The Untouchables

"I regard the Masterplan as a living document that must be allowed to evolve and be flexible enough to respond to changing circumstances." (Senator Jim Hacker, "Yes Minister")

Philip Ozouf was “mistaken” with his pre-lets figure of 200,000 square feet. That is how Senator Maclean tried to spin away the assurance that was given in February 2014. Apparently, with this kind of mistake, it doesn’t come to light until just after you have one tenant for an office block.

And now Alan Maclean has “clarified” that we didn’t need that condition because it only applied when Harcourt were developing the site, and now the States is doing so in phases, there is not that risk.

Apparently, with this kind of clarification, matters only need to be "clarified" after you have signed one tenant for an office block and decided to send in the bulldozers.

Scrutiny, meanwhile, were given notice by the same Alan Maclean (who was dismissive of commercial risk of the building) that they needed to sign a disclosure agreement making them personally liable for any leaks of commercially sensitive information. Suddenly unique and unprecedented conditions appear like a conjuring trick.

The Greffier, thank goodness, advised them that this would set a very bad precedent. Constable Chris Taylor from Scrutiny was on BBC Radio to explain about it. This is not Reform; these are central standing politicians who are being treated with distrust as if they cannot behave responsibly in accordance with the standards of Scrutiny. And Alan Maclean gets away with this!

And the whole matter is kept from debate in the States. Scrutiny no longer has time to do its job thanks to Senator Maclean’s refusal to hand over documents until it is too late to prevent the bulldozers going in.

If anything, this reminds me of China, where the rulers decided to just bulldoze out a space for the Olympic stadium, regardless of any people living there.

Now there are no people living on the waterfront, but the same arrogance is present. Senator Maclean, of course, stated before the election that this was his last time in the States – unless of course he decides to “clarify” that!

Like a good conjuror, with a glib patter, there is a lot of trickery and smoke and mirrors. So far, he has not decided to saw Senator Ozouf in half, but the day may be coming soon.

Senator Ozouf is becoming unstuck elsewhere. He did not leave a note, as far as we know, saying “there is no money”, but he did give what seemed to me to be a rather contemptuous dismissal of John le Fondre’s claims about a budget shortfall of around £100 million when speaking to a Scutiny panel - pre-election, of course.

Everything was rosy before the election, but now we know that there was indeed a shortfall, possibly as high as £130 million. The Financial Times reports Alan Maclean saying that “80 per cent of households may have to pay more tax next year. An increase in the marginal rate of income tax from 26 per cent to 27 per cent is under consideration for 2016. The move could raise £8m from lower and middle income earners.”

Evidently Senator Ozouf, in both his statement to scrutiny, and his aim to reduce the marginal rate, was again “mistaken”.

And now Jersey’s Health Minister has announced that the island’s new hospital will be built on a single site.

As Channel News reported: “At a meeting this evening, Senator Andrew Green has confirmed two potential sites are being investigated, but they are waiting to put together a costing plan before naming them.”

“It comes after tens of thousands of pounds has been spent on consultants looking at whether the hospital should be spread over one or two sites.”

And how much money was spent producing a report which went to the States suggesting the Hospital should be built on two sites? And who proposed it to the States? Step forth Senator Ozouf. 

"It became very clear that no other option existed that was realistic, affordable and would deliver a hospital within a timeframe, apart from the dual-site option"

He also appointed a "design champion" - a post which he decided did not need advertisement - "We did not advertise it. We needed to make progress. "

Presumably, his plans, promoted as “the solution”, were – what is that word – “mistaken”.

Meanwhile Senator Ozouf remains an Assistant Minister but with a special prerogative of being part of the Council of Ministers – when he is in the Island, of course. There are no reprimands, no blame apportioned to him, and it seems as if his position is secure as ever. He can come and go as he please rather like the Cheshire cat, for this is Wonderland.

And Alan Maclean can just send it the bulldozers regardless of waiting for Scrutiny reporting back. Forget Scrutiny, because evidently when something is to be forced through, Scrutiny is treated as toothless and ignored. Is this a good way to govern?

It appears that whatever mistakes they make, or how appallingly dictatorial they can be Senator Ozouf and Senator Maclean are the modern “untouchables”. The mistakes of one can be "clarified" away by the other, and no one is ever held accountable.

Philip Ozouf’s Twist on the Poll Tax

Do you remember Margaret Thatcher’s massive shake-up of the rates system in Scotland and the UK? This was change to a property tax based on people living in a property rather than the property itself. It lost the Conservatives all their Scottish MPs, and was a disaster which brought down Mrs Thatcher.

The changes suggested by the Treasury Minister, Senator Philip Ozouf, are not quite as radical, but they are a move in the same direction. Instead of the present situation whereby the owner and occupier share the burden of the rates, it is envisaged that the entire burden falls on the occupier, whether owner / occupier or occupier alone.

“Moving to taxing the consumer (i.e. the owner or the occupier) of land/property on its current value.

“Domestic properties – the tax could be based on the current market value of the property – potentially based on either the sale value or annual rental value – and charged to the occupier only.”

“Taxing the occupier of property instead of the owner and occupier as now”

The proposals are made by PWC and we still don’t know how much they were paid to produce this report, and they include

“Building appropriate reliefs into the system to protect those who would struggle to pay.”

Well, we all know what that means – most people will pay more. “Middle Jersey”, those above thresholds, but still paying high rental values, or owners of a single residence, will have to pay considerably more under these proposals. Rents are already very high in Jersey, and the burden on the average resident will increase considerably.

It is not quite a poll tax, but it is a fundamental shake-up which shifts the burden from owners who rent domestic property to the occupiers, the very people who can least afford such changes.

As the elections approach, I wonder if we can we afford Senator Philip Ozouf and his commissioning of reports like this (no doubt at considerable cost)?

James Rondel, at Change.Je, has written a very good piece on the new proposals at:
http://change.je/property-plunder/
"Is the new Green Paper on property taxation really all about consultation and efficiency, or is it a centralisation and increase in taxation through the back door?"

And readers might also like to look at my own initial review:

http://tonymusings.blogspot.com/2014/07/centralising-rates.html

References
http://www.statesassembly.gov.je/AssemblyReports/2014/R.101-2014.pdf

Truant Members Caught by School Prefect

A number of the major absentee States members have hit back at Jeremy Macon’s figures, describing him as a “School Prefect”.

One of the tasks of a Prefect is to “maintain discipline”, and by showing who is playing truant, we can get a better idea of how important our representatives think it is to represent us, the voters, in the house. And in the meantime, we get excuses...

Notably Philip Ozouf makes a distinction between “house keeping” votes and those on important subjects. But the spreadsheet supplied contains a page which contains all the items on which votes were counted, and it can be seen that Jeremy Macon has excluded all the “house keeping” items like passing regulations, various re-appointments of boards etc. This is a bit of special pleading by a Senator who has been caught out!

Just skimming through some of the more recent votes, I see that Philip Ozouf was absent for:

Charities Law, the Road Traffic Law Amendment – on helmets for bicycles, some votes on the Island Plan, the Regulation of Jersey Care, International Criminal Court Act 2001: extension to Jersey, Draft Passports (False Statements and Forgery) (Jersey) Law 201- Articles 1 to 10,

None of those would appear to be house keeping, and it is not as if he is not present for other votes on the same day. He has simply decided to pick and choose which ones to stay for and which ones he will be absent on. There is no “excused attendance”, “out of island”, “ill”, etc.

He may be hard working in other areas, but he is a slacker when it comes to attendance at votes that he does not consider important. I wonder if the electors think that they elected him to decide for himself what to vote for, and when to be absent without leave?

And why are so many Constables low down, with the notable exceptions of Michel Le Troquer and (a bit further down, but not too bad) Juliette Gallichan. Simon Crowcroft does particularly badly, but others including Len Norman don’t fare especially well either.

Citing Parish matters is not sufficient excuse. If Parish matters take up so much of the time, perhaps the Constables should not be in the States, after all. Or perhaps they simply need to learn to delegate and not micromanage their Parishes.

Deputy John Le Fondre

Deputy John Le Fondre cites a virus, but being off ill is not counted. This virus seems to strike at inopportune times, allowing him to be present for some votes but not others, during the same day. Looking at the 8th July, as an example, we a persistent pattern where (like Philip Ozouf but more often); he is present for some votes in the day, and not for others.

Are we to believe he struggles to keep going, but every so often has to take a rest outside the Chamber? Incidentally, when he has been ill, it has been consistent, for the whole day, or from a period onwards in the same day.

Civil marriages: same sex couples (P.102/2014) – second amendment - agreement to reduce the lodging period so allow the matter to be debated at present meeting Pour

Redundancy payments: businesses which have ceased trading Suspension of Standing Order 32 to allow matter to be considered at the present meeting. Not present for vote
Date:

Redundancy payments: businesses which have ceased trading reduce lodging period to enable the matter to be considered at the present meeting. Not present for vote

Civil marriages: same sex couples (P.102/2014) – second amendment Pour
Civil marriages: same sex couples (as amended) Pour

Draft Aircraft Registration (Jersey) Law 201- Not present for vote
Draft Air Navigation (Jersey) Law 201- Articles 1 to 51 and Schedules 1 and 2 Pour
Draft Air Navigation (Jersey) Law 201- Third Reading. Not present for vote

Civil marriages: same sex couples (P.102/2014) – second amendment. Pour
Civil marriages: same sex couples (P.102/2014) – second amendment - reduce lodging period to enable amendment to be debated at present meeting Pour

Shirkers

One of the statistics which is missing is the record of those who are present for roll-call and then bunk off. I believe that Senator Ben Shenton did this a good deal, possibly because of business commitments. He did, however, decide that perhaps the dual commitments to the States and his business meant that States got short shift, and did the honourable thing, and stepped down at the next general election.

I wonder if Deputy James Baker falls into that category. He has been absent for a number of votes. And those, as Jeremy Macon points out, are not those where there is a legitimate reason – “out of island”, perhaps as Assistant External Relations Minister.

If Deputy Baker is part of a trade delegation in Dubai, sky diving or going up in hot air balloons or on camel rides to improve our relations with Arab States (and I’m only going by his Facebook and Twitter feeds here), or travelling by First Class at Gatwick, that is not reflected in lack of voting records.

