Guernsey Press

Awash with money but unable to spend it wisely

I MENTIONED here the other day that I was struggling to understand the latest gross domestic product statistic, the GDP number that measures the island’s ‘national income’ and is a good indicator of how well we’re all doing. Or not, as the case might be.

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Thanks to the 2019 Budget, I can now let you into a little secret: Policy & Resources seems to have issues with it too and so is ignoring the new data when it comes to applying something called the States Fiscal Policy Framework to its own numbers.

This is pretty significant because it has also scrapped any effective, expert or independent oversight of how prudently our top politicians are managing your money and maintaining taxpayer assets.

Yes, the ‘two wise men’ who were charged with providing top-level oversight of whether government was abiding by its own financial rules have been kicked into touch on the back of the new, higher GDP figures that not even P&R is relying on in the latest Budget.

In broad terms, a revision of the GDP process has concluded Guernsey’s economy is bigger than anyone realised, that we’ve never had it so good, and national income growth is zipping along at a brisk pace.

There are a couple of problems with this. Firstly, there’s little evidence on the ground that everything’s rosy in the state of Guernsey and, secondly, the data hobbits in P&R Towers haven’t explained where all this extra notional GDP wealth has come from.

The point, however, is that the latest official figure is £3.05bn but the Budget is using an earlier figure – £2.5bn. So far, so arcane, but the relevance is this. Under the fiscal rules, we’re supposed to be spending 3% of GDP per annum on investing in island infrastructure.

So if we followed the framework, that would mean some £91.5m. – or a quarter of a million pounds a day – to pump into the economy and, hopefully, really get things zinging, plus a few totemic tower cranes adorning St Peter Port’s skyline.

However, P&R wants to restrict that to ‘just’ £76.5m. under its GDP-lite proposals and is asking the Assembly to pop an appropriate amount into something called the Capital Reserve (AKA infrastructure fund) to facilitate that.

But look, here’s the odd thing. There’s already £240m. sitting there doing nothing: ‘unallocated’, in States-speak. Blimey, that’s several runway extensions if we were so minded to boost the economy and come to the rescue of the beleaguered construction sector.

Poke a bit deeper, however, and we’re awash with cash. Total reserves top half a billion, depending on what you include. And that’s avoiding a Robert Maxwell raid on the public sector pension fund of around £1.2bn.

So the reluctance to spend is surprising, given what needs to be done and the benefits of putting some of this cash (your cash) back into local circulation.

Again, I can let you into a secret.

The delays are because the States can’t spend it properly. As P&R puts it in the Budget: ‘…it has become apparent that there is a general lack of capacity and capability for initiating and developing projects. The greatest demand is for support to define the fundamental components of a project in terms of its scope, deliverables, time scales, resource requirements and budget.’

You might want to read that a couple of times as it is a massive indictment on government in the broadest sense. They are lifting huge quantities of cash out of your back pocket but for no purpose.

Yes, the need for projects might have been identified – but without any credible or timely way of pursuing them. Perhaps that’s one of the reasons why the independent insight the two wise men might have provided is no longer required: there’s only so much criticism an under-fire administration can take.

But it’s actually worse than that.

The committees have been silent on the delays and the States members we elect into office to keep the ship of state on course have been asleep at the wheel. That’s why former deputy and now commentator Peter Gillson called this Assembly the weakest in a generation. They simply haven’t done anything.

At least P&R has now identified the problem and created a small team of ‘capital business partners’ to try to break the logjam of projects. And, in a way, it is trying to do so despite the weakness of the States through the new civil service structure being introduced by the chief executive and by involving third-party organisations with the expertise to assist.

So, on top of the external challenges the Bailiwick faces, we now see that internal capacity and capability issues have been exposed, which means it will be interesting to see how Home Affairs emerges from its HM Inspectorate of Constabulary review.

Fair play for having the courage to put themselves to the test in this way because the report should give an indication of how a Guernsey committee discharges important roles of oversight and strategic direction – in effect providing a benchmark of how effective all political boards might be.

Until that’s released, we’re left with the Gillson Verdict and P&R’s ‘lacking capacity’ assessment – neither of which are comforting in these difficult times.

AS A postscript to the referendum, I think we can see my fears were realised because a seismic shift in the way we elect deputies has been imposed by just 6,017 votes.

On top of all the other details to resolve, I doubt it can be made to work without electronic voting as, had anyone asked, the parishes are unlikely to be be able to cope with the additional burden.

A friend with access to an egghead endowed with an Oxford double first in maths tells me that the referendum alone provided 326 potential different ways of filling out the form, including leaving it blank, so you can see what a nightmare 2020’s general election will be.

More fundamentally, however, fretting about how we elect deputies will ultimately be shown to be far less important than asking what we really need from them and how best to recruit and retain the talent the island requires.

Why? This from another contact: ‘If John Gollop started the “Gollop party” with the only requirement for membership being that candidates had to change their name by deed poll to “John Gollop”, the next election would be a landslide,’ he says.

‘Alternatively, congratulations to all the familiar faces, good or bad, on your re-election in 2020. Congratulations also to Fred Smith who, with 45 votes, has made it in as deputy No. 38 and commiserations to candidates placed 39 to 765, who all failed to get in with 44 votes.’

No offence intended to John, who’s an excellent chap, but you get the idea. The other niggle is election expenses. Currently capped at £2,300 per district, that implies a minimum of £16,000 on an island-wide basis, way out of reach of many candidates.

Brace for taxpayer money being used to subsidise wannabes?