I was frankly astonished to see the Guernsey Press proclaim on its front page on Monday 20 July that ‘States pension faces cuts if deputies freeze budgets’.
I regard that headline as fake news, and I believe the Guernsey Press should correct it.
The States does not fund the old age pension from general revenue. Not a penny. The pension is paid from the Guernsey Insurance Fund, funded by social insurance contributions and investment returns. That fund stands at approaching £780 million and increased by approximately £16 million last year.
Yes, actuaries may describe the fund as being in an actuarial deficit against the level of reserves they would ideally like it to hold. Actuaries might sleep more soundly if there were sufficient reserves to pay 10 years of pensions in the extraordinary hypothetical circumstance that every contribution suddenly stopped. We may currently be closer to seven. But that is not a ‘deficit’ as any ordinary reader understands the word. This is a fund with approaching £780m. in assets, receiving continuing contributions and earning investment returns.
Nor do I accept the extraordinary proposition that the amendment passed by the States somehow caps the amount that can be paid in old age pensions. My reading of the amendment is perfectly clear. It caps States expenditure. It restrains States spending.
Payment of an old age pension from a self-funding contributory insurance scheme is not States spending merely because the States happens to administer the scheme. The money does not come from general revenue. It comes from the Insurance Fund. Nothing in the amendment, as I read it, caps what that fund can pay in old age pensions.
Perhaps the person who drafted the amendment was simply too clever and failed to appreciate how his perfectly straightforward words might subsequently be interpreted by those less richly endowed. It says States expenditure. It means States spending. The old age pension is paid from a self-funding contributory scheme. How much clearer did it need to be?
The principal money the States itself puts into the Insurance Fund is in its capacity as an employer, making social insurance contributions in respect of its employees, just as every other employer does.
And perhaps therein lies the real horror of the spending cap.
Perhaps the genuine concern is not that the States will have to cut Granny’s pension at all. Perhaps it is that the States might finally have to curb its seemingly incessant appetite for employing ever more people and paying ever more to those it already employs.
How very convenient, then, that within days of deputies voting to restrain the relentless growth of States expenditure, the shadow of austerity is suddenly being cast over the island’s pensioners. Apparently it is not the ever-expanding machinery of government that might have to tighten its belt. Oh no. Granny’s pension is apparently first for the chop.
I don’t believe it.
A politician is perfectly entitled to claim that pensions may have to be cut. The Guernsey Press is perfectly entitled to report that claim. What I do not believe the Guernsey Press is entitled to do is take a highly contentious political interpretation and present it, without qualification, as fact on the front page of the island’s newspaper.
‘Deputy warns pension could face cuts’ would be reporting.
‘States pension faces cuts’ is something altogether different.
It is particularly irresponsible when the people most likely to be frightened by such a headline are pensioners who may reasonably assume that their newspaper has established as fact that their incomes are now under threat.
The Guernsey Press has not merely reported Project Fear. It has put Project Fear on its front page and presented it as news.
I therefore call upon the editor to correct the misleading impression created by today’s front page, immediately and with prominence equal to that given to the original claim.
Horace Camp
St Sampson’s
Tina Bury, president of the Employment & Social Security Committee, responds:
The Sloan amendment states: ‘To agree that, as a matter of fiscal policy, growth in total States expenditure (revenue and social security spending) should not exceed inflation over...’
The wording is not limited to specific budgets or to general revenue expenditure. On the contrary, it explicitly includes social security spending. We do not believe this inclusion was inadvertent. A similar previous amendment, lodged by the same proposer, specifically excluded social security spending, indicating a clear awareness of the distinction, and suggesting that its inclusion in this amendment was deliberate.
On that basis, we interpreted the amendment as applying to all social security expenditure. This interpretation was not corrected by the stand-in proposer during the debate or through subsequent public commentary. However, we recognise that the original proposer was unable to present the amendment personally, due to personal circumstances, which may have limited opportunities to clarify intent. Should they wish to provide further clarification at a later stage, we would welcome it.
‘During the debate, we highlighted that such an interpretation could have significant implications for a range of essential benefits that support some of the most vulnerable members of our community, including income support, severe disability benefit, long-term care benefit, and the States pension due to increasing demand. While subsequent media reporting and online commentary have largely focused on the States pension, the potential impact extends more broadly across the social security system.
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