Who doesn’t love a good fairy tale?

They’re a wonderful way for children to learn the importance of things like keeping your promises, seeing through deception – and telling the truth.

And then, of course, there are political fairy tales.

On Friday, the States voted for Policy and Resources’ (P&R) ‘Option B’ budget.

It gave our government nearly £16m extra of taxpayers’ money to spend – despite agreeing to 1% ‘efficiency savings’ as part of the GST package just five short weeks ago.

P&R’s Deputy Andrew Niles said economic growth “must be at the centre of everything” the States does – in other words this was a ‘budget for growth’.

Putting aside, for a moment, whether P&R has been entirely honest with the public by promising savings and then voting against them, is Deputy Niles right? Is this a budget for growth?

Guernsey definitely needs economic growth, among many other things.

After years of sluggish economic growth, P&R is forecasting just 0.5% real growth for next year – and the medium-term outlook is similar.

Stimulating economic growth would definitely help our economy and help alleviate some of the pressures the island has been facing for years.

What would a ‘Budget for growth’ look like?

If P&R or the States more broadly wanted to stimulate growth, there are things it could do.

Generally speaking, governments in Western capitalist democracies have a poor record of engineering growth directly.

When governments try to pick ‘winners’, they normally fail.

If you look at Guernsey’s historic industries – from piracy, to growing, to finance – they weren’t the result of decisions made in the States of Deliberation.

They were down to a bit of geographic luck, world events we had no control over – and islanders with an eye for an opportunity.

And Guernsey’s not alone in that. From South Africa’s diamond mines to startups in Silicon Valley garages – none of them started in government committee.

In fact, when governments try to intervene, they often make things worse.

Take London’s Silicon Roundabout.

It started organically in run-down, cheap East London warehouses because landlords weren’t asking much.

But as soon as politicians showed up with photo ops, corporate branding, and master plans, rents exploded and the startups that built the place had to pack up and leave.

Soil vs plants

That’s not to say governments have no role in successful economies.

Economists often talk about the difference between soil and plants.

Growing economies need certain things in order to thrive. But the government’s job isn’t to try and grow the plant – it’s to tend the soil.

The ‘soil’ is the basic, unglamorous groundwork that no single business can build on its own.

It’s reliable sea and air links. It’s fast digital connectivity. It’s a planning system that doesn’t take two years to approve an extension, a tax system that encourages investment, and enough housing so workers have somewhere to sleep.

In Guernsey’s case, there’s too much red tape for business starting up.

While getting rid of red tape isn’t something a typical budget would cover, if the States is serious about encouraging growth, that’s a great place to start.

Is the extra money being used to stimulate the economy?

If this is a ‘budget for growth’, then you’d expect the extra money to be going into areas that would, at least in theory, generate growth and encourage entrepreneurs.

Perhaps you’d expect to see Economic Development given a big chunk of the £15.7m.

Or it could go towards the airport, Aurigny, or our ferry links.

Earlier this year, the States decided to pull support from the island’s only startup hub, the Digital Greenhouse.

Whether that was a wise decision remains to be seen, but perhaps some of the money being saved could be redirected elsewhere to stimulate growth?

Maybe the money could go to housing, generating work for building firms and providing affordable accommodation for the people working in all these yet-to-be-founded, high-growth firms.

Or perhaps, subsidising the outrageously high cost to start a limited company here compared to the UK.

This is where Deputy Niles’ claim starts to look seriously over-inflated.

How much extra money is Economic Development getting out of the £15.7m?

Just £392,000.

In fact, the committee is having its budget cut in real terms, compared to last year, by 6%.

Well then, what about Housing or the Development and Planning Authority (DPA), surely they’ll get a nice healthy chunk of bonus pot?

Again, not much.

Housing is getting just £140,000 more, while the DPA is actually getting its budget cut by 5.6% in real terms compared to last year.

Is any of the extra money going to help improve the Airport? Or the ferry service? Or to help Aurigny improve our air links or reduce prices?

You guessed it. No.

In fact, the States Trading Supervisory Board (STSB), which oversees Aurigny, the airport and harbours, saw its budget slashed by a whopping 15.2% – though it’s important to point out that this is the Board’s own budget, not the operating budgets of the arms-length firms it supervises.

It’s also worth noting that the wider budget does include a £15m economic growth fund, spread over three years.

But that was included in both Option A and Option B, so it’s hard for P&R to argue the reason for the higher budget is growth.

So where is the extra money going?

Surely, though, in a ‘budget for growth’ some money is going towards areas that would stimulate growth. Right?

Right?

Corporate services

Well, some of the extra money is going into Corporate Services – the part of the civil service that is shared across all departments – £1.8m in total.

Corporate Services does things like: write press releases, HR, procurement, insurance, digital services and IT.

While we’re sure the island would collapse if the States stopped issuing press releases about vital topics like teddy bear hunts, or such unprecedented events as primary schools opening their registration for next year, it’s hard to make a case for government press releases stimulating economic growth.

Likewise, how is an extra person or two in HR at Frossard House going to drive our growth rate above 0.5%?

