States Meeting Transcript - 20/09/2007

STATES OF JERSEY OFFICIAL REPORT

THURSDAY, 20th SEPTEMBER 2007

PUBLIC BUSINESS – resumption ...............................................................2

1. Annual Business Plan 2008 (P.93/2007): Objectives for the States' Assembly and its services....................................................................................2

The Greffier of the States (in the Chair):.......................................................2 1.1 Deputy J. Gallichan of St. Mary (Vice-Chairman of Privileges and Procedures Committee - rapporteur):................................................................2

1. Connétable A.S. Crowcroft of St. Helier:................................................2
2. Deputy A. Breckon of St. Saviour:.......................................................2
3. The Deputy of St. Mary:.................................................................2

2. Annual Business Plan 2008 (P.93/2007): Total States' Net Expenditure ................3

The Greffier of the States (in the Chair):.......................................................3 2.1 Senator T.A. Le Sueur (The Minister for Treasury and Resources - rapporteur):.........3

1. Deputy S.C. Ferguson:...................................................................6
2. Senator T. A. Le Sueur:................................................................10
3. Deputy G.P. Southern of St. Helier:....................................................12
4. Deputy C.J. Scott Warr en of St. Saviour:...............................................15
5. Deputy P.V.F. Le Claire: ...............................................................16

7. Deputy A.D. Lewis of St. John : ........................................................21
8. Deputy J.J. Huet of St. Helier : ..........................................................23
9. Deputy J.G. Reed of St. Ouen:..........................................................24
10. Deputy G.C.L. Baudains of St. Clement:............................................28
11. Senator F.E. Cohen: .................................................................31
12. Deputy J.A. Martin of St. Helier:....................................................31
13. Senator L. Norman:..................................................................33

ADJOURNMENT................................................................................33 The Greffier of the States (in the Chair):......................................................33

The Roll was called and the Dean led the Assembly in Prayer.

PUBLIC BUSINESS – resumption

1. Annual Business Plan 2008 (P.93/2007): Objectives for the States' Assembly and its services

The Greffier of the States (in the Chair):

The debate resumes on the Annual Business Plan. Before the Assembly moves to the financial parts of the proposition there is one hopefully brief remaining part of paragraph (a), the subparagraph relating to the objectives of the States' Assembly in its services as detailed on page 142. I call on the Vice Chairman of the Privileges and Procedures Committee.

1.1 Deputy J. Gallichan of St. Mary (Vice-Chairman of Privileges and Procedures Committee - rapporteur):

I will not speak at length on this matter as of course Members are all very well acquainted with the area concerned as it affects the smooth and efficient running of the States' Assembly including the provision of all necessary information and documentation to Members, enabling of an effective scrutiny function, electoral and States' reform and the provision of information to the public. The 2 major items in our figures, Sir, concern scrutiny and Members' remuneration. On these 2 points just a brief word. Firstly, to confirm of course that the fifth scrutiny panel is now fully up and running and it is included in the estimate in your figures. Secondly, to remind Members that States' Members' remuneration is fixed by an independent body. It was fixed for 3 years to the end of 2008. Therefore, during 2008 the States' Remuneration Review Body will be reconstituted so that it can consider remuneration for the forthcoming years. I, therefore, commend the objectives detailed on page 142 to the States, Sir.

The Greffier of the States (in the Chair):

Is the proposition seconded? [Seconded] Does any Member wish to speak?

1. Connétable A.S. Crowcroft of St. Helier :

Two questions: one relates to the cost of running the States' Assembly. One of the frequent criticisms we hear about the States is the number of Members for a relatively small population, at least in contrast to other jurisdictions. I wondered whether the rapporteur would be able to give us any indication of whether the States will be asked in the coming year to consider a reduction in the number of States' Members because clearly this would be good news for those members of the public who think we should be running our Assembly with, even if it was only 4 or 5, fewer salaries to meet. The second question relates to the recent decision to bring the election of Constables into line. I wonder whether we could be informed whether the law drafting for that is in hand and whether there is a good chance that that objective will be achieved in time for a single election of Constables at the end of next year.

2. Deputy A. Breckon of St. Saviour :

In regard to keeping the public informed and access to information, I wonder if the rapporteur could give any indication because it is not there of the Freedom of Information Law, where it is and when indeed we will see it because I understand the Assembly approved a long time ago that the code be translated into law and it has not happened.

3. The Deputy of St. Mary :

Firstly, the Constable of St. Helier will be well aware that Privilege and Procedures did bring recommendations to the States this year in the form of several proposals. Included in them was the opportunity to reduce the number of States' Members which this House rejected, Sir. I believe that at the time the committee indicated that this was the time to move reform forward or to stop -- not wasting our time but to stop expending so much of our valuable time on it when it was not able to achieve an objective. I believe that, therefore, this matter will not be dead of course but it will not be coming back in the immediate future. As regards the election dates for Constables, as far as I am aware, Sir, every effort has been made and this will be brought forward in the swiftest possible time. Freedom of Information for Deputy Breckon has been a massive undertaking as he is well aware. A decision was made a few months ago to put out another consultation paper because there was a different approach taken to the law; a different sort of basis for its construction which would hopefully make it more easy to administer and perhaps more cost effective. That consultation process, I believe, continues and will come back to the House in due course, Sir.

The Greffier of the States (in the Chair):

I put the objectives. Those Members in favour of adopting kindly show. Any against? The objectives are adopted.

Senator M.E. Vibert :

Can I just say we are just having another paper sent round again. Again there is no indication where it comes from. It was brought up yesterday. In future can papers please be marked as to who has asked or put it round.

The Greffier of the States (in the Chair):

It is a matter I have discussed with the Deputy Greffier before the meeting. It is a matter for the Members who distribute the paper. Perhaps the person who distributed it would inform the Members.

Deputy S.C. Ferguson of St. Brelade :

Absolutely, Sir. I am terribly sorry. I thought I had typed Public Accounts Committee at the top of the page. I am obviously having a blonde moment. I apologise to the Senator.

2. Annual Business Plan 2008 (P.93/2007): Total States' Net Expenditure

The Greffier of the States (in the Chair):

Very well. The Assembly comes now to paragraph (b) of the proposition relating to the total States net expenditure. Perhaps in the interest of good order I could ask the Greffier to read paragraph (b).

The Deputy Greffier of the States:

To agree that total States net expenditure for each of the years 2008 to 2012 will not exceed the amount set out in Summary Table C, page 45, and to request the Chief Minister to present annual business plans to the States within these amounts with any additional growth in the net revenue expenditure of a States funded body being offset by compensatory savings elsewhere within the total amounts.

