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Duty freezes and more money for Health in new Gov's spending plan

Duty freezes and more money for Health in new Gov's spending plan

Tuesday 04 October 2022

Duty freezes and more money for Health in new Gov's spending plan

Tuesday 04 October 2022


The new Government wants to freeze duty on alcohol and fuel, give an extra £20m to Health, slightly increase super-rich immigrants' tax contribution and pay off all its covid debt by the end of next year as part of a budget it describes as “stable, affordable and sustainable”.

Today, Treasury Minister Ian Gorst has published the next Government Plan, which proposes firm spending plans for next year and looser proposals for the following three years, taking them to the end of 2026.

As with all previous Government Plans and Budgets before them, the States Assembly will have to approve the proposals at the end of a debate in December.

Before that, Scrutiny Panels will examine them, and the panels and States Members will have an opportunity to suggest amendments.

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Pictured: Fuel duty is being frozen.

Accompanying and underpinning the Government Plan is a fresh 'Common Strategic Policy' - a document laying out the Government's key priorities for the coming years.

These are: housing and the cost of living, economy and skills, children and families, ageing population, health and wellbeing, environment and community.

Key elements of the plan

Despite extra financial support and spending on capital projects – all on top of a £56m package of measure included in the recently approved ‘mini budget’ – the Government says it is fully aware that the future economic outlook across the world is bleak. 

Rising interest rates and prices actually boost Government revenues in the short-term through better investment returns and tax returns but Ministers want to save as much of this as possible and keep retain a surplus, in order to protect both the public purse and islanders, should they need more financial support in the future.

Income is expected to be £120m more in 2023 compared to 2022, while expenditure is £114m more. 

This Government Plan is predicated on income increasingly exceeding expenditure over the next four years. 

There is also an £61m of new revenue expenditure compared to 2022 and £63m more set aside to cover for rising costs. 

The main features include:

  • Higher rate of stamp duty for buy-to-let, second homes and holiday homes;

  • Freeze on alcohol duty;

  • Tobacco duty increases, with the duty on a standard packet of 20 cigarettes due to rise by 97p;

  • Freeze on fuel duty;

  • Increase in Vehicle Emissions Duty, with the highest two bands increasing by 75% and 85% respectively, with lower bands increasing by 32%;

  • Increase in the tax paid by high-value residents;

  • Extra £20.4m for Health to pay for, among other things, its recently announced ‘turnaround’ programme and to reduce waiting times;

  • Extra £16.5m for Education, including £12.5m to pay for a reform and inclusion review, and children’s social care reform.

The plan provides £53m for the impact of inflation on the cost of public services in 2023, and also maintains commitments to fund Arts, Heritage and Culture at 1% of revenue expenditure, to grow Jersey Overseas Aid contributions as a proportion of Gross Value Added and to invest an additional 2% in the health service each year.

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Pictured: Tobacco duty will rise.

The States Grant to the Social Security Fund will also be restored from 2024.

‘Efficiencies’

The new Government has rebranded and scaled down its predecessor’s ‘rebalancing’ measures, which had a target of delivering £120m of ‘efficiencies’ from 2020 to 2024, including £20m in 2022.

Now, the new Government have halved the annual target to £10m a year between 2023 and 2026. Next year, £7m of the £10m target will be achieved “through restraint in the allocation of non-pay inflation”. 

The other £3m will come from a new 'Value For Money' (VFM) programme implemented across all departments. Health has to find the most savings next year, at just over £1m.

Ministers say this is a minimum reduction in overall expenditure, and they will “will look to simplify operations, stop services that are no longer required and improve efficiencies across government”.

The ‘VFM’ programme will also look at improving departmental productivity by helping staff to identify better and more efficient ways of doing business through training and new tools.

A series of ‘Best Value Reviews’ will also be carried out as part of the VFM initiative.

Capital spending

The plan allocates £363m of infrastructure spending between 2023 and 2026, including £85m in public infrastructure, £158m in the Government’s own estate, and £50m in IT. 

Next year, it plans to spend £141m on capital projects, £16m more than the amount budgeted by the last Government for 2022.

Projects receiving money in 2023 include £35m on IT; the Opera House (£6.3m, with another £3.2m spent in 2024); £3m on improvements at the prison; £2.8m on sexual assault referral centre Dewbury House (with another £1m spent in 2024); and £960,000 on a new Army and Sea Cadets headquarters (with another £2.3m earmarked for 2024).

The new investment in the Opera House, as well as the development of a therapeutic children’s home has been possible through one-off special dividends from JT in 2023 and 2024 after the sale of its ‘internet-of-things’ division.