And then of course, there’s procurement – civil service speak for ‘buying stuff’.

In theory, they do a valuable job: putting together tenders, checking we’re getting value for money, insisting there are proper governance structures in place, and ensuring there are clauses in contracts to make sure whoever is picked does the job on time and budget – with penalty clauses for failure to deliver.

It’s surely unfair to put all the blame for the States’ long list of catastrophic failures in major projects at their door.

But on the flip (flop?) side having any involvement in picking Agilisys probably isn’t something to draw attention to in your CV.

Frontline services

Of course, the civil service isn’t the only area the extra money’s going to.

Committees like Health and Social Care (HSC), Home Affairs, and Education, Sport and Culture (ESC) are getting major boosts too, with £3.1m, £1.66m, and £1.61m extra respectively.

Now clearly, these are valuable things and vital to the running of the island.

We have an ageing population, so it’s understandable that HSC needs more money.

Likewise, even the most ardent proponent of austerity would surely accept that education is vital.

Home Affairs has its fair share of well-documented problems. But policing, the prison and population management all need support.

The committee’s President, Deputy Marc Leadbeater, has warned that without extra money the public’s very safety could be at risk.

Whether you buy the argument or write it off as scaremongering is another thing, but – while there’s serious room for improvement – few would argue we don’t need the services Home Affairs provides.

Many will argue it’s right that these three committees get extra money. Certainly, if savings need to be made, there are more obvious candidates.

Without investment in health, education, and policing we all suffer – and the poorest and most vulnerable people in society often suffer disproportionately.

But that’s not the same as saying the extra money the committees receive will generate significant economic growth for the island.

Education is arguably important for long-term growth, but if you’re investing in a five-year-old’s education then you won’t see the economic benefits for at least two decades.

There may be a minor economic impact of employing a few more nurses, prison wardens, or teaching assistants, but it’s unlikely to move the dial on our 0.5% growth.

Public sector wages & reserve funds

That leaves the biggest chunk of the £15.7m windfall – just under £6m – disappearing into central reserve funds and public sector pay pots.

Now, with inflation biting over the last couple of years, civil servants, nurses, and teachers naturally want pay rises that match the soaring cost of living. Fair enough.

But topping up the wage pot to settle pay disputes isn’t an economic growth strategy.

In fact, expanding the public sector wage bill in a tiny island with virtually zero unemployment can actually do the exact opposite of stimulating growth.

Every extra pound spent out-bidding the private sector for local staff, and every extra administrative role created at Frossard House, is one less person available for local businesses desperate to hire.

As for the millions parked in contingency reserves? That’s not seed capital for bold new local ventures; it’s rainy-day money to buffer the States when things inevitably go over budget.

It’s sensible housekeeping, perhaps.

But calling it a “catalyst for economic growth” starts to sound less like reality and more like fantasy.

One might even say it’s starting to sound like a political fairy tale.

The moral of the story

As already mentioned, fairy tales teach us morals – things like keeping your promises and telling the truth.

It’s clear that the members of P&R, along with a few other deputies, have failed to keep their promises.

When Express interviewed P&R President Deputy Lindsay de Sausmarez at the start of June, she told us: “We’re spending £20 million less [over three years] than we otherwise would have been.”

That was the promise P&R made. That was what deputies voted for five weeks ago – as part of P&R’s GST tax reform package.

Instead of £20m of efficiency savings over three years, P&R voted for a budget that spends £15.7m more in a single year.

There are reasonable arguments that we shouldn’t be gutting frontline services to fund savings.

Many politicians made those arguments during the tax debates, such as Deputies Tina Bury, Marc Leadbeater, and Andy Cameron.

P&R didn’t.

Deputy Niles can claim Option B is a budget for growth all he likes, but he’s stretching the facts to the very limits of credibility.

There is almost nothing extra in the Option B budget designed to stimulate growth. There’s almost nothing in it that could stimulate growth.

While there are some measures to stimulate growth in the original Option A budget (the one that stuck to P&R’s promise to make 1% efficiency savings), almost none of the extra £15.7m will.

This is a budget to protect public services – which is an admirable thing to do and one many islanders will support.

It’s also a budget that will increase the money available for areas like HR, procurement, and press releases – which are less obviously vital.

Some people may accuse P&R of lying to the public, deliberately or otherwise.

That may – or may not – be true.

Perhaps something changed between the start of October and the beginning of November.

Politicians are entitled to change their minds if new information becomes available to them – though the speed at which P&R members changed their collective tunes is remarkably fast.

But if any of them think the extra £15.7m in this budget will stimulate growth, they’re certainly lying to themselves.

Deputy Niles has already had his nose put out of joint once this year over his claims about GST and Guernsey’s S&P rating.

So perhaps he and his P&R colleagues may want to take heed of that other fairytale, ‘The boy who cried wolf’.

If you argue black is white often enough, people will eventually stop believing anything you say.

Children grow out of fairy tales when they realise magic beans don’t actually sprout into beanstalks overnight.

Perhaps it’s time P&R learned the same lesson.