2.1 Senator T.A. Le Sueur (The Minister for Treasury and Resources - rapporteur):

It falls to me as the Treasury Resources Minister to present the financial proposals within this draft Annual Business Plan which is the second in accordance with the Strategic Plan which we agreed last year. The Annual Business Plan today is the first part of the States debate of tax and spending under the new Public Finances (Jersey) Law 2005. As Members are aware, today we will debating the allocation of various spending and resource allocations and then in December we will debate the tax and funding consequences of today's spending decisions in the proposals for next year's budget. It is my role today on behalf of the Council of Ministers to lead Members through the expenditure and resource allocations. But before I do that I would like to set the proposals in context against our overall financial framework. Members will be aware of how much importance I have put on the States living within its means and also ensuring as far as possible an economic climate which generates those means. The financial framework which we are working to relies on the financial policies which have served the States well over the last few years in terms of balanced budgets, low inflation, improvements in efficiency and sustainable growth in priority areas. The

Strategic Plan outlined a financial framework for the next few years. It called for prudence in States' expenditure and to the extent that was possible growth should be directed primarily to investment in economic growth and the priority services of health, welfare and social benefits. The investment in growth of our priority services has been part of our policy in previous business plans. The resource allocation process has redistributed the efficiency savings from the Change Programme to these priority areas. Without significant cuts in our existing public services this is the only way in which we can achieve real growth in those priority areas. The Strategic Plan confirmed and endorsed that approach. The continued investment in those areas is reflected in the proposals before the House today. However, we have to be realistic in the extent to which we increase our spending since otherwise there is a very real danger that our expenditure starts to outstrip our income. In other words we start to live beyond our means. I must say I have been disappointed by the extent to which our spending has had to increase this year. I appreciate it was driven largely by inflationary pressures, together with social benefit payments to the less well off. But I have to say that if we are to stay on track for future years our spending has to stay at or below the levels set out in this plan. To that extent I welcome the Deputy of St. Ouen 's amendment No. 5 which the House has now approved which re-emphasises the point which I thought we had made in this paragraph for our proposition. I remind Members it says now that we will do that rather than we should. The Strategic Plan and the Fiscal Strategy emphasise the importance of stimulating economic growth to sustain and improve our tax revenues. The early success of the Economic Growth Plan can be seen in an improvement in our financial position. These improved tax revenues are needed as part of the Fiscal Strategy to replace those tax revenues that would be lost through the move to Zero/Ten. We need this growth to continue and be sustained over the financial planning cycle. I remind Members that the Fiscal Strategy included as one of its elements an increase of £20 million in economic growth. These policies together with the timely introduction of new tax measures, including G.S.T. (Goods and Services Tax), are essential if we are to substantially mitigate the impact of that move to Zero/Ten. Our forecasts are based on the presumption that that will indeed happen. Today is not a day for a G.S.T. debate but I would simply say to those who think we do not need G.S.T. if we cut spending, just look at the numbers. Over the years I have always maintained that G.S.T. is there as part of the solution to Zero/Ten.

Zero/Ten is a one-off drop in revenue and having resolved that problem there was no reason why G.S.T. should not stay at 3 per cent for many years as long as States' Members can contain their spending. I stick by that statement and I say that I do not want G.S.T. to rise above 3 per cent. I am sure none of us do. The answer is for us all not to increase our spending beyond our basic level of income. I emphasise the "us". It is not just me. It is not just the Council of Ministers. It is all of us. What is important is that the financial framework and the growth and expenditure proposed limit is sustainable. The latest forecast in Table 3.1 of the Business Plan Report show a balanced position over the 5-year planning period. When the next financial forecasts are produced I would expect to see some improvement in income. I would like to think that that improved income would remain for years to come. But we have to be realistic and appreciate that the economy runs in cycles. In a downturn our income reduces or goes up more slowly. An economic growth policy helps but only changes the extent of reduction not the principal because unfortunately our spending cannot suddenly reduce to match the profit income. So I warn Members about the danger of thinking of increasing spending simply because there is a temporary increase in revenue; an increase which we all know will most likely drop off in future years. That is one of the reasons behind the setting up last year of the Stabilisation Fund. I am pleased to say that I have now been able to lodge a proposition for the appointment of the Fiscal Policy Panel. As well as helping guide the States on the use of stabilisation funds, the people appointed will be key in providing professional and independent expertise and advice aimed at containing inflation, improving economic stability and creating the necessary conditions for economic growth in the Island. Looking beyond the 5 year planning cycle and acknowledging that beyond 2009 our forecast can only be indicative due to the significant structural changes as a result of the corporation tax move to Zero/Ten, there could still be deficits in the longer term. This is why it is important to review our

forecasts regularly and why I appreciate the willingness of the Corporate Affairs Scrutiny Panel to help us in those forecasts so there should be no complacency about our financial position in the short term. Our best estimate of the ultimate loss from Zero/Ten remains in the region of £79 million to £94 million but the actual loss will not be known until after 2011. Until then it is not known exactly what action, if any, may be required. What we can say is that the current financial and economic position is very sound. Therefore, if the policy of the Council to stick to these proposed spending limits is upheld and the States stick to that commitment then no new taxes will

need to be introduced until 2012 at the earliest and our financial position is certainly sustainable until at least 2013. That is why I and the Council of Ministers are vehemently opposed to any amendments to increase spending further in this debate or in future years. If further remedial measures are required in respect of Zero/Ten, these could be phased in with the aim of achieving balanced budgets by 2015. We can phase in any changes and cushion the impact on individuals if we need to by using part of the interest on the strategic reserve as a short term measure but we must acknowledge that is not a long term solution. That then is the fiscal and financial framework within which the current spending policies and those policies for the use of all States' resources before the House today are proposed. If I turn to the financial forecasts - and I would like to draw Members' attention briefly to them before I move on to expenditure allocations - those Members who were present at briefings early in the year will be aware that revenues for 2006 exceeded our original forecasts. As Members know we review our forecast 2 or 3 times a year on the basis of the most up to date information. The current trends show an ongoing improvement for most areas so far in 2007. This is undoubtedly reflecting the positive growth in our economy, as has been well reported particularly in the finance sector. We should be aware, however, that the outlook in the last couple of months including the problems of one of Britain's U.K. largest mortgage lenders may reduce the growth on next year's forecasts due in October once the 2006 personal tax demands have been issued. The current forecasts reflect the changes and trends and show an improved financial position from that last published in December budgets. I must emphasise that though this improvement is needed and welcome, it needs to be sustained and more importantly those forecasts are based on the assumption that G.S.T. comes in early in 2008. As a result, the financial forecast for the next 5 years is balanced. Pretty finely balanced, I admit, but balanced. As I emphasised earlier this does rely on the timely introduction of G.S.T. and the avoidance of any increase in the spending within that period. This forecast of sustainable finances should not allow us to become complacent. The Council of Ministers is determined to vehemently oppose those who propose any measures - and I repeat, any measures - to increase the proposed spending limits still further. If the States become at all complacent about its constraint on expenditure during this or any future debate, it only needs to look at the longer term forecasts to see that although those forecasts are indicative and cautious we can identify a difficult and challenging time ahead. I said that we need to take a longer term view and some might think looking at the forecast for 2012 and beyond that we are heading for gloom and doom. That I think is to overstate the position particularly in the light of currently improving revenue. The message we should be taking from those forecasts is that now is

