Health charge "to start in 2017"

Friday 26 June 2015

Islanders are likely to start paying a new health charge in around two years – and it’s probably going to mean a hike in Social Security contributions.

Plans for the new £35 million “health tax” will not be included in the States budget plans due out next month, but ministers will start working on it as soon as next year’s finances are approved.

And while some “user pays”-style charges are still possibly on the table, it looks as though the new charge will be based on earnings and levied through the contributions system.

Currently, employees pay 6% of wages – up to a threshold – as a contribution to Social Security funds, while employees pay 6.5%.

As a very crude calculation, the target of £35 million divided by the total number of employees in Jersey would work out at an annual charge of slightly over £600 for each person in work.

Last month ministers announced that a £35 million health charge would be part of the solution to the £125 million deficit in States finances that is expected to emerge over the next four years.

The charge will be ring-fenced to fund most of the £50 million in extra annual funding that the Health department will receive to cope with the costs of the ageing population and rising prices of medicine.

The Medium Term Financial Plan sets out specific spending for next year, and outline plans for the following three years.

It will also set out plans for major capital expenditure including the new hospital – now likely to be built on the Waterfront or at Overdale – as well as a new Les Quennvais School building and access improvements at Fort Regent.

The document will set out some detail on how ministers plan to make £85 million worth of cuts in the next few years. They have targeted £60 million from workforce savings including pay freezes and redundancies, and another £25 million in cuts to benefits and services.