Your money or your life?

HERE’S a question for you. Do the people of Guernsey want to pay significantly more in taxes or do they want a sub-standard health service?

(Picture by Shutterstock)
(Picture by Shutterstock)

I know the instinctive response is ‘neither’ but in the real world that simply isn’t an option. Sure, the States can look to spend money more efficiently. They could even completely stop providing some services which may be deemed less essential than others. Neither measure alone will cut the mustard.

The amount we need to put into health, and just as importantly social care, over the next decade is eye-watering. Unless of course we are content to put up with services which don’t come close to meeting the expectations of our population.

Those expectations have traditionally been pitched pretty high and I can’t see that changing any time soon. After all, most of us would like to think that both we and our loved ones could rely on high quality care if we/they ever became very ill or simply so frail as to no longer be self-sufficient.

The problem is that we are probably talking about a step change in the annual cost of providing decent health and social care running into several tens of millions, in real terms, over the next few years. Why so?

It could be said that I am partly responsible through my campaign to ensure our government at least comes up to the fairly low standards of the UK in funding medicines and treatments for its citizens. If so I plead guilty as charged. I would only point out that the fact that it will be so expensive to remedy just shows how bad the situation had become.

I am delighted that the current attitude of HSC (and hopefully P&R) is so radically different to the rather dismissive one displayed when I first raised this issue early on in this political term. I certainly make no apology either for my campaign or for the hefty price tag attached to the response.

That said, the Nice drugs issue is just the tip of the iceberg here. It is just one element of a perfect storm made up of new treatments becoming available, health inflation and, crucially, an older population profile.

It has been as plain as a pikestaff for several years that spending on health and social care was heading for a crisis point. While no one involved in delivering those services can be blamed for that, I do think they are slightly culpable in not flagging it up sooner.

To be fair, over the last couple of years they have been doing just that and becoming increasing shrill in their warnings. But at the back end of the last political term and the beginning of this one they seemed more interested in earning brownie points for achieving what they called ‘system grip’ than in signposting the looming spending issues ahead.

Actually the whole States, or most of them, were tending to do something similar at the time. As the annual expert reports on States’ finances by Prof. Geoffrey Wood stressed repeatedly how remarkable Guernsey’s spending restraint was, only a few deputies were honest enough to admit that such reductions in real terms expenditure could not last forever.

As a result it is now coming as something of a shock to be faced with the stark question I posed at the start of this column.

Some will seek to sidestep that difficult choice, saying things like ‘if we stopped sending overseas aid that would solve the problem’ or ‘let the bus service stand on its own two feet’ or ‘just close down Aurigny and that will release millions to spend on health’. Of course this will be pure fantasy and an exercise in sticking their heads in the sand.

Guernsey is not going to say ‘let the poorest people in the world go hang’, and nor should it. Not only would it be morally wrong but would destroy our international reputation. It is true that I did recently propose a more modest increase in spending on aid and my motivation was partly that I knew the pressures we were going to see on our domestic budget, but I lost that argument and respect the outcome.

A bus service without the current level of subsidy would rapidly shrink until it was unrecognisable. That would damage our tourist industry, increase congestion on our roads and leave thousands of islanders more isolated in their own homes.

As for Aurigny? Well its losses definitely need addressing pronto, but getting rid of it altogether would be both foolish and dangerous.

In reality there is no silver bullet for the upward pressure on spending on health and social services and the only sustainable answer is to increase States revenues. How? Well that is the $64,000 question. Or maybe that should be the $64m. question.

There are several possibilities. There could be a new tax on general consumption, which would be unfair and regressive. There could be changes to our flat income tax structure – shock horror. Or there could be ‘green taxes’ to raise more cash while trying to save the planet, the only problem being that the more you succeed in changing behaviours the less you raise.

Only two things are certain.

The first is that whatever Guernsey does to bridge its funding gap will be deeply unpopular. Don’t shoot the messenger, by the way – I am just being open and honest in a way many deputies won’t dare to be nine months before an election.

The second is that just tinkering within Guernsey’s current tax base, putting a bit on this and a bit on that, won’t solve the problem?

So what will happen?

My guess is that the can will be kicked down the road, with the States choosing to run a deficit for a couple of years.

In other words, no horses will be frightened until the election is safely behind us.

It’s not what should happen but it is probably what will happen. But who knows? P&R might surprise us with their courage and vision come budget time.

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