Last chance to reinvent the island

ON TUESDAY, I sat down and penned this week’s column, provisionally headed Building Back Better Begins With Regime Change. ‘Coo,’ said my proofreader. ‘Cynical even by your standards…’

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Then Policy & Resources published its Revive and Thrive blueprint for recovering from the economic, social and health consequences of Covid-19 and, bless my soul, they’re going for regime change.

So this is version two of this week’s piece with all previous cynicism removed (copies of the scrapped article available on request).

For someone who has observed the States for a long time, the past few years have been profoundly depressing. Government changed from something (comparatively) buccaneering and fast-moving to a cumbersome behemoth more interested in process and procedure than outcomes.

Revive and Thrive attempts not to waste a good crisis by proposing a recovery based on building back better and pushing to one side so many of the things that have hampered the island in recent times.

That includes the discredited population management regime, accelerating public sector reform and (good luck with this one, Gav) persuading States colleagues to stop navel gazing and concentrate on making Guernsey great again.

The document’s a bit more polite than that but, if you want to decode it, here are some pointers.

First, read Lyndon Trott’s letter in this newspaper on Wednesday about borrowing and ponder why such a Janet and John explainer was necessary and who it was aimed at.

Secondly, in the Revive and Thrive document itself look at the data supporting the possibility of a V-shaped recovery but only if the plan is followed.

Thirdly, note reference to ‘risk-based regulation’. Hello, Guernsey Financial Services Commission…

Lastly, savour the architects of the recovery’s assertion that: ‘Based on the projected impact to the public purse, prioritisation and affordability must now be at the heart of all government and operational decision making.’

There’s not room here to unpack all of those, I’m afraid, but you’ll recall I’ve mentioned before that the consequences of lockdown were largely hidden from sight. Yes, we saw the closed businesses but not the effects on their owners and staff.

Today, that’s clearer: 3,000 extra claims for benefit since lockdown was imposed, a three-fold increase in unemployment to 1,000, and public finances themselves taking a £190m. hit this year alone.

Unchecked, modelling suggests the impact over the next decade could be £400m. with persistent unemployment, falling wages and reduced household incomes.

Against that backdrop, P&R is hoping islanders and States members will rally behind its barebones strategy

and accept that to build back better means doing things differently – and for different outcomes.

It’s one reason why an official report on rescuing the island’s economy has a section on governance in the rebuilding process and seeks to establish business and community advisory groups so it’s a true partnership approach.

The stakes here are high too. Not just in the sense of the wellbeing and health of the island – an increase in domestic abuse cases of up to 40% tells its own story, along with a consequent spike in children-at-risk referrals – but economically as well.

Without fiscal stimulus, modelling shows it will take the island 10 years to recover and that the blow to prosperity (as measured by gross value added) would be eight per cent – nearly three times as bad as the global financial crisis of 2008. Worst case would see a slump of 11%, on a par with the UK and, according to the OECD, the worst in Europe.

The proposed rescue plan looks not only to restore most economic activity next year – hence the V-shaped recovery – but to see things leap ahead of the previous growth path within three years.

That could net government an extra £280m.-£360m. in new tax revenue over the next decade, compared with an expected loss of £40m. a year if there is no revive and thrive package.

Put another way, that would mean either similar cuts in public services or tax increases just at a time of increased demand for health and welfare support plus significant unemployment and hardship.

For my money – and it is ours after all – Revive and Thrive offers a credible way forward. The island has wasted other opportunities to change and thus muddled through, with government becoming more and more dysfunctional and reliant on a handful of heroes to make it all work.

This, for all the pain that’s led to it, is a real chance to reinvent the island. Previously, that has meant economically and in streamlining the public sector. This can still happen. But more importantly, the process will include environmental and social outcomes as well as financial ones.

What’s impressed many over the past few months is how well the island has coped in a crisis. We’ve had leadership, a willingness to act on expert advice and streamlined decision making.

If we hold on to that, we really can build back better.

My fear, however, is that we will win the Covid war only to lose the peace. Prove me wrong, deputies, please prove me wrong.

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