Future Guernsey: the tax and spenders have won it

A YEAR ago, almost to the day, I invited islanders to look around at what was happening to Guernsey and ask themselves how many existential crossroads a small community like ours could face in one go. I won’t rehearse them – the link’s below if you can bear to be reminded – but since then matters have deteriorated in an unexpected way.

Because Policy & Resources has given up. It has thrown in the towel on trying to lead the States or provide a steer on the appropriate way to manage the Bailiwick’s finances and public services.

Instead, it is leaving that task open to the States as a whole and the committees which – you could quite credibly argue – got us into this mess in the first place. To compound this they are also potentially chucking you, Mr and Mrs Guernsey Taxpayer, under the bus.

This running up of the white flag is announced in the mid-term reset of the Government Work Plan which, instead of majoring on affordability and need, basically agrees that government must be free to spend what it wants.

‘In short, the principal committees have been asked if they can do less or do the same differently – their overall response has been that they cannot, and that they also need to do more,’ says P&R president Peter Ferbrache.

That refusal by States members – who have just trousered a 5.7% pay rise – to contain costs is already projected to lead to a deficit in public finances of £100m. a year by 2040. But that’s just for starters. As Deputy Ferbrache warns:

‘This position is now further compounded by the total funding and resources to undertake obligatory actions, continue delivery of the States’ agreed strategies and plans, and respond to emerging issues.’

So in fact, the mid-term ‘reset’ is actually a huge policy shift from what was originally headlined ‘Investing in Islanders’ to today’s iteration, which is essentially ‘Government First’. That’s why the first two priorities in the reset are ensuring public service resilience, security and governance and planning for sustainable health and care services. The third and final ‘strategic portfolio’ is a rather vague ‘grow economic competitiveness’.

Read the mid-term reset closely and P&R has been factual in its approach. The Assembly is the government and the principal committees are its chief agents, also responsible for holding themselves to account, delivery, and making things better for islanders.

This, too, is a major departure from the public perception of P&R as leadership committee and chief adviser to the States. Forget the past, Deputy Ferbrache reminds us, the reality is we’re servants to, not masters of, the States.

As he puts it: ‘…the principal committees… make clear their view that what is being put forward by each of them is considered to be critical and must proceed; that other services cannot be paused or curtailed in order to redeploy existing resources to new priorities; and that it will primarily be government delivering these services.’

Which means business as usual and don’t even think of outsourcing. That message is reinforced by P&R leaving delivery of the reset strategic portfolios down to the relevant committees themselves: ‘[P&R] is not establishing a complex governance arrangement for these portfolios,’ he says. To underline this hands-off approach he also adds, ‘The Policy & Resources Committee will discharge its responsibilities by formally monitoring progress’ on the revised work plan.

The report is also clear that ‘the longer-term financial position is unsustainable’, and that ‘the principal committees and States members need to accept that government will need to ask taxpayers to provide more funding to the States now’.

This is a not particularly subtle way of telling committees and their members that you got us into this mess and we’ll be reminding voters of that when tax rises are demanded ahead of the next election. Those tax rises, incidentally, will be around £2,500 per taxpayer, so significant sums at a time of a cost-of-living crisis and spiralling rent and mortgage bills.

So far, so clear – or is it?

Yes, P&R has stopped trying to steer the States but it is instead insisting members accept responsibility for their actions. We’re not taking the rap for your profligacy, he seems to be saying.

Endorse the mid-term reset, says Deputy Ferbrache, and we’ll come back with proposals that substantially raise taxes and charges to pay for continued growth in public services that you have told us is pragmatic, proportionate and necessary for Guernsey.

Reject the reset and that means you agree neither the GWP nor all the other nice-to-have strategies and policies approved by the States previously are affordable. In that case, we’ll come back with ‘revised strategic proposals within a reduced funding envelope’ – in other words, something the island can afford and actually needs.

‘In short,’ he says, ‘the States Assembly will then be asked once again to reprioritise and to reconsider what is essential and what is not.’ Your very last chance to contain government costs.

There is a sense of P&R frustration in all this, as it mentions the now-talismanic anti-discrimination law ‘with a significant and on-going cost to the taxpayer both as a service provider ensuring its own compliance and as a provider of services enacted through the legislation’.

While valued and helping the vulnerable, ‘increasing the operating costs for government services in this way without significantly increasing revenues cannot continue,’ he says. And, the clincher, ‘Critically these extant commitments and their legacy operating costs leave very little capacity to resource a response to emerging issues…’.

So where does all this leave you and I? Bluntly, as rather powerless onlookers as the battle for the economic heart and soul of the island – tax and spend v. small state affordable government – reaches end game.

In the absence of executive government or a manifesto-led party system, P&R has accepted political reality – with no powers of its own, the only thing to stop the States from splurging more of your money is the States itself.

And since the committees are wedded to their plans and P&R has stopped trying to cajole them, that will never happen. We’ve just crossed the crossroads.

https://guernseypress.com/news/voices/richard-digard/2022/07/22/the-ultimate-crossroads/