Horace Camp: Deficit is not a leak, it’s a gaping hole in the boat

If you want to understand the Guernsey budget, picture a small wooden boat bobbing about in the harbour. It has a few leaks but nothing serious. The crew are not worried because they have always managed to keep it afloat. They have a few buckets, a bit of gumption, and the knowledge that if they work together they can cross to Herm and back without too much trouble.

Then a new captain takes charge. He says that the old buckets are not up to modern standards and that every crew member should be issued a brand-new inflation-proof model. The crew cheer. The purser points out that new buckets cost twice as much, but the captain explains that it is important for morale and will look good in the annual report.

With that done, the captain notes that the crew are overworked and proposes hiring a few more sailors. After all, the sea is unpredictable and the waves are rougher these days. A committee is formed to review how many extra hands are needed and it returns with a report recommending at least 10% more crew, all to be paid at the new higher rates. The purser gulps but signs the papers.

Next, the carpenter pipes up. The boat needs new planks, he says, not because the old ones are rotten but because timber prices have risen and it would be irresponsible not to budget for that. The cook asks for better rations. The helmsman demands a new wheel. Soon every corner of the vessel is being improved, expanded, or replaced.

When the bills come in, the purser is pale. The numbers no longer add up. The boat that once floated comfortably on the tide is now so laden with shiny buckets, extra crew, and upgraded fittings that it sits low in the water. The leaks are still there but now the sea is lapping at the gunwales.

At that point the captain gathers the crew and delivers his solemn warning. The ship, he says, is in danger. The problem, he explains, is that the passengers have not been paying enough for their journey. If they do not start contributing more, the vessel will surely sink.

It is a fine speech and the crew applaud. The passengers are alarmed and reach for their purses. The captain smiles, relieved. The deficit has been explained.

That, in essence, is the Guernsey Budget.

Every year we begin with the assumption that nothing can ever cost less. Every contract, every salary, every programme must rise with inflation and preferably a little more. Then we add more staff, even as we insist we cannot find enough people for the jobs already on the books. In truth, some of those jobs exist only on paper. They are the ghost crew, conveniently left unfilled so that the unspent wages can be steered elsewhere. It is an old trick, well known in every bureaucracy. You budget for ten sailors, hire eight, and quietly use the two spare pay packets to fund a pet project, repaint the cabin, or finance another round of meetings to discuss efficiency.

And while the ship lists lower, the generosity grows wider. This year’s budget increased the Overseas Aid and Development Commission’s allocation from £5m. to £5.6m., including a £400k real-terms rise to help reach a target of giving away 0.2% of our GDP by 2030.

It is a noble aspiration, but a curious one for an island running a deficit and struggling to house its own people. In a year of record shortfall and warnings of peril from our leaders, one might have expected that budget to have been reduced rather than increased so generously. When you are borrowing to give charity, it is fair to ask who exactly is the donor.

And then there is the budget reserve. This year it has risen from just over £6m. to nearly £17m., a near tripling of the pot kept aside for pay awards, in-year pressures, and so-called government work plan initiatives. One might ask why a government claiming it cannot balance the books feels the need to set aside an extra £10m. in loose change. Is this prudent planning, or another way to make the deficit appear so large that new taxes become unavoidable?

The Committee for Economic Development has also been given an extra £545k for ‘initiatives related to the finance sector development and marketing and tourism promotional activities’. In a year of deep deficit, one might wonder whether that too is essential or simply convenient. The Committee for the Environment & Infrastructure has meanwhile secured another £1.3m. to support the dairy industry, proving that even in a fiscal storm there is always money for the sacred cows.

On top of that we layer every new ambition that takes the fancy of a committee. Only when all of that is done do we ask the most basic question of all, which is how much money we actually have.

The answer, unsurprisingly, is less than we plan to spend. It always is. But rather than cut back, we declare a deficit and call for new sources of revenue. That way the cycle begins again.

This year the deficit stands at £117m. That is not a leak. That is a gaping hole below the waterline. Yet if you look closely, it was not created by the sea. It was built plank by plank through a budgeting process that rewards expansion and penalises restraint.

The tax review now tells us that we must introduce a goods and services tax to plug the hole. The argument is simple. The boat is taking on water. The passengers must pay more or it will sink.

What we are not told is that much of that water was poured in deliberately. The inflation-proof rises, the ever-growing payroll, the automatic spending uplifts, all ensure the ship lists lower each year. The bigger the leak, the stronger the case for a new tax.

We are being played by our own arithmetic.

In the private world, when a business faces a shortfall, it looks first at its own costs. It trims, restructures, and reprioritises. It does not start by increasing wages and headcount and then sending a begging letter to customers. Yet that is exactly what our government does and with an air of righteousness.

The phrase ‘budget discipline’ has all but vanished from the vocabulary. Departments no longer compete to save but to justify growth. They treat spending as a right rather than a responsibility.

Even the word ‘cut’ has been replaced with ‘efficiency saving’, as if acknowledging reality might damage morale.

The result is predictable. A budget drawn up in this way cannot fail to produce a deficit. It is designed to. And once the deficit exists, it becomes political capital. It is the evidence needed to convince the public that a new tax is inevitable.

It would be easier to swallow if the spending produced clear results. But islanders see little sign of improvement. Waiting lists grow, roads crumble, and education lurches from one reorganisation to another.

The payroll swells while productivity stagnates. The only consistent output is paperwork.

We are told that the solution is long-term fiscal stability. That sounds sensible until you realise it means stability for the machine, not the people feeding it. Stability for government departments, guaranteed pay rises, and predictable revenue streams extracted from every household. The passengers pay, the crew stay dry, and the leaks are rebranded as opportunities for investment.

Guernsey was not built on that sort of thinking.

Ours is a small island that thrived because we knew how to make do. We repaired before replacing. We cut our cloth to fit. We did not mistake wish lists for plans. Somewhere along the way that spirit was replaced by the language of entitlement.

The old boat still floats, but only because it always has. The tide is kind, the sea forgiving, and the passengers resilient. Yet the patience of those passengers is not infinite. They are beginning to notice that the same faces who created the leak are now selling the buckets.

GST is being marketed as the lifeline. Without it, we are told, the ship will go down. But adding a tax to a structurally bloated budget is not a repair. It is an excuse to keep doing the same thing. The water will still rise, the crew will still grow, and the captain will still congratulate himself on steering through troubled seas while the purser quietly rearranges the figures below deck.

There is an alternative. It begins with admitting that the hole is not in the revenue but in the method. Instead of beginning each year by promising inflation-proof rises, we could start with a blank page. Ask what must be done, not what can be afforded after everyone takes their share. Treat every new hire as an investment that must earn its keep. Reward departments that spend less, not those that merely explain their overruns more convincingly.

That kind of budgeting would not make the captain popular with the crew, but it might just save the boat.

The truth is that Guernsey does not have a revenue crisis. It has a spending addiction. Each year the hit must be stronger than the last to get the same buzz. New staff, new projects, new schemes, anything to feed the habit. When the high wears off, they blame the public for not supplying enough cash to keep the feeling going.

Perhaps it is time for the States to book themselves into rehab. One of those famous clinics where celebrities go to rediscover restraint. It will cost a fortune, of course, but it might save money in the long run. And who knows, a few weeks of detox could remind our leaders what it feels like to live within their means.

Guernsey’s budget will not be saved by another tax or another review. It will only recover when the people in charge admit they have a problem. Until they do, the rest of us are left filling the bucket with money from our wallets while they reach for another fix.