ONE of the advantages of recruiting an eminent economist to validate the success or otherwise of the island’s fiscal framework – the code which sets constraints on any borrowing and total levels of revenue and expenditure – is the degree of independence brought to the process.

In addition, economists do not think like politicians and the focus provided by Professor Geoffrey Wood, a former Bank of England economist, makes his evaluation report a very blunt read.

While government was telling taxpayers that public sector expenditure was under control, it was anything but. By what is little more than sleight of hand, the effect of Social Security expenditure was removed from the picture.

Include it, and the island’s finances look dangerously out of control.

The reason is that this – and some other areas – are what’s known as formula-led: if an individual qualifies for a benefit they receive it irrespective of the island’s ability to pay. Because of that, the political response has been to ignore the effect of rapidly rising benefit inflation and instead to concentrate on easier to manage expenditure.

As a result, there is a disconnect between day-to-day government spending and the cost of providing old-age pensions and other welfare benefits and this, Professor Wood says, should not be allowed to continue.

While politicians tend to focus on the next big idea and leave someone else to worry about funding it, he comes from a refreshingly different perspective: decide what you can afford and then what you want to achieve.

Are, for instance, the existing policies and payments geared to encouraging people to work or to simply giving them money when they are not?

It is not an academic question. In a frighteningly short time, every person in work will be matched by one not employed and thus needing to be supported out of an under-pressure tax take.

This change in the so-called dependency ratio is a result of the island’s rapidly ageing population and restrictions on immigration but is a very real threat.

What Professor Wood’s report shows is that new thinking will be required to get the island through a demographic crisis.