THERE was only one question left in my mind after reading the Public Accounts Committee’s report into last year’s Budget.

How many more accountants would PAC like to see employed by the States? One or two won’t be enough to satisfy the committee’s rigorous requirements. Perhaps ten or 20 more might be able to do the job, but then of course you can’t have too many accountants when you’re trying to cut costs.

Now I’ve got nothing against accountants – some of my best friends are accountants – and they play a vital role in any organisation. But we have to be careful not to confuse a good set of accounts with achieving real goals in terms of service and performance. Accountancy is just a tool, not an end in itself.

Now PAC are very keen on figures and they would like to see the States producing an enormous amount more than they do already. They are particularly keen to find the ‘true’ cost of everything.

This might sound surprising to the non-accountants among us. Surely we know the cost of running the hospital, the police force and the schools? After all we pay enough taxes for their services, and we have budgets and accounts to tell us where our money goes.

But that’s not enough for PAC. We don’t know the real costs, their report says, because no one has worked out the cost of using property, the depreciation on assets they use, the cost of replacement capital and the costs of central services provided to departments.

It means that the Health Department, for example, does not know the true cost of a hospital bed, according to PAC. So how can the department know that they are providing services more cheaply than the private sector? Well they don’t know, but then there aren’t that many private companies wanting to run a hospital, prison, police force or schools in the Island.

Such information would be nice to have, but it’s not vital to the running of States departments and it would require an army of accountants to produce.

We can only imagine what taxpayers would think about employing more of what even one member of PAC describes as ‘pen pushers’.

So this information must go into the category of ‘nice to have’ which in the current state of government finances means it’s not affordable.

So the chairman of PAC says that ‘it would be virtually impossible to run a private sector business on a sustainable long term basis with the quality of financial information and risk mitigation that is currently prevalent in public sector finances and management accounts.’

Who can argue with that? But the States is not running a private business where profit is the driving motive. The motive is public service, as it says on the tin.

Obviously sound business principles have to be applied in the public sector because it’s taxpayers’ money they are using, but we should be careful that we don’t end up with public servants who know the price of everything and the value of nothing.

There is a good case for improving financial reporting and accounting in the States, and the Treasury Department is working hard (with limited resources) to plug the gaps. So banging on constantly about failings isn’t particularly helpful.

For example, no opportunity is missed to raise the issue of the foreign exchange losses on the Energy from Waste plant which took place at a time when the currency markets were probably the most volatile they have ever been. Now, of course, we also have swine flu and historic child abuse to use as weapons to batter the public service.

In the case of swine flu, you would have to either be very brave or foolhardy to have suggested we shouldn’t do everything we could to protect the public against a pandemic. So we bought more vaccine than it turns out we needed. Personally I would rather that was the case than not having enough. It’s like saying that buying a crash helmet is a waste of money unless you have a crash.

Then we have the millions spent on the historic child abuse inquiry, which is also mentioned in the PAC’s report. That might well have been a waste, but it had little to do with financial management. It was an operational matter, not willful neglect by profligate public servants. The spending was even approved by the States itself.

There is some good news in the PAC report. The fact that the States Treasury is close to introducing GAAP accounting is welcomed by PAC, but although Jersey is probably the first small jurisdiction to do this, the PAC still manages to find something to complain about.

That’s their job, of course, and it has to be done, but we shouldn’t lose sight of what we are all trying to achieve.

Which brings me to mid-Staffordshire. Unlike in Jersey, there were appalling failures in the hospitals of the Mid Staffordshire NHS Trust between 2005 and 2008. Some patients were forced to drink water from flower vases, and many remained unwashed for weeks. Several hundred patients died prematurely, and there have been a number of enquiries into mismanagement.

The latest inquiry, which was only presented to the UK minister last month, concluded that managers had been ‘pre-occupied with cost-cutting, targets and processes’. Sound familiar?
Peter Body is Editor of Business Brief magazine