But his constituents might ask how much he can represent them, either when he is not voting, or when he is in Arab states:

“Eating great food and recovering from a day of meetings, site visits and a spot of skydiving.”

Somehow it rather reminds me of when Prince Andrew was a UK Ambassador for Trade

Long Term Illness

The problem of long term illness is one which needs addressing. I recall that Vernon Tomes was often absent because of illness (something not the case with Deputy Le Fondre). And Constable Frank Amy was injured and away from the States for a prolonged period.

Notably, of course, one Deputy has been ill for a long time because of fighting cancer, and has young children.

It seems heartless to have raised this subject before, and deprive them of perhaps much needed income, so it is only as we approach elections that I am bringing it up.

I notice Article 8 disqualifies a member from the States if they have not been resident in Jersey for a period of more than 6 months. However, they could be in the Island, but not turn up to the States for a period of more than 6 months for a variety of reasons (incapacity, making a political statement etc).

I have asked PPC to consider for a future agenda amending Article 8 to include absence from States sittings for a period of more than 6 months.

I think that the same principles would apply – namely that the member was not fulfilling their obligation to represent their parishioners in the Assembly? As the election period is set to increase to 4 years, I think that is an important matter to consider.

This would not cover periodic absence, but it would mean that long term absence would ensure that the electors would still be represented.

Eye on the States

Just perusing the last States sitting on Hansard, and there are some choice nuggets to digest.

Questioned by Sarah Ferguson about the fiscal stimulus supporting imported building labour, Senator Ozouf said:

I think that the Senator will be aware in her position as Corporate Services Scrutiny Panel Chairman that the rules surrounding fiscal stimulus were only "local employment" and I have said before on my feet in this Assembly that I myself went in the middle of the night to check on projects such as at Victoria Avenue to ensure that it was local labour together and I saw myself that that was the case. We delivered local labour for those projects and it was the right thing to do.

How on earth can you check "in the middle of the night" that the labour employed is local? The mind boggles at this kind of statement! Workers probably have a variety of accents, so it is unlikely that he could check whether they were local by accent alone. Did he buttonhole workers and ask to see some form of local ID, a health insurance card? Or did he just ask them outright and trust that they would tell the truth?

Senator Ozouf: Hello, I'm Senator Ozouf. Are you a local resident, or have you come over from the UK?

Or did he simply say: "Do you know who I am?", and if they did, they must be local. It's very unlikely that anyone local hasn't heard of Senator Ozouf, and his broken promise on GST. He's just made another promise - as the JEP noted:

STATES departments are due to meet £65 million cuts targets and no new taxes will be needed over the next three years, says Treasury Minister Philip Ozouf.

Is that a promise? Or an off the cuff, talking optimistically political remark that in no way can be considered a promise? And does that also include "users pays", otherwise known as "stealth taxes"? We shall probably never know, until the Senator has been re-elected, of course.

Meanwhile, Deputy Higgins was on Senator Ozouf's case with regard to employment of States public sector workers, and the effectiveness of the comprehensive spending review:

I wish I could have the same confidence of the Minister in their ability to generate the growth and the prosperity he is talking about, especially bearing in mind the written answer that I received today from the Chief Minister, which shows that on the C.S.R. (Comprehensive Spending Review) policy, which has been lauded by the Minister for Treasury and Resources, a total of 104 jobs were cut as part of the C.S.R. process and yet in the same department, 128 jobs have been created. So if you are going to have that sort of success with our economic policy, I think we are in dire straits.

New jobs created as part of a review to cut jobs? Where have I seen that before? Perhaps this sequence from Yes Minister shows how the trick can be worked:

Ludovick Kennedy: I just wanted to confirm that you are now this country's chief bureaucrat.
Jim Hacker:  That's nonsense. This government believes in reducing bureaucracy.
Ludovick Kennedy: Figures I have here say that your department's staff has risen by 10%.
Jim Hacker:  Certainly not.
Ludovick Kennedy: What figure do you have?
Jim Hacker:  I believe the figure is much more like 9.97.
Ludovick Kennedy: Well, it has been suggested that your department is less interested in reducing bureaucracy than in increasing it.
Jim Hacker:  Well, yes, but that's because we've had to take on more staff in order to reduce staff.
Ludovick Kennedy: I beg your pardon?
It's common sense. We need more doctors to cure more patients, more firemen to extinguish more fires.
Ludovick Kennedy: How will you extinguish local government bureaucracy?
It's a challenge I'm looking forward to.

Another highlight was Rob Bryans, who made his maiden speech in the States. He starts with a very upbeat paragraph about the need to do something:

I preface this by saying in the middle of difficulties lies opportunity. The industry I come from had a simple pneumonic device: plan, do, review. Repeat when necessary. The time for planning is over, now we need to start the doing. Outside these walls people are desperate. Not just to hear what we propose but they want us to act with a sense of purpose, a sense of urgency.

And along the way, we have some wonderful insights into mistakes, and why there are rubbers on pencils:

People make mistakes. It is why they put rubbers on pencils. I was told when you make a mistake you apologise for it, correct it, make sure it does not happen again and move on. As I said, anyone that does not make mistakes has never tried anything new. We need to try new things.

It is perhaps not the best way of dealing with mistakes to use an analogy of rubbers, as it might call to mind "rub them out", which is what Senator Ozouf is alleged to have done with Mr Flower's reputation. Actually if you rub things out with a pencil, do you need to apologise for the mistake? I'm not sure of the coherence of the analogy, but it makes for a wonderful speech!

Later, we are told about Tolstoy and his wax discs - clearly Mr Bryans belongs on QI. This is a nice maiden speech, even though it has a touch of the pulpit about it.

Tolstoy recorded wax discs before he died that have only recently been translated. Asked the question: "What should be our purpose in life?" he replied: "Every day you should make your life better." I would add, I think you should make it better for others too.

And no sermon is complete without an apocalyptic element - here we have what appears to be the kind of remark that caused Captain Mainwaring to tell Corporal Jones, "I think you're straying into the realms of fantasy, Jones".  This is, to recall, the debate on the strategic plan, which Mr Bryans evidently thinks should cope with a tsunami.

If a national disaster, a tsunami, hit this Island all notions of position and titles would be swept away. Doctors, lawyers, politicians, civil servants, et cetera, would just become people who need help. As we have witnessed countless times over the last few years help will be given.

I would have thought that while politicians etc would be people who need help, doctors would probably be helping people from the start. And Philip Sinel would probably pop up on behalf of the legal profession to see if anyone wanted to make a legal claim for compensation.

And now the sermon continues with something profound - to Mr Bryans, it seems. It doesn't seem quite on the level of Martin Luther King, but one must make allowances:

A friend of mine at a great time of stress for him said a profound thing to me the other day. He said: "You and I are different, we think differently. We came to this Island to find a better life or to make one." He is right. That is why immigrants still find themselves on these shores. This Island still has a lot to offer otherwise they would not come. People still expect a better life

And now we come to the full blown purple prose, where a well thumbed book of maxims and metaphors is in use, and one follows the other, in machine gun succession. I'm not sure that these sentences actually make much sense, in terms of a coherent argument - what is "an organic document" - but it sounds wonderful when they are all strung together, one after the other!

The wind of change blows through these corridors. I am sure there will be resistance to some parts of this plan but without resistance you cannot fly. This is an organic document and should change as we change. If there is a gap let us plug it and crack on. I would rather light a candle than curse the darkness.

And finally, Mr Bryans comes to a close, with an upbeat management-speak finale that would not be out of place at one of those Management Training days out.

We need to set an example. Let us get positive, let us seek We need to set an example. Let us get positive, let us seek challenges and meet them head on. Let us get creative; get innovative; and prove that not only can we put it down on paper but we can make it happen. That is the Government I want to be in. That is the Government I believe we have. I support this plan.

It's quite a tour de force. I'm not sure I wholly agree with Mr Bryans, but for States members, sitting in the Chamber, listening to some very long and dull speeches - the ghost of Deputy Wimberley lives on - this must have been quite a refreshing change.

Et Tu, Brute?

The knives are certainly out for Senator Ozouf, but is this of his own making or not?

A letter written by the Comptroller and Auditor General, Chris Swinson, said he thought the treasury minister was attempting to smear his review.

He reviewed the failed attempt to buy the Lime Grove building for the police. The minister, Senator Philip Ozouf, said the accusations were one-sided. He said:

"This is the second time the comptroller and auditor general has effectively published a report with one-sided accusations that somebody being held to account that they in their view are being harassed to do their job."(1)


The other time, of course, was Bill Ogley who accused Senator Ozouf of harassing him, and behaving in a manner ill befitting a politician; this was the cause of Mr Ogley's rapid departure, although the golden handshake itself was a mistake to be laid at the feet of former Senator Frank Walker - another politician who just doesn't seem capable of apologising, or seeing any need to do so.

I wonder if these reports had come out before Senator Ozouf tried and succeeded in keeping his position as Treasury Minister, whether he would have managed to get re-elected to that post. I somehow doubt it.

But this was part of the culture of the States. Senator Frank Walker led the way. First there was his angry "shafted" remark to Senator Stuart Syvret - when he thought the cameras and microphones were safely off, and he could be rude with impunity. Then there was his apparent bulling of Wendy Kinnard at a meeting witnessed by Graham Power, which would also have gone unremarked.

The Health Minister Jim Perchard told Stuart Syvret in a States session to slit his wrists, and denied it, before being forced into an embarrassing admission of guilt, because other States members had overheard. Stuart Syvret probably didn't help, with his tirade of invective that made me wonder if he was trying for the Jeremy Clarkeson award for rudeness, but like Clarkson, one rather expected it of him, and at least he was open and honest about his insults, not sly and underhand.

Meanwhile, Terry Le Main fired off letters as Housing Minister to try and influence a Court case in which the defendant was the man who provided him with election posters and leaflets at cost, and ranted that he had done nothing wrong.

With teachers like Senator Walker, is it any wonder that Senator Ozouf learnt to express himself forcefully, albeit never in the public sphere. The learned behaviour is as follows - don't ever apologise, go on the offensive.

Unfortunately, as we have seen, these things leak out eventually.

