Government to clear last chunk of £65m covid debt

Thursday 03 November 2022

All covid-related debt - which peaked at £65m at the end of last year - will be paid off by the end of this year, the Government has said.

It means that a component of its ‘debt framework’ – which was to take a bond out to pay off this outstanding balance – will not now be needed.

Since the pandemic hit in March 2020, the Government has spent £347m on its covid response, including vaccines, PPE and paying wages.

This is considerably less than the amount budgeted for in spending plans. Not only have the bills been lower that first thought but tax receipts have also bounced back quicker than expected.   

This means that the debt has been lower and the Government has been able to pay back what debt is has incurred at a faster pace.

Pictured: The Government has budgeted £2.5m for PPE in 2023.

The last Government Plan, covering 2022-25, budgeted for a maximum of £208.5m of covid debt this year but the actual figure has been far less than this approved ceiling. By also using budget underspends from 2020 and 2021 to pay down the debt, the Government has only used £40m of its 'revolving credit facility', and not all of that has been used on covid.

In 2020, the Government was given the authority to draw down £385m of the £500m overdraft limit.

Paying off the covid debt does not mean that covid spending has come to an end, although the Government says that, after 2023, spending on the pandemic will come out of departmental budgets rather than out of a specific covid pot. 

For next year, however, it has set aside £30.2m to deal with the virus - £25.2m on the response and £5m in reserve. This is set out in the latest Government Plan.

This includes £19.6m of new expenditure in 2023, including £9.5m on testing, £3.3m on vaccines, £2.2m to fund measures such as infection control and covering teacher sickness in schools and colleges, and £2.5m for Health to, among other things, reduce waiting times for surgery and cancer screening, provide care for islanders with Long Covid.

When it comes to the £9.5m for testing next year, the Government says: “The testing and tracing programme has played a critical role in the island’s response to Covid- 19. 

“While the public health context is now substantially different, this investment is intended to meet the on-going need to provide a testing and tracing capability as well as the enabling technology for vulnerable Islanders, people living and working in vulnerable communities such as care home residents and health care staff, and diagnostic purposes to ensure treatments can be appropriately targeted.”

The £25m total budgeted for covid in 2023 also includes £2.5m for PPE and £2.6m for ‘social recovery’. Looking ahead to 2024 and beyond, the only covid-related money relates to PPE, which falls to £1.4m by 2026, and ‘warehousing, staffing and logistics’ which falls from £421,000 next year to £105,000 by 2026.

On the £5m reserve for next year, the Government Plan said: “As the ongoing impacts of Covid-19 continue to be uncertain, a reserve of £5m has also been provided in 2023 to meet unforeseen costs of Covid-19 or other health protection incidents. 

“If possible, this will be supplemented by unspent allocations at the end of 2022”.

There are currently 391 recorded cases of covid in Jersey, with seven of those being patients in hospital and under five islanders in care homes.