£5m will spent next year on moving sport from Fort Regent to Oakfield, with another £2m due to be spent in 2024. 

Just £100,000 has been earmarked for a new Vehicle Testing Service over the next four years, suggesting ministers have shelved plans to build a new centralised centre, which was rejected during last March’s Bridging Island Plan debate. 

Ministers also want to spend £1.8m on feasibility work for future projects, including £250,000 on planning for a replacement for VCP and the same amount on a new North of St Helier School, both budgeted for in 2023. 

Future studies include £200,000 on the viability of a new South of St. Helier School, scheduled for 2025, and £200,000 for feasibility work at La Sente, to take place in 2026.

The new plan also allocates an extra £2.4m to finish the delayed Sewage Treatment Works at Bellozanne, which should be completed by 2026. The Government admit that the project has been “impacted by inflationary cost pressures” after the main contractor went bust last year.

Our Hospital project

The Overdale project is being reviewed as part of the Council of Ministers’ 100 Day Plan, which will be completed by 20 October. To reflect this, the project has been included in the plan based on existing States decisions, but shown separately. 

Once the review has concluded, a proposition will be brought to the States that would amend the Government Plan to reflect any changes to the project, including the funding strategy.

The overall expenditure on Our Hospital up to 2021 was £63.3m, with a further £25m forecast for 2022 - a total of £88.3m. This is on top of the approximately £40m spent on drafting up previous incarnations on the existing site.

Changes to rules around ‘high-value residents’

Since 2018, all incoming ‘high-value residents’ have started paying a mandatory annual personal income tax charge of £145,000, with all income over and above £725,000 taxed at 1%. Around 70 of 200 1(i)k’s in Jersey pay this £145,000.

Now, ministers are proposing that this minimum amount rises by £25,000 to £170,000, with all income over £850,000 taxed at 1%.

A "stable, affordable, sustainable" plan

Describing the plan as “stable, affordable and sustainable”, Treasury Minister Deputy Ian Gorst said: “We are allocating the growth in Government resources carefully and in line with islanders’ priorities, including health, education and infrastructure.

“While we rightly focus on our island’s finances, we must always be mindful of the wider global situation. The war in Ukraine, changes to UK interest rates and new governments across Europe all have far reaching impacts on the global environment and economy.

“With the UK announcing new tax measures and the Bank of England increasing interest rates it shows how vital it is for us to maintain a stable and prudent approach to balancing our finances.

“We are assessing the situation and planning for many eventualities and scenarios. Whilst the global and UK economy is in a state of flux it is important to take stock of the situation, understand it’s impact whilst remembering we have a strong economy that has proven resilient in the face of many challenges over the last few years.

“We also need to be mindful that the current level of volatility, inflation and interest rates may lead to further measures being necessary to support islanders. We will not hesitate to announce further measures should there be a need.” 

READ MORE...

Reducing reliance on immigration fails to make new Gov's key priorities - Express examines how the old and new Government's set of priorities differ

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Comments

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Posted by Scott Mills on
Education....should use a portion of their budget to run a drive for men to become primary schools teachers, because the current ratio is absolutely appalling. Some schools without any apart from the caretaker. The stigma and current perceptions of a male primary school teacher needs to change (not for topic converwsation) but simply for the benefit of the pupils'. Role models are hard to come by these days, especially male role models. If it was a majority of men who taught at such schools, they'd be uproar. Both boys and girls definitely need males to help teach and guide them through their schooling. End of
Posted by Keith Marsh on
An extra £20.4m for Health is welcome, however to be of any use, we need Good Quality Consultants in every section, with suitable back up.
I see no ships of such personnel on their way to Jersey.
Posted by MichaelEvans46 on
So the wealthy will pay a minimum of an extra £25k tax but their other rate gets an increase of £ 125k, totally wrong
Posted by Jon Jon on
Should of looked at taking duty off fuel etc ,many elderly especially who use central heating oil are looking at prices far higher than last year,many will not put it on ,then risking falling ill and ending up in hospital,that’s if there’s beds available! It’s like putting liquid gold in your oil tank now!
Posted by Bernadette Evans on
A MOVE to stop Andium Homes from increasing the rent – for at least a year – for social-housing tenants who move into refurbished properties was rejected in the States Assembly.

Deputy Rob Ward, who brought the proposition, said that Andium tenants who were given no choice but to move into a refurbished home would face an average rise of £260 in their monthly rent.

Many of these tenants are on Income Support which is funded by the Jersey Taxpayer so why has the approval for this astronomical increase been given the go ahead in the current economic climate? This cannot be good news for taxpayers.
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