The report, published on Tuesday, catalogues accusations of harassment and bullying by Senator Ozouf and an attempt to smear the former chief executive of Jersey Property Holdings, David Flowers. (1)


Senator Ozouf was once the golden boy, the heir apparent of Frank Walker. When Ian Gorst was standing for Chief Minister, there was still a chance for him to challenge him for the post; once Philip Bailhache decided to stand, he must have realised that he would not stand a chance. His natural supporters, like John le Fondré once was, have now seen what he can be like and they wouldn't vote for him to be Treasury Minister. James Reed was effectively stabbed in the back by bringing forward education proposals that appear to have been rubbished by the Treasury Minister.

Channel Television kept showing a picture of him looking gaunt and jaundiced, alongside captions like "Bullying". The Jersey Evening Post has the headline "Ozouf 'prepared to ruin civil servant's reputation'" The BBC report is probably the least antagonistic, and does print something of his reply:

Senator Ozouf said: "It's very easy to say when someone is being challenged that that behaviour is too challenging, well we were at risk of purchasing the most expensive piece of property the States would have ever bought - I think the public expect me to ask questions. (1)


On Channel TV, the Senator also said he would be giving a full statement when he returns to Jersey. But the knives are definitely out, and with past allies like Frank Walker and Terry Le Sueur now gone from the scene, it will be interesting to see if there is pressure for him to resign from the Treasury. One thing is certain: he will need a lot of luck to remain in the States next election.

Of course, there are more than one side to a story; it can be told in different ways, and events can be open to different interpretations. Dunkirk, after all, can even be seen with positive spin as a "miracle", even though it was a retreat. When one looks at history, there is always a need to be aware of possible alternative interpretations, and how well they fit the available evidence. But the Auditor General has been doing this. He is an honest man, without an axe to grind.

It is noteworthy that the Auditor-General's report has taken great care to sift the evidence, to test what he is told by witnesses, including Senator Ozouf, and he is very careful not to make any political judgements. That task falls to the States, and in particular, the Council of Ministers. We shall have to wait and see.

Links(1) http://www.bbc.co.uk/news/world-europe-jersey-18147648

Tax Questions in the States: A Gloomy Prognosis

Do you remember that Senator Philip Ozouf promised he would try and find a solution to the problem whereby locally owned companies, such as Voisins, effectively still pay income tax here, and yet the next door company De Gruchy does not? Ransom's Garden centre does pay local tax, but St Peter's Garden Centre - owned by non-Jersey shareholders does not. And the list could go on.

Deputy Geoff Southern has recently been criticised for asking too many questions at the start of States sittings, and one pundit in the JEP suggested he would be better off contacting the Ministers directly outside of the States. Perhaps, but when a question is asked in the States, then it nails a Minister down to a particular commitment. In this case, he asked:

Will the Minister assure members that he will keep his promise to bring forward in his fiscal policy for 2013, and beyond in the Medium Term Financial Plan, measures that will deal with the absence of a contribution to Jersey's tax revenues from zero-rated companies?

What lessons, if any, has he learned from the experience of Gibraltar in attempting to raise revenue from such companies without breaching European Union regulations?

We have the usual answer which really is just a restatement of Senator Ozouf's position:

The Minister remains committed to bringing forward measures to deal with the issue of nonfinance, non-locally owned businesses. However, the Deputy's question is fundamentally flawed when it states that there is an "absence of a contribution to Jersey's tax revenues from zero-rated companies". As has been stated many times, those companies which are subject to tax at 0% contribute significantly to tax revenues either through taxes and Social Security paid by individuals they employ, GST or contributing to the taxable profits of the finance industry.

Well - let's take an example. Robert's Garage is a town garage around Springfield with quite probably a fairly substantial income - it's in a good location, and cars are always going in and out. Recently it was taken over by a UK company. The result: a company which was contributing to local income tax on its profits is now contributing zero.

The reason is that local shareholders are taxed on those profits - they are "attributed to the shareholders" as local income, but overseas shareholders do not - they only get taxed in the country in which they receive any dividends.

Yes, Roberts Garage pays GST, and they employ staff - but they did that before. The loss of the profits coming into the Jersey tax net should not be underestimated - the fact that they pay GST suggests their turnover was pretty substantial.

The substantial contribution from their profits is now gone. If you look at the slice of the pie that they contributed, that's reduced substantially. So "much diminished contribution" would be a better way of describing the situation, but to read Senator Ozouf's reply, the suggestion is that is "significant", and nothing to worry about. But a good many companies have moved from local to UK ownership since zero / ten was introduced, and the black hole is growing.

Senator Ozouf's reply is lazy, and doesn't address the real concerns. Perhaps he should speak to the retailers and traders that I've spoken to - they all think the anomalous situation is grossly unfair to them. But finally something is coming to the table to address the issue:

A significant amount of work has been done on this and the fact that is has taken so long to deal with illustrates that this is not a simple issue and there is no perfect solution. Members will be fully briefed on this issue before the Budget debate. A report will be issued in the summer and proposals will be brought forward in the Budget Statement.

Or is it? The rest of the Senator's statement does not actually give us much grounds for hope:

The Deputy rightly mentions the recent Gibraltar case. This highlights two issues. Firstly that the international world is constantly changing and Jersey needs to act accordingly. Secondly, assuming the Code of Conduct Group takes a similar position as that taken by the European Court of Justice, it will not be possible to tax the majority of companies in Jersey and maintain a compliant regime.

Jersey chose to implement zero/ten as that was in its best interests to protect its economy. It more recently chose to maintain zero/ten for the same reason. No action will be taken to jeopardise that position. Similarly no action will be taken which jeopardises employment when the economy is so fragile.

What is the Gibraltar case? Gibraltar had proposed to implement a new tax system setting a zero rate of corporation tax for all companies, much like Jersey. But in order to claw back taxation from local companies, the proposal not only removed effectively corporation tax, it also involved replaced replacing it with new taxes targeted at company personnel and property occupation - which would have been capped at 15% of profits.

The European Court of Justice ruled in November 2011 that while property taxes and payroll taxes would normally not be subject to corporate tax regime scrutiny, that in these circumstances - because it was specifically set up to claw back tax revenue from local companies, and not the offshore ones (who had been paying an exempt company tax instead), it was discriminatory.

In the judgement, it states that "due to the absence of other bases of assessment, combining those two bases of assessment excludes from the outset any taxation of offshore companies, since they have no employees and also do not occupy business premises".

"By combining those tax bases, even though they are founded on criteria that are in themselves of a general nature, the Court of Justice finds that in practice the regime would discriminate between companies which are in comparable situations. Combining those bases does not only result in taxation according to the number of employees and the size of the business premises occupied, but also, due to the absence of other bases of assessment, excluded from the outset any taxation of offshore companies, since they have no employees and do not occupy business property."

"Furthermore, the fact that offshore companies are not taxed is not a random consequence of the regime at issue, but the inevitable consequence of the fact that the bases of assessment are specifically designed so that those companies, which by their nature have no employees or occupy premises, have no tax base under the bases of assessment adopted in the proposed tax reform. This gives reasons for the Court of Justice to conclude that offshore companies enjoy selective advantages."

Hence, "those criteria discriminate between companies which are in a comparable situation with regard to the objective of the proposed tax reform, namely to introduce a general system of taxation for all companies established in Gibraltar."

The general guiding principle in the ruling seems to be that a tax system designed in such a way that offshore companies avoid taxation constitutes a State aid scheme that is incompatible with the internal market. This is where those words by Senator Ozouf are important - "it will not be possible to tax the majority of companies in Jersey and maintain a compliant regime".

It may well be the case that no scheme is possible without falling foul of judgments on taxation, and the case of Gibraltar rules out some of the options already being mooted for Jersey. That's probably not the message Senator Ozouf wants to deliver, and it's not what Jersey people want to hear, but the Gibraltar ruling may have boxed us into a zero / ten regime that is very difficult to escape.

Part of the problem was that the Isle of Man acted unilaterally, boosted by their own VAT system for providing extra tax revenue, which was already established. Once they decided on a zero / ten regime, it was hard for Jersey and Guernsey to compete with, for example, an low but not zero corporation tax rate. In effect, it was a race to the bottom, and we are still paying the price for that kind of fiscal strategy.

Fishing for Co-Operation

We often hear it said that Guernsey and Jersey should pool their resources, and work closely together. Certainly, in the fiscal sphere, Philip Ozouf tells us on his website that "I am working closely with my colleagues in Guernsey".

In 2009, as Economic Development Minister - that is only two years ago - Senator Ozouf went over to look at areas in in which Guernsey and Jersey could better cooperate have been identified, and talked to Guernsey's Treasury minister Charles Parkinson; they committed the Islands to greater cooperation. Here are a few quotations from Senator Ozouf:

"Times have changed - we have a real drive and determination to work together, to be much more rigorous and detailed and dedicate time and resources to move the cooperation agenda forward, with the objective of efficiency and savings for both islands."

"Competition helps in some fields but that doesn't mean we can't be very cooperative and friendly and share information about better ways of doing things."

"I am not going to tell Guernsey how to run its affairs at all, but I will talk about how we can run things together" (1)

But I wonder exactly how well we have since "run things together"? How close Senator Ozouf worked that is? Unknown to the Treasury Minister, or even the Economic Development Minister, Alan Maclean, Guernsey was unilaterally negotiating its own position for fishing rights, regardless of the fact that this would seriously damage the livelihood of Jersey fishermen, who have fished in those waters for many years unimpeded, and who would now have to apply for licences, with the very real chance of those being rejected.

At the moment there is a three-mile protection limit around Guernsey, but the island has agreed a deal with the UK to extend it to 12 miles. Don Thompson, Jersey Fishermen's Association president, said it was "an erosion of the rights of fishermen". He said: "They have been fishing there legitimately for decades." Mr Thompson added: "It is not as if we should be on our hands and knees begging for the right to carry on doing something we have been doing legitimately for decades and decades.".. The agreement licenses UK fishing boats to operate within the three to 12 nautical mile zone around the bailiwick. Dougal Lane, president of the Guernsey Fishermen's Association, described the move as a "very good deal". He said local fishermen had been kept informed by the States throughout the negotiations. (2)

The news report tells us that local fishermen "had been kept informed by the States". Perhaps Senator Ozouf or Senator Maclean could ask the States of Guernsey why they neglected to tell the States of Jersey, who were not kept informed. How are we to have co-operation between the Islands if these kinds of issues are not resolved?

