Scrutiny's investigation into States charges timely

IN THE last decade the States has more than doubled the amount of income it brings in by charging for its services.

It has gone from some £16m. in 2006 to more than £38.5m. budgeted for in 2017. This has raced ahead of inflation by some £18m.

Increases in fees and charges was one of the most controversial parts of the financial transformation programme too.

Quite rightly, most people did not see this as driving efficiency and making savings so much as a quick win to bring in extra revenue.

Fees and charges are up by more than £5m. every year as a result of the FTP, targeting areas such as bus fares, planning applications, charges at the hospital, fixed penalty notices, tipping fees and Beau Sejour.

All these areas will simply grow and grow as the years tick by.

We also know that the new waste strategy is about to add to the burden with another inflation-busting rise, with the average household set to be spending £250 a year more when it gets under way – and who knows what in five or 10 years' time.

The charge could be raised further to help provide a rebate to struggling households too.

Scrutiny will investigate the impact of increases in States fees and charges as part of its review of in-work poverty.

It is a timely intervention.

Back in early 2007, the States debated a Treasury and Resources report on fees and charges.

At the time it was clear that it was looking to bring in more income in this way, especially with the impending loss of corporation tax as part of zero-10 looming.

'There remains scope in a number of areas for increasing the amounts raised by the States through fees and charges,' it said.

The tax strategy envisaged bringing in a minimum of an extra £2m. to help plug the black hole – clearly, we have gone a long way beyond that.

The former Public Accounts Committee had commissioned the UK National Audit Office to look at this area.

Its June 2005 report said in many areas the fees and charges were well below the levels raised in other jurisdictions, which sparked departments into reassessing what they were doing. Fees that had not changed for 20 years went up.

It was also made easier for this to happen too, with several able to be increased by regulation rather than going through a full-blown States debate. What that brought in efficiency it lost in transparency. There is rarely an explanation to show how charges are changing and you have to be an eagled-eyed reader of the Billet to notice.

The user-pays principle is now firmly in place.

Indeed, in the shape of higher than expected returns in planning fees, it was one of the contributors for the States' unexpected move back to surplus for 2016.

Having had a decade of unchecked dipping into the public's pockets, taking a fresh look at fees and charges, and the guidelines covering them, is a welcome move.

That 2007 report put in place 15 criteria against which fees and charges should be evaluated.

They were pretty anodyne – what is the cost of providing the service, is it politically deliverable, can the customer afford to pay? – type of thing.

You wonder also if they have been lost in the mists of time – I mean, when was the last time they were publicly referred to? Can you spy them in the waste report, or the changes to Emergency Department charges?

There has been plenty of attention paid to the tax system, the wholesale review carried out last term made sure of that.

The argument remains that the island is overly reliant on income tax and that in the long term that is not sustainable.

Every time there is a Budget report there is a debate about how much fuel, alcohol or property duty has gone up by, or how personal allowances should be tweaked – and because of the way they are delivered, the collective impact on both people and inflation are reasonably well understood.

But barely a passing glance is paid when it comes to nodding through committees' desires to increase charges.

Those people paying them often do not know until they actually need to use a service.

There is no idea about the collective wider impact because it all happens in fits and starts with no debate.

But they are a substantial part of the States' revenue raising activities – and clearly a growing one.

In 2017, taxes and miscellaneous income accounts for £402.8m. in revenue. Committee operating income, which is in addition to this, and is the broad header for charges and fees, is £38.7m.

Charges and fees have little or no regard for a user's ability to pay.

There is a danger too that they can mask inefficiency within a service.

Very often there is not the ability for someone to shop around for a better deal like they would in the private sector, for instance – monopoly positions are obviously de rigueur in the public sector, there is only one authority that can give you planning permission, for instance.

Whereas a decade ago the argument was all about the States not charging enough to cover the costs of providing services, today the public is acutely aware that they are being asked to pay for more and more things to keep the public sector ticking along.

What Scrutiny's work will hopefully do is spark more of an informed debate on this issue and whether the States is striking a fair balance.