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Policy & Resource Plan published with Medium Term Financial Plan and capital investment update

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Monday 22 May 2017

The Policy & Resource Plan has been published today, for debate in the States of Deliberation starting on 27 June.

The policy letter (available via the useful pages section on this page) sets out:

  1. The programme for government in this term - the Policy & Resource Plan
  2. The medium term financial plan to support the delivery of the Policy & Resource Plan over the next four years
  3. The development of the capital portfolio of major projects over the next four years

Deputy Gavin St Pier, President of the Policy & Resources Committee, said:

'The Policy & Resource Plan, the Medium Term Financial Plan and the Capital Portfolio Plan have been developed together over the past few months, building on the submissions and policy plans put forward by the principal committees of the States of Guernsey. Each of them is focused on delivering the Future Guernsey outcomes that were agreed by the States of Deliberation just under six months ago.'

1. Programme for government - the Policy & Resource Plan

In November 2016 the States of Deliberation agreed by an overwhelming majority to direct the Policy & Resources Committee to co-ordinate the work of committees in developing a plan to support the delivery of eight outcomes:

Each committee - including the Policy & Resources Committee - has set out their own plan and priority of work to deliver those agreed outcomes.  The committee plans are published as appendices to the over-arching plan.

Deputy Jonathan Le Tocq, member of the Policy & Resources Committee, said:

'This has been a challenging and iterative process because it is new, reflecting the direction of the previous States and the recommendations of the States' Review Committee which I chaired in the last term. The objective was to work across government and the community to build a plan that works, that is achievable, and where progress is measurable. Collectively we have done that - now, as a government, we need to be focused in delivering it.

'The Policy & Resource Plan is not the Policy & Resources Committee's plan, it is a plan that has been built by the government as a whole for the community it serves. We have been ambitious, and it might prove to be that in some places we have been too ambitious, particularly given the finite resources that we have. So as the plan is implemented, progress will be reported back to the States and the community annually, starting in June 2018.

'People have asked what the biggest differences are between this approach and the previous government business plan, with which I was also involved. There are many, but the two most striking are that this process has been focused on outcomes, not on individual committee mandates; and that committees are working closely to share resources to meet those outcomes, not working in silos. It is not just good government, but better government.

'I am not saying that the plan is perfect.  But the process of its preparation has imposed a discipline on government to really focus on what its priorities are, given finite resources. This is a further step in our evolution and just like the capital programme, I would expect future iterations to be an improvement on this version.

The Policy & Resources Committee will now work with the States' principal committees to further prioritise their plans.  Proposals in relation to resource allocation will be brought forward with the Budget in the autumn.

A series of workshops on prioritisation took place early in 2017 with representative groups from the community, and their feedback has helped to shape the policy letter published today.

2. Medium Term Financial Plan 2017-21

The development of the Medium Term Financial Plan presents for the first time a fiscal strategy that can support the delivery of the outcomes in the Policy & Resource Plan.

The plan will ensure the States is able to achieve and maintain a balanced budget before moving into a sustainable surplus over the next four year period, which will then enable the re-building of reserves and the investment in future public services in support of achieving those outcomes.

Deputy Lyndon Trott, Vice-President of the Policy & Resources Committee, said:

'This financial plan is unashamedly not radical other than in the firm commitments to deliver fiscal sustainability and the reform of public services that will result in those services looking different, better meeting the needs of service users and customers, while costing less. The plan does not seek to find a silver bullet or materially change the fiscal approach adopted over recent years as there is no evidenced need so to do.

'A realistic and medium term approach, including a balance of increased revenues, particularly from those most able to pay, and a reduction in the cost of providing public services can see a return to fiscal surplus without the need for unrealistic or drastic measures. The structural pressures are not something that can simply be tackled through raising taxes or cutting services. If no action is taken, an underlying structural deficit will persist throughout the period - and that is not an option.

'The burden of eliminating the structural deficit must be shared between taxation and a reduction in the cost base through the reform of public services - which will lead to working differently, changing and improving the way services are delivered to enable savings to be made. The Policy & Resources Committee estimates that, over the plan period, a total net improvement to the baseline of £40m is necessary to close the gap and is proposing that 65% of this value, £26m, is realised through ongoing public service reform initiatives and 35%, or £14m, from targeted tax measures.'

The Medium Term Financial Plan sets out the associated policy work of the Policy & Resources Committee over the period. The Committee will seek to ensure annual budgets are proposed which are in line with this plan, and deliver on the taxation policies with regard to raising additional revenues as far as possible from individuals and entities most able to bear the burden. The Committee is also seeking to make the tax system fairer and will therefore be prioritising work with the Committee for Employment & Social Security to redesign the way funds are raised for both the Health Service and Long Term Care Funds to apply the same principles as for income tax, with personal allowances protecting those on low incomes and those who can afford to, paying more.

If the States of Deliberation agrees the plan, it will put in place a strategy for delivering savings through ongoing public service reform which will deliver a £26m improvement to the financial position over the period. However, in recognition of the improved base revenues and the concerns expressed by committees in trying to deliver substantial savings in two years, the Policy & Resources Committee is now recommending that this reduction in the cost of the public service is delivered over four years.

Other recommendations in the plan include the establishment of a social investment commission, which would support the sustainability of the charitable sector in Guernsey.

3. Priorities for developing the capital portfolio of major projects over the next four years

The Medium Term Financial Plan also sets out the proposed capital portfolio for the next period, and a plan for its delivery which is affordable and realistic within the overall financial envelope. The thorough and inclusive capital prioritisation process has allowed a picture to be built not only of the capital requirements in the next four year period, but beyond that, and the Policy & Resources Committee is also proposing a pipeline of longer term projects which extends the planning horizon for these long-term investments.

The ultimate objective of the capital portfolio is to support the achievement of the vision set out in the Policy & Resource Plan and the delivery of the strategic objectives for the States through investment in infrastructure and systems. 

Deputy St Pier said:

'An important piece of the jigsaw for funding the capital portfolio will be returns from the States' Trading Assets through the work of the States' Trading Supervisory Board to ensure these entities operate more commercially and are able to make appropriate annual returns which increase modestly over the period, without placing a disproportionate burden on those who can least afford it. In addition, better management and further rationalisation of the property estate will allow receipts to accrue from the disposal, or different use, of our extensive estate.

'Evaluating projects on the basis of how effectively they maintain our infrastructure, transform our services, or grow our economy is a significant step forward in how we approach investment in our community. The "maintain, transform, grow" approach also reflects the approach in the Policy & Resource Plan, the Medium Term Financial Plan, and the public service reform work, underlining the more strategic approach that the States is taking in this term.

'I am particularly pleased that the work undertaken to scrutinise the capital portfolio means that we should be able to deliver the capital projects we need over the next four years within the resources available.'

 

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