Horace Camp: Living on the never never

The first Budget of this new Assembly has not yet been approved, yet already it asks the people of Guernsey to accept something no sensible household would ever do. Hidden within its polite language is the admission that the States intends to spend £115m. more cash than they will take in next year. That is not a difference of opinion about priorities. That is a gap between what we earn and what we spend.

To understand what this really means, imagine a family that earns £70k a year and plans to spend £115k. They could manage for a short while by dipping into savings or borrowing a little, but everyone in the house would know that it could not go on. That is exactly what the States is proposing for the island. The figures may look impressive on paper, but they hide a truth that would not pass the kitchen table test in any Guernsey home.

This is the first financial plan of an Assembly that was elected on promises of restraint. Candidate after candidate assured us they would bring government costs under control. Some even said it was the reason they were standing. Yet within months of being elected, the same deputies now sitting on committees have set aside those pledges. The budget shows that committees collectively asked for £28m. more than the cash limits agreed by Policy & Resources. That tells its own story. Once in office, every department thinks its spending is essential. The spirit of thrift that once defined Guernsey government has been replaced by a culture that always finds a reason to ask for more.

The headline number in the Budget is a £48m. deficit. It is presented as progress, as if the situation is improving. But the small print reveals something rather different. That figure already includes £40m. of supposed income from the new Pillar Two corporate tax, money that will not actually be collected until 2027. Take that away and the true deficit is £88m. Every pound of the new tax revenue has already been spent before it even exists. It is like a family writing next year’s overtime pay into this year’s shopping list. It looks balanced only because the money has been borrowed from the future.

If Pillar Two is anything to go by, we already know what will happen next. The moment new money is found, it disappears. £40m. of future income has been devoured before a single payment has been received. It has vanished into the void of government spending, absorbed without trace. If this is how we treat new revenue, then no level of tax will ever be enough. A goods and services tax would meet the same fate, consumed by a machine that grows faster than its income.

Once the cost of capital projects and the losses from trading bodies like ports, waste and the dairy are added in, the real cash drain reaches £115m. That is the figure the Budget itself calls a ‘real and material cash impact’. It is another way of saying that the States will burn through over £100m. of reserves and borrowed funds just to keep things running as they are. The island is now living off the prudence of past generations who saved for the future instead of spending it.

Guernsey people have never been reckless with money. Our parents and grandparents saved their pennies in biscuit tins and fixed what they could rather than buying new. They paid their bills before they treated themselves. They believed in living within their means because that was what kept their families independent. It is a strange twist that a government made up of their descendants seems to have forgotten those lessons.

Policy & Resources talks of prudence and discipline, but the Budget reads like the opposite. It includes a so-called savings target of £4m., yet £2.5m. of that has already been counted in the figures. It promises a structured review of services, which means another round of consultants and management reports paid for out of the same overstretched funds. The language of control is being used to disguise the lack of it.

This Assembly was elected on the promise of change, but in truth it has followed the old pattern. Pay costs have risen by £14m. Total expenditure is up by more than 4%. Every major committee, from Health to Education to Home Affairs, is spending more. There has been no serious effort to ask whether all of these services are affordable, or whether some should be delivered differently. Instead, the assumption remains that if the government does it, it must continue to do it.

The States now behaves much like the banks used to warn their clients not to. They treat one-off windfalls as if they were regular income and treat reserves as if they were a bottomless purse. The illusion of stability depends on optimistic accounting. In real terms, the money simply is not there.

Guernsey used to pride itself on doing better than this. When we were a smaller, tighter island economy, we had to keep the books balanced. Committees in those days knew that they could not spend what they did not have. When they needed to build something, they saved first and built later. Somewhere along the way, that mindset was lost. The discipline of the parish has been replaced by the habits of a bureaucracy that thinks it can always find a new source of funding.

If this Budget passes as it stands, it will mark a turning point. It will confirm that Guernsey has accepted the idea that living beyond our means is normal. It will turn our reserves into a routine funding stream rather than a safeguard for emergencies. Once that happens, there will be no going back. The next downturn, or the next unexpected cost, will expose how fragile our position has become.

The most striking thing is that the Assembly still talks about responsibility while preparing to do the opposite. It speaks of sustainability but puts forward a plan that relies on spending money we do not yet have. It says it wants to protect the future but is already spending the future’s income. This is not a question of political ideology. It is a question of arithmetic and honesty.

There is still time for deputies to act. The Budget has not yet been approved, and they have a chance to show that their campaign promises meant something. They can send it back for revision, insist that real savings are made before new spending is agreed, and demand that the Pillar Two income be recognised only when it actually arrives. Above all, they can insist that Guernsey’s government should live by the same standards it expects of its people.

For too long the public has been told that it cannot understand the complexity of States finances. But the principles are not complex. Any farmer, shopkeeper, or tradesman on this island could explain them. You cannot keep spending more than you earn. You cannot count next year’s money as this year’s. You cannot live on reserves forever.

It is time for islanders to remind their deputies of that simple truth. Each voter knows who they supported at the last election. Many of those deputies made clear promises to rein in the size and cost of government. Now is the time to hold them to it. The people of Guernsey should contact their deputies, write to them, speak to them, and remind them that they were sent to the States to bring spending under control. They were not elected to continue the same habits that have brought us to this point.

If this were a family household, there would already be a serious conversation around the kitchen table about cutting costs before the savings run out. The same conversation now needs to happen across the island. Guernsey’s future depends on it.