More money taken from wages to pay for health care

Wednesday 29 June 2016

We will all be asked to pay more for better health care from 2018.

As anticipated, the Council of Ministers plan to introduce a health charge to help fund a £40m annual increase in health and social care spending by 2019. The charge will be collected in the same way as Long Term Care – as an addition to income tax. If the States agree, it will start at 0.5% of your ITIS rate before increasing to a one per cent in 2019. Like LTC, it will appear in a separate box on your tax slip.

Businesses will also have to pay to have their rubbish and liquid waste taken away. This is expected to raise £11m a year by 2019.

Today, the Council of Ministers published its snappily titled “Medium Term Financial Plan Addition”, which lays out our government's spending plans for 2017-2019. Last year, the States approved the plan's overall spending limits, which covers 2015-2019 in its entirety, but the Council asked for more time to assess its reform plan and the latest figures before setting departmental spending for the final two years. Now it has published those updated plans.

Like most things in life, there is good news and bad news. The bad news is that taxpayers will be asked to dig deeper into their pockets, and businesses will, too. It is also potentially bad news for States workers. The civil service will continue to shrink - by almost 250 over the next four years - but Ministers are hopeful that this will happen through retirements and workers choosing to go.

The good news, emphasised by Ministers of course, is that the economy is actually in better shape than first thought and the extra they want us to pay is less that it could have been. The health charge, for instance, originally was going to raise £35m but improving tax receipts and savings mean it is now £15m.

And, above all, Ministers say that society as a whole will benefit from the plan: more money to support vulnerable families, new schools, new homes and extra funding to help Islanders go to university, to name but some projects on the 'to-do' list.

The MTFP focuses on the five strategic priorities which the States agreed last year: Health and Social Services, Education, St Helier, essential infrastructure, and economic growth. The departments that have responsibility for these priorities get the lion’s share of extra spending and have to make fewer cuts and efficiencies than others.

Today, Chief Minister Ian Gorst said: “This financial plan moves funds into the agreed priority areas. Health will be receiving additional annual funding of almost £40 million by 2019 and Education will be receiving £11 million of additional funding every year from 2019.

“£168m has been allocated to capital projects over the four years of the plan, including £55m for school buildings, £43m for sewage works and £21m for IT systems. And we are investing in the economy through initiatives that will have a positive effect on economic growth or productivity.

“The Fiscal Policy Panel [the independent advisers who keep a watching brief on States spending] has validated our approach - supporting the economy in the short-term, investing in the services and infrastructure that support growth in the medium-term, and balancing our books at the right time. We are making the decisions about tomorrow, today."

And what the great unknown that is Brexit? Senator Gorst added: “As a result of the vote by the people of the UK to end their membership of the EU, there is likely to be a period of some uncertainty across the UK and Europe, but Jersey is well placed to weather the effects of this change.”

As well as increasing income through growth and extra charges, Ministers are confident that they can successfully implement this plan by making the States more efficient. They have set themselves a target of £90m of savings and efficiencies and reckon they will hit £73m by 2019. £33m of that will be achieved by the end of this year. 

They will also take £100m from the Strategic Reserve - the 'rainy day fund' - over the course of the MTFP period to pay for capital projects and transfer £5m per year from the Health Insurance Fund in 2017-2019 to fund primary health care delivered by Health, while the health charge is being introduced.

The plan will be debated by the States in September.