The situation at the moment is that "positive talks" are now going on, which Alan Maclean says are "a step in the right direction", even though he is in fact not attending the meetings!

Senator Maclean who, like Mr Thompson, did not attend the meetings, said: 'My understanding is that they were positive discussions. This is the beginning of the process and there are many more discussions to be had, but both sides are working towards a sensible solution that suits both parties.' (3)

Let us hope that a sensible solution is found, and that the discussions don't break down, but perhaps mechanisms could be put in place to ensure that this kind of event doesn't happen again. Otherwise, all the trips across to Guernsey, the good photo-opportunities, the cheerful sound-bites making it sound as if the Islands are co-operating, are just hot air.

And in the meantime, another story says that "The Channel Islands competition watchdog is looking for more ways for Jersey and Guernsey to work together."

The Channel Islands Competition Regulatory Authority wants to address issues in both islands at the same time to make sure people get a fair deal. Executive Director John Curran said some issues will be different in the two islands. But he added he wanted both offices to work together to promote value, choice and quality in goods and services. He said: "Reducing our costs further, sharing our resources where possible and engaging in joint working are all integral in fulfilling our mission." (4)

Fishing might be seen as a competition problem between Jersey and Guernsey, where a little bit of sharing resources and "engaging in joint working" might be useful. If the Channel Island really want to work together, perhaps the competition watchdog should broaden its scope to look at a situation which could well mean that Jersey fishermen do not "get a fair deal".

It is ironic that " looking for more ways for Jersey and Guernsey to work together" has come up at the same time as a story which shows that there is at least one way for Jersey and Guernsey to work together, and that is to develop a joint fisheries policy. At the moment, the plight of the fishermen highlights a significant lack of communication in areas outside the finance industry.

And so for the moment, the fishermen are left with "positive talks", by Senator Maclean, who is not, we are told, attending the meetings. Perhaps he should take note of what Senator Ozouf said in 2009 about closer co-operation between the Islands:

"Talk has been cheap and now we need to roll our sleeves up."

Links
(1) http://www.thisisguernsey.com/2009/04/24/economy-leads-two-ci-rivals-to-join-forces
(2) http://www.bbc.co.uk/news/world-europe-jersey-15430882
(3) http://www.thisisjersey.com/news/2011/10/24/guernsey-fishing-limit-talks-a-step-in-right-direction/
(4) http://www.bbc.co.uk/news/world-europe-jersey-15434659

A Bid for Chief Minister?

The bizare nature of "unjoined up government" became even more apparent with the announcement by Philip Ozouf that he has put in an amendment to the Business Plan to allocate more funding for the Clinique Pinel Refurbishment.

BBC Radio Jersey notes that:

An "urgent" upgrade of mental health wards is needed at St Saviour's Hospital in Jersey. Treasury and Resources Minister Philip Ozouf has asked the States to approve additional funding of £1.7m. The money will be used to upgrade facilities at the Beech and Cedar Wards at the hospital's Clinique Pinel, which are not up to standard. Clinique Pinel provides assessment and treatment for people over the age of 65 with mental health illnesses. Some £1.1m has already been allocated to refurbish the wards, but Mr Ozouf would now like the States to increase the amount to £2.8m for "health and safety improvements". He said a recent visit to Clinique Pinel had make it apparent the work could not wait and was "absolutely essential" in order to bring conditions for residents up to a minimum standard. "I consider this work to be unavoidable," he said.

Now that part of the budget comes under the purview of the Health Minister, Anne Pryke, who has been asked no difficult questions about why the facility has been let to run down. With Health and hospital facilities, the departmental approach appears to be the same as that for Housing with the States Housing - not to spend money on any essential work until it is absolutely necessary. To paraphrase a saying, the maxim followed by the States appears to be:

"If it ain't broke, don't bother spending any money on maintenance"

Ben Querree, writing in the JEP on "one of the great States myths" notes that "one of central tenets of the 2005 ministerial reforms - that instead of 15 or so States departments pulling in various different directions, what you'd have is ten ministers pulling together, creating 'joined-up government'."

And he is quite right - there seems to have been no consultation over the cutbacks in health between Ministers, and clearly, when money is put back, there is no investigation about why matters were allowed to deteriorate in this fashion. Was the Health Minister, Deputy Pryke aware of the situation? Or was she kept in the dark by her Chief Officer, who was keen to save money at any cost? These are the kinds of questions I would like to have seen raised by the JEP or BBC Radio Jersey, but they were singularly absent. I am reminded of the curious incident of the dog in the night time.

According to the report in the JEP and BBC, this amendment was made after a recent visit by Senator Ozouf to St Saviour's Hospital, prompted by concerns raised by Anita Shepherd. Clearly, Senator Ozouf needs to get out and about more.

Other matters that he might like to consider in the budget proposals (in the Annex to the Business Plan, where all the dead bodies are usually buried) are:

Special Educational Needs and Special Schools - Provide educational support for children with special educational needs. Cut by £67,500

Youth service: Cutbacks £16,700

Grants and Advisory Council: Provide miscellaneous sports grants to support individuals and organisations.Cut Budget by £146,200

Of course, after the Elections this year, comes the election for Chief Minister, and it will not hurt Senator Ozouf to have on his CV such items as:

Provided funds to Durrell from the stability fund in 2011 - when of course, in 2010, there was a cutback to the education budget taking away the Annual Grant to Durrell enabling Primary Schools to take children there. Robbing Peter to pay Paul springs to mind. But the Education Minister had to make the cutback, not Senator Ozouf.

Provided funds to Health for St Saviour - and no difficult questions asked about why such conditions had been left for so long, who was in charge of monitoring the property, and why the Health Minister was not aware of this. Again Senator Ozouf triumphs, but it is not too good for Deputy Pryke.

This way, of course, he can be the harsh task master, reigning in States spending for other States departments, and yet also show himself to be generous and compassionate with his personal largesse - the other Ministers get all the flack, he gets the glory.

Or am I being unduly cynical in thinking he is using what is, after all, taxpayers money to buy popularity for his bid for Chief Minister?

Links:
http://www.thisisjersey.com/2011/08/30/one-plus-one-equals-nothing
http://www.thisisjersey.com/2011/08/27/2-8m-for-st-saviours-hospital/#ixzz1WaU9KrAy
http://www.bbc.co.uk/news/world-europe-jersey-14701988

How to Translate Philip Ozouf

I've been looking over Philip Ozouf's replies to the JEP survey, and decided, in a light-hearted way, to translate what he says into what he may actually mean, or what may the be intended outcome.

The "translation" is very much an opinion based on what he has said, and is intended to be somewhat tongue in cheek. The idea that he might really be slightly duplicitous, and conceal his real intentions behind well chosen words, is of course, a figment of my fevered imagination!

He says: The States need to organise their business more strictly, introduce time limited speeches and find a mechanism where proposals that are never going to get a majority approval do not dominate States assembly business.

Translation: When I am Chief Minister, I don't want lots of speeches from backbenchers, and I want to cut out any propositions that backbenchers may bring against me.

He says: The Council of Ministers is elected to serve the Assembly and the island; ministerial government has been in place since 2005. Now, with the benefit of experience, I believe there are important aspects about the way the Council of Ministers operates that need to change. Most importantly the Council of Ministers needs to work better together as a collective committee, making joint decisions, without individual agendas becoming dominant.

Translation: When I am Chief Minister, I want a Cabinet Style government, with the Chief Minister acting very much like the Prime Minister in the UK, with the power to ensure other members come to the "right" decisions.

He says: Many scrutiny panels have been characterized by in-fighting, yah-boo point scoring, and reports that have lacked research, balance and depth.

Translation: I don't want any Scrutiny that criticises me seriously at all, or scores any points against weaknesses in my arguments.

He says: Going forward, we are proposing to cut spending by 65% (to fill 65% of the deficit), and raise 35% of the deficit through more taxes. That means more taxes on business, raising the cap on social security contributions, and more tax on islanders with the increase of GST to 5%.

Translation: More means testing and stealth taxes, another rise in GST (I keep my promises!) and no extra taxes on business because despite endlessly promising that something would be done about local trading companies owned by overseas shareholders who pay no tax at all here, I can't think of anything that will work. Meanwhile, I'll stick to Mr Micawber's line - "something will turn up". And taxes on islanders doesn't include 1.1(k)s, of course.

He says: We need to be careful and sensitive about immigration, looking after the island and protecting the right of locals, while still accepting and welcoming the skills, expertise and hard work of new residence.

Translation: Expect Chief Officers to be appointed from the UK, as they have been mostly for the past decade, and paying them massive salaries for their "expertise".

He says: One of the downsides of strong economic performance that Jersey has seen in the post war period is that house prices have risen to unaffordable levels for young people and first time buyers. Providing affordable homes for islanders should be a very high political priority. With the right to develop land should come the responsibility to provide a proportion of affordable homes. The island plan provides for the first time, planning obligations on all sites that will be developed in the future, limited re-zoning of brown field sites will also provide affordable homes for first time buyers.

Translation: You can expect more luxury development, but the developers will have to provide houses for first time buyers, providing they are rich enough and probably work in the finance industry.

He says: We need to deliver affordable homes on states owned sites and give further consideration to the scale of re-zoning that is going to be required.

Translation: Now that John Le Fondre has been sacked and is no longer in charge at Property Services, we can get all kinds of deals passed without careful financial scrutiny. Expect more costly States mistakes like the "affordable homes" at St Lawrence, where Housing can rubber stamp deals.

He says: As an elected member, perhaps it's inappropriate for me to answer this question! I suppose I would like to know a new States Members view on long-winded speeches, and how many, if any, they intend to give.

Translation: I want States members who are quiet, say little, but just vote the way I want them to.

