (31972985)

IT WAS Jean-Baptiste Colbert, the brilliant finance minister of the Sun King, Louis XIV of France, who said that the art of successful taxation is to pluck as many feathers as possible off the goose without causing too much squawking from the bird.

Le Roi Soleil enjoyed a long and largely successful reign – a one-way appointment with Madame Guillotine for the King of France was almost a century away into the future. Given the expensive construction projects he undertook and even more expensive wars in which he indulged (not always successful, as Marlborough at Blenheim can testify) clearly the goose lost an abundance of feathers with not a lot of squawking.

(Incidentally, apropos not a lot unless you’re French, it was also said during the reign of Louis XIV that ‘The law of France is made on the street’. The man who would be king currently in the Elysee Palace may care to take note as he dodges the hurled cobblestones).

More of Mr C later.

As has clearly been shown by the Policy and Resources Committee generally and many good speeches and exhortations from Deputy Ferbrache in particular, the (GST-free!) penny has finally dropped that the tax-raising cart must not come before the tax-spending horse.

Whilst too many deputies sadly don’t really understand States funding (or ‘money’ as it’s known in our house) they can be forgiven for failing to grasp the idiosyncratic States’ accounts and lack of quality forecasting. To plan how much tax you require, you need verifiable cash spending forecasts. Why we spent £400k (as opposed to the budgeted £150k) on external consultants to get us precisely nowhere is beyond me.

Simply put, we will need to find a quarter of a billion quid in cash shortfalls by the time of the next election (June 2025) with no appetite to look at taxation in the meantime. The usual fear of committing democratic harakiri surely doesn’t apply in an election where ‘Vote for me and I shall do so-and-so’ is meaningless since there is little or none of the policy formulation and whipping into voting line found in a party system. Thus little actually gets done in the ‘Every person for themselves’ shouting match that is Guernsey politics.

Messrs Ferbrache and Helyar have valiantly implemented recommendations to set up this or that committee to look at:

. Capital expenditure spending plans.

. Finding savings of £10-16m. over five years (aiming to save two or three million quid a year does appear, being kind, to lack ambition to say the least).

. Identifying an economic, social and environmental model and report back by the end of… er… 2024. That’s got ‘Wait a while and then spend it’ written all over it.

. Investigating raising more money through transport. Tax the car more, every day in every way. Using fiscal impetus to drive behavioural change isn’t new but can be remarkably effective. But, of course, as a long-term fundraiser it perversely fails if it’s successful as when people start doing what’s desirable, tax revenues fall.

. Working out how the tourist can be taxed more. I bet that went down like a lead balloon with our just-recovering hospitality sector.

. To review the package of terms and conditions for new public servants and redundancy policies, including consideration of the closure of the public servants’ pension scheme to new entrants and offering a defined contribution pension scheme and to report back by the end of next September – only that’s autumn next year, not this.

. Reviewing possible changes to the tax system.

And it is the last two on this list that I ask you to join me in considering for just a few moments before you shout ‘a plague on all your houses’ and throw down your Guernsey Press in a good old Shakespearean flounce.

Public sector pensions must, not may, be reformed. The recommendation above frankly doesn’t even scratch the surface. Closing to new members the amazingly beneficial yet ruinously expensive (for you and me, the taxpayer) current final salary schemes should happen at once, rather than awaiting the timid conclusion of ‘possibly’ in a year and a half’s time. There is not a single current public sector employee who will be affected by such a measure and our children and their children will thank us for grasping this nettle right now. The long-term consequences of doing nothing, even of delaying any action, are enormous. What part of ‘Guernsey’s taxpayers cannot afford this’ do they not understand?

Reform of public sector pensions is long overdue. Why every employee in the public sector is considered in the same way is beyond me. Public sympathy with nurses and doctors, firefighters, prison officers and police officers is great and rightly so. There will be other types of jobs that require different treatment. But not every person paid out of the public purse should be treated the same in pension terms. Why should an administrator in the civil service be the beneficiary of wonderful pension benefits at the huge expense to the taxpayer when that self-same taxpayer in a very similar job in the private sector (including similar or even less pay and benefits) could never dream of benefiting from such a pension?

Civil servants do important work and the island would grind to a halt without them, but do we need so many? Why don’t we hear from P&R that the headcount will be reduced through a voluntary (and compulsory if needs be) redundancy programme? Will that be expensive? Yes. But it’ll be a one-off (even worth borrowing for) and the benefit in tax saved will be felt for years, and what’s more the vast majority of islanders will think it’s only fair. How many of them realise that with every percentage point of inflation (and yes, including the inflationary effect of GST) the dreaded deficit that tax rises are needed to fill just gets bigger as more and more cash is required to meet the ever-increasing demands of those civil service pensions. Expensive but vital reform of that scheme has to happen. Where is the equity in the divisive ‘haves and have-nots’ of pension provision on our island? If only the general public understood the monumental and increasing cost paid by the many for the benefit of the few then politicians would surely be energised ‘to do something about it’.

The can-kicking has to stop. Explanations of the true situation regarding cost and numbers should be made public in transparent and easy-to-understand figures that compare the public sector pension provision with that in the private sector. The taxpayers are surely entitled to know for what they are paying and why. Reorganisation will be essential – cuts in service provision are not inevitable with good quality planning and leadership. And we do not need to run off and spend squillions on those dreaded consultants which will only occasion delay and excuses. Come on, deputies – your chief minister has said it – don’t be a lame duck administration. Action this day!

And so we come to the last point on P&R’s list, which brings me back to where I started – Monsieur Colbert and his goose. In our three years as very happy immigrants on this welcoming, safe and lovely island (believe me, Guernsey may have its problems but, compared with so many other societies, we are very lucky, even if it doesn’t feel like it sometimes), I have always wondered why there is not in place an extensive and detailed means-testing regime when it comes to each and every element of paying for public service provision. The editorial in this very publication suggested as much the other day. It is time to get this done. Yes, the subject of the state pension is sensitive and requires both considered and equitable treatment, but something can definitely be worked out with resolute leadership and a spirit of ‘can-do’.

Our illustrious editor wrote, ‘Sell it to them properly... and most islanders won’t object to means-testing’. I agree. The more affluent goose won’t squawk as a few of its means-tested feathers are pulled, provided it sees a similar spirit of ‘making a contribution’ in the public sector.

Perhaps the ghost of the Sun King’s money-man could stalk a few of those corridors as well.