ON A couple of occasions now, Guernsey’s chief minister and the Treasury minister have emphasised the importance of the States holding the line on economic policy, particularly keeping day-to-day expenditure increases at or below RPI.
To date, the perception has been of some success. The runaway increases of the boom years have been curbed and what is promoted as restraint has enabled Treasury and Resources to increase budgets in certain key areas like health.
However, the just-released interim financial report paints a rather different picture.
In 2004 and 2005, States payroll costs went up by 7.4% and 7.7% respectively, amounts that were clearly unsustainable but reflective of past attitudes to expenditure.
In 2006, the increase was just 3.2% and suggestive of a new realism towards an area of government expense that accounts for a little under half of all public sector spending.
Last year, however, that promising start was slipping, with payroll going up by 4% and this year’s increase is set almost to double to 7.9% - worse than when the regime of ‘restraint’ started.
T&R explains this by saying the figure was affected by a £3.4m. underspend to budget (which means that the previous year’s 4% figure should have been higher) so the true rise was 5.6%. That, too, is slightly misleading because it reflects the employers’ higher social insurance contributions, which the States introduced, so the actual rise was 4.6% or thereabouts and a whisker under RPI.
However, what the figures more clearly show is that from 2006 payroll costs have increased in real terms year on year and the number of staff has also gone up. In other words, it is not restraint that the private sector would recognise.
Ministers are placing emphasis on the fundamental expenditure reviews departments will be conducting but have yet to explain how these are to operate and how what are essentially internal procedures will provide the rigour required to control the wage-driven demand to take yet more tax off islanders.
Asking bureaucrats to axe the bureaucracy that rewards them is a faint hope unless there is the political will to ensure it happens.
On the evidence of the interim financial report that, too, is lacking.
Article posted on 15th July, 2008 - 2.30pm
One Article Comment
The final few qords of the comment say it all “Asking bureaucrats to axe the bureaucracy that rewards them is a faint hope unless there is the political will to ensure it happens.
On the evidence of the interim financial report that, too, is lacking”
Perhaps the Comment writer could have added “Where there’s a will there’s a way”
It seeems the pre election warnings of Deputy Parkinson about payroll costs assimilating any additional tax take, is proving to be spot on.