Links:
http://www.ozouf.je/2011/07/jep-election-survey/

Taxes are for the Little People

DOZENS of super-rich immigrants are to be lured to Jersey with the promise of lower taxes under plans being drawn up by the Treasury. Senator Philip Ozouf is hoping to attract 15 tax exiles to Island shores a year by lowering the amount they have to pay on their worldwide income. However, in return for the more generous tax rates, they would be required to pay at least £125,000 in income tax a year and 20 per cent on their Jersey income. It is hoped that the lower rates will increase the cash coming into Island coffers, because more 1(1)ks would be bringing more of their money to be managed in Jersey - thus creating jobs and other indirect sources of income. (1)

Part of the disquiet on reading this headline is the lessons of the past. Last year, it was revealed that some 1(1)ks were paying less that £10,400 a year in tax, because the minimum liabilities in the 1970s and 1980s were set at between £5,000 and £10,000. That would have seemed substantial at the time, but the pace of inflation has eroded it over time. The same would clearly happen with the £125,000 - it seems a large figure now, but in 10 or 20 years time, we will be back with the same kind of situation as before. The only way to avoid this is to  build in some kind of indexing with inflation, so that the threshold can increase over time, and a sudden leap would not be necessary.

Philip Ozouf comments on the 1(1) ks that  "We have been fairly unsuccessful in attracting 1(1)ks recently. We were uncompetitive and that is why Senator Le Sueur changed the rules in 2005. That has meant we have been more successful, but that has had. the effect of limiting people's contributions. They have managed their affairs to cap their contributions."

Does he not think it likely that managing affairs to minimise contributions can somehow be prevented? 20 per cent on their Jersey income sounds fairer, but how much of their income will be available for local taxation, and how much can be structured out into other jurisdictions? What counts as world-wide income? If a Delaware company, for instance, owns assets in Jersey and receives income from those, which is remitted (perhaps via a trust or another company) to the 1.1(k) in the form of dividends, do they pay on just the dividends or are these overseas income? I am sure there are more sophisticated means of moving funds around, such as onshore and offshore "tax wrappers", the use of offshore trusts etc. and all those nice forms of "private client tax planning", as a brochure that's just landed on my desk proclaims.

Nicholas Shaxston's book "Treasure Islands" on tax havens noted how financial affairs of the 1.1(k)s could be negotiated and structured so that the minimum necessary local tax was payable. An example of what he found is given below:

A retired property developer who did not want to be identified said, I pay a quarter in tax terms of what the guy who collects my bins does. I  play golf all day while he probably can't even afford to pay for the house he lives in. Living in Jersey is like that: if you've got the money, you get the cream'." (2)

An example from the UK of how tax can be restructured so that individuals pay little in their resident locality is Sir Philip Greene:

Let's look at an example of somebody David Cameron thought was doing it so right he appointed him to an official role advising the government: Sir Philip Greene, Britain's sixth richest man. He runs BHS, TopShop, and Miss Selfridge. These businesses exist on our streets. You can see them every day. Yet for tax purposes, they are "registered" in a small building next to a dentist in Jersey, and with Greene's wife in Monaco. So he avoids more than £250m a year that you and I have to pay instead. It adds up pretty quickly. (3)

The carrot to the local population, already struggling under the burden of 20 means 20, and GST, is that income from 1.1(k) will mean less revenue will needed to be raised from the ordinary taxpayer. That's true. But is it right that some people in the Island receive special tax privileges? Is it right that, as the notorious billionaire tax fraudster Leona Helmsley said, "taxes are for the little people."  Taxation  is  an economic issue, but it is also a moral issue. Effectively 1.1(k) is Jersey's own version of non-domiciled status in the U.K, where individuals who are resident are treated for taxation purposes as if they are not. Should all who are resident be treated equally with regard to taxation?

Dan R. Ebener, looking at the State of Iowa, comments on a situation which seems depressingly familiar with Jersey:

Part of the problem is that our states are involved in a race to the bottom - the race to the bottom of tax rates for corporations so that we prevent our corporations from moving out of state. And a race to the bottom of tax rates for wealthy retirees so that we keep our retirees in the state and they keep their tax payments in our state.  It's an unhealthy competition where the rich win, the common good loses, and the states feel forced to compete or lose competitive advantage with neighboring states. (4)

Which sounds very much like what Philip Ozouf is saying, except he doesn't see anything wrong in this race to the bottom - we have to reduce the demands for 1.1(k) because they will go elsewhere with their money if we don't, and we won't compete well with other jurisdictions. But is it right? Is it fair?  Economics is not moral analysis; at best, it's information. It is not a substitute for moral analysis. And that, at the present, is what we sadly lack.

Ye friends to truth, ye statesmen, who survey
The rich man's joys increase, the poor's decay,
'Tis yours to judge, how wide the limits stand
Between a splendid and a happy land.
Proud swells the tide with loads of freighted ore,
And shouting Folly hails them from her shore;
Hoards, e'en beyond the miser's wish abound,
And rich men flock from all the world around
Yet count our gains. This wealth is but a name
That leaves our useful products still the same.
Not so the loss. The man of wealth and pride
Takes up a space that many poor supplied;
Space for his lake, his park's extended bounds,
Space for his horses, equipage, and hounds;
The robe that wraps his limbs in silken sloth
Has robb'd the neighbouring fields of half their growth,
His seat, where solitary sports are seen,
Indignant spurns the cottage from the green;
Around the world each needful product flies;
For all the luxuries the world supplies:
While thus the land adorn'd for pleasure,
all In barren splendour feebly waits the fall.

Oliver Goldsmith, 1770

Links
(1) http://www.thisisjersey.com/2011/01/17/plan-to-attract-more-tax-exiles/
(2) Treasure Islands: Tax Havens and the Men Who Stole the World by Nicholas Shaxson, published by The Bodley Head, price £14.99.
(3) http://www.johannhari.com/2011/01/17/you-pay-your-taxes-or-go-to-prison-unless-you-are-super-rich-or-a-corporation
(4) http://woodstock.georgetown.edu/resources/articles/taxation-and-the-common-good.html

Spycatcher and Hindsight Bias

"Life is lived forwards, but understood backwards." (Soren Kierkegaard)

After the essay on Spycatcher, here is a review from me on that book, again from the Mensa Magazine of 1987. When books of this nature come out, it is important to note that they are enfolded in an interpretation of events, a narrative which both gives out information, and cites it as evidence to show a point. There is nothing wrong with coming to conclusions in hindsight, but there can be a danger of reading them back into past events.

In Mr Wright's book, an example of this is when he tells a story about Peter Ustinov's father, and tells us that it gave him a lesson - in how retired spies are mistreated - that he never forgot. And yet he also tells how he was surprised that the "gentleman's agreement" on his pension was not to be honoured. Clearly, the lesson he learned is in fact a later one, which he projects back and imputes to his earlier self, a lesson that is in fact learned in hindsight.

So with any leaks that come with a "framing narrative", we have to be careful about seeing what that narrative says, whether it is an individual, or a journalist, because it could reflect later concerns, rather than present ones. That's not to say the author is deliberately misleading the reader - they may not even be aware of that - or that the concerns are not valid, but in constructing a history, we have to be aware of that kind of bias when we put matters into a chronology. It is what is called "hindsight bias".

As David G. Meyers in "Exploring Social Psychology" says:

In everyday life we often do not expect something to happen until it does. We then suddenly see clearly the forces that brought it to be and feel unsurprised. After Ronald Reagan's presidential victory over Jimmy Carter in 1980, commentators -- forgetting that the election had been "too close to call" until the campaign's final few days -- found the Reagan landslide unsurprising and easily understandable. (1)

Baruch Fischhoff, a psychologist at Carnegie Mellon University, notes that this is something that politicians are very good at doing, rewriting their histories. His research shows that " people can fight the hindsight bias only when they honestly and systematically try to explain how different outcomes are possible. Such self-doubt is the exact opposite of how modern politics works: In the age of the blogosphere, certitude is king."

At its core, in other words, the hindsight bias is a form of overconfidence. Clearly acknowledging how you might be wrong is the only weapon against the error, Fischhoff said, but that is one thing politicians hate to do.(2)

With the recent news story breaking that zero-ten is unacceptable, it will be interesting to see how many politicians - those who didn't publically say so beforehand (so not Ted Vibert) - will now exhibit "hindsight bias", and say they knew there were significant problems with the strategy all along, but they didn't want to "talk down the economy" until the EU Code of Conduct report had come out, in case they could be resolved.

Unfortunately there is little "wriggle room" for Senator Philip Ozouf, who has publically nailed his position to the mast that it was just one aspect of zero-ten that needed amending, but it will still be interesting to see what he says on that a year later, when a new Chief Minister needs to be chosen.

"Spycatcher" by Peter Wright
A Review

This is a very readable book, detailing a certain amount of the fascinating story of a life spent in the Intelligence Service, although Mr Wright has been careful to omit any information that would impair the present Service.

However, the reader should be warned; it is written in the personal style of the modern autobiography. A short passage from the book amply illustrates this: it occurs when Mr Wright visited Klop Ustinov (the father of actor Peter Ustinov) who had worked for the Government in the Second World War:

As the vodka took hold, we began to talk of old times. Tears began to wet his cheeks as he told me the story of what be had done for the country. Finally his reserve broke.

"I do these things, Peter, and they leave me here. My wife and I... penniless. "
"But what about your pension?' I asked,
"Pension? I have no pension," he flashed back bitterly. "When you work for them you never think about the future, about old age. You do it for love. And when it comes time to die, they abandon you."
I sat silent. It seemed scarcely credible to me that such a man could be left to such circumstances, forced almost to beg."

As this passage shows, this reads as if it were an exact rendering of events. The reader should be cautious in this respect, because this is where the modern autobiography parts company from history. It describes events as taking place, and makes no allowance for the fact that Mr Wright's Judgements may have changed over the years, even if his "facts remain the same. We are told of Mr Ustinov': bitterness over getting no pension, or Mr Wright'; condemnation of this. But how much has the story been coloured in the telling by the fact that M Wright himself lost most of his pension, and partly: wrote the book as a means of living?

In the book, Mr Wright mentions that. he left the Navy to move to the intelligence Services on the proviso that he would not lose the fourteen years of his Admiralty pension as he had no private income to fall back on. He later discovered that the "gentleman's agreement" was not going to be kept and was, himself, somewhat bitter about this. The problem arises as to how much this has coloured his perspective on the past. For instance, in connection with Klop Ustinov, he concludes that I learned a lesson I never forgot: that MI5 expects its officers to remain loyal unto the grave, without necessarily offering loyalty in return.. Was that really a lesson learned in 1956, or rather a modern comment on past events?

