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INSIGHT: Government announces rebranded spending plans for 2025

INSIGHT: Government announces rebranded spending plans for 2025

Friday 02 August 2024

INSIGHT: Government announces rebranded spending plans for 2025

Friday 02 August 2024


Starting construction on a new hospital and a move towards the Living Wage both feature in the Government’s nearly £1.3 billion budget for next year – which aims to focus on the cost-of-living pressures facing islanders.

Chief Minister Lyndon Farnham hailed the '2025 Budget' – rebranded from the ‘Government Plan’ – as a “commitment to building a secure future for Jersey”.

Calling it a "responsible budget", Treasury Minister Elaine Millar said the plan "puts the money available where it is needed most" and aims to boost personal wealth by upping tax allowances and implementing Living Wage – as well and putting £710 million toward commencing the long-awaited new hospital project.

The Government has also frozen alcohol and fuel duty for the coming year.

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Pictured: Deputy Lyndon Farnham has overseen some changes in how the Government sets out its spending plans.

The Government's 'Common Strategic Policy' – which sets out a list of priorities for Ministers' remaining two years in office – was announced in April and approved in May.

This focused on tackling cost-of-living pressures, extending nursery and childcare provision, and key health-related priorities – most notably the new hospital. 

But today's Budget sets out the finances for achieving those priorities, translating the CSP into "actionable initiatives".

A statement announcing the Budget said: "The 2025 Budget is a robust plan for the remaining two years of this administration.

"It provides stability, demonstrates fiscal responsibility and ensures that public funds are used in a targeted and controlled way to the benefit of islanders."

Before it is debated later this year in the States Assembly, Express took a look at the 2025 Budget headlines and what islanders can expect...

The big picture  £1.2 billion on delivering services

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Pictured: The 2025 Budget at a glance.

In comparison to the 2024 Government Plan, the 2025 Budget has a number of differences beyond its name.

Its release comes more than a month earlier, with the spending plans for the next year usually released in September.

Deputy Farnham has previously said that he intended to bring his own plans forward in the summer, to allow more time for debate and discussion.

The spending total for next year is also higher than the £1.1 billion budget approved for 2024 last December.

This Government is set to shell out £1.2 billion on just delivering services to islanders – with additional expenditure to go toward investment in the new hospital, Health, the transition to Living Wage, and infrastructure projects.

On the increase, Deputy Farnham said: "Inevitably, as the cost of goods and services increases there will be some increase in Government spending."

The Budget also fulfils some of the Chief Minister's commitments to curbing "excessive growth" in the public sector, and revenue expenditure (the total amount paid to Government employees) will increase by 5.7% compared to 9.4% in the previous plan.

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Pictured: The departmental spend in 2024 (left) compared to what is proposed for 2025 (right).

In a statement accompanying the release of the Budget, Deputy Farnham said: "The 2025 Budget is a commitment to building a secure future for Jersey.

"By aligning our financial resources with the Common Strategic Policy, we are taking steps to address the most pressing challenges facing our island."

Treasury Minister Elaine Millar added: "Maintaining sound public finances is paramount.

"This Budget strikes a balance between necessary investments and fiscal prudence, ensuring we can sustainably support vital services and initiatives that benefit all islanders."

Health and Hospital – additional £31 million investment in Health and £710 million for a new Hospital

Before discussions of spades in the ground are even had, the Government has pledged an additional £31 million (meaning, in addition to inflation and pay) to meeting structural funding issues in Health to ensure high-quality services can be provided to patients.

This extra boost runs alongside the Financial Recovery Programme, an ambitious plan masterminded by the "turnaround team" of external consultants to deliver £25 million of savings.

Deputy Millar asserted that "we are set to begin construction of the Acute Hospital at Overdale, with a completion target of 2028".

"This £710 million project is critical for our health infrastructure and public consultation has shown strong support for swift action," she added.

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Pictured: In May, new concept imagery and videos showcasing the designs for Jersey's proposed acute hospital were released alongside the launch of a public consultation.

As part of the Budget, the Government will also be presenting a new plan to finance the New Health Facilities Programme, with the previous financing strategy "no longer being affordable due to the changes in economic conditions, in particular increased interest rates".

This investment represents a huge leap from the £52m allocated to the 'New Healthcare Facilities Programme' during 2024.

It is also far greater than the £234 million that Express reported had been spent or allocated to a project that is yet to lay a foundation stone.

Living Wage – £20 million in support for the transition

As part of the commitment to social equity and economic growth, the Budget introduces support for businesses transitioning to the Living Wage – which currently sits at £13.41 an hour.

This initiative aims to "improve the standard of living for workers while promoting sustainable business practices", the Budget said.

Businesses previously expressed concern about the knock-on effects of a jump to aligning minimum wage with Living Wage.

A total of £20m has been set aside to support businesses and charities with this transition.

Tax thresholds

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Pictured: New tax allowances proposed for next year.

As well as boosting wages, a £700 single-person tax allowance increase to £20,700 means that islanders will keep more money in their pockets. 

There is also a £1,150 increase for married and civil partners.

Deputy Farnham said the Budget would extend nursery and childcare provision, and it increases child allowances.

Currently set at £3,700 per child for 2024, the child allowance amount with increase by £150.

There are also £250 increases in childcare tax relief and £700 increases in higher childcare tax relief.

Duties – fuel and alcohol frozen, but tobacco and vehicle emissions on the rise

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Pictured: Deputy Farnham's proposed duties for 2025.

Former Chief Minister Kristina Moore's Government faced some harsh criticism when they announced that duty on beer, wine and spirits would increase 8.9% in 2024.

The hospitality trade urged States Members to throw out the ministerial plans, saying that the proposed rise would add up to 50p on to a pint and "unfairly hit ordinary businesses and islanders".

Following intervention from a Scrutiny panel, Ministers lodged a "compromise" amendment to their own proposal to almost slash the the rise in half to 4.5%.

The new Government has now announced there will be no increases on the cost of a pint of beer or a litre of fuel in 2025.

However, tobacco will cost 83p more per 20-pack and there will be a 20% increase in Vehicle Emissions Duty for the highest CO2-emitting vehicles to support the Climate Emergency Fund – a pot of money which is helping to fund the island's transition to net zero by 2050.

Strategic reserve – increased to £1.2 billion

There has been some recent conversation around boosting the Government reserve fund which safeguards against future economic crises, following a withdrawn proposition from backbencher Deputy Max Andrews.

Last year, the Fiscal Policy Panel – a group of independent experts who advise the government on economic issues – raised concerns that the value of the Strategic Reserve, also known as the rainy day fund, was "unlikely to be sufficient to meet a major crisis".

It currently stands at just over £1 billion, but that is set to change next year, if Deputy Farnham's plans are approved.

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