Friday, October 30, 2009

The C-Word: Don't read this if of a Sensitive Disposition

Already, it is time for the JDA to be looking through our 2008 policies and scrapping the many things that have been overtaken by events, and then to be shaping a new raft of policies to take us into the 2011 elections.

The hard thing with looking two years ahead though, is that the short-term future is looking exceptionally unpredictable right now. Will our economy return to growth? Will it continue to gently decline? Will something spook the finance industry and leave our economy with bricks where the wheels were? All three possibilities are two-figure percentage chances from where I am looking.

If growth returns, then it will be easy to write a nice manifesto. There is a need for some alternative taxation to fill the “Black Hole” that is Terry le Sueur's legacy, but with more money about, it would not need to bite too hard. All we have to do is firmly outvote any expensive pet projects that anyone might put forward for the party, and we should be all right.

The tougher parts will be to prepare for further decline and outright crash. One senior member of the JDA was appalled that I even mentioned cuts at a recent Council meeting, but if the money is not appearing in the income column of the ledger, it should not be in the expenditure column, either.

The only eager votes for a manifesto of cut this, slash that and snatch the other are going to come from the hard-right wingers we exist to oppose, so we can't be shouting too loudly about intentions to do it. However, if things are grim by 2011, and the old guard are the scapegoats in the General election, then the erstwhile opposition are going to be faced with a dirty job that someone has got to do, and we really ought to have a clear idea of how we are going to go about it.

A fall of a few percent in revenue can largely be made up in the traditional manner, by corresponding rises in the rates of existing taxes and duties. However, these have already been jacked up faster than many people can easily adjust to in recent years, and any government doing much more of that will rapidly lose public confidence. Therefore, the C-word does have to be bandied about:


In a diverse career, I have been an established officer in the UK Civil Service for a spell, and I get a little irritated at attacks made on a stereotype sixty years or more gone in real life. I think the popular image of the idle and arrogant man in a pinstripe suit and bowler hat leisurely making arbitrary decisions about the affairs of the hoi-polloi may have been true to life once, but not in my lifetime, or at least not at the levels that commonly interact with the general public.

However, any organisation will tend to gather dead wood over a few decades, and a thorough audit, once in a generation, on the principles Leslie Chapman laid down in the 1960's, will inevitably show up a few jobs that are there because they have been done, rather than because they still need to be done. I know that the States of Jersey do already have an Audit Department that does these kind of surveys, due to a small quango that I used to be involved with receiving their attention, but they don't get the publicity they deserve.
So, the first level of cutting should be a rolling out of this thinking on a broad front. If a few percent of public sector jobs can be identified as dispensable, then their holders can be transferred to other more essential posts as they fall vacant through natural wastage, and the overall size reduced. A key factor will have to be the independence of the audit, though. If senior management are challenged to produce plans for reducing their own empires, then, humans being human, they tend to select those who would be most sorely missed as the priority for cuts, so making the plans unacceptable.

The big challenge, though, is how we would cope with a big fall in the size of Jersey's economy, say a quarter or a third. There would need to be expenditure on helping the unexpectedly destitute, on top of all the usual business, so even more of the latter would have to be stopped. Law and order, and sanitation infrastructure would remain essential, and nobody would want to see medical care or education shaved too closely. But what of the rest? Opinions will be shaped by individual circumstances, but where would the consensus be found? No more roadworks, save essential utility repairs? Close the States Communication Unit, that just produces derided propaganda, and the Statistics Unit that only publishes useless and misleading “information”? Refreeze the Town Park, and halve the gardening in the existing parks? Across-the-board culls of Civil Servants? Whatever you look at, there would be more losers,than winners, but don't forget I am not asking how do we want Jersey 2012 to be, but how would we cope if the bottom had fallen out by 2011?

I am writing this to open a debate, not have a rant, so I beg you to consider what your idea of the “least-worst” cuts in a collapsing economy would be, and submit them by clicking the Comments option. (Tip: If you have never commented on a website before; if your answer is more than a few words, then draft in a word processor, copy and paste, because blogs don't reliably save at the first try.)

David Rotherham

Thursday, October 15, 2009

We Told You So!

The JDA have never had any confidence in the Zero-ten tax scheme, especially after our expert, Preston Hobbs, submitted the damning report, which we published over two years ago.
Now, it seems that we were right, and the EU have seen through it. Terry le Sueur's position as Chief Minister will no longer really be tenable after the inevitable questions are asked, and Geoff Southern will ask them, if noone beats him in the queue. However, the man has more than enough brass neck to make up for any shortcomings in his abilities, so I suppose we can look forward to two more years of his "leadership"
David Rotherham

Monday, October 12, 2009

Geoff responds to Kevin Keen on Pay Freeze

The letter from Kevin Keen, until recently the manager of the Dairy, “Sorry, States workers” (JEP, 9 Oct), demonstrated not only a deep prejudice against the public sector workers but also a fundamental misunderstanding of basic economics and industrial relations. It also gave a less than accurate picture of the state of the economy.

To suggest that they should feel lucky not to be made redundant or be forced to take a pay cut is simply offensive. The first draft of the Health Business Plan did indeed threaten redundancies for some staff. Thankfully these were later withdrawn. Whilst, regrettably, there have been some redundancies in the private sector, their numbers have been fewer than many anticipated.
As to pay, whilst some employers have taken the opportunity to cut or to freeze their employees pay, this has not been the rule, but the exception. Cost of living pay rises have been awarded by many companies and bonuses have continued to be paid, especially in the finance sector.

The difference is one of representation. Where employees are represented by a trade union or strong employee association, they have been better treated. I have a list of 14 private sector groups where the workers are represented by Unite, whose representatives have negotiated pay awards at or above the March RPI of 2.1% through the normal process of collective bargaining. The public sector has similar representation, but they have had their rights to bargain removed by the arbitrary, unilateral and late decision to impose a pay freeze.

In the meantime the details of the Fiscal Stimulus Plan have been announced, with some £26 million going into building and renovation projects and a further £6 million on infrastructure. The vast majority of this money will be pumped into local private sector companies. This is exactly what government should be doing in a recession; spending money to keep the economy going and save jobs. This is £32 m to support the private sector. Does Mr Keen and the Chamber of Commerce object to this? Of course they do not. But in the same breath, he objects to some £3.5 m going to the public sector to stimulate the economy. This is sheer hypocrisy.

The need for government to maintain spending through a recession is a basic tenet of economics. As David Blanchflower, until recently a member of the Bank of England’s Monetary Policy Committee recently commented “Lesson one in a deep recession is you don’t cut public spending until you are in the boom phase”. Commenting on the Tory party proposals to cut public spending and freeze pay, he said that they would “push the economy into a death spiral”.

All the public sector representatives are asking for is the restoration of their collective bargaining rights. The Chief Minister, along with his supporters should recognise the justice of the public sector workers’case and step back from the confrontation with their employees that they have provoked.
Geoff Southern