Recovery’s too risky for the States

BY NOW, as you reach for your afternoon cup of tea, nominations for Guernsey’s first island-wide general election will have closed and we’ll know how many hopefuls there are in the race to make the island a better place. Most expect 100-plus candidates and you have 38 votes with which to select the winning team.

Being a postal elector, I shall use all 38 and am, mentally, just in double figures for definites. The new faces, therefore, have a lot to play for and the fresh Assembly will have a huge responsibility on its collective shoulders.

I know, it’s a pretty obvious thing to say. But, much like Marvin the paranoid android, what makes me so depressed is few of them will see it that way. Let me explain.

Over the last few weeks, I’ve set out some of the financial issues facing this island and how we’ve committed to expenditure with no real understanding of how that’s to be paid for. And that was before Covid struck.

So anyone promising to do stuff in the new States will effectively be demonstrating their lack of understanding of public finances. That’s unsurprising. Only a handful of people here truly do.

November’s Budget will bring greater clarity but it won’t be until the Covid-19 aid packages end that we will know what unemployment really is or how seriously damaged the visitor economy has been.

On the plus side, Guernsey’s in pretty good shape, with assets and reserves and a financial services sector that’s largely unaffected by the pandemic. But government also has a growing fiscal black hole and an urgent need to generate an as yet unknown amount of extra revenue.

And this is where the pressure on the Assembly becomes clear. Tax increases at a time of recovery are contra-indicated, borrowing’s a burden on the next generations and the best way under Guernsey’s tax regime of generating more money is to get more people into work.

So we need to pause all the new policy initiatives increasing revenue expenditure – amazingly, that could save around £80m. over the lifetime of the new States – suspend the population management law and encourage new businesses and residents to set up here.

We also need to invest in infrastructure projects with a strong multiplier effect on the local economy, like grants for insulating homes, or which have associated income streams, like a floating dry dock for VAT-free luxury yacht servicing/refitting.

But the new States won’t do any of this, because it is incapable of doing so even if it wanted to. I’ll cite just two reasons in support of that. The first is the Seafront Enhancement Area (SEA). The second, but associated, is the recent report by Scrutiny Management, which demonstrates government is useless at projects. Hence my Marvin moment.

Look at the last report on SEA – development of which, you will recall, is slated as a priority – and it reveals that since 2017 nothing of any note has happened because it was set up as (seriously) the wrong sort of committee.

Experienced developers have come up with integrated east coast schemes, particularly incorporating flood defences and revenue streams like generating tidal power, but government has not.

As retiring Scrutiny Management head Chris Green notes in his capital projects report, nothing much has been started or finished by the States in the past eight years, it’s anyway failed adequately to maintain what it already has and economic growth opportunities have been stymied (his word) by bureaucratic process.

Marvin the paranoid android. (28649005)

So before the pain in the diodes down my left side gets any worse, let’s get to the meat of this election. It’s not about island-wide or building back better. It’s almost not about the economy or recovery. It is, however, about recognising two things: Firstly that we cannot as a community of 63,000 souls have everything the UK does and remain low tax, so what are we prepared to go without?; and secondly, reviving and thriving requires a government structure that’s fit for purpose.

There have been many independent reports on how Guernsey’s political system fails to deliver. Well, the starting pistol has been fired on yet another unstructured change, although this one could, on paper at least, provide some benefits. If unwhipped parties can vote coherently and consistently, that is.

More fundamentally, the civil service which underpins everything, is now proving to be a limiting factor – and that’s after five years or so of supposed reforms that, from Scrutiny’s analysis at least, have achieved nothing but increased salary costs.

One of the criticisms of regulation here is it sets risk/reward parameters too low, which is why finance now specialises in compliance rather than innovation and growth. But, if anything, public sector process is even more risk averse.

The lack of progress and the absence of ambition in the States’ strategic thinking vividly illustrates what’s known as paralysis by analysis: being fixated on getting something so right nothing gets done at all.

I wish all this week’s declared candidates well and much success in whatever grand plans they have for making us live our lives as they wish us to. Instead, I’d suggest concentrating on swiftly re-engineering the system they hope to join so it can achieve the things we actually need within their four-year political lifespan. But that won’t happen either.

Yes, we’ll muddle through but what makes me especially glum is knowing we could do so much better if we took a chance or two, threw away the civil service rulebook and focused on outcomes. Not just open for business but hungry for it.

Some candidates are on board, others less so. And all we really have to go on is name awareness, websites and a manifesto booklet like a small phone book.

I don’t know about you, but without a brain the size of a planet to crunch the data, a bit of help in choosing 38 individuals best suited to these challenges and capable of forming a government of unity wouldn’t go amiss. Marvin?

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