States policies subject to fraught money wrangle

ONE of the consequences of ever-tightening public finances is a renewed and welcomed focus on trying to prioritise spending on new policies.

On the whole, Treasury has a simple message for fresh initiatives – the money is simply not there and departments need to reorganise the spending from within their existing budgets to make them happen, whether this is for £2m. plus on pre-school education on one end of the scale or a mere £80,000 for a biodiversity strategy to help slow or halt habitat and species loss at the other.

Both these reports go to the States next week and will illustrate a tension within the States' policy-making process as it now stands.

T and R pretty much bluntly says no to any new funding requests and wants the departments to think again.

It, backed by the States, did the same thing when the Home Department tried to get let off major savings it is late in making as part of the Financial Transformation Programme cost-cutting drive.

The trouble with this approach is that it requires remarkable resolve from States members when faced with very appealing proposals and to which normally, somewhere along the way, they have already given a tentative nod that there is a need for them to happen.

This is exemplified by the pre-school funding debate.

It has also led to departments casting their eyes around to raid their colleagues' funding streams.

To make the sums add up for pre-school, Education wants a cut in family allowance and to take a sizeable chunk of the transformation and transition fund.

This £25m. fund was established last year for projects which deliver significant long-term transformation in the delivery of service which show a return on the investment.

All departments were asked to apply for this money, with the 24 proposals received outstripping the amount of money available.

In the bad old days before prioritisation, when capital spending was under pressure there was a rush of departments trying to get States reports through to get their slice of the pie before it had all gone.

There was no real scrutiny of whether the money was being spent in the right places.

Education's approach harks back to those days.

No doubt among those reliant on this transformation funding will be the Health and Social Services Department, where significant savings are available but it will cost money to make those happen.

Education is trying to get to the party early.

There is an understandable frustration with a stasis in States policy planning and spending under the current system.

One minute members gleefully put aside a pot of cash as in this transitional fund, the next T and R and the Policy Council realise that they don't know how to fairly sort through funding requests.

In many ways the money is there but the processes and procedures are still not up to the job.

Until the reform of government kicks in for the next term, T and R is left to simply say no.

This is a real problem when so many can see sense in the policy being proposed.

Evidence shows the undoubted benefits of access to quality pre-school education.

The Education Department warns that if it was to find the money from within its existing budget, there would be 'significant' cuts in services which would have a 'detrimental impact' on educational outcomes.

Significantly, it does not identify what areas it considered cutting and what the detrimental impact would be, because then there could be a grown-up discussion about where the money should come from.

It is unsatisfactory for departments, as Home did before, to simply say 'we can't do it without cutting services' and warn of dire consequences without spelling all that out for proper scrutiny.

Equally, departments need to know that it can be acceptable to cut one service if what is coming in is more beneficial. Because come next term, that is exactly the kind of reality that the new States will be faced with.

In commenting on Environment's bid for an extra £80,000 a year for its biodiversity strategy, T and R makes much play of the new system of government.

There is a real hope that it will help ensure this type of debate where bids for cash are always taken in isolation will not happen again because early on in the term, a policy and resource plan will be approved.

'Until such a plan is in place, there is not an integrated approach to business and financial planning and an agreed method for prioritising services and spending across the public sector to ensure the direction of resources towards political priorities,' T and R states in its letter of comment.

'It is clear that when consideration is given to approving new strategies and services which invariably have resource requirements to implement, consideration should also be given to how these rank against those currently provided. It is now vital that money for new initiatives is made available by reducing or ceasing some current services which are considered to be lower priority, otherwise funding for new services should not be agreed.'

Treasury ministers have argued that it is a tough job saying no – but in these circumstances it really isn't because it is saying no to everything, which at least brings about some consistency.

Others in the chamber are clearly less enamoured with this blanket approach and prefer some nuances to the decision-making.

Strangely enough, it will probably be easier for members to say yes to millions in funding some form of pre-school education system than it will to tens of thousands to fund Environment's biodiversity strategy.

Biodiversity can be kicked down the road easily – and who wouldn't believe that the department doesn't have small change like that to spare?