not the time to consider any increases in expenditure. I move to the proposals in the Business Plan. Those expenditure proposals are based on the approved States' Business Plan from last year. The levels of capital spending are largely unchanged and primarily reflect changes in the phasing of different aspects of the capital programme. Regrettably, the proposals for revenue spending have increased over the last year. In particular, the impact of inflation on pay, prices and benefits on the Island have risen sharply and could not have been foreseen when last year's proposals were prepared. The several step increases in interest rates have indirectly caused significant additional costs to our public services through its effect on RPI (Retail Price Index) and, therefore, on pay and benefit inflation. With almost £300 million of our expenditure in staff routed areas, those increases are difficult to contain given the current employment conditions, the active labour market and the need to attract and retain many skilled persons including teachers and medical staff where there is a strong national competition for a reducing supply of labour. Similarly we felt that we had a moral as well as a legal obligation to protect those on low incomes who are dependent on benefit payments and those benefits have been inflated accordingly. The net result of re-pricing last year's proposals and those for 2008 based on current inflation forecasts represent an increase in spending of £24 million. That £24 million represents the majority - or 5.1 per cent - of the 7.3 per cent proposed increase in net revenue expenditure. The remaining 2.2 per cent increase proposed relates primarily to growth in priority services and the policies approved by the States. They relate to matters bearing from third party appeals and the fifth Scrutiny Panel, to the proper funding of the prison and the phased introduction of the Prison Improvement Plan. In that context I have to say that the Home Affairs Minister has recently advised the Council of Ministers and more recently the House that despite the additional funding her department has received for 2007 it is questionable whether it will be sufficient to deliver even the essential parts of the Prison Improvement Plan. We have committed to a financial review of this area which could lead to a further funding request. The council has undertaken an extensive business planning process with departments to identify the priorities and pressures on key services. This process was also informed by the quarterly financial monitoring process identifying spending pressures in 2006 and 2007 to date. The result of the planning and prioritisation process is the net increase of 2.2 per cent or £12 million in key services. Members often talk about savings and although we have now achieved annual savings of £35 million, the council has considered every opportunity for further savings and service reductions and has taken those which can be delivered within the vision of a strategic plan. But that vision for Jersey is to maintain its position of pre-eminence in the international arena and continue to be able to compete by protecting and improving the level of priority services and investing in social, environmental and economic initiatives. I put it to Members that this would not be the case if we were to support the fairly radical cuts of £35 million proposed over the next 3 years by the Public Accounts Committee today and why later this morning I hope, the council will be strongly urging Members to reject that amendment. If I turn to the proposition itself, the purpose of part (b) is to agree limits for the total States' net expenditure for the 5 years, 2008 to 2012, that is, in other words, revenue and capital expenditure. These figures then set the framework, the financial planning limits, within which a more detailed allocation to revenue capital programmes can be decided. We will come on to that later in the debate. The figures are shown for each of the 5 years

in Summary Table C on page 45. Over the 5 years the increase averages 4 per cent per annum. While this may sound higher than desirable this more or less matches the expected inflationary increases over these years. 2008 in particular is higher than I would like; I am sure all Members would like. The Council of Ministers has looked but sadly cannot see any way of reducing that level and still delivering the services that are required. However, on a brighter note, if we can keep these spending targets I believe we can continue to balance our budgets over the 5 year cycle. It will not be easy but it will be a target worth achieving, since if we can do that it means that there should be no need for increasing G.S.T. or other new taxes. I, therefore, Sir, at this stage move part (b) of the proposition.

The Greffier of the States (in the Chair):

Is the paragraph seconded? [Seconded] There are a number of amendments to paragraph (b), the first of which being taken by the Assembly is the part (a) of the ninth amendment to the name of the Public Accounts Committee. I ask the Greffier to read the introductory paragraph to that amendment.

The Deputy Greffier of the States:

In paragraph (b) after the words "set out in Summary Table C page 45", insert the words "except that the proposed figures for total States net revenue expenditure allocation in the said Table C shall be decreased by £12,425,000 in 2008, by £15,964,000 in 2009, by £23,657,000 in 2010, by £30 million in 2011 and by £35 million in 2012 as shown for information in the following table".

1. Deputy S.C. Ferguson:

The Public Accounts Committee has received quite a slating from various quarters over this amendment. I would remind Members that we were elected to do a job. As a result of the work we have done, we have come to the conclusion that this particular amendment is essential. I would remind Members of our terms of reference and standing orders to assess whether public funds have been applied for the purpose intended by the States and whether extravagance and waste are being eradicated and sound financial practices applied throughout the administrations of the States. Members will hear all sorts of figures bandied about. I would like to explain simply what this is all about. On Members' desks there is a piece of paper. I regret it slipped through the net and has not got Public Accounts Committee written at the top of it. There are 4 columns. In the left hand column is the 2007 budget approved in 2007 of £516 million. The next column is the budget we approved for 2008 in 2007, last year, which was £534 million. The £547 million is the figure the Public Accounts Committee recommends for 2008, and £559 million is the figure that the Council of Ministers recommend for 2008. For those who have forgotten their calculators I have included the differences between those numbers. Last year we voted for an increase of £18 million between 2007 and 2008. Our amendment increases that amount by £13 million. The Council of Ministers' figure increases it by another £12 million. There are rounding errors. At least because I am using whole numbers the half numbers have fallen out. Therefore, our recommended budget is £13 million higher than the budget that was approved last year. If you add up those totals the Council of Ministers' total budget is £18 million plus £13 million plus £12 million higher than the budget for 2008 which we approved in this Assembly last year. In other words it is £43 million higher than the budget for 2008 which we voted in 2007. We have aimed to be reasonable and to set achievable, if a little uncomfortable, targets by only curbing the spending by £12.5 million if Members will keep that in mind. In fact, given that Members remember that, there are only 3 other things you need to remember in this debate. Increased spending will require higher taxes to pay for it. The Council of Ministers want an increase of £25 million. We are curbing that increase at £13 million. States' spending has grown by 96 per cent over the last 10 years as shown in the accounts of the States. Retail Price Index has grown by 46 per cent. We are here to decide on the bottom line; the size of the cake, if you will. We cannot decide on how much shall be allocated to each department nor should we. We are here to decide on fiscal policy. How big the expenditure should be. It is for the Council of Ministers to divide up the cake and for the Chief Officers who are highly skilled, experienced and trained professionals to deliver the services under the direction of

the Ministers. To continue with the cake analogy, we do not decide on how the cake is sliced up. We merely decide on how big it will be. The Public Accounts Committee held hearings in July on the States' accounts. Among the questions we asked was how to control expenditure. The Treasurer commented and the full transcript of the hearing can be found on the Scrutiny website. I welcome Members looking at it and reading it. The Treasurer commented: "That is a political decision. The increase in States' budget expenditure in this year's business plan is 7.3 per cent. It will be the States who decide whether they want to do that or not". He also commented: "Every year the States has a business plan. This includes 3 year forward cash projections which the States have approved for one year. Every year thereafter the States agree a new business plan that ignores the cash limits that they set themselves the year before." Finally: "How you really control States expenditure is for fiscal discipline and would be for the States to agree that business plan for a year for 3 year cash limits and then have their hands tied so they cannot change it." I hope that the amendments of the Deputy of St. Ouen, my Vice Chairman, will go some way to tying Members hands. I had hoped that the Business Plan would develop into an efficient document, separated into summaries and with explanations of new services, expansion to ongoing services and continuation of existing services and the resources required to supply those services. Instead we have a number of - and these are technical terms, Sir - warm and fuzzy objectives like encourage, support and sustain community and parish activities. Yes. Consolidate arrangements for further, higher and adult education which take account of changing patterns of participation, provision and funding. I am sorry you have lost me a bit on that. My favourite, protect and improve the environment. But this one worries me as it talks in the financial performance column of: "Increase to 30 per cent the area of natural habitats under the Environment Department's control in favourable conservation status by 2010." We want less government not more. Sir, we have a plan with few - there are some

