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Where did the government’s £30million black hole come from?

Where did the government’s £30million black hole come from?

Tuesday 02 July 2019

Where did the government’s £30million black hole come from?


Mystery surrounds the origin of the forecast £30million black hole in the public purse, after government officials declined to provide any information about how they came up with the figure.

A need for large-scale changes to the public sector and staff cuts arising from a predicted “structural deficit” for 2020 to 2023 was first announced by the Chief Minister, Senator John Le Fondré, at a Chamber of Commerce lunch event in October last year.

But despite nearly nine months passing since then, and questions from Express and politicians, no further details have been provided over how exactly the significant funding gap arose.

According to information provided following a request under the Freedom of Information (FOI) Law, the figure came following a “strategic assessment”.

But when Express asked for a copy of this strategic assessment was requested under FOI Law, the request was refused after heavy delays.

They said this was because the government was in the process of developing an ‘Efficiency Programme’ – a roadmap as to how to achieve the savings needed to plug the black hole. Details of the plan will be included in the Government Plan, which is due to be lodged with the States Assembly by the end of this month.

Therefore, the response reasoned, the information should be exempt under two articles of the FOI Law: '35 – Policy under Development' and '36 – Information intended for future publication'.

While it acknowledged that providing the information would “promote accountability”, as well as helping the public understand “the methodology underlying the proposed financial savings”, the government added that it needed a “safe space” to develop its money-saving policy, and that this therefore outweighed the public interest in transparency.

Express has since appealed this refusal, as the request only aimed to establish the origin of the deficit figure – not gain details information about the Efficiency Programme arising from it.

But it isn’t only the media that has been declined this information.

In a written question to the Treasury Minister, Deputy Susie Pinel, Deputy Rob Ward asked: “What data was used to calculate this deficit?” 

In a reply released this morning, Deputy Pinel simply stated that it was “based on forecasts using the latest information available at that time.”

Deputy Susie Pinel

Pictured: The Treasury Minister simply said the deficit figure was based on "forecasts".

The £30million to £40million gap in public finances  has largely been used as the rationale for driving forward Chief Executive Charlie Parker’s ‘OneGov’ regime – a programme that has involved the largest ever shake-up to government services with the creation and renaming of several departments, with a focus on driving “efficiencies.”

At the time of the announcement, the Chief Minister explained that the upcoming deficit would therefore involve identifying “savings” and a “permanent reduction in the size of the States’ workforce”. The size of that reduction is still yet to be announced.

Since then, the deficit has also been quoted as the rationale for not providing cost-of-living pay rises to government workers, which led to industrial action by civil servants and teachers, which escalated into days of walk-out strikes.

When the island’s biggest civil service union, JCSA Prospect, urged the government to use £51million from savings and surpluses to put an end to the dispute, followed by proposals to do so by Deputy Geoff Southern, the Chief Minister firmly declined on the basis that the government was in a vulnerable position, predicting a funding shortfall of up to £40million.

The deficit has also been used as the justification for the employment of several highly-paid consultants and interim staff tasked with delivering these savings. Last week, Express revealed that their travel and accommodation expenses over 18 months totalled nearly £600,000.

Although full details of the ‘Efficiency Programme’ is yet to be made public, it is known that each department has been asked to trim its spending.

OneGovPhilipLeFeuvreHouseLaMotteStreetSocialSecurityCustomerServices3.jpg

Pictured: The Chief Minister said the La Motte Street move for public-facing services would save money.

But in an interview with Express, the Chief Minister, Senator John Le Fondré, declined to describe this as “cuts”.

Instead, he said that departments were being asked to find “one-off savings” that would carry forward – delivering “the same or better services” at a lower cost.

Providing a “tangible” example, he said that the decision to move attestation forms online would save "around £30,000" yearly in manpower and time.

He added that the decision to integrate several public-facing services at La Motte Street into the now ‘Customer and Local Services Department’ would also achieve a significant spending reduction.

The Chief Minister further added that the government was currently looking using facilities that are only put to full use “around 40% of the time” in a more productive way, but declined to provide further information.

Despite the Education and Infrastructure Ministers, among others, having previously publicly spoken of budgetary pressures, Senator Le Fondré denied that there were any tensions within the Council of Ministers team regarding identifying areas where expenditure could be slashed.

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Posted by David Moon on
Was it not the introduction of the zero ten taxation system which exempts businesses and wealthy residents from tax by using companies and banks and financial companies only pay tax at 10% which created the deficit
Posted by John Henwood on
There's nothing new about the 'black hole', in other words a structural deficit in the government's accounts. I remember three Treasury Ministers and three States' Treasures ago (respectively former Senator Terry Le Sueur and Mr Ian Black) giving a presentation in advance of the annual States Budget at which it emerged we were heading for a deficit of, at that time, over £20 million a year. The reason was straightforward, the States was spending more than the Island as earning. Since then we've experienced a number of tax increases to help fill the 'black hole', but no one has seriously attempted to tackle the other side of the issue, the cost of running public services which remained far too high. Until now. The reforms which the Chief Minister and Mr Parker are trying to implement are long overdue and should be supported. Unfortunately, there is the usual foot dragging from within the public sector where change is always seen as something to be resisted.
So, no mystery about the black hole, the only surprise to me is that it isn't bigger than £30 million.
Posted by Major Misunderstanding on
The recent pay uplift debacle with the SEB will have cost around £3,000,000 of this - the pay protection they have awarded for the next three years is costing way more than the existing £750K figure they have been quoting.
Posted by Paul Troalic on
I have said countless times that until we remove the wretched zero ten idiocy then we will encounter deficits. This is the root cause of our problems.
Remove zero ten, tax companies properly and fairly, then begin to install proper controls on spending as though our lives depended on it. Because it does!
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