A pat on the back for Scrutiny – and yes, I really mean that

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The Panel themselves are no shrinking violets and claim in their report published last week that ‘this was Scrutiny at its best, where Scrutiny detected shortcomings in a process used by the minister and the minister responded immediately to rectify the situation’. But we can forgive them for patting themselves on the back after all the flak they and their chairman have received.

There’s still quite a lot wrong with the Scrutiny process and I’m not absolutely sure if everyone involved knows precisely what scrutiny is supposed to achieve. But the Corporate Services Scrutiny Panel’s intervention in the Economic Stimulus Plan has helped to clarify the enormous problems the Treasury Minister faces in making sure the plan works. That’s obviously why he accepted their recommendations because he knew that they were trying to help not just criticise.

The scrutiny panel’s report is not perfect, of course, but then I don’t suppose this column will be perfect either. But while some observers might disagree with some of their findings, they have at least highlighted many of the issues that will have to be dealt with if the plan is going to help us get over the recession.

Interestingly, the panel’s report highlights one topical issue that some of the ‘clever after the event’ critics have raised in relation to the foreign currency losses on the contract for the Energy from Waste plant. That was all down to incompetence in the Treasury Department according to these armchair critics.

But the scrutiny panel accepted that ‘organisational hiccoughs’ in the Treasury’s handling of the stimulus package were due to the ‘critical pressures placed on their resources’. This follows the Comptroller and Auditor’s complaint some time ago about ‘the paucity of high-level resources in the Treasury’. There was also ‘a recognition that insufficient resources lead to mistakes’. Anyone looking for the biggest contributory factor to the currency problem, need look no further.

This scarcity of resources in Treasury and other departments is going to make it difficult to introduce and control a huge and complex stimulus package which has to be in place very soon, before it’s too late. Indeed it may already be too late for some in the building industry, the report says.

The scrutiny panel was even considering calling for a delay in spending all of the £44m because the system being put in place simply couldn’t cope properly. There were also so few details in some of the projects that were being considered for a cash boost, that the panel thought there was ‘an excessive rush’ to spend the £44m.

However, evidence was given to the panel that if there was any significant delay in the package, the Island would be further into recession and the stimulus would be much less effective.

Following criticism by the panel that ‘there was insufficient definition of the economic benefit within most of the bids’ the Treasury Minister came up with a traffic light scheme for the bids to receive the money. Approval would be given in principle now, which would give the scheme the amber light. Only after the department concerned had come back with much more detail about how the stimulus would benefit the local economy and in particular jobs, would it be given the green light.

The real problem, as I’ve mentioned before in this column, is who is going to get this £44m. Apparently no one in the private sector is going to receive any direct cash injection because it appears that no one made it clear that they could ask for help. That’s a pretty significant omission.

The stimulus will come instead from States departments bringing forward maintenance projects, infrastructure spending and assistance for individuals affected by the downturn.

But the scrutiny panel raises some serious and mainly valid concerns about how effective some of the proposed projects will be. One concern that I personally think is overplayed is their rather protectionist stance and the call for local jobs for local people. I can’t see the problem.

Presumably the Regulation of Undertakings Law will not be suspended despite the severity of the downturn, so employers will know that they can’t blatantly bring in outside workers instead of using locals. That’s assuming they would even want to; employing locally must surely be better for most employers.

It is true that some of the money to be injected into the economy will be ‘lost’ through people buying imports. But that will only be so if there is no local equivalent (at the right price and quality, of course. Think Twice, Buy Local, please take note). In any case, the money is not lost if it has done what it is supposed to do and that’s create or save local jobs.

A similar argument applies to money ‘lost’ through profits being repatriated to the UK or elsewhere. It’s not lost if the stimulus has created/saved jobs as it is intended. Indeed if we were that paranoid about leakage from profits leaving the Island we wouldn’t allow hundreds of financial services firms to set up here. No, Jersey thrives because it is such an open economy, and now is not the time to be protectionist or tell any firm that they can’t do business here.

Potentially the biggest failing in the stimulus plan, highlighted by the panel, is the lack of any direct help for the finance industry.

As the panel’s visiting expert said: ‘The majority of the bids were related to building and construction. Little direct stimulus was planned for a large section of the Jersey workforce. If the recession persists and occurs within the Island’s dominant industry, it is unclear what contingencies the authorities have in place to address the fall-out in employment’.

The Treasury Minister probably didn’t need to be told that, but now, thanks to the panel, we are all aware of the danger of ignoring what is going to happen to 41% of the workforce.

As the panel’s report says: ‘The review has revealed that in a situation never before experienced in Jersey, both the Minister and the panel were employing a two-way street of communication and information sharing, with complete openness, combined with the flexibility to respond to both problems and answers as they arose.’

Hear hear. Let’s have more of the same.

Peter Body is editor of Business Brief magazine

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