Friday, 29 August 2014

Philip Ozouf: Into the Black Hole

The States Remuneration Body, mindful of the black hole in States finances, has recommended a "pay freeze" for States members for the next 3 ½ years. Julian Rogers, the chairman of the States Members' Remuneration Review Body has said:

"Having taken everything into account we concluded that the current total remuneration figure of £46,600 remains appropriate for the next three and a half years although we will nevertheless continue to undertake annual reviews to check that this remains the case."

That's a rather nuanced statement, and it does not mean that States pay could not rise, because next year, the board could decide differently. What it does mean however, is that there is not likely to be criticism over the pay rise made this year, or over the body being out of touch with the ordinary people of Jersey where salaries for States members are concerned. In other words, it ensures pay is not a hot election issue this year, while providing scope for it to be reviewed again next year.

I still feel that States remuneration and the Public sector pay should be linked in terms of percentages, so that the limited pay rises of the Public sector should be reflected in the States. That way, they would be share in the general cuts on a fair basis.

Public sector pay is not usually so high on the coalface, but a recent report on salaries shows that the upper echelons receive very large sums indeed, well about £100,000 per annum.

Quite a few years ago, in 2010, when Terry Le Sueur was Chief Minister, the Treasury Minister, Philip Ozouf mentioned a fundamental review of States pay - and salary differentials - cutting down on the number of different grades. That never seems to have happened.

In fact, February 2010 saw some sunny optimism by Senator Ozouf:

Deputy G.P. Southern: The Minister refused to be drawn earlier on to figures for the structural deficit for 2013, nonetheless does he not accept that large scale cuts in public spending and services, and their associated redundancies, will only ensure increased recession and worsen the deficit if he performs them before 2013?

Senator P.F.C. Ozouf: I very much hope that the economy will have returned to growth by 2013 and 2014, and therefore any necessary changes in terms of public expenditure will be able to be absorbed within the economy.

As we now know, Senator Ozouf's hopes have proved rather unfounded, and a black hole emerged, which he is rapidly trying to talk his way out of before the next elections. And another States Treasurer has just departed "for personal reasons", coincidentally at this time. The budget, coming as it does while the old States is sitting for the last time, is usually a good election boost - "safe pair of hands" etc, but this year, he is "all thumbs".

His turnaround, which will probably be at the Chamber of Commerce Lunch talk (conveniently before the budget debate and the election!) will be to present the PwC report on reform of the property taxes and rates. I wonder if anyone will ask how much that report has cost the taxpayer? This is, however, a deflection from asking the question: how come the UK has managed to emerge with small but steady growth, while the Jersey economy is still very much in the doldrums?

Expect the lunatic suggestion of charging GST on all imports to also be made. This sounds good on paper, and of course a retail outlet, acting as a collection point, can charge GST on everything from a 20p bar of chocolate upwards, because the 1p collected on that goes into the general till receipts.

To apply it to goods coming into the Island, however, is a logistical nightmare. If I buy sometime (a computer cable, perhaps, which I did earlier this year) costing £1, I will need to pay 5p on that. Where on earth do I pay the 5p and how?

Online payment of GST by credit card, as happens now, would be absurd, as the card processing charges would far outweigh the 5p concerned. Should I post it? Or receive the goods with a demand to pay 5p to the Treasury at Cyril Le Marquand House, where more civil servants will be needed to cope with the vast number of items of low value.

It reminds me most of Tony Blair's "on the spot fine" idea whereby police would take a drunk to the nearest cash machine, and get them to pay the fine there and then. That was another piece of spin, which rapidly was retracted as the unmanageable nature of the suggestion became clear.

In this case, it may take a little longer, but the notion of having no "de minimis" limit is just as nonsensical a piece of spin, an economic sound-bite which looks wonderful - we could raise millions - until the practicalities are considered. Do we really want to keep a Treasury Minister who can make such daft suggestions?

One question which remains unanswered, and which the former Treasurer could answer: was he aware of the looming budget deficit when the Plemont debate took place? He must have been well aware of the deficit before the publication of the budget, and the Plemont debate was only a month before it was present to the States. Did he keep back the knowledge of the black hole during that debate?

1 comment:

Nick Le Cornu said...


Can you tell me where one can buy a 20p bar of chocolate? Inflation has been considerable since our childhood when the tuck shop at VC had such luxuries.