Hope for the Best, by All Means, but Prepare for the Worst, too.

A couple of years ago, I tried to start a discussion on cuts on another, more popular blog, to a disappointing lack of response. Here I get a good quality of comment, though, despite my small readership, so I shall revisit the topic, with a bit of copy and paste from last time, but some updates, too, and hope that we can create a really good thread between us.

Anyone with intentions to stand for Election this year should have been looking through their 2008 policies, if they had any then, and scrapping the many things that have been overtaken by events, and then shaping a new raft of policies for the 2011 elections, to carry us towards 2014.

The hard thing with looking three years and more ahead though, is that the short-term future is looking exceptionally unpredictable right now. Will our economy return to growth? Will it continue to gently decline? Will something spook the finance industry and leave our economy with bricks where the wheels were? All three possibilities are still two-figure percentage chances from where I am looking.

If it were certain that growth will return, then it would be easy to write a nice manifesto. There is probably still a need for some alternative taxation to fill the “Black Hole” that is Terry le Sueur's legacy, despite the GST hike, but with more money about, it would not need to bite too hard.
The tougher parts will be to prepare for further decline and outright crash. Many left-leaning people will probably be appalled that I even mention cuts, but if the money is not appearing in the income column of the ledger, it should not be in the expenditure column, either.

The only eager votes for a manifesto of cut this, slash that and snatch the other are going to come from the hard-right wingers I, and probably most of my readers, oppose, so we can't be shouting too loudly about intentions to do it. However, if things are still grim by the end of 2011, and the old guard are the scapegoats in the General election, then the erstwhile opposition are going to be faced with a dirty job that someone has got to do, and we really ought to have a clear idea of how we are going to go about it.

The latest figures show that States revenues are still buoyant, so there has maybe been a less pressing need for spending cuts and tax hikes than we have been led to believe. However, there is a lag of a year or two in the full effects of the recession filtering through to taxation, so it may be that something awful is about to emerge from the pipeline. And we need to be prepared to deal with it, if we aspire to replace the current government.

A fall of a few percent in revenue can largely be made up in the traditional manner, by corresponding rises in the rates of existing taxes and duties. However, these have already been jacked up faster than many people can easily adjust to in recent years, and any government doing much more of that will rapidly lose public confidence. The lost opportunity to lose the Social Security cap will have to keep on being revisited until there is a result. The diminishing progressivity of the Income Tax system is somewhat perverse, and also will have to be tackled by a new regime. I thought the way government budgets work is that they cost the activities and purchases they consider necessary to run the state in their chosen manner and then work out how much tax they need to raise. Jersey, with its love of quaintly different ways of doing things, currently goes for a different strategy of deciding how much tax to ask for, and then seeing what it buys. And, between falling profits in a global downturn and tax breaks for those rich enough not to need them very much, the tax yield is not likely to buy as much in the near future as it did in the near past. So, the C-word does have to be bandied about: CUTS!

In a diverse career, I have been an established officer in the UK Civil Service for a spell, and I get a little irritated at attacks made on a stereotype sixty years or more gone in real life. I think the popular image of the idle and arrogant man in a pinstripe suit and bowler hat leisurely making arbitrary decisions about the affairs only applies to the Bill Ogley/Mike Pollard type of senior manager, not at the levels that commonly interact with the general public. I don't think for a moment that large-scale redundancies in the public sector would do anything other than serious social and economic harm.

However, any organisation will tend to gather dead wood over a few decades, and a thorough audit, once in a generation, on the principles Leslie Chapman laid down in the 1960's, will inevitably show up a few jobs that are there because they have been done, rather than because they still need to be done. I know that the States of Jersey do already have an Audit Department that does these kind of surveys, due to a small quango that I used to be involved with receiving their attention, but they don't get the publicity they deserve.

So, the first level of cutting should be a rolling out of this thinking on a broad front. If a few percent of public sector jobs can be identified as dispensable, then their holders can be transferred to other more essential posts as they fall vacant through natural wastage, and the overall size reduced. A key factor will have to be the independence of the audit, though. If senior management are challenged to produce plans for reducing their own empires, then, humans being human, they tend to select those who would be most sorely missed as the priority for cuts, so making the plans unacceptable.

The big challenge, though, is how we would cope with a big fall in the size of Jersey's economy, say a quarter or a third? When even John Boothman, the avuncular ex-banker the finance industry often trots out to give it a human face, famously admitted that the finance industry could “leave at the click of a mouse”, there is no case for assuming it will continue to dominate our future as it has our present. There would need to be expenditure on helping the unexpectedly destitute, on top of all the usual business, so even more of the latter would have to be stopped. Law and order, and sanitation infrastructure would remain essential, and nobody would want to see medical care or education shaved too closely. But what of the rest? Opinions will be shaped by individual circumstances, but where would the consensus be found? No more roadworks, save essential utility repairs? Close the States Communication Unit, that just produces derided propaganda, and the Statistics Unit that only publishes useless and misleading “information”? Refreeze the Town Park, and halve the gardening in the existing parks? Across-the-board culls of Civil Servants? Whatever you look at, there would be more losers,than winners, but don't forget I am not asking how do we want Jersey 2014 to be, but how would we cope if the bottom had fallen out by 2013?

Depending on whether I get worthwhile feedback, I may make this the first of a little series, also taking a look at the options in less disastrous situations, and maybe following up any interesting tangents from the reader comments.

I am writing this to open a debate, not have a rant, so I beg you to consider what your idea of the “least-worst” cuts in a collapsing economy would be, and submit them by clicking the Comments option. (Tip: If you have never commented on a website before; if your answer is more than a few words, then draft in a word processor, copy and paste, because blogs don't reliably save at the first try.)