This must surely also be a problem with any assessment of Mr Wright's claim that the Head of MI5, Roger Hollis, was a Russian spy. Mr Wright's recollection of events on his investigation of Roger Hollis point to the inevitable conclusion that Hollis was a spy. But how impartial has that recollection been? How selective has Mr Wright been in his choosing facts to fit his theory, and how often might memory of judgements made been reinterpreted to fit that theory? Mr Wright also mentions that all his documents were destroyed prior to his departure, so memory is the only guide. This is the real problem facing any reader who digs beneath the surface of this book: how much is truth, and how much is mimetic fiction?

Links
(1) http://csml.som.ohio-state.edu/Music829C/hindsight.bias.html
(2) http://www.washingtonpost.com/wp-dyn/content/article/2006/10/01/AR2006100100784.html

GST and Exemptions: The Pros and Cons

Treasury Minister Philip Ozouf has been insisting that the Budget that he and his advisers have drafted is such a carefully constructed set of proposals that there can be no deviation from what it recommends. As well as undermining the idea that the budgetary sums can be made to add up in only one way, proposals to exempt food or fuel would cast doubt on a principle that has so far underpinned the operation of GST in this Island - the single uniform rate. It has been consistently argued by the executive that this is the only way in which excessively costly administrative overheads can be avoided.(1)

In fact, by November 22, 2010, Philip Ozouf had already considered the option of allowing a debate on tax exemptions on food and domestic fuel, but with GST at 6% (a tax neutral option, as it has the same effect as GST at 5% on everything). However, he is still against exemptions.

His argument against exemptions is twofold:

(1) He is of the opinion that 5% is the absolute threshold at which we can't bring in exemptions, but that if we sort out our finances, we should not have to go above 5%. Given his failure to keep it at 3%, which, in fairness, was in part due to circumstances beyond his control - the world economic downturn - this seems an unduly optimistic assumption.

(2) He argues that 5% is the better option because it is simpler for retailers, and also has higher compliance rates, and the evidence is that exemptions bring about more difficulties with complying with the GST law because it is based purely on the value of goods rather than contents. Once exceptions come in, mislabelling and other avoidance strategies increase the amount of work done to check goods, especially imports.

In "The Economics and Management of Small Business", Graham Bannock provides a degree of support for that argument. After looking at various studies, including one by the OECD, Bannock notes that:

the real resource costs absorbed by regulation per firm are very large indeed (about £1,700 on average for all firms in the United Kingdom with fewer than 250 employees), and these resources have alternative uses.(2)

Bannock comments that:

There are, of course, other reasons for high administrative compliance costs. As noted in the discussion of taxation above, regulatory systems have become more complex in an effort to achieve fairness. As an example, if VAT were levied at a single rate with no exemptions and on the whole of consumer expenditure, the compliance cost of the tax would be greatly reduced. Pressure for exemptions (food, for example) prevents achievement of this simplicity in most countries.(2)

This is found in Denmark and New Zealand, precisely because they have simpler systems:

Denmark and, to a lesser extent, New Zealand, have very straightforward VAT systems. However, Denmark is being forced to complicate its system in the interests of European tax harmonisation. (2)

Here is where the effect of "distortions" of the market, comes in, because there is a cost to complying with exemptions, and the more complex the rates of VAT and exemptions, the more this regulation costs the retailer or service provider:

There is no such debate about regulation, the costs of which are unknown to the electorate - and, indeed, until recently, to the legislature. The public is largely unaware that there are any costs to regulation. Where they are aware of costs, it seems to be assumed that these costs will simply be borne by business instead of, by large firms at least, passed on to the public. (2)

But of course, at least part of the cost of compliance will undoubtedly be passed onto the consumer. Most local businesses are quite hard pressed financially anyway, and with rents still going ever up (despite the recession), they will not be able to absorb all the costs, and the consumer will end up paying more:

Where regulations increase market distortions, then costs (in addition to compliance costs) are incurred in the economy. These costs are known as 'excess burdens', 'efficiency costs' or 'deadweight losses'. Excess burdens are difficult to assess but are thought in some cases to be a multiple of compliance costs. (2)

The fact is that VAT is inherently a complicated tax that is costly to administer in business... The best VAT systems are those with single rates covering virtually the whole of consumer expenditure. Political pressures resulting in multiple rates (e.g. higher rates for luxury items) or exemptions (such as food) create additional compliance costs for firms dealing in goods with different rates, as well as economic distortions. (2)

If Jersey did decide to go for exemptions, the simplest solution regarding food would be to use the lists already available in the UK. These have some patent absurdities - for example, a sandwich may be free of VAT but a toasted sandwich, classed as cooked food, attracts it - but at least if we were tied to UK lists, it would avoid costly litigation.

The other area which a more complex GST system with exemptions would impinge upon the public would be increased staffing costs. In "Public Sector Economics for Developing Countries", Michael Howard notes that:

Staffing of the VAT office is a significant aspect of VAT administration. The staffing requirement is a function of a large number of variables, including the tax treatment of various sectors of the economy, the extent of exemptions, the frequency of returns, the complexity of tax rates, and the existing computer systems. For example, the higher the level of transactions omitted from the VAT, the more staffing needs are reduced. Further, if a large amount of the VAT is collected by the customs at the import stage, this reduces the demands for staff in the VAT office. Finally, the more complex the VAT, the greater is the need for staff to administer it. A multiple rate VAT requires more staff than a single rate VAT. (3)

This is necessary, not least because a more complex system, with more exemptions or different rates, leads to increased forms of tax evasion. At present GST leveled on imports is simple - it is based on the value of the goods imported. But if exemptions are allowed, then large imports by retailers (where foodstuffs were involved) would require a more careful check and breakdown of the inventory, to ensure that mislabeling (a common means of evasion) is not taking place, and that requires more staff.

Like New Zealand, Singapore adopted simpler systems precisely because of this problem with complexity:

Singapore had learnt from the experience of other countries that operate VAT systems with multiple rates and multiple exemptions. These administrations had encountered many difficulties arising from countless disputes with the businesses on the scope of tax. Multiple rates and exemptions also pose higher compliance burden on the businesses. It was also recognised that a complex system with multiple rates could potentially lead to more abuses. (4)

But against these arguments, the question is really whether 5% is a permanent solution, or whether the tax rate will have to go up. If GST has to increase, then it makes better sense to go to 6% - an increase of 1% - and introduce exemptions on food and domestic fuel - rather than have to introduce exemptions later, when the increase in GST with exemptions would have to be considerably larger to account for the loss of revenue.

Moreover, the experiences of New Zealand and Singapore - both countries with simple GST systems - cast considerable doubt on whether the tax can remain low. In New Zealand, GST was brought in on October 1, 1986 at 10%, and later increased to 12.5% on July 1, 1989, and was increased to 15% on October 1, 2010. In Singapore, GST was implemented at a single rate of 3% on 1 April 1994, with an assurance that it would not be raised for at least five years. This promise was kept, but it was later increased to 4% on 1 January 2003, and 5% on 1 January 2004. It was raised again to 7% on 1 July 2007. Keeping a lid on the rate is not as simple as one supposes. Denmark, while it has one rate for VAT, has it at 25%

The other argument is that while GST goes up, targeted assistance is provided to lower-income families. The trouble with this is threefold:

(1) deciding the amount of assistance is problematic, and can fall below the threshold of what is really needed because it is extremely complex to assess the needs of individual families, and consequently the analysis of needs works from a simplified model;

(2) there are always people at the margins, who are hit by GST, but who are just above the level at which they could claim for assistance. While the GST bonus scheme can address some of this, there still seem to be marginal cases, just above various thresholds for claiming support, who are penalised and find it more difficult. It is particularly areas such as food costs and domestic fuel that they have to struggle with. The Parish Welfare system was very good at proactively identifying cases of hardship, but this seems a weakness of the more simplified and centralised income support system, which increases in GST will only exacerbate

(3) rapid changes in market prices, such as a large increase in domestic fuel (which does occur), for example, will invariable not be offset by immediate increases in the amount of assistance; there is a time lag in reviewing the figures, and taking decisions, which increases the chances that the targeted aid will simply not be sufficient.

I can see the merit of some of Philip Ozouf's arguments, but I can also see the problems at the lower end of the scale, and I remain unconvinced that targeted assistant works efficiently enough, either at its thresholds, or if economic situations (as with fuel) change rapidly. Given that GST will probably have to increase yet again - the experience of Singapore and New Zealand suggests that it will do so - I think that the GST at 6% with exemptions on food and domestic fuel is the wisest option.

References:
(1) http://www.thisisjersey.com/2010/11/29/exemptions-now-will-ease-the-pain-later/
(2) The Economics and Management of Small Business: An International Perspective, Graham Bannock, 2005
(3) Public Sector Economics for Developing Countries, Michael Howard, 2001
(4) GST in Singapore: Policy Rationale, Implementation Strategy & Technical Design, 2004

Philip Ozouf's Challenge

Ludovick Kennedy: How will you extinguish local government bureaucracy?
Jim Hacker: It's a challenge I'm looking forward to.
Ludovick Kennedy: Would you agree there's even more bureaucratic waste there than in Whitehall?
Jim Hacker: Yes, that's what makes it a challenge.
Ludovick Kennedy: How will you meet the challenge?
Jim Hacker: It's far too early to give detailed proposals he broad strategy is to cut ruthlessly at waste
while leaving essential services intact.
Ludovick Kennedy: That's what your predecessor said.
Jim Hacker: Did he fail?
Ludovick Kennedy: I was just asking you whether you would agree that your predecessor had failed.
Jim Hacker: Certainly not. On the contrary. It's just that this job is an enormous...
Ludovick Kennedy: Challenge?
Jim Hacker: Exactly!

Listening to Senator Ozouf on the radio this morning, I couldn't help be struck by the similarities between him an Jim Hacker - this spending review of the States will be an enormous "challenge", but we can deliver "efficiency savings".

The list of savings, however, pretty well all concerned frontline services, or easy targets like school milk. When Chris Stone asked about any cuts to higher ranking civil servants, Senator Ozouf went on to talk about a comprehensive review of all states salaries being undertaken - which was an evasion, Jim Hacker style, and not an answer.

