Prudence or paralysis? Do the sums in the Comprehensive Spending Review add up?

I never thought I would say it but I’m even beginning to agree with the president of the Corporate Services scrutiny panel. The good Senator has expressed many views that are total anathema to me, but she is spot on in much of what she writes in the scrutiny panel’s investigation of the Comprehensive Spending Review.

For example, after investigating the CSR process ‘the Panel found that there is no clear vision for the CSR or what the role of government and the States is’.

‘Without a vision and the whole hearted take-up of business transformation, the current Comprehensive Spending Review process is merely an attempt to balance the books,’ the panel’s press release says.

Quite right, but she does rather miss the point that CSR was nothing to do with business transformation. It was all about saving money. The idea that it was part of a major business transformation programme was only thought up subsequently, after the panic subsided.

However, she is spot on about a lack of vision, which she says the scrutiny panel has wanted for three years. This column has been calling for it for longer than that, although whether the panel’s vision for the States would be anything like mine is a completely different matter.

The president is also spot on when she expresses doubts that the States will achieve the £65m savings target. I, too, have serious doubts but perhaps for different reasons. My doubts stem from the fact that I don’t believe there are £65m worth of savings that can be made without damaging essential services, and the States won’t want to do that because it tends to upset the electorate.

Indeed it would be interesting for someone to investigate what damage has already been caused to the public service by the CSR process. That’s damage in terms of efficiency (just because it’s cheaper doesn’t make it more efficient), the loss of skills through redundancy, damage to staff morale and the inability to plan for the future. I suspect public service managers find it difficult to look to the future because they are not only busy enough trying to provide the same services with fewer resources, but they also have the disruptive CSR process to cope with. However I don’t suppose any scrutiny panel would find it worthwhile looking at that. Certainly the Corporate Services scrutiny panel wouldn’t be interested.

Rather the panel says that not enough is being done in the ‘cross cutting initiatives’ which is the centralizing of functions such as procurement, property, human resources and information technology. These are said to be the ‘big prizes’ of the cost cutting process, but it’s naïve in the extreme to believe that this is easy to achieve. I’m sure we can save several hundred pounds by centralizing the buying of pencils, but that won’t save a lot when we have to fork out £400,000 on an airport fire tender. I’m no expert, but I would imagine that centralizing IT across departments as diverse as waste management and maternity is also not an easy prize to win, and therefore not a big money saver.

Presumably the ‘cross cutting initiatives’ is what’s driving the exciting plans to merge the airport and the harbours. Outsiders will think that shipping and aviation are very similar activities which share many common interests, but I’m not sure that’s how the airlines and the shipping companies view it. The merger will certainly save one big salary, but where the other savings come from beats me, and it’s even a mystery to those working in the departments, so I’m told.

Anyhow the inability to save large sums of money, which is the main plank of fiscal policy, didn’t stop the Treasury Minister’s budget from getting through the States to wide acclaim and only token opposition. In any case this particular House has rather run out of steam and now clearly votes for personalities not policies, so my fingers are crossed for the next intake.

So in his usual comprehensive and efficient way, the Treasury Minister told us how the Island hadn’t taken the easy path out of our financial difficulties, and is now therefore in a strong position. It’s interesting that this strong position now includes the value of the utility companies and States property, including infrastructure, plus well funded pension schemes. These were not previously mentioned when discussing the financial strength of the States balance sheet, although they always did so in Guernsey.

Not taking the easy way means we retain the fixed assets and reserves needed to cope with current financial difficulties, but as the Treasury Minister asked himself in his budget speech last week: ‘Is there a prize for such prudence?’ In other words, if we are all suffering from higher taxes, fewer jobs and a floundering economy, is prudence worth it?

Yes, of course it is, even I accept that. But there’s prudence and there’s paralysis. Using some of those extensive resources we boast about to carefully help us out of our current difficulties is not imprudent whatever the accountants might say.

Just in case anyone believes the Treasury Minister’s rather rosy scenario, we should remember that we have record unemployment (still low by nearly everyone else’s standards, but rising), we have a stagnating economy that might not get back to normal growth even when we’ve got through the recession (zero-ten or no zero-ten), and, of course, we won’t have enough resources in the private sector post-CSR to make a difference.

In the meantime areas such as tourism desperately need public investment, and I don’t know of any evidence that supports the contention in the budget speech that ‘event led tourism has been a success’. (And isn’t it embarrassing to welcome visitors at this time of year, because you can’t find a museum that’s open to show off our heritage.)

Then you have other industries such as fulfilment which apparently depends on a single tax concession and where only now the Island authorities are putting up a fight, after the battle has been lost. And you have an economy where the only real bright spot is the possibility of super fast broadband for all, ‘lighting up the lives of Islanders with fibre optic’, as the Treasury Minister described it. However this will take years to achieve, with or without States support, and if all the public support is going to the incumbent operator, then other businesses in the sector will understandably be annoyed to the extent they might go elsewhere.

This is indeed a harsh assessment of how lucky we are, but something is needed to counterbalance the view that we have taken all the difficult decisions needed ‘to secure sustainability for future generations’.