- financial performance measures and existing, expanded and new services all muddled up together. What I can tell you is that according to the annexe - and I am sorry I am a bit sad, I went through and added them all up - there will be a net extra 141.12 full time equivalent new staff on the payroll which at average earnings of £740 per week - again this is a government figure - will cost something in the order of £5.5 million before the pension contribution. Including pensions I estimate it will probably be about £6 million at average rates. Savings anyone? The interesting numbers are Health: 60 new staff among which they want additional midwives. Hang on a minute, the birth rate has been falling. Home Affairs: net of transfer of the emergency services workshop of the 5 transferred out is 9.3 so that the gross figure is 16.3; of which 5.3 are for the police, 2 for customs, 9 for the prison and one for the fire service. I thought we were concerned about the prison. Why are we not concentrating our increases on the prison? The fire service are doing their prevention job so well the number of callouts is falling. The police will have their shiny new Tasers. Why do they need extra staff? My Vice Chairman has done a great deal of work on manpower which he will no doubt tell you about. The Treasury Minister reminded us of the Strategic Plan. I have a few quotes: "Pay surpluses into the Stabilisation Fund." The only item transferred into the Stabilisation Fund in 2006 was the Dwelling Houses Loan Fund. It is in the accounts. You can see it. "Pursuing a sound fiscal strategy" and further on: "Prudent fiscal strategy." With a 7.3 per cent increase in spending? Or: "Our Strategic Plan commits us to cutting out unnecessary costs wherever they are found. We are proposing to invest in modest growth." 7.3 per cent? "There will be some tough decisions to be made about the use of assets or funding issues. The Council of Ministers is clear that the financial framework agreed in the Strategic Plan must not be exceeded. Stay within agreed financial constraints." What did we get? A pay increase. We voted for 2.75 per cent and the Council of Ministers awarded 4.4 per cent. We voted for a forecast expenditure of £534 million for 2008 and we are being asked to approve £559 million. The equivalent figure we voted in 2005 for the 2008 was £482 million so there has been £77 million of expenditure creep since 2005. The States of Jersey Law states that the function of the Council of Ministers shall be co-ordinating the policies and administration for which they are responsible as Ministers, which to my mind includes applying the objectives outlined in the Strategic Plan. I am sorry that he has had to go to the Licensing Bench because the Ministers might well like to take a leaf from the example of the Connétable of St. Helier when he was faced with a rates cut. The economic advisor said in 2006: "It will be important that earnings growth does not pick up again as a result of the increased inflation due to higher oil prices, as this could mean the Island gets trapped in a cycle of rising costs and inflation." He also said: "Earnings growth has tended to outstrip inflation when the economy has been performing strongly. This sounds a note of caution going forward because unless pay awards are matched by productivity improvements there is danger that inflationary pressure will build up in the economy. This will only serve to undermine the competitiveness of the Jersey economy, adversely affecting employment opportunities and eroding economic growth." Basically, if you increase States' expenditure too much, you will increase inflation and erode growth. As I said at the beginning our proposal is very simple. The Ministers want an increase of £25 million on their forecast budget which we approved last year. We want to curb the increase to £13 million. The current increases in States' spending are unsustainable in the long run. The time to start restraint is now. As to the importance of controlling spending I can do no more than quote the Treasurer again. It is all on the website. You can read it. "Because of decisions on spending there is now a structural deficit in future years because the level of expenditure is higher than anticipated. All I can do is tell politicians that if they spend at this level they will have structural deficits and they will need to raise taxes. If you have a structural deficit there are only 2 answers: you increase taxes or you cut spending. This means discomfort now or agony in 2011." He went on to say: "If you want to reduce the rate of spending then the only people who can do it are politicians by them agreeing to spend less." If States' Members did not want that increase then when the Business Plan goes to them in September they would choose not

to agree to an increase in States' expenditure of 7.3 per cent and would say no. The answer is in our hands and the time is now. There would be much play on services to be cut because of this amendment. I do not propose to go into the detail. As I have said, this amendment allows an increase of £13 million on top of the £18 million already allowed last year and we have included the transitional relief for income support separately. We have not cut the transitional relief for income support. The Public Accounts Committee is asking for new projects and new appointments, expansions in personnel - £6 million or thereabouts - to be put on hold while we sort ourselves out. I think it comes under the first law of holes. When you are in one, stop digging. We are not in a hole yet but we are digging fast. There will be a structural deficit in 2011. The scrutiny chairmen will make their own comments on the list in the comments to the amendment. I will restrain myself to the following: Chief Minister's Office loss of one member in the communications unit. Is that the post most recently advertised? Bit less spin, can that be bad? Education, Sports and Culture just lumped all the service cuts together. Health, as Members will have gathered when I was on the committee I worked out the organisation structure. By my reckoning - and I checked it with the officers - there appeared to be 8 layers of management between the bottom and top of the organisation. In industry -- and I have worked in engineering companies, banks, auditors; I have had quite a reasonable experience. In industry there would be 5 layers for efficient working. In addition, I understand we have a growing numbers of health tourists requiring extremely expensive procedures. Home Affairs, where are the savings in the police and the fire service? Only the prison is mentioned. Come on, there is a £40 million budget there and the Minister has been in post for 8 years so she must surely be able to see savings in the police and the fire service. Planning and Environment, I have mentioned their unintelligible sentence about 30 per cent of area of natural habitats under the Environment Department's control. Frankly I am wary of the States' ability to manage land. Leave land management to the farmers who understand it. I am also curious about this as the department seems not to be able to recognise ragwort even when it was all over Howard Davis Farm. Social Security, what is this provision of a childcare scheme for those with less than 5 years' residency? That is a new service. TTS (Transport and Technical Services), one of the callers on talkback suggested contracting out or contracting in some of the work to the prison but I leave that one for the Minister and his able Assistant Minister. The Council of Ministers have also neglected to mention the access to other funds, under spends and the like. That availability of extra funds is why we voted for £441 million in 2005. When the accounts for 2006 were published we found we had unwittingly authorised £466 million. You know it is a big difference. Mind you, the Chief Minister has said that we could also use the interest on the rainy day fund if necessary. Hang on, that is a change in policy. The Public Accounts Committee is asking for a curb on new and expanded services. As usual the fallback is to the easiest approach; cut frontline services and jobs. Well, that is not good enough. We employ highly skilled and highly paid civil servants to manage and administer on behalf of the States. They had better get out there and manage. What is important is that they must be given solid political support. Please do not forget the States' Assembly is not able to dictate what monies will be spent on what projects by each department as demonstrated by Deputy Southern . Was it yesterday? It feels like years ago. That is for the

