The TRUTH about States spending

The TRUTH about States spending

  • 1    it is less than all other wealthy jurisdictions as a percentage of national income
  • 2    it is less per head than the UK, by a country mile.

The UK of course has expenses which we do not have – such as defence and foreign affairs (although we seem to have a Foreign Minister now). But on the other hand we are a small island, and that makes everything  more expensive.

Here is the chart of government spending as a share of national income across the OECD countries = basically the wealthy countries of the world:

 

 

 

 

 

 

 

 

 

This chart is reproduced from page 91 of SR9/2010 Corporate Services “Scrutiny of the Comprehensive Spending Review,”  presented to the States on 31st August 2010, Appendix B by Doctor Harkness.

Commenting on the chart, Dr. Harkness points out, first, that Jersey’s spend as a share of national income (GNI) is about 17%. This means that Jersey’s public sector is “relatively small.”  In fact we spend, as a share of national income, far, far less than any other country, less than half the OECD average, and less than a third of the highest spenders. Jersey’s spend per head is also much lower than the UK: approximately £7,500 while the UK’s is over £10,000. The full text is at the end of this page.

As noted, the UK has expenses which we do not – defence, higher education spring to mind. However, on the other side, everything costs more in Jersey, first because we are an island, and second because we are so small, and have few efficiencies of scale. KPMG, in the course of their work for the Health review, have estimated that providing health care in Jersey is probably about 20% more expensive than on the mainland.

So Jersey’s spending on its public sector is very low when compared to other places. So the fact that on the whole our public services seem to be pretty good, in spite of the low spend, is a tribute to all those who organise and provide them. It gives the lie to those who claim that there is plenty of fat, and that all we need to do is cut it out. The fact is that, by and large, any fat in the public sector has already been trimmed.

But maybe it explains why, too often for comfort, Jersey simply fails to operate at an acceptable standard. It also explains the lack of ambition, and so often the slowness to get things done. It may even explain the occasional horribly expensive mistakes – the capacity is simply not there. Here is an extract from the PAC hearings into what went wrong with the incinerator and the Euro. They have just established that the one person with experience in foreign currency had left (in fact they had resigned – the story is here.)

“Deputy T.A. Vallois:

Does that not send alarm bells ringing, though, that if somebody … only one person had experience in that area and they left, that they did not request a consultant or adviser to step in for a short time period to help them?

 Mr. W.D. Ogley:

Well, they had advisers that they were relying on, but I think you have hit on a problem throughout the States.  The States is an organisation with extremely wide responsibilities.  Everything a government does, everything a quango in the U.K. (United Kingdom), everything … a lot of things that have been privatised in the U.K., the States does it all, massive range of responsibilities.  It may well seem to people that there are a lot of people employed by the States, but a lot of those are frontline workers; the vast majority of them are frontline workers.  You can go around almost every, I would say, department, certainly a large number of departments, and you will find that there is one expert on something, and that is a problem.  There is no doubt about that.  As that expert leaves, it is not that you have teams of people that you have responsibility is shared … or not shared but passed and knowledge known.  You have a lot of individual experts, and I think the report makes clear that the handover in this instance was not as well managed as it could have been and the report makes clear that Treasury were under a lot of pressure, which is probably what led to that.  But I am afraid if we were an organisation that had backup to all of the various professions, we would be a much bigger organisation and we would cost the public an awful lot more to run.  We do run, I have to say, on a very thin layer of professionalism and often on a shoestring.  That is what we do.”

It is not the whole story on the Euro fiasco, for more see here and here. But it is part of the story, I am sure.  We are running many departments at or beyond their limit, and this is not good for performance and ultimately it must destroy morale. Do we really want an over-worked and demoralised public sector?

For the effects of Jersey’s too low public spending – see here.

 ____________________________________________________________

Here is the full text of Dr. Harkness’ comments in her Appendix written for the Corporate Services Scrutiny Panel.

“Public Expenditure in Jersey

The public sector in Jersey is relatively small, with a total gross revenue expenditure of £688 million in 2010 (including £171 million on social security spending) accounting for approximately 17-percent of Jersey’s Gross National Income (GNI).27 Twelve percent of employment is in the public sector. This contrasts with the situation in the UK where public spending comprised 43-percent of national income and 21-percent of employment in 2008/09.28 While income is higher on average in Jersey than for the UK, per capita spending is also lower in Jersey, at £7,43829, than in the UK where the average spend is over £10,000 per capita. Table 1 shows average public spending across 28 OECD countries, all of which have considerably higher spending levels than Jersey.”

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Responses

  1. It is clear that Jersey spends less per capita than the UK – about 25% less – but, as you point out, we do not have large defence spending etc

    “defence, higher education spring to mind.”

    It is also clear that as a percentage of national income we spend much less than most developed nations but as our national income per capita is much higher than most, the actual amount of public spending we do in real terms – the amount we actually “buy” – is much closer to the international norm than figures like 17% vs 50% suggest.

    No doubt it is because we are a low tax area that public income is so much less proportionately, compared to the size of the GNI cake, than other countries can achieve


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