In her report the Comptroller and Auditor General, Karen McConnell, who independently scrutinises the quality of States accounting and financial reporting, said that the way the government allocated resources lacked transparency.
‘The politicians will have a pretty difficult job. It will be difficult because although Jersey is in an enviable position and healthier than most economies, with positive assets rather than big debts, the economic performance has not been as benign – the Great Depression led to a difficult economic position, which did not bounce back.’
Fiscal Policy Panel chairman Joly Dixon, speaking in January.
And her review also concludes that the States three-year system of financial planning – the Medium Term Financial Plan – was no longer fit for purpose and is acting as a barrier to the government’s programme of reforms.
Now, she has said that amid ‘significant’ budgetary pressures, with every department working to make up to two per cent in savings, the States urgently needs cultural change. Mrs McConnell said: ‘The States face a challenging agenda. Much needs to be done and effective financial management is essential to that change.
‘The Treasurer of the States is supportive of my recommendations but will need time and the active engagement of ministers and the Corporate Management Board to make the necessary changes.’
Her 31-page report looked at the States allocation of and accountability for the use of resources, financial governance and leadership and financial planning.
The review also concluded that ‘significant improvement’ was needed when it came to accountability for resources and financial planning and that there was too much emphasis on departmental responsibility at the expense of collective strategic leadership.
She said: ‘I welcome the proposed changes in how the executive reports on financial performance to the legislature.
However, maximum value will only be secured when the current system of allocation of resources is changed: the current system lacks transparency, is partial and provides perverse incentives.’
Chairman of the Public Accounts Committee – the States spending watchdog – Deputy Andrew Lewis called Mrs McConnell’s report a ‘wake-up call’ for anybody who had an interest in how the government spent public money.
He added: ‘The public should be concerned as it would appear that government has not been reporting on its financial performance as clearly as it could have been.
‘States Members should be concerned because there are weaknesses in the system that hinder the States Assembly when holding departments to account for their spending.
‘The PAC is concerned that existing financial management arrangements appear to be holding back the public sector reform agenda.
‘I will today be writing to the chief executive and the Treasurer of the States asking them to explain to PAC how they are responding to the C&AG’s recommendations.’
The report’s 36 recommendations include extending the MTFP to cover all public finances in Jersey and reinforcing the culture of collective responsibility for corporate financial management issues by the Council of Ministers and the Corporate Management Board.
It is also said that future MTFPs should include corporate risk assessment information and a States balance sheet forecast.
Mrs McConnell’s review says that adopting a medium-term financial plan was a significant step forward, but that the mechanism is not flexible enough to be effective.
Her report adds: ‘The MTFP process is no longer fit for purpose and acts as a barrier to reform. It is insufficiently rooted in corporate priorities – both priorities for what the States do and priorities for how they do it.
‘It is too inflexible and too much a drawing together of individual departmental plans. It does not adequately reflect the key drivers of change such as changes in information technology, different approaches to office accommodation and new ways of working.
‘The States needs a flexible and dynamic MTFP that facilitates corporate planning for reform and expenditure reduction.
‘What is needed most is cultural change. There needs to be a shift from the departmental to the corporate, from the short-term to the long-term and from a presumption of growth to the reality of retrenchment.’
SERIOUS concerns were raised in January about how ministers proposed to pay for plans to put four key areas at the heart of government policy at a time when States departments were already under increasing pressure to save money.
The unveiling of the Council of Ministers’ proposed strategic aims, which include making healthcare, education, economic growth and St Helier priorities in the next three and a half years, received a lukewarm response from backbenchers, some of whom criticised a ‘lack of meat on the bones’.
MINISTERIAL spin about the way our public finances are managed has been laid bare. In what can only be described as a damning report, the Comptroller and Auditor General, Karen McConnell, the States independent spending watchdog, has shone a light into the way departments manage their finances – and the system has been found wanting.
Her conclusions reveal that a silo mentality which for years has acted as a barrier to better, more effective and efficient government is still all too apparent.
More than that, though, the way departments spend taxpayers’ hard-earned money, she says, ‘lacks transparency’ and ‘provides perverse incentives’.
For a number of years, we have been told by those at the top of government that the introduction of Medium Term Financial Plans marked a major step forward in improving financial planning. On Thursday, Mrs McConnell said that the MTFP process was ‘no longer fit for purpose’.
And perhaps most damning of all, she says that ministers and senior civil servants must get real, to understand the new economic reality which demands a presumption of retrenchment and not growth.
A new joined-up, corporate approach is needed which ensures uniform best practice across the public sector and more transparency and accountability.
Above all voters, taxpayers, Islanders, whatever label is used, want honesty and reassurance that those in charge know where we are and where we are going.
Ministers are talking tough about reining in States spending, and the appointment of Kevin Keen provides some hope that something might finally be achieved, but we are now left with the troubling possibility that vital areas of policy – from taxation and population to capital projects and public spending – are predicated on a mirage, or worse still a lie about the potential for growth.
It may be that ministers know all of this, but are simply talking up what they would like the reality to be in the hope that no one notices.
If those in charge are serious about seeing through their much-needed public sector reform agenda, they must, as Mrs McConnell makes clear, encourage cultural – as well as procedural and structural – change. And that job will be made significantly easier if they are open and transparent about where we are, what is working and what is not.
