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Jersey’s government is today celebrating a “strong” balance sheet with a surplus of over £300 million in 2016 – but is already emphasising that this was an “exceptional” year, and that this is unlikely to continue due to future uncertainty.
After suffering a deficit of £42 million in 2015, the States has today announced a surplus of £307 million last year, and a growth in net assets from £5.9 billion to £6.2 billion.
Those figures were revealed in the States Financial and Accounts report for 2016, which showed that higher than expected funds raised from income tax, driven by record levels of employment, bolstered the States balance sheet. Those levels of employment saw the States Income Support budget retain £6 million, due to fewer claimants as a result.
Brexit also had an unexpected positive effect on finances, with the devaluation of the sterling boosting investment returns.
Departments across the States were praised for exercising restraint on their budgets and meeting savings targets, with an underspend of £33.9 million – almost 5% of the total budget. £7 million of that has already been put aside for agreed projects.
2016 States Accounts show continued strength of Jersey’s finances: excellent investment returns & improved income from personal taxation pic.twitter.com/wd4gJq2SKR
— Senator Alan Maclean (@AlanMacleanJsy) June 9, 2017
Despite the largely positive results, Treasurer Richard Bell warned against complacency over 2016’s success, given the oncoming challenges.
“2016 has been an exceptional year. But the danger of an exceptional year is then when we come out with the accounts of an exceptional year, people would then start saying, ‘we can expect that for each and every year going forward’. It’s still … people are looking for bad news, there’s some less positive messages in there in respect of those income forecasts.”
Treasury Minister Senator Alan Maclean added: “These are results and they’re very positive results for 2016. I think if there’s anything to be concerned about it will be looking forwards. And that’s where the income forecasts will start to highlight that we still have a great deal of uncertainty ahead – we’ve got the whole Brexit dynamic to unfold over the next 2-3 years, and that can throw up all sorts of issues for us in terms of financing the future. So you’ve got to separate the results that we’ve had that have been exceptionally good for 2016 but also in the context of the uncertainties that lie ahead.”
According to forecasts, Jersey’s deficit is set to jump from just under £2 million last year to a forecasted £42 million. But Senator Maclean said that they were actually expecting a better result than this: “The level of “deficit” (£42m) is based upon the assumption that all of the expenditure budget will be spent, this will not happen, so provided the income forecast holds up, the position will be better than £42m deficit.”
Video: Treasurer Richard Bell presents his conclusions about the health of the States' finances.
Nonetheless, both argued that Jersey was in a “strong” position for the uncertainties lying ahead.
“The added uncertainty arising from, in particular Brexit, which presents opportunities as well as challenges, underlines how important the extra resilience that the 2016 performance gives us, to see us through this uncertainty,” Senator Maclean told Express.
The biggest uncertainty threats, the report stated, will come from the impact of new international tax initiatives, UK banking sector reform, employment levels, and Brexit negotiations.
Asked whether the positive year would be enough to not only protect against uncertainty, but protect pledged large capital spending projects, the Minister commented: “The largest part of the increased investment returns, is locked up in the Social Security fund and leaves us even better placed to address the costs of funding pensions going forward. Taxation receipts being buoyant improves the position of the Strategic Reserve AND the current account, (the Consolidated Fund).
"We are now working towards the Budget for next year and clearly this improved position assists with being able to afford projects in the future. We already have funding in place for projects such as the new Les Quennevais school. Funding for the hospital still needs to be resolved, but is definitely not made any more difficult by the confirmation of the income forecast, nor the very strong year in 2016.”
The Minister approved these amounts to be carried forward…
£12 million into reserves and contingencies £5 million is allocated to Health and Social Services to replace the funding that is no longer being transferred from the Health Insurance Fund
£3.2 million funded a non-consolidated pay award of up to £500 per eligible employee for 2016
£6.9 million is for departments to fund additional spending requirements, as well as funds of £7.4m for previously agreed projects
And hopes this will fund…
Demolition of the old cable car station
Investment in Children’s Services systems
Climate risk assessment
Jersey Pupil Premium
Disposal of asbestos at La Collette
Investment in infrastructure
Providing schools with the freedom to manage the timing difference between academic and financial years
Sports Travel Grants
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