Cuts in the public sector are not the answer, Senator
Friday 19th February 2010, 2:59PM GMT.
From Craig Channing, president, Fire Service Association.
I AM writing this letter disappointed at the recent statements by Senator Ben Shenton in the JEP of 10 February.
The quotes ‘Adapt or die’ and ‘Step up to the plate and open dialogue’ are insulting to our members and derogatory to the hard and often thankless work the staff-side representation of the public sector workforce put in on a voluntary basis for the benefit of the 6,000-plus members.
What does the Senator think associations have been doing over the last few years? We are always open to negotiate and are constantly consulting our employer. We have worked tirelessly during 2009 alone over the way in which the public sector workforce have been treated over pay and terms and conditions.
Our association in particular has revised its position several times during this dispute, with no commitment from the employer to reach a settlement. Our own legitimate right to negotiate was taken away from us in 2009 when the Council of Ministers recommended that the States Employment Board pursue a policy of a pay freeze.
Certain people would say (and I am sure the Senator is among these few) that we are lucky to be in States jobs with, he quoted, ‘a job-for-life culture’ with hopefully some form of security and pension. Agreed, these are benefits of working in the public sector, but primarily we all joined to serve the people of Jersey and are both loyal and dedicated to providing a service.
We cannot, though, sustain the constant degradation of our terms, which in turn devalues our role and the first-class services we provide for the Island.
None of us is naive about the current economical climate, with the private sector workforce facing freezes on pay and job losses. These are always regrettable, but I feel it is fair to put some context to this.
A certain utility company is 100% States-owned and in 2008 showed a significant profit of £11 million. The states claimed back over 61% of their profits while making staff redundant, at the same time as paying out over £340,000 to top-level staff just for retention.
How is that a beneficial use of public money in the private sector? Coincidently that money would virtually cover the pre-allocated pay award for the Home Affairs department.
In all cases where there have been unfortunate job losses, I am sure the staff have felt valued by the employer. I am also certain that they have, at all times, been fully appraised of the situation, while being treated with fairness and dignity by their senior management.
Senator Shenton spoke about the increasing overspends of States revenues and reining in on public sector pay to safeguard predicted deficits. Contrary to popular belief, Jersey is not broke and has zero debt. We have over £550m in the Strategic Reserve alone.
The impact of recession can offer no logical argument for the injection of £44m into the economy for both public and private sector initiatives, while at the same time refusing to add the £7.4m into the pockets of the 6,000-plus public sector workforce who will undoubtedly spend the money back into the economy. Therefore a wage freeze and rein on pay will only serve to exacerbate any recession we find ourselves in.
The Senator also mentioned capping expenditure, as in the past few years it has spiralled out of control. While I agree, he fails to mention that that while expenditure has risen significantly, so has income.
In 2007 the States had an £87m surplus; in 2008 they also had a £57m surplus; and last year, when they decided to reverse the pre-allocated funds to cover the public sector wage bill, the States had a £50m surplus. Hardly out of control. Certain departments, though, may have to find cutbacks from the comprehensive spending review, but the States must look closer to home before passing on this burden to department heads.
Our ministerial government has shown an inability and lack of intent in spending restraint with the poor management of public money. We all know the recent debacles, and those responsible have remained unaccountable and beyond reproach for their part, while the public sector workforce have not only faced a pay freeze in 2009, but now face cuts in public services to try and recoup the £50m shortfall.
It is unacceptable for the public sector to face this crisis alone. It is criminal for our workforce to bear the brunt of poor ministerial decisions and face possible expenditure cuts of about 10% to cover the hole left from the removal of the zero-ten tax regime.
Put this into perspective for the Fire Service. We have 72 uniformed members who are all fully trained frontline staff. Fifty-two of them are operational shift-based who provide the Island with 24-hour fire cover seven days a week, 365 days a year. A total of 90% of our budget is for staff costs.
If we have to save 10%, the financial cost to the service would effectively equate to the loss of ten firefighters, or the whole of our retained colleagues, leaving the public without the appropriate level of fire cover should the unthinkable happen. This is already on top of ‘managed’ shortfalls we currently have.
This deficit is a problem for the whole of Jersey, not just the public sector. The public sector provide the Island with good value for money, but if people want a safe and clean place to reside with first-class public services, we are all going to have to pay for it.
None of us wants increased taxation, but we all have to be honest with ourselves. We know taxes are going up, with GST already set to rise. Place the predicted deficits on all Islanders and share the burden. That way, everyone does their bit to resolve the issue.
Now is the time for the Chief Minister to lead us, and not be led by certain subordinates running a hidden government within our government whose sole purpose is to manipulate the public into accepting their own private, political and expensive agendas through the back door.
