Savings or "padding"?

Monday 05 September 2016

The high vacancy rate for States jobs has led to claims that budget savings may be being over-stated.

At a fractious Scrutiny Panel hearing on Friday, Treasury Minister Alan Maclean explained that officials were looking into the high number of vacancies - currently running at just under 13% of the States workforce - to find out why departments were holding them open, and if their budgets needed to be changed to account for the fact no-one was actually being paid. In 2015, the public sector employed just under 8,000 people.

Chairman of the Corporate Services Scrutiny Panel, Deputy John Le Fondre was concerned that the issue might lead States members to agree a higher budget for departments than they actually needed to do in the forthcoming debate on the Island's financial plans for the next three years; and that if the money wasn't spent, then it would allow Ministers to claim savings which hadn't actually been made:

"The vacancy rate appears to be high at 12.9% of posts, which on a very simplistic calculation is worth about £46m; is that number included in the departmental spends that States are being asked to approve, and against which savings and efficiencies are being applied. It won't be £46m but even if it was half that, that is effectively padding, and how tight are the efficiencies or savings going to be, or is it just that posts which we have been operating without for some time are just having the money taken away."

Senator Maclean said that the States HR team was currently investigating the exact nature of the issue, and that Departments needed flexibility to employ someone if necessary. He also pointed out that every year underspends were returned to the Treasury, and if a Department didn't spend it's allocated budget, the excess money would be accounted for. 

He also reaffirmed Ministers' commitment to making the £77m worth of savings contained in the current proposals, with £33m of those being achieved by the end of this year:

"With the progress we have made to date, there is no reason to think that won't be achieved."

The Minister also confirmed that his colleagues had considered increasing GST by 1% as a way of increasing revenue, along with pushing up the marginal rate of tax, or increasing social security rates, but those options were later rejected in favour of a new health charge, which will be ring-fenced to pay for Islanders' medical costs.