The fact that the hospital has around 18-20 people in a "human resources" department - identified by Senator Ferguson in her hospital organisational chart - somehow didn't come into the hospital cuts, possibly because it is the hospital deciding where cuts should be, and she drew up the chart - they wouldn't supply one and don't have one of their own.

How Senator Ozouf thinks cuts can be identified properly without such a chart is beyond me, but I suppose in the world of management speak, "efficiency savings" "cutting costs", and letting departments decide for themselves, this simply doesn't occur. And yet higher ranking and wasteful bureaucracy can only be identified by such means - the first instruction of any spending review should be to tell departments to get their act together and draw up such a chart.

It is also notable that Roy le Hérissier has been refused any details of higher bureaucratic salaries, of what chief officers earn, for example, and any pension and/or expenses packages that are part of the deal. How there can be a proper review of salaries which Philip Ozouf kept telling Chris Stone would be "transparent" - when such matters are kept secret - seems to stretch credulity to breaking point. Or is "transparent", as I suspect, one of those buzz-words like "open government", which is used a lot, but when someone really wants information, turns out to be a political mirage:

I  explained that we are calling the White Paper Open Government because you always dispose of the difficult bit in the title. It does less harm there than on the statute books.   It is the law of Inverse Relevance: the less you intend to do about something, the more you have to keep talking about it. (Sir Humphrey Appleby, Yes Minister)

Senator Ozouf also fudged tax rises - he said there would be combination of States cost-cutting balanced with rises in taxes which would have to be greater if the cuts were rejected. But he didn't say what those tax rises would be, although it is pretty obvious that the two main sources of tax revenue over which he has control are indirect taxes, such as those on fuel or drink, and GST. In the meantime, more staff are being taken on by tax to chase non-payment and avoidance, which he says will pay for itself - which no doubt it will, in the short run, but there must be a point when that backlog of cases starts to diminish - and what will those staff be doing then?

 

I have just started reading "Delivering Public Services That Work", which is a collection of case studies on systems thinking in the public sector. It is worlds away from the vague managementspeak, and yet all the case studies which involve real public organisations in England have made substantial gains in efficiency, which they can measure - yet without going down a culture of "targets". Measurable here means (in one case) 6.5% less resources to handle 33% more work - improvements one can believe in. It is a book which I would recommend to anyone like Senator Ozouf.

These cuts are not finalised yet, but they will be in the business plan which is published just after the last States sitting in July, and debated in September. Now it is true that people need adequate time to review and think on these matters, but there always seems to be an element (from last years plan), of delivering it so that there can be no immediate debate or comment in the States, no questions asked about it, until the States return.

It is like letters I've sometimes had from schools, which tell you about cut backs, and are sent out just after schools close. Is it just me, or is there a hint here of giving out bad news and deliberately running away from any engagement or come back on it? Certainly, it is not a good example of "consensus government", when it is issued as a declaratory edict, with no prior consultation or engagement with other States members. But then when Senator Le Sueur took over as Chief Minister, he promised "consensus", bringing everyone along with government - just like that White Paper in Yes Minister on Open Government!

Why are so many questions asked in the States?

Paxman: Did you threaten to overule him?
Howard: I was not entitled to instruct Derek Lewis and I did not instruct him.
Paxman: Did you threaten to overule him?
Howard: The truth of the matter is that Mr. Marriot was not suspended-
Paxman: Did you threaten to overule him?
Howard: I did not overule Derek Lewis-
Paxman: Did you threaten to overule him?
Howard: -I took advice on what I could or could not do-
Paxman: Did you threaten to overule him?
Howard: -and acted scrupulously in accordance with that advice. I did not overule Derek Lewis-
Paxman: Did you threaten to overule him?
Howard: -Mr. Marriot would not suspend him-
Paxman: Did you threaten to overule him?
Howard: I have accounted for my decision to dismiss Derek Lewis-
Paxman: Did you threaten to overule him?
Howard: -in great detail before the House of Commons-
Paxman: I note that you're not answering the question whether you threatened to overule him.
Howard: Well, the important aspect of this which it's very clear to bear in mind-

Why are so many questions asked in the States?

Part of this has to be with the fact that we have politically active members who are not prepared to be silent if they aren't on the Council of Ministers. Back in the 1970s, there were a number of members who rarely asked any questions, or indeed made any speeches. Some of them spent most of the time in the States Chamber asleep.

The Deputy for St Clement was a friend of my parents, and was an extremely nice chap, even if he and his wife did keep the TV on in the background all the time when we visited! But he could have been a Trappist monk, with a vow of silence; for all his time in the States, not once did he ever say anything. He was not alone.

Along with that in the "good old days" were farmers from the Northern Parishes who would enter the States, and suddenly appear as nominee directors on half a dozen companies. I remember a friend of mine Ken Webb commenting on this. "I taught Tom," he said, "and he was as thick as two short planks. Yet now he's been elected, he's suddenly got all these directorships. Fancy that!"

In those days, before the reform of Jersey's company law, accountancy firms would supply their own partners as nominees on hundreds of companies, and charge a suitable directors fee each year - easy money, and Jersey was as much involved at that time as Sark - I know, I worked in accountancy at the time!

So the old days, where States members were less inclined to ask questions, and the business of the States went faster (because some members never spoke or were asleep) is not all a "golden age", even if there were some members like John Le Marquand, a master of oratory, who could deliver long speeches ex tempore, without muddle, rambling or hesitations. Alas, other members were also rambling windbags, including one past member of Policy and Resources (charity forbids me mentioning, ah, ahem, his name). But there were less of them, and more Trappists.

Another reason for asking so many questions is that so many States Ministers evade the question. Here is an example. Deputy Wimberley asks the following:

"Given the evident importance of the Comprehensive Spending Review process can the Minister tell members where they can find the written guidance, authorised by himself and/or agreed by the Council of Ministers and issued to Departments, outlining exactly how they were to approach and carry out their duties under this review?"

Simple enough, you would think. But it gets a non-answer from Senator Ozouf:

The Council of Ministers approved the principles of the Comprehensive Spending Review in late 2009 and in February this year agreed the rules and framework which would deliver longer term financial and business planning, improvements in financial management and control of States spending

After the Council of Ministers approved the parameters of the CSR, it was, and is, for officers to develop a process to achieve the agreed principles and parameters. At the beginning of 2010, a dedicated team of seconded officers was brought together to work with departments to deliver the CSR and developed a toolkit and templates for departments to complete for 2011, 2012 and 2013 targets. The written guidance was sent out by officers and, although both I, as Treasury and Resources Minister, and the Council of Ministers are kept up-to-date with progress, we do not get involved in the process of the CSR.

So the written guidance was sent out, as he mentions, but in rambled on for two paragraphs and he has still not not managed to answer the simple question - where can States members find it (and obviously read it). That's not an answer; it's an evasion, and poor Deputy Wimberley will now have to frame the question differently in the hope that he might get a copy of this written guidance - he doesn't want to know whether the Council of Ministers or Old Uncle Tom Cobley is involved with it; he just wants to get hold of it.

Why are so many questions asked in the States? Clearly, from listening to all the indirect evasions and muddle Ministers give in reply, because their interlocutors still are encouraged with the hope that if they keep asking, like Jeremy Paxman asking Michael Howard, they might just one day get a straight answer.

Paxman: I'm sorry, I'm going to be frightfully rude but - I'm sorry - it's a straight yes-or-no question and a straight yes-or-no answer: did you threaten to overule him?
Howard: I discussed the matter with Derek Lewis. I gave him the benefit of my opinion. I gave him the benefit of my opinion in strong language, but I did not instruct him because I was not, er, entitled to instruct him. I was entitled to express my opinion and that is what I did.
Paxman: With respect, that is not answering the question of whether you threatened to overule him.
Howard: It's dealing with the relevant point which was what I was entitled to do and what I was not entitled to do, and I have dealt with this in detail before the House of Commons and before the select committee.
Paxman: But with respect you haven't answered the question of whether you threatened to overule him.
Howard: Well, you see, the question is...

Senator Ferguson needs extra homework

Recently, Deputy Montfort Tadier brought a proposition calling for a Monday off when Liberation day fell (as it does this year) on a Sunday. Later when this failed he tried for a Friday, this was also rejected.

Philip Ozouf stated that "I think it would be unconscionable at this stage in the calendar at the end of February to be discussing and to be considering an extra and public holiday in what is effectively 12 weeks' time. No self-respecting nation state would be debating in their national parliament the addition of a holiday at such late stage. "

Deputy J.M. Maçon commented: "On a point of clarification, if I may. The Minister commented that no self-respecting national assembly would bring such a proposition at such short notice. May I ask when the Council of Ministers brought their Boxing Day proposal, how many weeks were given then?"

Now Deputy Maçon knows very well that the Boxing Day proposition was rushed through the assembly with very short notice. He has, in fact, caught Senator Ozouf in an inconsistency. What do you do when you have been caught out? If you are Senator Ozouf you respond by ignoring this and moving the debate to general terms. Well done to Senator Ozouf for not giving a straight answer!!!

Senator P.F.C. Ozouf: "If I am able to respond, clearly there is an issue that we need to sort out in relation to giving certainty in relation to public holidays and bank holidays. We need to sort this out, there are another 6 occasions in the next 35 years when Liberation day falls on a Saturday or a Sunday and when there are other Boxing Days and other days and we need to sort this out that there be an automatic statutory provision, not this chaos."

But the best of the commentators has to be Senator Ferguson, who plainly prefers to rely on memory rather than research.

"I think I have been lost in the points of clarification. I am confused by this habit of suddenly thinking: "Let us have an extra duvet day." I think it is something that seems to have come upon the population in general over recent years. The Deputy said it is the 65th anniversary, well, why not the 64th? Why did we not do this for the 64th or the 66th? Every year we celebrate Liberation Day is important because every year we remember. "

She now tackles the comment that the USA moves the day when Independence Day falls on a Sunday.

"I certainly did not intend to mislead the House but I can certainly assure the Deputy and the House that we did not get an extra day when I lived in America. Again, it must be a fairly recent thing because when I lived in New York we celebrated the day on the day and that was it, there was no extra holiday."