Please stop thinking that reducing the public sector workforce is the easy option to resolve this issue.
While we are committed to work constructively with our employer in dealing with this issue, we are not willing to lay down and be battered by our ministerial government and taken for a ride.
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The most concerning area of this letter is the suggestion that the Strategic Reserve should be used to pay for increases in staff costs. This is a serious and fundamental flaw and shows lack of understanding of what reserves are for. No successful business would ever use their reserves to pay for staff costs because that would mean that they have surplus staff to the revenue they can generate. Instead the States need to either cut the workforce so revenue matches expenditure or they need to increase revenue which means increasing taxes. The Strategic Reserve should only ever be used in extraordinary circumstances such as a buffer against a structural major economic down turn and that excludes a recession. Discipline is particularly important as we have a number of gun-ho politicians who would take the noble but flawed precedence to use the rainy day fund to prevent redundancies as a free for all on their follies.
The other flaw Craig’s letter is that he has only looked at the past when referring how successful the States has been at realising surpluses each year. He hasn’t referred beyond 2009 and future forecasts which show the Island running into unprecedented deficit from 2010 or 2011 onwards when 0/10 takes full effect. This forecast deficit is the whole reason the States have to cut back on spending unless we all want to pay more tax so I’m perplexed as to why Craig used past surpluses as an example of how Jersey has the money to maintain increases in expenditure in the future.
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We all know that the civil service is concerned by job losses and letters like this come as no surprise but Joker is right. You can’t start raiding the piggy bank just to keep staff on unless you can predict a future upward surge in business to replenish it, but even then its a massive gamble and not good governance.
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Well joker, judging by Craigs title I would hazzard a guess that he is biased towards the public sectors that really do have employess that joined to serve the island and I have no problems with this.
What needs to be adressed is the number of civil servant jobs that really are simply overstaffed and if the lazy culture in many departments was investigated in full then I think there will be plenty of other areas that redundancies can be acheived by others actually working hard for the money that we pay them.
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And to Craig, what is criminal is the amount of states employees, perhaps those higher up the ladder who quite simply do not know how to account for a budget except for accounting to ensure that if they make savings they may lose it next year. In which case they do not and will not admit that simple savings are attainable.
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Just need to point out here that Mr Channing did not state that he beleives the States should use the fund to pay for Staff. The quote is:
“Contrary to popular belief, Jersey is not broke and has zero debt. We have over £550m in the Strategic Reserve alone.”
This is stating that Jersey is not broke and has no debt.
But on the issue of the fund, if not to be used for a recession then what is it to for? The treasury have raided it to fund £44 million pound fiscal stimulas, thats what it is for! a rainy day.
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Joker,
I beleive Craig wrote that income had increased to match expenditure over the past three years meaning that Jersey was not broke or that it had not spiralled out of control.
In the Senators original letter, he stated that expenditure over the last few years had spiralled out of control causing the predicited deficit. We all know the reality is that this hole was really caused by the 0/10 tax regime, and GST has not being able to cover it. That leaves us with two options – cut services or increase taxes.
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Paul # 4 You said those in the hierarchy of States Departments…” quite simply do not know how to account for a budget except for accounting to ensure that if they make savings they may lose it next year. In which case they do not and will not admit that simple savings are attainable”.
How right you are. Surely departments that can make savings one year, shouldn’t be penalised the next. The problem is many managers are encouraged to spend all the money that is allocated to them and that has hleped us get into this financial mess. If senior States managers had been encouraged to save in previous years, maybe there would be more money in the coffers to help pay for pay rises needed to cover inflationary costs.
You wouldn’t run a private business’ or household budget like that. Like in Pharaoh’s dream, you’d store up in the good years for the bad years.
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Mr Channing, please wake up here. Jersey’s public sector is lavish to say the least, there is no proper control on spending and lack of accountability and governance. Don’t believe me ? Have a look at the latest C&AG’s review of the Public Finances Law 2005. Zero debt ? Just look at the States Employees’ Pension Scheme black hole & see how long your Strategic Reserve lasts.
Want to know who has been facing this crisis alone ? The taxpayer, the private sector employee who has seen no pay increase in the last three years, seen tax bills jump significantly and who has seen his or her final salary scheme end. So don’t wave your shroud at me, please !
Yes keep money in the economy, but do that by reducing taxes, cutting public sector costs and avoiding the inefficient money go round of tax collection and subsequent reallocation to the public sector employee by way of a pay award.
Please stop thinking the people of Jersey believe you provide good value for money & want ‘First Class’ public services. We don’t. What we do want and in fact demand are services which are relevant to the island & which we can afford.
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428cj
Mr Channing did state in his letter that the ministerial goverment had no control in spending and a lack of accountability, so why the call to wake up? and how is this shroud waving.
