Estimated hole in public purse reduced by half

Thursday 02 September 2021

The Government is expecting to end the year with a £92m deficit - half the size of the hole in the public purse it originally predicted it would have.

Overall, the Government is £88m better off than predicted in the Government Plan 2021-2024, which projected a deficit £180.6m by the end of 2021.

Releasing a Mid-Year Review of the Government's financial position, Treasury Minister Deputy Susie Pinel said the income forecast for Spring was £74m higher than for Autumn 2020, which helps reduce the Government’s overall deficits as well as the amount needed to rely upon debt.

It is, however, £38m lower than what had been expected for this year prior to covid.

Pictured: The Government should end the year with deficit of £92.4 instead of £180.6million.

The Personal Income Tax forecast alone was £42m higher than the Autumn 2020 forecast. £7m of the tax debt caused when islanders were moved onto Current Year Basis has already been repaid.

There are also higher forecasts for both Impôts and Stamp Duty. At the end of June, the former were £3m higher than for the same period in 2020 (£32.6m vs £29.6m), thanks to the sale of tobacco and fuel, while the number of property transactions so far this year is at its highest since 2017.

Stamp Duty income was up £14.7m compared to the first six months of 2020 (£28.6m vs £13.9m) and there has been a significant increase in the number of higher value transactions. 

Pictured: A breakdown of expenditure by departments.

Meanwhile, the revenue expenditure is forecast to be the same as 2020 and £14m lower than set in the Government Plan. 

Covid-related costs and lost income are expected to reach £126m by the end of the year, less than last year when a total of £190m was recorded.

In total, it is expected that £171m out of the £190m available will be spent on capital projects. This includes £31.2m on the second phase of the Our Hospital project and £22.4m on the Integrated Technology Solution, a five-year project will cost £63m - a figure more than twice the £28m initial estimate. 

The Government Plan 2020-2023 set out an ambition to achieve £100m of savings, with the first £40m to be achieved in 2020. Within the Government Plan 2021-2024, the Council of Ministers added a further £20m savings goal for 2024, increasing the total value to £120m.

The delivery of the £40m efficiency target for 2020 was reported to have been achieved through £25m of "recurring efficiencies" and a further £15m of one-off savings measures, some of which involved deferring projects.

The report said the deferrals were, in large part, a consequence of prioritising the Government’s continued response to covid-19. Therefore, the report said the £20m target for 2021 had increased by £15m to a revised savings target of £35m. 

Only four departments – Customer and Local Services (CLS), Justice and Home Affairs (JHA), the Police and non-ministerial departments – are currently on track to achieve £145,000 through increased income and cost recovery, out of the £950,000 budgeted.

Pictured: A reduction in travel has helped the Government save £40,000.

Meanwhile, £417,000 should be saved from non-staff budgets, which includes a £40,000 cut in travel expenses from the Chief Operating Office, a saving which could become permanent through a preference for virtual meetings.

£270,000 is expected to have been saved by the end of the year thanks to a new contract for printing and a reduction in volumes derived from an increase in home working and continued investment in technology.

Just over half-a-million was reported to have been saved in the Children, Young People, Education and Skills Department as a result of a new therapeutic support model for children with complex needs and the review of budgets in the antenatal services, care leavers and intensive fostering.

In the Health Department, the closure of Samares is predicted to save £1.8m, while a review of contracts for off-island placements should save £1m. A review of agency staff costs and a recruitment freeze is expected to save £1m and £300,000 respectively.

The Infrastructure, Housing and Environment (IHE) is forecast to achieve only half of the savings expected through the review of its overall structure, sports division, business administration and the transfer of its customer-facing services to CLS.

Meanwhile, IHE is set to save £358,000 through a leaseback of the bus depot. 

JHA will be selling a home previously used by the Fire and Rescue Service, the exact value of which has yet to be determined but is forecast to bring at least £453,000. They did, however, decide to abandon the idea of a fee for asbestos licences.

£235,000 has been saved by the Police by not recruiting new staff to fill vacancies during the staff review that took place over recent months.

Pictured: The development of the Long-Term Housing policy has been halted.

Despite the housing crisis, the Strategic Policy, Planning and Performance department has opted to defer the development of the Long-Term Housing policy, along that of the Financial Independence in Old Age policy and the implementation of the Public Services Ombudsman by one year, which will lead to a saving of £128,000.

A number of savings have also been achieved through measures implemented last year and carried forward in 2021, which included a continuing freeze on benefits, the review of Government contracts and vacancy management.

Plans to save money through improved efficiency in operating theatres were not fully implemented due to the pandemic, resulting in £425,000 in savings instead of the £2.9m expected.

Likewise, the Sustainable Transport Policy has not been delivered and an extension to car parking charge, which could have brought in £700,000, has not been implemented.