Well, if one wanted to be really picky, I would note that when, in 1779, July 4 fell on a Sunday, the holiday was celebrated on Monday, July 5. I don't really think that Senator Ferguson is quite that old, but that would certainly explain the shortfall in her memory.

If she had done her homework, she would have found that in 1938, Congress changed Independence Day to a paid federal holiday, and federal holidays, when they fall on a Sunday, are observed by workers the following Monday. When was this decided? Well, this year as it happens, Independence day falls on a Sunday, and as noted:

July 4, 2010 (the legal public holiday for Independence Day), falls on a Sunday. For most Federal employees, Monday, July 5, will be treated as a holiday for pay and leave purposes. (See section 3(a) of Executive order 11582, February 11, 1971.)(1)

It can be seen that the order making this so was in 1971! So this is Senator Ferguson's "fairly recent thing". I myself would not consider 39 years quite as recent as that, but I am not quite as old as Senator Ferguson. I do hope that next time, however, she doesn't rely wholly on her memory but does a little extra homework.

It might also provide a good idea for Jersey politicians like Senator Philip Ozouf to look at this whole section to save reinventing the wheel! Here is the exact paragraph mentioned above:

Executive Order 11582--Observance of holidays by Government agencies

Source: The provisions of Executive Order 11582 of Feb. 11, 1971, appear at 36 FR 2957, 3 CFR, 1971-1975 Comp., p. 539, unless otherwise noted.

By virtue of the authority vested in me as President of the United States, it is hereby ordered as follows:

Sec. 3. (a) Any employee whose basic workweek does not include Sunday and who would ordinarily be excused from work on a holiday falling within his basic workweek shall be excused from work on the next workday of his basic workweek whenever a holiday falls on Sunday.
(b) Any employee whose basic workweek includes Sunday and who would ordinarily be excused from work on a holiday falling within his basic workweek shall be excused from work on the next workday of his basic workweek whenever a holiday falls on a day that has been administratively scheduled as his regular weekly nonworkday in lieu of Sunday. (2)


Links:
(1) http://www.opm.gov/Operating_Status_Schedules/fedhol/2010.asp
(2) http://www.archives.gov/federal-register/codification/executive-order/11582.html

Efficiency or Triage?

People in Jersey could see cuts in public services and a possible increase in taxes over the next few years. That's according to the latest States Business Plan. Falling tax revenue will lead to a public debt of 51 million next year and 70 million the year after. 156 million pounds from the rainy day fund will be injected into the economy, but that alone won't be enough - all States Departments are being told to cut spending by half a percent. The business plan will debated by the States in September. (1)

Listening to the presenters going through the business plan, it seems to me that what we will be getting is a form of selective triage. Triage was originally defined as a medical model:

Triage is a process of prioritizing patients based on the severity of their condition. This rations patient treatment efficiently when resources are insufficient for all to be treated immediately. The term comes from the French verb trier, meaning to separate, sort, sift or select.(2)

But it has been taken over to a business model:

Within each category, the desired outcomes and goals are ranked based on the "threat" presented to the company if the outcome or goal is not achieved and the level of "outrage" that will occur should the threat be realized.(3)

Within the business model, as it could be applied to public services, we can see how those least able and most vulnerable can be isolated, segregated, and have services cut back or curtailed. There is no threat from these groups, and they can be treated as insignificant; there is little or no threat to politicians, especially with three years until the next election.

Against simple poverty, the States of Jersey has in place the income support scheme, which - however much it has defects - attempts to keep people above the breadline. This is in part a matter of justice, but also a means of averting confrontational politics. The Trade Unions often represent the poorer workers in society, and their ability to take industrial action, and withdraw labour, and for it to escalate into a general strike, is always a potential threat.

The recent strike at the Airport in Guernsey was potentially very damaging to the Island's image as a well-run finance centre, and the Chief Minister, Deputy Lyndon Trott, intervened extremely rapidly to concede to enough of the strikers demands to defuse the strike.

But other minority groups, such as carers of those who are mentally handicapped, or suffer from varying forms of dementia, or the elderly on meagre State pensions, but owning their own home, can find and have found services cut back or means tested (another way of cutting back), because they don't have the same pressure that they can put upon the States.

The easy option, then, is to remove respite care, or provide it only as a paid but subsidised service ("user pays"), or provide services free only to those who get above a threshold, which may include not owning one's own home. It is the easy option, because the groups it targets can be vocal, but they pose no significant threat to the States. I have been in touch with several people, and it is clear that this is happening now. It may be curtailed to a few hours respite, or one morning per week, which actually is little use, because what these people need is a decent break from the stress of being carers, and a longer time provided less frequently would be a better option.

Support for people wanting to give up smoking is another area under threat, according the report on BBC Radio Jersey. The logic is clear: if people want to give up, why should this be subsidised by the tax payer? The fact that this may lead to less of a burden on the health service in the long term is forgotten, and like Yes Prime Minister ("The Smoke Screen"), there is also the income being generated by taxes on tobacco which would be lost which is probably also lurking in the background.

The buzz word for all this is "prioritise". I think it should be "triage", as it would provide a better description of what processes of thinking are taking place. Hard decisions are being made, and the essence of these is - where can cutbacks be made without meeting significant opposition and the threat of massive social disorder. That may seem unduly cynical, but I will argue that it is built into the model that works with terms such as "efficiency" and "prioritise".

Robert Halpern provides a warning from the great depression of the 1930s:

As relief budgets shrank and demands on those budgets increased, the differentiated responses to different family situations and the balance of responsibility for relief among public and private agencies that had just begun to be worked out, collapsed. New, often harsh, and in some cases bizarre rules for providing relief were created. Some local rules required social workers to wait until families were completely destitute before approving relief In New York City, a rule called "Skip the Feed" required local offices of the Department of Welfare to skip every tenth family seeking relief (Hall 1971:12). Casework was also rationed. Agencies struggled constantly with whom to select for relief-related monitoring and follow-up. Some developed triage systems for deciding who could benefit most from supportive casework services-for instance, families at neither too high nor too low risk, with neither too many nor too few problems. (4)

Harry Moody has also questioned if this is the way to go with regards to the aging population:

As more and more professionals provide services to the aging, the expense grows greater, yet there is dissatisfaction with the services provided. Is there a way out of this dilemma of greater needs and limited capacities, or must we face a "politics of triage" that leads either to privatization, on the one hand, or rationing of services, on the other? (5)

Fundamentally, where the use of the words "efficiency" and "prioritise" can be so bad is that they conceal the moral choices, and instead it seems more like putting a mechanic to work on fine tuning the machinery of government. The moral values behind the words is lost, and the drive for efficiency - in effect a form of triage - can lead to picking targets where there can be seen to be substantial (and often quick) results for the finance and manpower used, which is not necessarily the right thing to do. This is brought out very clearly by Christopher Hudson in his discussion of prioritisation of mental health provision:

The seeming conflict between the principles of triage and need is one of the philosophic bases for many of the policy discontinuities involving the community mental health movement interest in primary and secondary interventions and recent state efforts to provide tertiary and rehabilitative services... Those in most need should always be given service priority, but priority should be given to those most able to benefit from service when persons of similar disability or need are considered. For instance, if a mental health center has developed effective services for their most seriously disturbed and has resources to program for either their moderately disturbed children or adults, a persuasive argument can be made to then concentrate on a program for those children, considering their longer remaining life span.(6)

The UK government's introduction of targets for hospital waiting lists is a good example of how "efficiency" can fail to provide a good service. The unintended consequence was that instead of concentrating on patient welfare, strategies were evolved to meet targets, which meant that the quick and easy result took precedence over the long term with uncertain outcomes. It was the absence of thinking about real goals, and assuming that a technical "fix" would provide a solution that ultimately led to the policy failing.

The same kind of strategy, of looking for visible effectiveness in the public sector was subjected to a very clear critique by Lipsky in his 1980 book "Street-Level Bureaucracy: Dilemmas of the Individual in Public Services.". Again, he points out that when "effectiveness" is the target, that is precisely what the public service worker wants to deliver, and this can easily lead to a worse outcome for many people.:

Public service workers stereotype clients as a reaction to an unstoppable stream of demand, determining who is worthy enough to receive service or attention-as in the case of a public defender who pushes a few cases to trial, while many other cases languish. Yet as Lipsky states, by modifying goals to best serve a few clients upholds a public image of effectiveness, but is not truly representative of a public benefit (Lipsky, 1980).

Triage and prioritising strategies ask: "How can we get best value with limited resources?" But the question implicitly assumes that "best value" is obvious, or can easily be measured in financial terms, or in terms of the results (with their short-term bias and quick fix mentality). But it may be the case that we should spend on something not because there are visible results, but because it is the right thing to do. A good example of this would be environmental values:

Environmental problems have an ethical dimension. They are not just about the efficient use of resources. Justice in the distribution of environmental goods and burdens, fairness in the processes of environmental decision-making, the moral claims of future generations and non-humans, these and other ethical values inform the responses of citizens to environmental problems (8).

We are told that "all States Departments are being told to cut spending by half a percent", which may be a worthwhile target given the state of the economy, but the debate on where to cut and why, and the moral justifications for doing so - which should have been part and parcel of the Strategic Plan - has yet to take place.

In English, the word "economy" has three meanings: avoidance of a waste of money; control and management of money and other community resources; a social or household a system of political economy; these have nothing to do with ethics. But in Chinese economy, "jing Ji" (Ching Chi, in the old alphabetic system of writing), is related to ethical value for it means "governing the world in harmony to bring about the well-being of the people."(9)

Links
(1) http://www.channelonline.tv/channelonline/
(2) http://en.wikipedia.org/wiki/Triage
(3) http://en.wikipedia.org/wiki/Business_Triage
(4)  "Fragile Families, Fragile Solutions: A History of Supportive Services 
for Families in Poverty." , 1999
(5) Abundance of Life: Human Development Policies for an Aging Society,
Harry R. Moody, 1988
(6) Dimensions of State Mental Health, C. Hudson, 1991
(7) http://userwww.sfsu.edu/~wwong21/documents/PA715-Book%20Report-Street%20Level%20Bureaucracy.pdf
(8)  http://www.erica.demon.co.uk/EV/EV925.html
(9) http://www.crvp.org/book/Series03/III-16/chapter_vi.htm