THE States Draft Business Plan for next year, which has just been made public by the Council of Ministers, is, on the face of it, a wordy and rather bland document. In spite of this, it makes it quite clear that the Island is entering a period of austerity in which Islanders will see services cut, reserves spent and taxes rising.

The 1.1 per cent increase in revenue spending outlined for 2011 will, after inflation has been taken into account, amount to a real-terms decrease in expenditure. In addition, Comprehensive Savings Review economies of £12 million are proposed, so it is fair to say that the promised era of prudence and parsimony is at last upon us.

There is, however, a figure which crops up in a couple of the document’s tables which, though carefully hidden, gives a sobering clue to just how tough the future is likely to be. Under the terms of the Fiscal Strategy Review, a target of £22 million in new taxation is set, although there is no specific mention in the plan of how this sum will be extracted from Islanders’ pockets – presumably because a consultation exercise is still asking people how they would prefer to cough up.

In his foreword to the draft plan, Treasury Minister Philip Ozouf explicitly says that his commitment to the public has been to avoid seeking approval for new taxes until it has been demonstrated that the public sector is capable of making savings of £50 million.

Given that new taxes amounting to £22 million are in the plan for next year, are we to assume that Senator Ozouf is now rock-solid in his belief that the promised savings can now be made? Or are we to assume that if the savings fail to materialise, the tax hike will be abandoned?

It would, of course, be naïve to imagine that events will follow any such pattern. The principal driver of fiscal policy and the spending review remains the forecast deficits which must be addressed if the Island is to return to its long-standing and ultimately sound commitment to balanced budgets.

There is, alas, still so much uncertainty surrounding the economic future – evidenced by the draft plan’s estimates of growth for next year, which vary between seven per cent and minus four per cent – that, far from being bound by pledges, the Council of Ministers will wrestle with deficits using any combination of taxation and cuts that is feasible and politically acceptable – coupled with any growth that just happens to come our way.