The problem that requires sorting is the welfare state

In my working life as an accountant between 1966 and 2008 I worked in both the public and private sectors.

My firm belief is that, as a generalisation, in comparison to the private sector the public sector is relatively wasteful and financially inefficient. But this is a cultural matter, and would be at best very difficult, and at worst impossible, to change, certainly within any meaningful time scale. It’s the difference between an organisation like Aurigny which prepares a profit and loss account and a government department for which this is impossible. We may have been horrified by Aurigny’s trading losses, but in the case of States departments it all remains under the radar and it is inevitable that financial efficiency is not at the centre of public sector culture.

So while there is certainly scope for asking whether the public sector is doing things that we really don’t need it to do, and whether it might do things better, this is not where we should focus our immediate attention in order to find a realistic solution to our funding gap.

No. The immediate problem that needs to be addressed is the scope and cost of what has come to be called the welfare state. In a mere 100 years or so this has grown from rudimentary beginnings into a comprehensive and substantial structure and it has become obvious that it now has an insatiable appetite for funding. It doesn’t matter how much money is spent; it is never enough. In fact we would love to be able to pay more into it if only we could.

We know there is a growing demographic problem in relation to social security services and it is also obvious that the ongoing amazing strides in health care have added much to the scope and cost of health services. And there are many other subsidies of an individually more minor nature which taken together all add up.

Don’t get me wrong. Our welfare state is a very important institution and our lives would be bleak without it. We have to continue to sustain it to as great an extent as we can. But the unpalatable truth is that we have got to be able to cut our cloak to our cloth and not try to do it the other way around, because it’s obvious that demands for welfare state funding are only going to continue to grow, and at some stage we are going to have to step back and take a hard look at it. This is the only realistic answer to our funding gap and sooner or later – and probably sooner – we are going to have to face up to this.

Taxation is not infinite. Further taxes on income are out of the question if we want to protect our economy. A GST may provide a measure of relief for a period of time, but the welfare state will soon outgrow even this unless we are prepared to face up to the funding problem and not let expenditure continue to drift in a rather piecemeal way.

What is needed is not a pro-rata appeal to all departments, since clearly some are going to have to bear more of the brunt of cost savings than others. I’d suggest what needs to happen is for the States as a whole to develop and approve a central budget for States benefits and subsidies of all kinds. This has to be prepared in detail, showing what will and what will not be paid for, and has to add up to a cost which we can afford to pay. This would not be a politically popular exercise and not something that we would really want to have to do. It’s a very considerable and complex task and really needs a ‘Dr Beeching’ rather than a committee to do it, and it will almost certainly not even be a once and for all job. It will be painful, and doubtless every proposed cut will attract a lobby of opposition. But I’d suggest that it’s going to have to happen sooner or later, so why leave it for our children and grandchildren to have to deal with?

We have got to grasp this nettle now – and it is a nettle – because we will not be able to keep on trying to raise more and more in taxation.

BOB PERKINS

Les Corneilles

Rue de la Ronde Cheminee

Castel

GY5 7GD

PS. For those who are too young to remember Dr Beeching, he became somewhat notorious in the 1960s as the author of the Beeching Report, which proposed the closure of many miles of non-trunk railway lines and many stations. At the time this was highly unpopular, but led to the continued survival of British Rail, and laid the foundations for the rail network that the UK still enjoys today.