Ministers and their Chief Officers. It is not the duty of the States to micromanage the departments. All we can be sure of is that we can only vote on the bottom line since the Treasury Minister has the power to move allocations between departments as he becomes aware of spending pressures. Article 15(1)(a) of the Public Finances (Jersey) Law refers. As I have said, the departments can move funds round their departments as they wish. It is for the highly paid and highly professional and experienced Chief Officers to make sure that the services are provided within the reduced budget constraints. I am getting the feedback that this can be done with strong political support. In other words the States makes decisions on policy proposals brought to this House by the Ministers. The Ministers are expected to prioritise and deliver on those policies. The Ministers rely on their Chief Officers to implement the policies within the budget constraints. Can I ask Members to look at page 12 of the first part of the Business Plan not the proposition? This is Table 3.1: Estimated Forecasts. If you look under the 2008 column there is an item of £30 million expected from Goods and Services Tax with a deduction of the costs of Zero/Ten corporate tax structure which totals £27 million. What is the net surplus for the year at the very bottom? £27 million. Without G.S.T. we would be at nil surplus. We are, therefore, forecast just to break even. This leaves us little room to manoeuvre in case of a global slowdown. As the Treasury Minister said, G.S.T. is to cover the effects of the changes in tax structure but the forecast given shows that we are spending our income up to the hilt. In the following years we end up with a substantial deficit despite the increased intake from G.S.T. If my bank manager - nay, even my Yorkshire grandmother - were looking at this they would say: "Cut your expenditure." If you look at the P.A.C. (Public Accounts Committee) projected forecast on page 15 of the amendment: "We project a small surplus in 2010 onwards", which means that we can keep G.S.T. at 3 per cent. No other new taxes. This is what it is about. Curb spending, keep taxes low. Members have had a report by the Public Accounts Committee on their desks; this comment on proposed legislation to come before this House. If the only power we have as States' Members is to decide on the size of the cake, even that power will be significantly reduced. I would remind Members there is no such thing as a free lunch. Any free services will have to be paid for through higher taxes. I would prefer lower taxes and low public spending. Let me decide how I want to spend my money. I can allocate it more efficiently than the States. In fact I am trying to help the States allocate theirs more efficiently. Yes, we do need a safety net for the disadvantaged and this is something that Senator Routier is working on. But remember if the States had remained within the budget we voted last year we would all have saved 14.8 per cent of our tax bills. We need business plans and budgets which are clear, incisive and understandable by non financial people; States' Members and the public. We need the Council of Ministers to show some leadership and restrain spending. I urge States' Members to do likewise. In the Strategic Plan the Ministers said they would take the tough decisions. We are asking them to rise to the challenge starting with rent rebates, supplementation and the rate of increase of spending. It is not the time in the economic cycle to spend as if there was no tomorrow. Members must remember increased spending now means increased taxes in the future. We must show the public that we take our election manifesto seriously. I think without exception every Member included restrained States' spending in them. We need to show that we meant it. Better a little discomfort now then agony in a few years' time. I urge Members to vote for this amendment.

The Greffier of the States (in the Chair):

Is the amendment seconded. [Seconded] Does any Member wish to speak on the amendment?

2. Senator T. A. Le Sueur :

Clearly the objectives of the Public Accounts Committee and Deputy Ferguson are very laudable as I said in my opening speech. I would be happy to endorse her comments if I could; if they were realistic. The trouble is they just are not realistic. In my opening remarks I pointed out that inflationary pressures had accounted for £24 million worth of this growth. Yet the Deputy would seem to suggest we could somehow trim that by maybe having a wage settlement of only 2.5 per cent rather than what we have agreed. I am sorry but we are, as someone said in the past, where we are. The settlement has been agreed. We have to reflect reality. That is the reality of the pay settlement. That is the reality which we have to build into a business plan. To try and put in a figure which is totally unrealistic and say: "That looks nice now but we cannot deliver it", would be totally irresponsible. The Deputy asks the Council of Ministers to show leadership. Yes, we are by producing in a business plan, a business plan which we believe is realistic. Of course the Deputy suggests that she would like to see the Business Plan written in a different way. I suspect that probably of those who are interested in business plans, everyone would have it written in the way that suited them. We have to try to present plans which are consistent from year to year, which are meaningful and which do try to explain things. We do not just produce printed plans. We make presentations to States' Members that can give them a chance to understand in greater detail. She said she would like to see the Business Plan analysed between new services, expansion of services and what is existing services. I would draw her attention and the attention of Members to page 25

of the Business Plan which I think explains quite clearly why we have this spending figure of £559 million, starting in Table 5.1 from where we were in 2007. What has caused the increase? Members can see quite clearly pay awards are the majority of it, up-rating of benefits a significant bit, non start inflation relatively little. Then she asked what about the changes in service? Well, that is the next section, protection of benefits. Yes, we could have cut that out and let the less well

off suffer. Overseas aid and health growth. Yes, we could have cut out that growth and stayed at last year's figure. Who would have suffered on that? People abroad, in need, and people at home with health needs. Where are the other increases? There are none. On the contrary, there have been savings  of £3.3  million  across departments.   The Deputy asks  could the Home  Affairs Minister not find some savings in the police or the fire service. Every department has had to find savings. Every department has had to take a cut and deliver, with reduced funding, the same level of service. So, if we look at Table 5.1, we can see that there is no fat there and that disappoints me. I would have liked to have been able to say: "Yes, let us cut that 559 figure down." As Treasury Minister, that is my objective but I could not see how to do that realistically. Yes, we have increased staff numbers and that is inevitable if you increase growth in things like health and education. Those departments are very staff-intensive and the majority of their budget is on staff so if we are going to deliver those services, staff will be needed. The Deputy talks about financial discipline, staying within spending limits. Well, we are and I have to take objection to one thing she says. She says that there will be a structural deficit in 2011. Well, I have spoken already about the difficulty in forecasting and we have forecasts here based on our best possible information and our best possible information shows that over the next 5 years between 2007 and 2011, our States' spending, if we stick to this Business Plan, will be in budget over those 5 years. I did say that there was an indicative suggestion that if things carried on exactly as they were, 2012 and 2013 could be more challenging but I said only "indicative", an indication we should restrain our spending. It was not to be taken as gospel that that would occur because so many things change from one year to the next that it would be pointless to take any firm answer from that. However, she is right in her analysis or on her comments about what my chief officer said in the Scrutiny Panel comments. If we are to avoid a structural deficit, we have to cut spending but no one is saying at the moment that there is a structural deficit. The Public Accounts Committee is saying that there might be and we need to be on our guard. I echo those words. We do need to be on our guard and we do need to keep spending under control. We do not need to slash and burn, as the Deputy would have us do, in order to achieve a possible theoretical solution which may solve a problem which does not yet exist. I think what is worrying is that there is no link between Part A of the amendment by P.A.C. and Part B. Because in Part B, in terms of actual spending, it does indicate where the cuts should be made. I think one of the things that disappoints me is, having said to the Council of Ministers and to the States we need to cut the size of the cake, the Public Accounts Committee then tries to

