Peter Roffey: ‘The States has just set itself up to fail’

Just as there is many a slip between cup and lip, there is also a huge gulf between the States resolving something and it becoming a reality. There could be a unanimous vote in favour of the sun rising in the west from now on, but it would still pop up from behind Herm the next morning.

So, to put it mildly, I am deeply cynical over the freshly passed resolution to target a 1%, in real terms, reduction in public expenditure. This would be hugely challenging even if it only embraced general revenue expenditure, but to extend it to include all public spending means the States has just set itself up to fail.

Firstly let me say that I am all in favour of a more efficient public sector, and the States looking to cut out waste and unnecessary spending at every opportunity. This is hugely important at any time but doubly so when we all know our government is going to seek tax increases very soon.

So I applaud the sentiment behind the Humphreys amendment. But, not to put too fine a point on it, to over-promise and under-deliver (which the States will in this instance) is foolish. It doesn’t help to build public trust. Rather it undermines it.

First let me explain why a 1% reduction – even if only applied to general revenue spending – would be very hard to do. After all surely any commercial business could find at least 1% efficiency savings if the need arose? So why can’t the States? The answer is that they can, and they should, but that’s not the point.

The difference is that the private business doesn’t have to constantly expand what they provide. So a 1% efficiency gain equals a 1% reduction in expenditure. By contrast the level of States service provision is very much being driven by the island’s changing demographics. Particularly in areas such as health care.

So they may achieve a 1%, 2% or 3% efficiency gain and yet still see total expenditure rise. Simply because they are having to do more than they used to. It just means that spending goes up more slowly than it would have otherwise. Obviously that is a good thing in itself, but it isn’t what the States just voted for.

So that’s why even bringing down general revenue spending in real terms would be tricky, and would probably involve some very unpalatable changes to services and how they were paid for. But last week’s States resolution went way beyond that.

It targeted a 1% reduction in ALL public expenditure. So this includes some massive, and rapidly rising cost centres such as spending on the States pension and grants from the long-term care insurance fund.

Let’s be clear – spending in these areas will continue to grow rapidly, unless we see a quite shameful betrayal of a long established social contract.

Why? Well it is very simple. We are going to see far more people in receipt of the States pension. And far more people are going to need formal social care and therefore qualify for support from the long-term care fund.

Why the rising numbers? Because despite the slowly rising pension age even more islanders are going to be above it. Meanwhile the number of us aged over 85 is going to absolutely sky-rocket, and that is the main measure for predicting demand for residential and nursing home beds.

Yes folks – you guessed it – it’s all down to those pesky demographics again.

So, short of a visitation of the black death, the only way to stop spending in these areas continuing to rise would be to utterly betray public trust and deny people the benefits they thought they had been paying for. ‘Yes Mr Le Page, we know you have paid 40 years’ of pension contributions but we simply can’t afford to pay you a pension, we have to reduce public spending you know.’

Its not on and thankfully it is not going to happen.

But the problem is that if there is no reduction in spending on contributory benefits, and probably none in healthcare either, then the axe will have to fall much more heavily elsewhere to achieve the total target. And not just a bit more. Between them, health and pensions make up a huge chunk of public spending, so if they are exempt, other service areas are going to need to be really slashed.

We shall see. The States might surprise us. And in some ways the exercise might be useful even if it fails to meet its target. But I do worry that it will be seen as a broken promise by the public.

How cynical am I? Well I have never been a betting man so I am not going to put any money on being right.

Instead I will simply say that if total public spending is really reduced by 1% in a year, I will believe that this States really does have the power to ordain that the sun should rise over Vazon.