I am a public servant and also facing higher tax bills, had no pay increase as such, so it is not just the private sector that is facing this alone. By speading the cost of running public services accross the whole of Island, the problem is shared.
We all enjoy clean and relatively crime free streets, we all want and enjoy clean beaches and we all want the emergency services to turn up when we need them most. Not just the public work force. The only way we can have and afford all these things and make Jersey a desirable place to live, is to pay for them.
As Mr Channing stated ” cutting public services is not the answer ”
I suggest you think about these services next time, which you dont seem to deem ” relevant ” before commenting in the future.
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#9 to clarify:
Public Sector pay has overtaken private sector pay – see recent Sunday Times article. The Jersey taxpayer does think the public sector has done very well thank you at their expense. The waste and inefficieny is not something which only exists at ministerial level but is prevalent all the way through departments including the fire service.
For example:
Capital Spending – Energy from Waste. Did we really need it. Why wasn’t the cost hedged ? Why is it being built to meet capacity 15 years out ? Hospital IT system – what efficiencies will that bring for the £12 m spend ? What is the desicion process around the £44m stimulus package ? How can the resurfacing of a road deliver economic development ?
Operational Spending – Private School subsidies, lack of centralised property management for all departments, no States office space plan, H1N1 edpidemic vaccine purchase, Lack of management of sickness in the States, still paying States employess in cash on a weekly basis.. the list goes on.
Ask yourself what does the public sector in Jersey deliver and at what cost ? Is it appropriate for an island of around 95,000 ? What does the law say the States needs to deliver & what is nice to have & what can be delivered in the private sector ? What does the Jersey taxpayer want ? For example – do we really need a States run Met Office ?
So what is Mr Channing’s answer – spend more & increase taxes or loose services. Nothing about the inefficiencies and wasted spend, but the usual focus on the essential front line services – therefore shroud waving I think you’ll agree.
The wake up call is therefore looking at what the States does deliver, how efficient it is at doing it, whether it can be better delivered elsewhere and identify savings. Once this is exhausted then explore opportunities to make the user pay more, then expore options to cut services.
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Sorry for the confusion but I didn’t say Craig ‘said’ we needed to use the strategic reserve, I meant the letter ‘suggested’ the notion; why even mention it unless it’s a subtle reminder that everything is ok (for now) and if taxes aren’t raised it’s another option? No one ever said Jersey was broke so why refer to it? There are many politicians that would like to get their hands on the strategic reserve and use it to cover salary increases and staff numbers. Jersey really will be broke if it runs out because who’s going to lend us money with our track record of not being able to manage our finances?
Mark G #5
The £44 million was not from the strategic reserve, it was from the stimulus fund specifically designed for dips in the economic cycle and is completely separate to the strategic reserve. Despite what Craig said the money was far better spent creating and keeping jobs rather than giving States employees a couple of percent increase in salary.
Chanchan #6
The Senator is right because the States did spend more than they planned to, it just so happened they were conservative with their income forecasts. This might look ok on the surface but it demonstrates poor control hiding the real issue which is was down to pure luck that Jersey received more than it spent. This method of financial management (hoping for the best) is not sustainable which is shortly to be realised.
The other issue I believe the Senator was making is that income increased early to help cover the future affects of 0/10. Instead of the States saving and beginning to cut expenditure early in the decade they continued to increase expenditure because they saw these surpluses, inherently staff numbers continued to increase. Short term thinking basically. As a result the strategic reserve is no where near the level it could be and nor is the stimulus fund.
The other problem I have with the letter is that Craig feels all should bear the burden of not cutting expenditure. I’m not sure why Craig thinks the public sector deserve more protection than the private sector unless he agrees that the States should also be raising taxes to bail out failing companies so their staff can remain employed. Fortunately for Craig he belongs to one of the most vital services this Island needs and is likely to be bottom of the list when it comes to cutting staff.
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In relation to the deficit and with rerence to the C&AG’s report looking at States’ Expenditure forecast, just be aware the £50m deficit arises from the States projected income / spend. Compare that to the track record of what the States said it would spend and what it did spend and the deficit goes up through £80m, hitting £100m.
As to strategic reserves, look no further than the now exhausted Criminal Offences Confiscation Fund as an example of how the States squander funds. Where was the user pays principle here ? Now £5m a year will need to be found on top of the 2010 business plan just to pay Court and Case costs.
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Talk of sharing the burden between all islanders does not recognise the vast inequalities in wealth that exist. The rich will simply not be paying any more. Capital and corporations will not be paying more, and more likely less. It will be labour, wages and salaries that will suffer.
Why should we have to pay for the bosses’ crisis by a reduction in our living standards?
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