15 May 2008
The Deputy Chief Minister has welcomed the Comptroller and Auditor General’s review of States spending
, describing it as a valuable and major report, and a constructive contribution to the debate on public expenditure.
Senator Terry Le Sueur is pleased the CAG’s independent spending review found no evidence of wide-spread inefficiency, and that it did find evidence that the continuing re-organisation of the public sector has already accomplished many of its objectives. Senator Le Sueur agrees there are improvements to be made:
“We can always do more to improve efficiency and cost-effectiveness. As the Comptroller and Auditor General says in his report, the States’ organisation is substantial and is unlikely to reach a point where there is no possibility of improving efficiency. Large organisations must always be looking for areas where savings can be made and where efficiency can be improved, and that is what we are doing on a regular basis.
“This report identifies possible savings within departments and across the corporate structure. While it is possible to implement the savings highlighted, some would be difficult. For example, stopping grants to local organisations would mean the end for many of them, as they depend on the regular funding they currently receive from the States.”
The Comptroller and Auditor General explains in his review that the spending cuts he has identified are “opportunities for reductions in expenditure” and he is not specifically recommending them. He makes it clear that he is not suggesting the opportunities listed would be straightforward to implement or acceptable to the island’s population.
He has also commissioned a number of independent reviews which build on work set in train by Chief Officers. His report acknowledges that moves towards a more corporate structure have already made the organisation more efficient, specifically in Financial and Human Resource Management.
The report identifies changes in pay and pensions as one of the opportunities to reduce spending. This is an issue which has been in the public domain for some time, and pay comparisons are published each year. For some lower-paid positions, the States pays more generously than the private sector, while for senior specialist positions the opposite is generally the case. A more flexible remuneration strategy could help tackle this, but moving towards a more market-led approach would require radical changes to job and salary evaluation, and to both the employment relationship and pay bargaining.
A significant level of research would be needed to analyse the pros and cons of establishing a new pay structure for the organisation. Any resulting changes would be likely to have the greatest impact on lower-paid members of society.
Senator Terry Le Sueur commented:
“Some of the identified reductions in expenditure would reduce the services available to islanders who would also face paying higher charges for some services. Changing pay structures for staff would have serious implications for the lowest-paid States employees and potentially raises serious industrial relations issues. Any such actions would need careful consideration and involve political decisions before they could be implemented.
“I am pleased though that this report has exploded some of the myths that have arisen about States spending. Far from being an organisation with too many bosses and not enough workers, this report has found the opposite, describing the management layer as “thin” and in particular three departments as under-resourced. The CAG has also made it clear that the lower-paid States staff are better remunerated than their equivalents in the private sector.
“I believe this report provides a realistic assessment of the efficiencies still achievable despite all the improvements and cutbacks in recent years. Other commentators, including the Public Accounts Committee, have put forward targets for spending reductions well in excess of the £7.6 million the Comptroller and Auditor
General believes may be achievable. Until now we have had no answer to such speculation. This report provides us with those answers".
Notes to editors:
Please contact – Senator Terry Le Sueur, Deputy Chief Minister on 07797 718798
The Office of Comptroller & Auditor General was established by the States of Jersey, under the Public Finances (Jersey) Law 2005, but remains independent of Government.
More information on Chris Swinson, OBE is available online.
An analysis of the savings identified as achievable:-
The cross cutting savings of £4 million suggested by the CAG have already been identified as part of the States efficiency review and are built into future spending totals.
Of the departmental spending reductions of £7.63 million the following points are relevant:
£1.15 million arises from demographic changes affecting ESC which would have been identified
£3.5 million is classified as speculative by the CAG, meaning he accepts they may be difficult to achieve. These include measures like reducing the grant to Jersey Finance, reducing grants to fee-paying schools leading to increased fees, reducing grants to organisation like the Opera House, Arts Trust and Child Care Trust, and closing the Western Fire Station.
£2.88 million relates to H&SS and is made up of a number of initiatives including:
£600k – reduced cost of locums
£800k – reduced cost of nurses
£200k – reduced cost of UK treatment
£90k – charge for A&E treatment
The majority of the H&SS savings were planned to be implemented by the department in order to stay within its cash limit.