Budget failures show a legacy of broken promises

THE 2016 Budget reveals a legacy of broken promises from this States.

There is a failure to control staff costs. A failure to fully deliver on savings. A failure to live up to expectations on investment in the island's infrastructure.

Let's start with a pledge to balance the books. That is severely undermined by projections for a deficit of £9.8m. in 2017 and £3.5m. in 2018 – what a legacy to hand over.

Then the only way balance has been achieved for next year is by breaking States policy on putting money aside for capital projects such as schools – a whopping £18m. will not go into the capital reserve but will instead cover revenue losses.

Take a glance at the States' pledges on efficiencies.

Health and Social Services, Education and Home not only failed to deliver the financial transformation programme savings as promised in 2012, they will all break promises that they had made to make good those savings in the coming years.

Of course, each year that ticks by when these departments are spending more than they should is a cost to the taxpayer.

Worse still, Home wants its remaining savings target of £263,000 scrapped altogether because it says there are no more savings to be made – the others will get there, just much more slowly. These are clear signs that some feel the time for value for money is over.

The biggest area of States spending is on staff costs – they did not even warrant detailed analysis by Treasury in the Budget.

Between 2014 and 2015 they are budgeted to grow marginally, but next year rise by £8.5m. to £212m.

Again the public can rightly ask if there is any real control being exercised by the States on spending.

Overspends expected this year at Treasury (of £160,000), Environment (£46,000) and the Law Officers (£101,000) are all down to staff – in these cases not running the anticipated 5% vacancies.

What is known as the 'vacancy factor', posts that are not filled during the year so lead to 'savings', formed part of the FTP project – indeed a payment was made to the consultant, so sure was the Policy Council on this.

It is beyond dubious to claim this as a new savings initiative. It always happened, and reliance on it as an ongoing saving, as it is meant to be, has been proven to be at best questionable.

Then take a look at the capital programme itself and what has happened with it this term.

The States earmarked £278m. on what was at the time said to be vital spending.

Projects costs have risen throughout this term, so much so that many of them will not even go ahead, and what was once vital has now been essentially mothballed to try again with the new States.

The new outfall project needed £1.8m. more, recapitalisation of Aurigny goes to the States soon with the bill having risen by £3.7m., Alderney's runway will cost an extra £2.5m. and the La Mare de Carteret High rebuild is some £4m. more than was estimated even in 2014.

Once the £18.3m. cut in what the States will deposit in the capital fund next year is factored in, and some positives from investment return etc, the pot is expected to have £225m. in it by the end of 2017 when the current programme finishes – £52m. short of what is needed if all the projects were to go ahead – and that has been helped by scrapping the £20m. earmarked for a new bus depot.

It is also dependent on the downturn in revenue not continuing for another year.

Treasury is recommending that £120m-worth of projects should not be voted on by this States and will take their chances next term. These include replacing CCTV cameras island-wide, the Alderney runway, work at the hospital and some coastal defence improvements.

That is a massive blow to the confidence the public can have in the ability of the States and its civil service to identify spending needs and deliver them.

Next time a department jumps to say something is urgent, everyone will rightly be treating it with a massive pinch of salt.

Revenue shortfalls from this year must be a big concern.

They mean that personal allowances are frozen, for one, another broken pledge.

Treasury and the Policy Council caution against reading too much into this £20m. hole – they say all the indications are that the economy is growing and this is a collection problem.

Examine that with a 'glass half empty' eye, though.

GDP growth is weak and declining based on the States own figures – from 4.2% in 2012 to 1.2% in 2013 and 0.9% in 2014.

These figures are also unreliable – the Policy Council has admitted this in a report recommending that changes are needed which will also be debated next month.

Treasury also relies on the Chamber of Commerce business survey for its positive outlook. But how robust is that? A limited number of businesses take part in it and limited data is released, casting doubt on how it reflects the state of the wider economy.

Some of this is also a problem of Treasury's own making. There are inherent inefficiencies in the tax system that led to this lag in payments and guesswork which it surely could overcome.

So what of promises from the States to stimulate economic growth? It set up funds with a great fanfare to do just that and it would appear that now would be a good time for these projects to be delivering. C&E has got the ball rolling with projects to encourage rich people to move here, get more visitors and grow the digital sector.

Worthy and successful or not, we just do not know because the analysis is not there to tell us and won't be for some time.

Of the £8m. available, £5.29m. remains. At a time when the economy needs a boost, has this States simply run out of ideas?

There are other legacy problems when analysing the success or otherwise of this administration.

Remember Treasury ordering Aurigny to break even and the promises that would happen with the help of the new jet?

Well, it won't, and actually, it needs millions more in investment than was indicated earlier this term.

Consultants say there is some £20m. to be stripped out of health spending, but why has it taken until now to uncover this given the work that was happening with the FTP that was meant to be so robust?

Once the public gets beyond the gut reaction to rising taxes and delves deeper into the reasons for them, they will have a right to be even more angry.

This was meant to be the States of Change – that change was not, though, meant to be for the worse.