'As the economy falters, is there an alternative to the absurd and unaffordable ‘hospital on a hill’? '

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By John Boothman

FOR such a small island, Jersey has more than its fair share of social dividing lines. Not least among these is the important distinction between those who work for the States and those who don’t.

This was brought home to me forcibly during a recent conversation with a senior official about the eye-watering sums of money passing through the government’s hands, thanks not just to the pandemic but to continued job growth, a backlog of infrastructure upgrades, the planned new hospital and other vanity projects. I was sounding off about ‘my money’ being ‘squandered’ when my companion said: ‘Let me stop you there. It’s not “your money” once it’s in our bank account. And as for it being “squandered”, how we spend that money is a matter for us – not you.’

It is hard to imagine such a remark being made in bygone days. An immigrant myself, I am now approaching my 50th year as a local resident. In 1973, Britain was going through a bleak period of power cuts, rampant inflation and industrial chaos – not to mention deep political polarisation. Jersey, by contrast, was an oasis of opportunity for ambitious young men and women, as well as being a great place to live.

The terms of engagement were clear. Islanders then were intensely patriotic, embracing many of the values of Britishness, but fiercely independent when it came to politics. In particular, they resisted the socialistic, tax-and-spend policies of the UK, which by the 1970s had demotivated entrepreneurs, plunged the country deep into debt and aggrandised the ‘men from the ministry’ presiding over an ever-rising torrent of government largesse. By contrast, Jersey’s cautious approach to fiscal policy seemed to outsiders parsimonious. To such critics Islanders had a simple riposte: ‘If you don’t like it, there’s a boat out in the morning.’

In his magisterial Economic Survey of Jersey, published in 1971, States economic adviser Colin Powell included a summary of the States’ revenue and expenditure account for 1969. Total outgoings were £8.36 million (projected to rise to £11.10m in 1971). The largest item was public health at £2.72m, followed by education (£1.57m) and welfare and childcare (£1.31m).

Even by the standards of 50 years ago, these were not large sums. The Jersey Retail Prices Index has risen by 18.6 times since 1971, so expenditure that year of £11m would translate in modern terms to about £200m. Allowing for a 50% increase in population over the same period, let’s make that £300m.

Hold on to your hats. In 2020, the most recent year for which details appear on the Statistics Jersey website, total government revenue expenditure was £919m. Adjusted for inflation and population growth, that’s around three times as much as in 1971. Some of the departmental comparisons are startling too. During the same half-century, real-terms education spending has risen threefold, health spending almost fourfold. Those in public sector roles will argue the breadth, depth and quality of services have increased too, in line with rising popular expectations. Salaries and wages tend over time to outpace retail prices, a further contributor to rising costs.

All that is true, but not the whole truth. Through the 1970s, the deeply-ingrained tradition of spending restraint mostly continued, even as the rapid rise of the finance industry meant unimaginable revenues poured into the States Treasury. By the 1980s, with cash (as one high-ranking politician put it) ‘coming out of our ears’, it had become harder to resist pleas from States Members to spend more on this or that favoured policy. Given continued robust economic growth this did not at first pose much of a threat to the Island’s finances, but around the turn of the century our chickens started coming home to roost.

While tourism, another important contributor to States revenues, continued its long decline, there was a significant slowdown in the increasingly predominant finance sector. This was exacerbated by the global financial crisis of 2008-10, as well as international initiatives to curb the activities of offshore finance centres. The net effect of these headwinds was to shrink the economy by about 13% between 2000 and 2020, an unprecedented retreat in the Island’s post-war history. Allowing for a rising population the fall in output per head was greater still, probably nearer 20%.

How has the government reacted to this? By battening down the hatches? There is no evidence of that. Spending has continued to rise year by year, in step with rising staff numbers. Last year alone 400 jobs were filled, taking total public sector employment to 8,530. This is not an abstract argument about ‘big’ or ‘small’ government, but a concrete issue about whether it is wise – or even possible – to maintain such growth in the context of a sluggish economy and even greater uncertainties ahead.

Perhaps reform is a better recipe than retrenchment? This was the transformation programme promised by former civil service supremo Charlie Parker. Tasked to evaluate the culture and inner workings of the organisation, Andy Bell of consultants TDP found much that was wrong: a lack of investment in IT and staff development; poor internal communications; bullying and harassment; and a reluctance to take decisions through fear of being blamed for failure. Then Covid struck, and (according to Mr Bell) everything changed: in a JEP interview he said the government’s response to the pandemic had been ‘astonishing and is still astonishing’. We are agreed on that, but whether astonishingly effective or astonishingly inept is another matter.

As it happens, in the last six months I’ve had a few encounters with tentacles of the giant squid myself, all of them for one reason or another unsatisfactory. Based on that I’d say the evidence of success is scant, but don’t take my word for it. In a recent letter to the JEP, former senior civil servant Sheila Baker delivered a damning indictment of ‘One-Gov’, a scheme intended to break down the silo mentality that has bedevilled our bureaucracy for years. So, far from improving matters, Ms Baker concluded it had been ‘a recipe for disaster’. Ann Esterson, a distinguished former head of Social Security, has been similarly critical.

A glimmer of hope is provided by the arrival of new chief executive Suzanne Wylie, who has taken the trouble to listen carefully to critics of the government apparatus as well as senior officials and cheerleaders. But what has scuppered almost all her predecessors is a lack of political commitment once the going gets tough. Essential questions remain unanswered, or in some cases have not even been asked. Where can efficiencies and savings be found? Could some services be streamlined or curtailed without causing undue distress? Have we got the right balance between chiefs and indians, or is the organisation top-heavy? Is there a more sensible alternative to the absurd and unaffordable ‘hospital on a hill’? Faced with serious and possibly existential economic threats, is this the right time to be racking up long-term debt? Above all, can spending be effectively controlled, within an envelope of affordability and tax capacity – and is there the political willpower to make the tough choices that implies?

Back to my anonymous interlocutor who, on reflection, deserves credit for telling it like it is. I love Jersey and am lucky to live here. Meanwhile, the challenges mount up. I wish Mrs Wylie well, but I hope she is not a believer in long honeymoons.

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