Professor Peter Clinch:

The council's view is there is an obligation to demonstrate the impact that capital spending can have. It is an investment in the future, so there should be a return on it. I would then be in agreement with Deputy Barrett that we cannot persist with the level of capital spending that we have in the economy at the moment. It strikes me that the opportunity is there in the review of the capital programme to grasp that nettle, but it is a complex area. There is a logic around the fiscal rules on current spending and there is a logic around the fiscal rules for capital spending, but the logic around capital spending is that there will be a return on it, that it will not be wasted expenditure that has to be continually repeated. The evidence is there about what capital spending can do, the evidence is there that we do not measure up in terms of capital spending to those economies that we are trying to compete with. The evidence is also there that capital spending will hamper our productivity rate which in turn will hamper our economic growth rate which in turn will hamper our ability to pay for current spending for valued public services. I agree with the Deputy and I would urge this committee to grasp that nettle too, if it is within its remit. As a council we will continue to talk about that, as the Deputy has urged us to do.

We talked a little bit about the USC. The challenge for us is where the funding is going to come from if not from the USC. As a council, we have pointed out that we are dealing here with an extraordinarily complex tax system. Even an individual with some accountancy experience finds it difficult to wrestle with it. We are always of the view that a simplification of the tax system and a logical tax system is desirable. The challenge that we have just put down is for those who will be advocating for the abolition of USC to say where the funding is going to come to replace it, or what spending will we forego if the USC-----