Guernsey’s P&R President says the States has “no choice” but to look at ways to be more efficient and rein in spending, as the island grapples with a growing gap between income and expenditure.
Speaking ahead of the publication of a major tax review, Deputy Lindsay de Sausmarez told Express that politicians have to be “honest enough” to examine cuts to public services and benefits alongside proposals to raise more revenue.
A Tax Review Sub-Committee was looking into possible corporate tax reforms, as an alternative to GST+.
Deputy de Sausmarez stressed that no decisions had yet been made, but said Policy and Resources (P&R) was exploring a “broad suite” of options.
“The situation that we’ve got is that there is a gap between the amount of money that we bring in as a government and the amount that we need to spend,” she told Express.
“There are two ways of bridging that gap. One is to raise more revenue… and another is to reduce the amount that you’re spending.”
Efficiencies
Deputy de Sausmarez said the States had already committed to finding around £17m of efficiency savings by 2029, including through greater use of technology and automation.
Examples included electronic rostering in healthcare and digital billing systems to reduce administrative costs.
“In practice, we have no choice,” she said. “This has to happen.”
However, she acknowledged efficiencies alone would not close the funding gap and drew a distinction between saving money through improved systems and reducing expenditure by cutting services or benefits.
‘None of this is fun’
“Expenditure reduction is very likely to impact on the kind of services and benefits that people currently rely on,” she said.
“If you spend less on benefits and services it has an impact on people – none of this is fun.”
She said any decision about cuts would be “really tricky”, because “the people who rely on those [services would be] understandably very shaken and upset”.
However, the job of politicians was to “explore” the options, even the unpopular ones.
“Even if those things don’t make it into our recommendations, it’s really important that we have been honest enough to have a look at all of the potential options”.
Deputy de Sausmarez said Guernsey’s ageing population and shrinking working-age demographic were placing increasing pressure on public finances.
“We’re living longer lives, which is a good thing, but it’s a fact of life that the older we are, the more likely we are to need much more expensive health and social care,” she said.
She also praised the work of the Tax Review Sub-Committee, chaired by Deputy Charles Parkinson, saying it had brought “clarity where there wasn’t clarity”.
The panel was tasked specifically with examining corporate tax reform options and comparing them with the previously-agreed GST+ package.
Ultimately, it found there was no “magic bullet” that could raise the money needed without significant risks to the island’s economy.
Deputy de Sausmarez said the wider P&R review would also consider areas including offshore wind revenues, broader tax measures and potential spending reductions before recommendations were brought to the States in July.