wash its hands of its responsibilities by saying: "That is not my job, our job, that is the job of the Council of Ministers and if the Council of Ministers do not agree, the Treasury and Resources Minister will somehow bring them into line." I can tell the Deputy and the House that that is wishful thinking because any Minister faced with the sort of cuts which would inevitably happen as a result of accepting Part A and Part B, would, I believe, be unpalatable and unacceptable and, more importantly, undeliverable without significant cuts in essential services. I will leave individual Ministers to elaborate on that. I think there is no doubt, even when I tried a couple of weeks ago to suggest in terms of nursery school funding that there might be a chance for trimming budgets slightly. I was quickly convinced that Ministers had already reduced their targets to an absolute minimum and that there was no fat in the system and I believe that they were absolutely correct. So how do we cut because, clearly, the Council of Ministers would have to have some guidance and yet the answer from the Public Accounts Committee is: "Do not look to us to do it. That is the job of senior management so we are going to ask senior management how to cut £12 million out of next year's budget." Well, that is no doubt a very fine and useful exercise for them to do. That simply means that we absolve total political responsibility and we give that job to our officers. They will choose which way we cut the money rather than politically this House will choose. I think that is irresponsible and that is why I think that this amendment is irresponsible because it does not face reality. It does not face the reality if I cannot tell the Education Minister to cut his budget by £3 million -- or at least I can tell him but he will tell me something equally ripe in response and he will say: "Go and take it from somebody else's budget" and I will go around in circles from one Minister to the next until eventually, having gone round and round in ever decreasing circles, you know what will happen. But, I will not get anywhere and nor will the States and that is the trouble with this amendment. As I say, it just flies in the face of reality. That is all sounding a little bit negative and can I inject a note of positive into it. I think there is scope for reducing our spending in future years if we can have a collective, collaborative approach which will involve not just Ministers but Assistant Ministers and hopefully the P.A.C. and Scrutiny as well in identifying just which areas people think spending cuts can be made. I get fed up with people telling me you can cut spending by cutting a layer of management here and you do not need to do this service and, sadly, the consequences of that do not seem to filter through to people. We have an agreed Strategic Plan. We have certain basic objectives. We have lots of other "nice to have" objectives which sadly we cannot deliver without falling into the very trap, the very difficulties, that the Deputy raises. What this Business Plan does is simply provide a basic core element barely enough to achieve what objectives we need to achieve if we are going to deliver economic growth, economic stability and protect those members of our society who need protecting. In short, Sir, this amendment, although totally well meaning, just cannot be delivered and what we have to do is to really work to ensure, as I said in my opening speech, that these figures do not get increased but to reduce them is simply out of the question.

3. Deputy G.P. Southern of St. Helier :

Well, so far one speech from either side and so far a very clear and detailed exposé from the P.A.C. from Deputy Ferguson clearly setting out what the central issues are. Focusing rightly on the right use of words to start with, what we are talking about is not a cut --

The Greffier of the States (in the Chair):

I have to stop you, Deputy , because the States are inquorate. I ask for Members to be summoned. [Interruption] I believe the States are quorate again. You may continue, Deputy .

Deputy G.P. Southern :

Quite rightly pointing out that this is not about cutting, slashing, burning the budget, the projected figures, this is about moderating the size of the increase in the budget by some £12 plus million. Another speech by the Minister for Treasury and Resources, which ran through the usual stopping points in many of his speeches and said: "But how do we take charge of our civil servants?" it seemed to me he was saying. Well, hang on. That is for politicians to do, to set the boundaries and to give the instructions and for the civil service to clearly be given a political lead from a political will. I thought that was what politics and government was about.

Senator T.A. Le Sueur :

I think the Deputy misunderstood me. I said that the comments of the proposers and Deputy Ferguson was it was the job of senior managers. [Aside]

Deputy G.P. Southern :

I will leave that "with political support". It is not going to happen from the bottom up. It is certainly going to happen from the top down, it seems to me, is the way things usually work. And then expresses, as he often does, extremes of sympathy with the thrust, the principle of what is being argued and yes, says: "I would love to be able to but it is hard" and: "Yes, but we cannot do it this year but in the coming years, of course we will do it." Well, hang on, hang on a minute. I seem to have heard this somewhere before. Ah, where is that? It could be the Treasury Resources speeches from any of the last 3 years. "Jam tomorrow. We will cut tomorrow, it is too hard now. We will cut tomorrow." Little increase, little increase, little increase, builds up to big increase. As Deputy Ferguson said, the time is now and as she reminded Members, there is probably, with a few exceptions who mainly sit on this bench, no one, no representative, no Member in this Chamber that at some stage on a hustings quite recently - 2005, think back - has said: "Yes, we must restrain, we must rein in, public spending and I will endeavour to try and do that." Now, it might not seem strange to hear me saying that because, traditionally, I have long been a supporter of public services and have stood time and time again to oppose cutting public services and cutting manpower in particular because I believe that is a function of government. So the case is there. I am undecided at the moment which way to vote on this. It seems to me the case has been made very well by Deputy Ferguson that it should be possible to trim the increase in the budget in the projected figures now. We have seen the reaction of the Ministers and, of course, it goes to the usual targets. Immediately anybody talks about cutting back or slowing down the rate of growth of this money, this budget, slowing down the rate of growth, they immediately lay on the pressure heavily on public sector workers and I know Ministers have been in touch with their representatives and are saying: "If this goes through, this means your jobs."

Senator F.H. Walker (The Chief Minister): That is simply not true.

Deputy G.P. Southern :

I believe I am reliably informed that that has happened and that the scaremongering has come directly from Ministers. The pressure is on. It has been transmitted to me and I have every faith that that is the case. One only has to look for evidence to the Council of Ministers' comments and here they are. Cuts in services, cuts in jobs. I urge Members to take a look at the table on pages 3 and 4 of their comments. We are talking, remember, about a reduction in the increase in the budget of some £12 million, £12 million out of a £500 million budget. Something of the order of 2.2 per cent, I believe. Yet, the immediate reaction is well, look at Education, Sport and Culture. One of these options: closure of classes in primary schools; reduction in the curriculum in secondary schools; material increase of school fees in the fee-paying sector. Reduction of sport for special needs. How many emotive targets do you want to hit? Just to make sure, anybody thinking of voting for this is frightened off. You continue shroud waving at its best or worst. Health and Social Services: the following actions would be initiated immediately. Very restricted availability to specialist treatment, e.g., specialist oncology referrals, cancer treatment. Contraction of community care packages, restricted availability of all specialist mental health services. Reduced operating times in theatre leading to increased waiting times. How many emotive buttons do you want to press? They are all in there. This is scaremongering at its very worst. Social Security, complete change of policy that we have had for years. No operating of benefits from January 2008. There is a nice one. Let us hit the poor, those on benefit. I misread the Transport and Technical Services. I thought it said: "Cessation of Christmas." [Laughter] I would not be surprised if it meant that but it says: "Cessation of Christmas display lighting." How emotive do you want to get? Extreme reaction. How extreme do you want? This is a ridiculous reaction to what is being suggested. So, there are 2 issues here for me, one the proposed reduction in the increase - let us keep using that phrase, because it is not a "cut" - reduction in the proposed increase seems to me a case has been made. The reaction of the Council of Ministers is an extreme overreaction, one of shroud waving and threatening every single vital important service that you can dream of. It seems to me that that is totally unrealistic. That cannot be the reality but I am not convinced yet. It is up to Members of the P.A.C. and supporters of this motion to convince me that these cuts are not what is going to happen and that they are an extreme overreaction, shroud waving, from the Council of Ministers. So, I have done my bit. I have looked at the Economic Development Budget Business Plan to see if I can work out where cuts might take place without extremely damaging consequences and with something like a 2.2 per cent reduction pro rata. That works out, in my calculations, to something like £400,000 on a £16 million budget. Okay, this is the small end of the vast spending that we are taking part in but it is around £400,000. So, I turned to the budget, the Business Plan, and I see on page 31 of the annexe: "Policy Development." This is a beauty. It says: "Consider and evaluate various policy proposals." Interesting. Nice hobby for somebody. Blue sky thinking, let us do some proposals. Various policies, no specific policy for what, where, by when. Just think about some policies. "Performance measure." Listen to this, please. "Performance measure is measured by the number of staff engaged and the proportion of the department's budget used." So we have got to keep everybody busy on it and we have got to spend all our budget, okay? It is measured also by the number of meetings and presentations held with key representatives and we have got to be seen to be having lots of meetings. Vital essential frontline service? I do not think so. Hang on, read along the line. "Cost £300,000. Number of staff 7.9." Well, I am sorry, excuse me, I must be naïve but I thought senior civil servants would devise policy as part of their job so that under a whole page of A4 which says: "Policy and Regulation", we do not have to have a little box that says: "Policy Development" with 7.9 people keeping busy and having meetings in it because I think you could cut that and nobody outside of ED (Economic Development) would notice. So there is £300,000 which I think could very usefully be cut. So, I am aiming at £400,000 and immediately, again, I then go in a different box: "Research and Statistics." "Research projects ensure that robust research and compilation of statistics is carried out to inform the department and the industry of future planning." Fine. Wonderful laudable aim, but hang on. Have we not got a Stats Department that does just that? Is there something unique and different about stats about tourism or stats about agriculture or stats about finance that somehow it should be the job of ED to do that and that alone and not the one of the Stats Department? Total sum for 2008, £217,000 and 0.6 of a person engaged doing it. Is that strictly necessary? Could that not be done by the Stats Department far better, far more reliably, and far more trustworthily than ED saying: "These are our stats." Statistics, the independent statisticians, should be doing this. Perhaps that 0.6 ought to be in the Stats Department and that job should belong to the Stats Department with some consequent efficiencies. So, not the whole budget perhaps but certainly a substantial chunk of that. Put that into Stats. Do it more efficiently. Do it

