Alistair Ramsay: Is government growth out of control?

Tuesday 17th May 2022 5:23 am
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This column first appeared in the Isle of Man Examiner of May 10.

The size and expense of government is back in the headlines with news that its workforce has grown by almost 300 in the past year.

Is a spendthrift public sector expanding out of control in the Isle of Man?

The perception is a dangerous one for politicians, particularly when their constituents are cutting back in the face of a cost of living crisis.

Ministers will explain that the staff increase is mainly in support of good things, like improving healthcare and combating climate change. The problem is that there never seems to be any offsetting reduction in lower priority areas.

There used to be a specific policy, the ‘Personnel Control Mechanism’ (PCM), to keep the overall headcount in check. This was replaced in 2015 by budgetary measures to restrict the cost of the workforce rather than its numbers.

A recent report from government’s Office of Human Resources (OHR) looks at aspects of that change. As you would expect it is full of interesting facts and figures as well as QLA (Quite a Lot of Acronyms).

The PCM was introduced in 1991 following an unprecedented 16.6% growth in the government workforce over the previous four years.

The policy’s aims are still valid today. They included preventing the public sector from becoming too big compared to the private sector, and incentivising departments to improve productivity and invest in new technology.

The PCM required permission from the Council of Ministers for the employment of additional permanent personnel. But it was often circumvented through the engagement of fixed-term, contract or agency staff, which could be more expensive than direct labour.

Over the years a number of groups, such as health workers, were exempted from the rigours of the mechanism, which was predictably unpopular with departments and seen as something of a blunt instrument.

In 2014 the resistance movement finally won. The Council of Ministers agreed that from the following year the headcount cap would be replaced by a pay budget cap.

The report from the Office of Human Resources offers no overall assessment of the successes and failures of the PCM. The remit it was given by Tynwald was too narrow for that, which was a missed opportunity.

Nor does the report present any pre-2015 statistics that would allow for a comparison of trends under the different regimes.

Nevertheless it ‘found no evidence’ that the subsequent 5% growth in the public service was caused by the change in staffing control policies.

What the report does indicate, however, is that the public sector in the Isle of Man has been expanding at a lower rate than its counterparts in neighbouring countries. This is not what the man on the Castletown omnibus was expecting to hear and he may not be convinced.

According to the OHR, the island’s public service grew from 6,703 FTE (full-time equivalent) in 2015 to 7,049 in 2021, a rise of 346 FTE or 5.2 per cent in seven years.

Over the same period public sector employment in the United Kingdom increased by 8.3%. Elsewhere the growth rate was 6.2% in Jersey, 6.6% in Guernsey, and 22.6% in Ireland (well done boys).

Less comforting are the figures for the Isle of Man’s civil service, which has been expanding much faster than the rest of its public sector, though this has also happened in the UK and Ireland.

The Manx civil service grew by 16.3% between 2015 and 2021, from 2,074 FTE to 2,413. Its pay bill went up from £83.6 million to £121.5 million, with a net increase of £23.5 million allowing for changes in accounting methods.

The OHR report attributes the growth in the civil service to various factors, including Brexit, Covid, climate change, health and care transformation, GDPR and other regulatory changes.

It is good to have these explanations of why and how government has taken on more people.

What we need now, for a balanced picture, is information on where the public sector has reduced staff and improved productivity.

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A dangerous precedent

The House of Keys has created a dangerous precedent by passing a whole piece of primary legislation in one sitting, with no effective notice to the public.

The Manx Care (Amendment) Bill, providing for an improved health service complaints system, was rushed through all its stages from first to third reading on Tuesday, May 3.

Readings are normally spread out, allowing time for people to become aware of the legislation and creating a window for scrutiny and comment.

The phased approach is an essential safeguard and a courtesy to the public, an acknowledgment that it is an important party to the proceedings. Dispensing with the notice period is bad practice and disrespectful to the public.

The Ministerial explanation for the one-stop lawmaking was that a better complaints system was supported by both Tynwald and the public, and should not be delayed. The Bill was only very short, simple and enabling, and would be followed by detailed regulations in due course.

This argument was neither convincing nor constitutionally literate. Yet all but three MHKs went along with it, and there was no debate.

There had, of course, been a private briefing for members, at which a more credible reason for the urgency may have been presented.

The precedent set by MHKs paves the way for the fast-tracking of other Bills in the name of ‘getting on with the job’, with no time for notice to the public.

This House is establishing itself as the legislative back office of the Council of Ministers.

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