Chief Minister Writes On Fiscal Challenges Facing Manx Nation

[manshimajin]

Brown should be leading the way in how we can actually 'make do' with what facilities we already have on this one IMO. 'Make do', is going to be a common phrase given a loss of 25% of govt income.

Albert one of the things that is bouncing around like a yo-yo is exactly how much revenue is being lost. If it is £90 million it will be 'only' 15% - if it is £140 that would be about 23%.

 

In terms of the public consultation on what needs to be done that Arkwright promised us in his epistle, it would be very helpful to know what the shortfall actually will be. Maybe Brown and Bell don't know how much is involved? If that is the case it would seem to be wise not to be out there promising to spend money on new projects until the overall position is clear.

[pongo]

Roll on the next election and a hope for some decent candidates !!

 

The island has a population smaller than all but 2 tiny English counties. From such a small pool it is unlikely IMO that you are going to get very many top drawer candidates. That is not a criticism of anyone. I know for a fact that I would be useless. If we were a parliamentary constituency we would be lucky to find a few good candidates.

 

Also - the political system here is too small to grow and nurture candidate talent. There is no system to come up through. In a mature political system candidates come up through student politics/unions/political associations/campaign groups/constituency parties/local council wards etc etc etc. They learn it on the way. Along the way they likely have a good opportunity to knock the edges off their gut reactions and form developed, do-able, political ideas and policies.

[P.K.]

Brown should be leading the way in how we can actually 'make do' with what facilities we already have on this one IMO. 'Make do', is going to be a common phrase given a loss of 25% of govt income.

Albert one of the things that is bouncing around like a yo-yo is exactly how much revenue is being lost. If it is £90 million it will be 'only' 15% - if it is £140 that would be about 23%.

It's based on GNI with a caveat for the first round hence £90m. The UK Treasury estimate they overpay £140m on the current figures so it's about 25% of IOMG so-called "revenue". But there is also an over/underpayment claw-back clause.

 

Welcome to the real world...

[manshimajin]

Welcome to the real world...

How true!!! It still surprises me that this was not predicted - presumably it has been known for some time that the 'revenue' from the 'common purse' was more than it should have been. Wouldn't Treasury have been watching this from the data they had available?

 

One has the sense of blind men walking over a cliff.

 

One can only hope that the alternatives being considered are sensible.

 

As an aside I still think that we should be doing our utmost to attract middle income UK 60-65 year olds. The way things are going in the UK in terms of repaying the borrowings they are one of the groups who will be hit very hard post the UK election. Say we attracted 1,000 families paying IOM tax of about £15,000 per family that would be a boost of £15,000,000 to the income tax revenue plus the flow on benefits to VAT and excise duties (maybe a low rate of stamp duties on house purchase?). It might also help to fill all those flats Dandara are building! This would also give the government more room to manouver on the 90 tax cappers who seem to be holding guns to their heads at the moment,

[%age]

If we were a parliamentary constituency we would be lucky to find a few good candidates.

 

...and yet we pay good salaries to 24 elected Members of the House of Keys and a couple of benches of Legislative Council to make up our Manx Parliament. Taking a similar view at our huge Public Sector this Island doesn't really stand up to scrutiny.

 

Regarding the VAT bonanza and how the matter has been handled by our politicians, remember that the huge amounts we were being overpaid has been known for years. Instead of keeping quietly grateful (perhaps the main word being "quietly") the Island decides to shout at the United Kingdom how fucken successful and wonderful we are.

 

Successful and wonderful. Certainly, that does not stand up to close scrutiny either.

 

 

Edited to add @ manshimajin:

The VAT revenue figures have been discussed a number of times on Mannin Line years ago. The figures suggested were startlingly close to what the UK is now removing from us.

[manshimajin]

Edited to add @ manshimajin:

The VAT revenue figures have been discussed a number of times on Mannin Line years ago. The figures suggested were startlingly close to what the UK is now removing from us.

Thanks - all I can say is bl**dy h*ll !!! As the bears say, turn your back on a problem and it will go away.

[Theodolite]

Yep, it goes away until it bites you on the bum.

 

There are quite a few charges the Government can make before they start looking at its own massive over-inflated salary and pension gravy train.

 

eg. How long I wonder before our children learn about student loans?

[Theodolite]

Unied Kingdom pledge £6million to Haiti

 

That is about how much the United Kingdom were over paying the Isle of Man in VAT every 2 or 3 weeks these past few years.

 

I can't work out if it is a generous sum to help Haiti. It was certainly a very generous amount of money to over pay the Isle of Man though wasn't it. Except, lets face it, we didn't really need it did we.

[Theodolite]

USA pledges $100million to Haiti

 

Aye, a big sum of money.

 

To put it into perspective, that works out at about how much the UK had been pouring into the Isle of Man Government coffers - free gratis and unearned - every few months this past decade or so.

[triskelion]

OMFG! Something other than speculation and bogus comparisons!

 

http://www.gov.im/lib/news/cso/updateonresponse.xml

[manshimajin]

OMFG! Something other than speculation and bogus comparisons!

 

http://www.gov.im/lib/news/cso/updateonresponse.xml

Thanks for the link.

A target of a ten per cent reduction in Government’s total staffing costs (as distinct from total staff numbers) in 2010/2011, which would save around £31 million and could be achieved in a number of ways.

A critical review of all Government spending to identify efficiencies, savings and new opportunities while safeguarding essential services.

A review of universal welfare provision and an assessment of the implications of greater targeting of support through an extension of means testing.

Consideration of increased and new charges for some subsidised services provided by Government.

