Falkland Islands Government ‘challenged’ to find £5m in cuts
Written for the February 3, 2023 issue of Penguin News. Printed under the headline “FIG ‘challenged’ to find £5m in cuts”.
A goal to find £5m in savings, in addition to a no-growth budget, was the subject of discussion in the Budget Select Committee - a goal which was revealed to be contentious, as MLAs were concerned about both pushing for no growth and an effective 5.3% cut in total operating expenditure as compared to the 2022/23 operating expenditure forecast.
The intent of no growth and push for £5m in savings is included within the government budget principle that, “an appropriate level of funding is provided to maintain efficient and effective public services”
Financial Secretary Tracey Prior spoke in the meeting about the goals of the principle, stating, “we’ve started to see significant pressure on operating expenditure from global factors such as inflation, Covid and the war in Ukraine,” as well as a general growth in government services.
This was expressed in the 2020 FIG State of the Economy paper as an increase in Government expenditure of 7% over the course of the previous decade.
MLA Spink stated the goal of the savings target was to, “set a challenge to the management team to find those efficiencies.”
Discussion was had among MLAs about the goal of £5m in savings while already under pressure from inflation, which MLA Gavin Short said may be “setting ourselves up for failure.”
MLA Pollard expressed: “I’m looking at the principle of no growth, despite the inflation and pressures we’re seeing, on top of £5m of saving,” and added “I think it’s a bit unrealistic.”
MLA Spink, chairing the meeting, responded saying inflation was “something that is to one side” but “there had been a growth in government expenditure and it was felt that officers needed to look for those efficiency savings.”
He said there were areas of government which under-spend every year and, “we wanted to drive those out of the budget process” to “put some pressure on government not to just look around for more money every year, year after year,” but to “drive those efficiencies out in the budget process.”
He added later it was his understanding the Assembly “felt that in a budget of £90m that driving out £5m, which is just 6%, 7%... was not actually an unreasonable amount to ask officers to look for.”
MLA Pollard stated, “I understand the principle about trying to remove inefficiency, I absolutely agree with that, I think that should be one of the core principles in budget select every time. I worry that we’re setting too high a target going into this budget round.”
He added, “when we come out to approve the budget in June I would be amazed if we meet that on top of the inflation pressures and the rising fuel costs.”
MLA Short voiced agreement with MLA Pollard, stating he felt “we should be driving out inefficiencies” but regarding the significant cuts “it feels like we’ve picked exactly the wrong time to try and do it.”
MLA Spink said he felt “it’s even more important to drive out those efficiencies” in times of high inflation “because we’re going to have more stress on our finances because of those inflationary pressures.”
MLA John Birmingham sided with the principle, and said “over the next couple of months this will go whichever way they’re going to go and we’ll see what we end up with.”
MLA Pete Biggs added that he felt the budget principle was “aspirational.”
Discussion on the principle began when raised by MLA Pollard that debate on the matter could have taken place in a public forum at an earlier stage, rather than in closed meetings and briefings, which MLA Leona Roberts reiterated.
“There was a suggestion some time back that we have a discussion publicly about the principles, and I think there is something to be said for it. Particularly,” she added, “when we are looking to make savings and we know things are difficult.”
“I think it’s helpful we’re having it here, but it’s also a little late in the day.”
A brief discussion on the balance of principles was also had, MLA Roberts adding “we have to bear in mind principle one, that’s about the quality of life of our community and our people and making sure that we are delivering the public services that allow for that quality of life.”
MLA Birmingham responded to this, “my number one priority is to make sure that the public finances are in good order and that at the end of an assembly they’re in a good enough order to hand over to the next lot.”
The principle provides there will be “flexibility for Directors to reallocate resources within their areas of delegation; identification of discretionary spend areas” and “detailed deep dives of significant budget areas including areas of subsidy and user paid services.”