The Business Plan for next year, which has just been published, indicates that revenue expenditure will go up by a fraction under eight per cent.
The percentage figure, however, must be viewed with some caution. For example, the move towards new accounting standards which transfers almost £12 million from capital to revenue spending muddies the waters considerably.
Speaking in terms of hard cash rather than percentages, it is planned that capital and revenue expenditure will rise by £745 million, though that sum excludes money from the Stabilisation Fund which is available to be used to stimulate the economy.
The total increase in expenditure for 2010, therefore, is likely to reach at least £800 million. Indeed, that could be a conservative estimate because the plan makes it clear that up to £156 million is in hand for the purposes of fiscal stimulus.
But the figures are just one feature of the 100-page document. Sentiments expressed by Chief Minister Terry Le Sueur and Treasury Minister Philip Ozouf reveal the nature of the tactical and strategic thinking behind the nuts and bolts of ministerial proposals.
Senator Ozouf, for instance, promises that he is determined that, in spite of the proposed budgetary increases, the States must maintain a ‘cautious approach to government spending’. He also makes it clear that the new plan proposes spending which, for the first time in recent years, is within cash limits that have already been agreed.
That such restraint has been pledged will please the many Islanders who believe that public sector spending must be reined in and that achieving more efficiencies and savings should be high the States agenda.
There are nevertheless warnings of dire consequences if all does not go according to plan. The failure to contain spending will, in Senator Ozouf’s words, leave ‘no alternative but to consider increased taxes and charges’.
The plan also focuses on the sheer uncertainty of present circumstances, thanks largely to the parlous state of the global economy, the consequences for financial services, and the continuing impact of extremely low interest rates. Thus, although it has been announced that government is moving to three-year cash limit planning, the degree of confidence underlying such forward-thinking must at present be very limited.