Does £90 million have to be saved on the 2010/2011 year or is it a case of implementing ideas that will save that amount in 2011/2012? Reason for asking is that if it is the former the longer it takes to implement the savings the less they will realise this year.

 

For example how long will it take the PS to achieve a 10% cut in staff numbers costs? I would think that it would be highly unlikely if the annual saving is £31 million or that they will get anywhere close to that figure within the next 12 months (but could do the following year possibly).

 

Note the words used 'a target of', 'a review of', 'a critical review of', 'consideration of' - no ACTION verbs - and of course the CM has promised wide consultation on this too - so there goes 3-6 months...I pray that I am wrong but it sounds like Sir Humphrey speak.

 

IMO if we really have to achieve a £90 million adjustement in revenue and or expenses in 2010/2011 there is no avoiding adjustments to taxtion. No direct mention of this. Maybe that is the 'further economic development'?

[P.K.]

A target of a ten per cent reduction in Government’s total staffing costs (as distinct from total staff numbers) in 2010/2011, which would save around £31 million and could be achieved in a number of ways.

I take this to mean savings without staff redundancies. Fair enough. So I'm looking for "real world" pension contributions plus proper targets for staff pay increments and the end of "dead man's shoe's" promotions.

 

Yeah, I know, dream on....

[bellyup]

One interpretaion of this letter:

 

"This sudden and unwelcome change " - we were caught with our pants down

 

"Dealing with it is a huge task, one that will take a number of years and involve several different strands of work" - we don't know what to do so watch this space.

 

"The next Manx Budget in February this year will only be the first step in the journey, a journey which we can complete together " - we haven't been able to think of anything at the moment but February gives us another 4 weeks to scratch around - and btw you will still be paying my pension

 

"Countries around the world are facing major fiscal challenges and we are approaching ours from a position of relative strength." - don't panic Capain Mainwaring - we've only lost 25% of our income

 

"Such endorsements, plus other positive moves during the year" - such as the Health arrangements with the UK - and my nice trip to China

 

"Another cause for confidence is the character of the Isle of Man and its people" - people will grumble but we'll be able to do what we want anyway

 

"the scale of the challenge ahead should not be under-estimated" - that's why we've done nothing to date except approve the new fence at the Airport

 

"we face fundamental questions about the structure, role and size of government, its spending priorities and its sources of income" - I am announcing now that the LegCo will be closed immediately to improve government efficiency..

 

"Such a radical review will need to be informed by discussion and debate across the Island" - once we've made our minds up we'll contact you

 

"The situation the Island finds itself in is indeed an opportunity to improve government's effectiveness, efficiency and overall value for taxpayers' money" - we certainly would not have done this if we hadn't lost 25% of our revenue and btw we've blown most of your dosh on Rolls Royce projects (and my pension).

 

"In addressing this challenge government will be guided by our twin priorities of protecting the most vulnerable and needy in our society and promoting the Island's economy." - errm that means the 90 folk who have their tax capped and the 90 people who have their tax capped (ohh and you lot and paying for my pension)

 

"It won't be easy and it will take time, but we can do it." - it'll be tough on you but you will have to live with it

 

Depositors Investors will have to be educated - err maybe not too much or they wont deposit invest here

[VinnieK]

In a mature political system candidates come up through student politics/unions/political associations/campaign groups/constituency parties/local council wards etc etc etc.

 

It's an interesting point you raise, because it can go both ways. I've heard the same phenomena levelled as a criticism of the political system in a lot of developed countries, as the education gained is often focused on how to play the political system to one's own professional gain, rather than offering a practical introduction to administration and government, and goes some way towards the creation of an institutionalized political class. As ever with these things the truth probably lies somewhere between the two, but I don't think it's completely unfair to suggest that such a system tends to offer advancement to the mediocre, populist, and ideologically orthodox as much as, if not more than, those with real talent or flair.

 

Of course, the same charge can be levelled at our own state of affairs, but nevertheless I do have a kind of whimsical attachment to a system of independent candidates that, at least in theory, affords anyone a reasonable chance at obtaining public office without first having to bow down to or compromise themselves in the name of party policy.

[triskelion]

For example how long will it take the PS to achieve a 10% cut in staff numbers costs? I would think that it would be highly unlikely if the annual saving is £31 million or that they will get anywhere close to that figure within the next 12 months (but could do the following year possibly).

 

Note the words used 'a target of', 'a review of', 'a critical review of', 'consideration of' - no ACTION verbs - and of course the CM has promised wide consultation on this too - so there goes 3-6 months...I pray that I am wrong but it sounds like Sir Humphrey speak.

 

IMO if we really have to achieve a £90 million adjustement in revenue and or expenses in 2010/2011 there is no avoiding adjustments to taxtion. No direct mention of this. Maybe that is the 'further economic development'?

He's unlikely to prejudice the budget, though is he? Nor are we ever likely to get a big list of all the cost-savings that have been made at a division, board and departmental level. The consultation thing seems to largely be a sop, and since we know that costs are already being cut (eg. ward closures at the hospital), I can't see that it would delay anything other than major changes (such as pension reform, redundancies or pay cuts).

 

The revenue falls are obviously based on previous VAT revenues and will be subject to change depending on how the Island's GNI moves.

 

One move that might be interesting is, as part of a move to unit-linked pensions (which could easily be administered by one of the many companies on the Island with the facility to do so), a fund was created that would invest in the construction of public buildings and then rent them back to the Government. This would supplement falls in capital spending and ensure that more of the substantial amount of capital invested in public sector pensions were invested on-Island, rather than gambled on the London Stock Exchange. Its not my idea though, its Richard Murphy's.