more reliably and bingo, you can do that. I believe you could do that very much more efficiently. So, that is up to £100,000. Then we have a piece of budget which is not there. Why? Because it has been nicked from the Chief Minister's Department and on the Chief Minister's Department on page 16, you find: "Increase in communication unit full-time equivalent due to requirement for dedicated EDD (Economic Development Department), harbours and airport communication officer. Funding to be provided annually by EDD." So EDD are going to bung some money in the pot to have an extra communications officer for harbours, airport and EDD. Why? Why? What is that about? Is the Assistant Minister not the most erudite and well-spoken explainer [Laughter] when things go wrong at harbours and airports? Of course he is. Does he need to employ somebody full- time to write his brief? I do not believe that he does. Is the Minister not perfectly able to explain his policies and to put forward what is happening at harbours and airports absolutely confidently? Does he need somebody to draft all his releases? I do not believe so. They are doing a damned good job as it is. Where is the need for an extra communications spin officer? I do not believe it is there. See, I am accused by Senator Walker of never praising EDD, there you are, there is some praise. They are very good at it as it is. They do not need that. There are £40,000 or £50,000 of savings to be made there. Moving on -- and it has already been targeted by another Member in the House. Senator Shenton has put his beady eye on the Policy and Regulation Competition (Jersey) Law and has suggested that the £573,000 we spend on the JCRA (Jersey Competition Regulatory Authority) could quite easily be cut and no one would notice, £150,000 he proposes. I can support that. You notice I am way over my £400,000 target and I have not come to the big one. I have not come to the big one. There it is, back on page 29. Finance industry support, £1 million and £25,000 effectively which supports Jersey Finance which was set up back in 2001, if I am correct, to be effectively self-funding and the initial funding was supposed to be seed money. This is a body which is the lobby group, the pressure group, the marketing group, of the Jersey finance industry. At the moment, as I understand it, we are putting £1 million into the pot and the finance industry itself is putting something like half that. So, a body which has set out to be self-funding

has found its budget growing, growing, growing, year on year, and is now over £1 million. Well, hang on, I hear we are in good news land. We are booming. Finance sector is booming. Profits up by 25 per cent at something like £1.3 billion. I think they might be able to promote themselves. I think they can probably afford it. That million pounds represents at tiny bit of their profits. So what are we doing loading £1 million into their budget? Given the philosophy of the current Minister for Economic Development, that would be entirely appropriate if they were to say: "You ought to take over this promotion yourselves" because what is the part of government in that? Surely the Government does not have a role. We want small government. It is up to you to make sure that you are promoting yourself and expanding your business and promoting the financial centre and you are the best placed people to decide whether the organisation that you are funding is doing that appropriately and doing it well and you are the ones who say: "If you are doing it well, fine, we will continue funding it. This is the best way of doing it." However, if you fall down, you are the ones who should say: "No, hang on, you are not doing it right. We are not going to fund you." It should not be reliant on a prop of £1 million from Jersey Finance. So, I set out to look for £400,000 pro rata in ED to go towards the £12 million target. If you take those sums and add them up, it could be - I am not suggesting all at once - but it is something like around £2 million, £2 million, and no one would notice. No front line service cut, no shrouds waved, no damage done to the people. Up to £2 million, that is far in excess of the £400,000 pro rata needed from ED. So, as far as I am concerned, certainly looking at my area, I think it can be done. I wait to hear from others whether they also think it can be done without damaging frontline services, without mass getting rid of jobs in the public sector. I wait to see if people believe it can be done and where it can be done. Before I sit down, just a brief mention of what is going on. It is an opportunity, perhaps, to say: "I told you so." Again, it was me being naïve all those years ago back in 2002 when I first came into the States. One of the early targets that my eye lighted upon was supplementation and I told you then you will have to do something about it. Naively, I came along with a suggested way forward, suggesting we had to do something about it then. I was ignored by the then presidents and as Ministers they - because most of them were there then - are still going along with their heads in the sand pretending that supplementation is something that will go away. Well, supplementation has just got up again off the ground and bitten them. I was right then and I am right now. It is not something to be done next year but, by God, unless this Government sorts out supplementation, we are in a mess. It will not be easy but it needs to be done, it has to be done, it has to be grasped and that is the plan that, yes, we can do in future years and, by God, I hope you are already working on it because, if not, we are headed, like the Titanic, for the proverbial iceberg, no cliché left unturned. Turn, if you like, to any one of the charts, any one of the tables, page 12, Table 3.1, and take almost £60 million off the expenditure and what does it do to those bottom lines? Why, they look completely different. Too right they do. Time to get on with that but, in the meantime, a cut-back, a reduction in the expansion of spending is absolutely what is needed and I believe Deputy Ferguson is right when she says if we are going to do it, we have to do it now.

Remember your election promises.

4. Deputy C.J. Scott Warr en of St. Saviour :

With all due respect to the Public Accounts Committee, I have to ask the question is this committee living in the real world. Is the committee going to defend cuts to essential services provided by Health and Social Services, this being one department example of social provision where these cuts in expenditure would, I believe, severely hurt. How will the committee feel if one of the committee's relatives needs specialist treatment in the U.K. and the patient's relatives are told there are insufficient funds to send that person? More importantly, or as importantly, how will members of the public feel? I would say to the Chairman of the Public Accounts Committee we are talking about more than discomfort now. Will the public be happy to go back to increased waiting times for operations? We have approximately 10,000 carers in Jersey. Carers will tell you how important respite care facilities are. It can make the difference between whether or not a carer can continue to cope. If not, this will end up costing the States far more than at present. Sir, I am speaking about health because that is the subject obviously I know most about regarding the departments. The Raftery Report recommended 3 to 7 per cent increase in health expenditure per annum and Members will know that England, the U.K., has put significant resources into the National Health Service. We cannot make economies of scale in Jersey. The rising costs, as has been said, in wages, the pay increases. One example of health costs in Jersey is the provision of drugs and the high percentage increase per annum and sometimes it can be, for one person's treatment, a large sum of money. These examples I am giving are not just hearsay, they are facts. Sir, I believe that the departments who provide social services to members of the Jersey public have already been making, over several years, efficiency cuts and savings. They would have to make substantial significant further cuts and they will hurt each man, woman and child in Jersey, make no mistake. I have never heard the Chief Executive of Health and Social Services say: "Well, we have got some additional cash. What shall we do with it?" I have never heard that and my impression in recent years has been trying to make sure there is not a deficit in the budget and basically fire-fighting. We are, Sir, talking about essential frontline services with regard to health and social services. These are vital services and they will be cut if this amendment is supported, and this is just one department that I am really talking about. For these reasons, Sir, I cannot support this amendment and I urge Members to reject it. Thank you, Sir.

