Health charge veto threatens new investment

Monday 03 October 2016

Jersey's Treasury Minister has warned that planned new investment in health and education is under threat, following a decision not to support a new health charge.

At the end of a four-day debate last week, the vote on whether to the introduce the new health charge was tied 23-23, which means it won't be going ahead. It was a key part of the Ministers' finance plans for the next three years, most of which got through the States unscathed.

But the loss of the health charge leaves a gap of £7.5million in 2018 and £15million in 2019, as Islanders won't now be asked to pay an extra 0.5% of their earnings in the first year, rising to 1% after that.

Senator Maclean has warned that means "important investment" in health and education services may have to be deferred:

"I am pleased that the majority of our plan was approved by States Members. It includes spending of £700m per year on public services and islanders can be assured that essential services will continue. Ministers understand that introducing a new health charge was a difficult decision and as we announced last week, a review of Jersey’s personal tax system will now be undertaken, alongside a number of other reviews that have already begun. 

"It is disappointing that many States Members didn’t feel able to support the health charge, especially in view of the advice of our expert economists and the post-Brexit uncertainty. The Assembly’s decision not to support a health charge means a shortfall of £7.5m in 2018 and £15m in 2019. I have made it clear from the outset that if sufficient savings and efficiencies are not delivered, or revenue raising measures are not introduced, then it would be difficult to continue with all the planned investment in areas like Health and Education, without putting the long term sustainability of our public finances at risk.

"We had planned £40m worth of additional spending by 2019 to deliver new and improved services for Islanders. We may now need to defer some of that important investment to ensure that we can live within our means and retain confidence in our economy."

The rest of the MTFP was passed, apart from an amendment forcing ministers to means-test all parents looking for a subsidy for nursery places, including those at States-run nurseries, and one which increased funding for jerriais tuition. 

The MTFP is a ministerial plan to address a potential £113million black hole in the Island's finances which could emerge by 2019, if they go ahead with new investment in health and education, and make £77million worth of savings from the States budget.