Savings, Efficiencies and User Pays - £77.5m
The Council of Ministers considered that the £90 million savings and efficiencies target by 2019 was not achievable without an unacceptable impact on the level of public services and therefore Islanders. Ministers are committed to achieving this target but they recognise that embedding substantial change requires time. They have therefore decided on a longer timescale to meet the target – taking it into the next MTFP period 2020-2023.
Allowing time to find further efficiencies will minimise the impact on services. Departments will continue to restructure and reduce costs over a longer period. Service reviews are underway and further efficiencies will come as the public sector adopts a culture of continuous improvement and reaps the benefits of technological change.
Savings - £1.8m
Savings are spending measures that result in a reduction in the level or quality of a service to its recipient. It can mean stopping a service altogether. For example, a reduction in opening hours.
Efficiencies - £46.3m
Efficiencies are changes to the way services are delivered so the same or better level of service is provided at a lower cost. This is generally achieved by changing the way it is delivered. Efficiencies provide better value for money.
The focus of the Council of Ministers has been to maximise efficiencies and minimise the level of savings.
Efficiencies – Pay Restraint - £24.8m
The Council of Ministers values the public sector workforce and recognises the importance of developing a fairer pay structure through Workforce Modernisation. At the same time it is important to recognise that staff costs represent more than 50% of budgets. Ministers want to maintain as tight a rein on the pay bill as on other spending to deliver value for money. Alongside Workforce Modernisation, pay restraint will need to continue over the period of the MTFP and will contribute approximately £5 million per year to spending targets.
The money set aside for pay and workforce modernisation is held centrally and any allocations will be approved by the Council of Ministers and then the Minister for Treasury and Resources.
User Pays - £4.6m
Departments have been reviewing the services they provide and identifying any taxpayer funded services that should, more appropriately, be charged to the users of those services.
Such charges can also place services on a more sustainable footing or encourage behavioural change, such as improved environmental benefits.
It may also be fairer for users to pay for services that are provided for a small section of the community but funded by taxpayers, many of whom do not use that service. For example existing charges for sports facilities.
In the Public Sector, unless a specific law says otherwise, the charge should cover costs and not make a profit.
As part of the Public Sector Reform process User Pays would be defined as:
· a charge for a service when it was previously free of charge, i.e, explosives licensing (CCA)
· a user pays more for a service or an enhanced service, i.e., commercial green waste disposal (DfI)
· a new service is provided with a User Pays charge, i.e., Environmental Health (DoE)
The User charge need not be paid to the States. For example charges for nursery education (NEF) are paid to private providers, but this still saves the department money, so it is classified as User Pays.
The Council of Ministers has been clear about its policy on the proposed expenditure measures. Departments must show that every effort has been made to prioritise existing services, to find savings and efficiencies and to demonstrate that public services are efficient and provide value for money, before increasing or introducing new charges for services. As a result the proposed “user pays” measures make up just £4.6 million of the £77.5 million total.
There is also a proposal to charge businesses for their waste disposal and treatment from 2018.
All new user pays charges are proposed in principle as part of the MTFP so they can be included in department expenditure limits.