5. Deputy P.V.F. Le Claire:

Well, this is probably going to be one of the milestones in speeches - not mine, obviously - in speeches that Members will make probably in my time in the States. I believe that we have reached the point where this is going to be the focus of much analysis in the future. Senator Le Sueur set us up today with what has got to have been one of the most sombre speeches I have ever heard him make and I have heard him make a few during what he called his "fiscal framework address". I will comment and question his fiscal framework address later on when we move on from this amendment. In the coffee rooms I have been pretty much badgered, I guess, by the comments of the Ministers and the Assistant Ministers in relation to this amendment and how we cannot support it and why we cannot support it. It may be that Members choose not to support this amendment. One can argue about whether or not that is the correct thing to do but one cannot argue about whether or not what Deputy Ferguson has done today, as the Chairman of the P.A.C. Committee, was the right thing to do. I have waited since Deputy Ferguson's appointment as the Chair of P.A.C. for a moment when her experience, mixed with her acumen, would deliver what was an uncomfortable truth and I have waited a while but today it was delivered. I thought that the first 3 to 4 minutes of Deputy Ferguson's speech were incredibly accurate. Let us not forget that Senator Le Sueur set us up with all of the mantra of careful and prudent finely balanced budgeting with the inability to afford to be complacent. Ministerial government means that we need strong Scrutiny and Deputy Ferguson today has placed before us a room with the curtains drawn wide open. I do not think this debate is going to be over today because we have other things to do. We will be back at this tomorrow. But I think perhaps it is important to reflect upon exactly what Deputy Ferguson has done because I believe strongly that she has done her job correctly - if not, over-egging her here, magnificently - today by focusing us all on what we set the P.A.C. up to do. That was to make us all look long and hard at ourselves and what we are doing and what the Island can afford to do. It may be at times that it is going to be uncomfortable and it may be inevitable that it is emotive but one thing is certain. It surely should not fall, as I fear it will, into becoming disrespectful, impolite and unpleasant because the Ministers and their Assistant Ministers, the Chief Minister especially, will fight strong and hard for their budget. They will fight strong and hard for the services that they are in charge of and they will fight strong and hard against this amendment today. I just make a plea before I contribute a small amount to it that we focus on the fact that Deputy Ferguson has done her job and we do not become unpleasant, disrespectful and impolite.

Had she have not done her job then perhaps she might be worthy of criticism. One of the Members commented that perhaps the P.A.C. should have been picking off the branches instead of hacking at the trunk and that they have sat silent throughout the proposals so far and said nothing about the

individual items. I believe that Deputy Ferguson's speech, up until when she mentioned individual items and individual departments, was flawless, absolutely flawless. The first 3 to 4 minutes of her speech should be printed off for Members in the Hansard and reflected upon in the future weeks. Where I would say, if she will forgive me, I think she went slightly into the area that will provide such contention is that she made the point that we set up the cake and then unfortunately she started to focus on some of the hundreds and thousands on top of it. Deputy Southern made a very good point that we are talking about reducing the increase, not cutting, and was criticised for mentioning again some of the hundreds and thousands on top of the cake. If Members are brave enough, which I do not think they are, to accept areas where individual Back-Benchers can point to, then perhaps those areas can be defended individually. Can all of those individual areas be defended collectively? I have struggled for many years in the States to try to impress upon Members the fact that the European Code of Conduct, with its 4 harmful measures identified to Jersey, was something that was going to bring us to this position. I was rubbished, ignored, and chastised in the end before it became evident that I was correct. I do not believe personally that the Zero/Ten option is going to be acceptable in the future and I am concerned that we might, in future, have to make drastic changes again, new changes, because I do not believe it is going to be acceptable. What was revealing, if not uncomfortably revealing, was the speech from Deputy Ferguson in relation to the testimony given by the Treasurer and the words: "The States ignore those figures and move on into the next year" are still ringing in my ears. Now, I have not read that Hansard of that transcript on the Scrutiny website but I certainly will go from here and read it. Obviously the Treasurer, who is one of our most capable and long-serving individuals within the States of Jersey, has gone out a bit on a limb there to make that remark, I believe, and probably did not expect it to be repeated today, let alone acted upon. The Public Accounts Committee has brought before us what it believes to be a decrease in the increase that is acceptable and manageable if one looks at the overall cake. I was hit with the emotive yesterday about all the jobs and redundancies and losses of service. I have heard it again today from Deputy Scott Warr en about our patients who are suffering will not be transported off the Island for important surgeries, et cetera, and I am sorry I just do not buy that. I really do not. I think if the Government of Jersey falls to that level, then the

Government of Jersey has no right to govern Jersey. Senator Perchard brought an amendment to the States Strategic Plan, that the States of Jersey stopped doing what it should not be doing and that was adopted by the States of Jersey. Let me wander very briefly into an area where, no doubt, I will get my legs blown off, the hundreds and thousands, and give Members an idea as to why we wonder whether or not there is not fat yet to cut. Health IT (information technology) system, one area of health, £3 million in 2008, £3 million in 2009 and £2 million in 2010 with the GPs (general practitioners) themselves currently paying for any hook-up from the IT services, I believe. As we have learned through JT Edwards and other things, the States are historically - I am tempted to say "inept" but I guess that will upset everybody - slow in realising we need more analysis on our IT systems. We need more evaluation cost benefit analysis on our IT systems and we need better and stricter guidelines when purchasing those systems and their applications. Three million, £3 million, £2 million, that is up to 2010. There is £8 million. Compost site, composting. If we did not do it, heaven forbid, there would be leaves in the countryside. People fly to bring branches into the woods; £6 million on the land; £4 million on the shed; £750,000 a year estimated annual operating costs. Communications unit, £165,000 a year. What are they going to communicate? That we plan to cut the overseas aid budget to pay for primary schools? I think Connex Bus Service subsidies need to be looked at hard and fast. I think we need to dig out that Committee of Inquiry and until we do start acting on committees of inquiry, I question the value of them. £7.5 million cost, £2.4 million fares, £4.6 million loss. Forty-five per cent of parents said that they would, under no circumstances whatsoever, allow their children to travel to school on the bus which means that 45 per cent of children are not travelling on the bus and 45 per cent of parents are not either. I asked yesterday about the fuel farm and we were applauded by the Minister for having fed into the analysis of the compost system how we can have isolated areas of green waste reception, which falls far short of the accepted practices that they were looking at anyway, which was in vessel