Modern slavery, a failed immigration system and a ministerial welcome for alleged Chinese gangsters.
Health service cuts, a pointless income tax increase and a looming fiscal crisis.
Not the best backdrop for a vote of confidence in the current government but it happened anyway.
By rejecting a motion of no confidence in the Chief Minister the House of Keys has effectively endorsed his administration. At least that is how the public will see it.
The 18 MHKs who voted against will be identified as sitting inside the government tent. The six who stayed outside are better positioned for the general election in two years time.
Members came up with a variety of excuses for not supporting the motion. Some were ridiculous: it was the wrong type of motion; it would lead to a collapse in business confidence; a change in Chief Minister would make no difference.
More plausible was the argument that no acceptable alternative was available. This may be true, but you would find an alternative if you fundamentally disagreed with the government’s direction of travel.
We can only conclude that those members who voted against the motion are not in this position of fundamental disagreement.
his management style has at times resembled that of Sir Alan Sugar
To be fair, the Chief Minister has looked like a strong and determined leader, even if his management style has at times resembled that of Sir Alan Sugar.
And the administration’s agenda has been adjusted in response to concerns, which is a polite way of saying that it has U-turned on certain issues.
The belated discovery of the importance of financial discipline is in marked contrast to the carefree spending of recent years.
Interestingly it was the Chief Minister and not the Treasury Minister who announced a target of £10 million in annual efficiency savings and restrictions on public sector recruitment. They are at last trying to close the stable door, and a task force will be set up to look for the horse.
There has been some backpedaling on the unpopular 100,000 population target, and a new emphasis on tighter borders has replaced the previous open door policy. Only one year ago the Department for Enterprise, an organisation that appears to be entirely devoid of political nous, was actually proposing the suspension of the work permit system. How times have changed.
Bigger Trouble Ahead
The confidence debate may have cleared the air inside the House of Keys but there is more and bigger trouble ahead.
Accessible government reserves, now routinely used to subsidise the annual budget, are due to run out in the next few years, even sooner if the current revision of the VAT sharing agreement with the United Kingdom takes another slice out of our revenues.
Without the cushion of reserves the options would include major cuts to public spending or big tax increases, both very difficult politically if not impossible. There is no sign of an economic boom so, pending a potential revenue surge from offshore wind or gas, the Isle of Man could end up borrowing to fund day to day spending – something that is not supposed to happen.
There is of course the National Insurance Fund, containing more than £1 billion, but currently this can only be used to make up any shortfall between NI contributions and the payment of state pensions and benefits. The NI Fund has itself been shrinking, largely due to the ‘triple lock’ arrangement guaranteeing generous annual increases in the state pension.
Logical and Politically Suicidal
Enter stage left the Treasury’s audacious plan for the future of the NI Fund, due to be debated at the November sitting of Tynwald. The plan is both logical and politically suicidal.
For people who have reached state pension age after April 2019 it proposes replacing the triple lock with a more affordable uplift based on inflation.
This would make younger pensioners worse off than the older cohort. Even more contentious, for many Manx OAPs it would mean lower annual increases than those enjoyed in the UK, where the triple lock is being retained for at least the next five years. Pensioners have more political clout than the rest of the community, because they are more likely to vote in elections, and MHKs will be unable to ignore their protests.
The idea is that ending the triple lock would stabilise and ‘save’ the NI Fund, which has sacred cow status in the Isle of Man. But what comes next takes the potential for controversy off the scale.
The Treasury plan allows for the use of any ‘surplus’ in the NI Fund to support health and social care, education, employment and the economy. This would address inter-generational fairness by investing in the future, in line with the long term vision of the Island Plan.
A move to recalculate the optimum size of the NI Fund could release up to £500 million for such investment.
‘Investment’ or ‘Overspending’?
The insurmountable problem for politicians is that the public will see ‘investment’ as a another word for overspending, and they simply do not trust government to spend their money sensibly. They regard the NI Fund as ‘their’ money more than any other part of the exchequer and many believe it is the source of their pensions.
The Treasury is presumably relying on the plan to inform the next budget in February, but there is no way the public can be persuaded of its wisdom in the time available, if ever. I predict a major government defeat, or retreat, at the November Tynwald, further undermining the position of the Treasury Minister.
Behind all this drama is the old question of how, and whether, the Island can achieve a high level of public services with an economy based on a low level of taxation. The coalition that is the Council of Ministers contains conflicting answers to that question, which makes it incoherent.
Every Manx Government is described as the worst ever, but the group of people saying that now seems larger than before. This is probably due to perceptions of a crude numbers-based population policy that has gone badly wrong, the scale of continuing overspending and a health service that is still struggling despite a tax rise.
Ministers and their fellow travellers on the back benches have two years to change the narrative before the next general election. Otherwise the names of the MHKs who have just expressed confidence in this administration may be taken down and used in evidence against them.
About the Author
You can read Alistair’s regular musings on his blog: Politics Isle of Man.
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