This Is Guernsey

Social Security administrator Malcolm Nutley tells the media how the department had kept senior States bodies informed of progress on its computer system. (Picture by Peter Frankland, 0542004)

SOCIAL SECURITY must keep control of the Guernsey Insurance Fund, according to both the current minister and a predecessor.

At present the department has autonomy over its finances and over fund investment decisions.

But the Public Accounts Committee’s report into Social Security’s supposed £3m. overspend on its new computer system recommends that the States direct the Policy Council and Treasury to report on whether that autonomy should continue.

That is a move that Treasury minister Lyndon Trott supports, especially as his department felt Social Security had failed in its responsibility to inform States members of the difficulties it was facing with its new computer system.

However, Social Security minister Diane Lewis is deeply concerned as to what it could mean for the fund.

‘I’m sure that Treasury and Resources would love to get their hands on the Guernsey Insurance Fund but it would be the biggest mistake that the States has ever made.

‘Pension payments would have to compete with other demands within government like education and health and it could suffer if Treasury and Resources had control.

‘At the moment Treasury and Resources looks after the States pension fund and we look after the fund for the island’s pensioners and I think there’s great benefit having two teams looking after these funds separately.

‘If one team managed the lot and got it wrong, it would be disastrous for the island.’

Former Insurance Authority president Bob Chilcott shares those concerns.

He felt Treasury was using the latest PAC report as a lever to take control. It was history repeating itself, he said.

‘I am even more convinced that all that Treasury and Resources wants is to get its sticky hands on the social insurance fund.

‘This is not new. Back in the late 1970s I, as president of the Insurance Authority, was advised by Charles Hodder, the then States treasurer, that we should split our fund in order to lessen risk as Advisory and Finance had done.

‘I told him that the members of the authority were the trustees of the fund and they would make whatever decision they thought fit.’

Mr Chilcott said the decision was taken not to do so and he believes the same should happen now.

‘The only time we approached the States was to seek authority to invest fund money in property, which we did when the fund purchased Arnold House, which was sold at a considerable profit recently.

‘I believe that this indicates that the States-appointed trustees might well be more capable of looking after their pennies than the members of the Policy Council who corporately are responsible for millions and millions in overspends.’

He recalled meeting Canada’s former minister for health and welfare Jake Epp in the early 1980s and being warned about playing around with pension funds.

‘He told me, “Don’t ever allow your government to mix your pension fund with taxation because it will always end in disaster”.

‘We should keep the Social Security fund separate from taxation.’

But Deputy Trott said it made sense for pensions and taxes to be incorporated.

‘There are efficiencies to be achieved in amalgamating the two departments and I think there is a widely held view in the States that it would be a sensible way forward.

‘The Guernsey Insurance Fund would remain standalone and there would be no suggestion that the pensions would be changed.

‘As Guernsey moves forward over the next few years, we are going to have to get clever and be genuinely joined-up in our thinking.

‘Silo mentalities in the States must become a thing of the past.’