Public services in peril without decisive action

WHEN I was invited to sit on the tax review committee early in this political term I was well aware I was being proffered a poisoned chalice.

No good was ever going to come of it in respect of my personal political prospects. So why didn’t I run a mile? Why didn’t I say ‘thanks but no thanks – it’s your pigeon P&R?’

Three reasons really.

I’ll take them one at a time.

The first reason I happily said ‘yes’ is that the whole idea we are simply talking about a ‘tax review’ is a major misconception.

It’s far more than that. The proposed changes to the island’s social security system completely dwarf those to its tax system. They represent a complete restructure of the way social security operates, of the type which can only be contemplated once in a generation. In comparison the tax reforms – significant though they are – are quite small beer.

So it really should have been called the ‘social security and taxation review committee’. As such, it would have been perverse for the president of Employment & Social Security not to have accepted a seat on it.

I was also delighted to be joined by one of the non-states members of ESS, Mark Thompson, who made a major contribution to our deliberations.

Of course the current narrative among opponents is all about taxation. Not just that, but it’s all about GST, when in reality that’s just one element of a well-thought-out package. The rest of the measures are ignored because the facts can’t be allowed to get in the way of a good polemic.

The facts are that the package has somehow managed to raise an extra £55m. per year (needed for reasons I’ll come onto) while making households on modest incomes better off than they are now. Completely at odds with the rhetoric that ‘this is going to hit those on low incomes’.

How has this been possible?

It hasn’t been easy, and it has meant levying considerably higher taxes and contributions on those in our community who are better off. This in turn has allowed three specific measures which will help those lower down the income scale.

The smallest of these is the higher income tax allowance. The middle one is the new 15% income tax band up to £30,000 of earnings. But the biggest is the restructuring of social security contributions – you know the one that opponents prefer to ignore.

That brings me neatly onto my second reason for agreeing to sit on the review committee.

I knew that the States would undoubtedly need to raise many tens of millions of pounds in extra revenue (I’ll explain why in a second) – the only question was how they would actually do it.

Now I might be doing the members of Policy & Resources a big disservice, but I was convinced the need to make any package of reforms as progressive as possible, and to protect low earners, would be higher on my political agenda than it would be on theirs. With that in mind, it seemed far better to be around the table advocating on behalf of the least well off, than to shirk that responsibility and just piously hope they didn’t end up getting hammered.

Of course, I knew that protecting those of modest means, while raising many tens of millions in extra revenues, was going to be a big ask. I genuinely believe the package on offer goes as far as it could in doing just that. And – if you’ll forgive my ego – I also genuinely believe my presence around the table helped to achieve that outcome. In my book that’s a result which far outweighs the prospect of receiving an electoral caning for being associated with tax increases.

My third reason for being willing to grasp this poisoned chalice is that this is really big political stuff. One of the biggest decisions to be made by the States in decades.

What on earth would be the point of being in politics if one shied away from any involvement in landmark policy considerations just to mind your own back? If I was that scared of public opinion I would have trained as a bookbinder, a dental nurse, or an accountant, rather than going into politics.

The point of being in government (as every Guernsey deputy is) is to govern. Even though nine of my colleagues seem to think it is to pretend to be a public campaign group. Bizarre or what? I support the right of any deputy to oppose the proposals both in the assembly and beforehand in the media. But surely the role of lobbying States members, from outside, with ribbons, marches and badges, should fall to concerned members of the public, not States members themselves?

Call me old fashioned.

But stepping back, why the need for the States to raise all of these extra revenues at all?

Is it because of profligacy? I know that is the popular saloon bar narrative but it is not supported by the facts. Despite its obvious lack of economies of scale, Guernsey spends less per head on public services than just about any other territory you can name.

No.

The reason why Guernsey’s government, and all of the rest of the western world, needs to increase public revenues comes down to one word: ‘demographics’.

It is simply because our community going forward will have a far higher percentage of old people than it did in the past. Nearly all of the cost pressures are coming from three areas: healthcare, social care and pensions.

All down to our ageing population.

And so far no sensible alternatives have been put forward to the ‘least bad’ option being proposed by the review committee via P&R. I am genuinely open to other solutions but what I have heard so far has been feeble.

For example many have cited ‘savings’ as the solution. But pressed as to where those savings could be made, we get pathetic comments like ‘why not cut out the health promotion unit or the active travel department’.

We can argue over the merits of these functions, but the point is that removing them is not going to touch the sides of the funding shortfall facing the States. It’s a bit like a householder facing a £1,000-a-month mortgage hike and deciding to balance the household budget by cutting pickled onions out of their weekly shop.

In reality, the only way to fill the financial black hole through spending reductions would be by making massive structural cuts to key public services. Not scare-mongering – plain fact.

That was my final reason for volunteering to be one of the unfortunate messengers on whom the community were always likely to carry out a little target practice. I really care about key public services. I always will fight to protect them, and they are in peril without some decisive action to raise additional revenues.