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DIGEST: How healthy is the public purse?

DIGEST: How healthy is the public purse?

Friday 03 May 2024

DIGEST: How healthy is the public purse?

Friday 03 May 2024


Jersey is in a "strong position in relative to other jurisdictions", with its finances starting to move "back into balance" after covid and the cost-of-living crises, according to the Treasury Minister.

In the foreword to the States Annual Report and Accounts for 2023, which were published this afternoon without prior announcement, Deputy Elaine Millar said this "strength, combined with prudent stewardship and an ongoing regard for long-term financial sustainability and stability, will be key to retaining and attracting businesses to the Island as well as safeguarding the wellbeing of islanders into our future".

But how strong are public finances currently? Express took a quick look...

Income up...

Last year, income increased by £89million (6%) to £1.582bn.

accnts.jpg

Pictured: The accounts were quietly published this morning.

"In 2023, we saw notable developments, amidst continued global geopolitical and financial challenges," Deputy Millar reflected.

"While our Group Income increased by £89 million (6%), this was lower than the inflation levels experienced during the year. This is not unexpected, as the measures set out in the mini budget in 2022, designed to put money back into Islanders’ pockets came into effect and impacted our tax yield."

...but so is spending

Last year, expenditure grew by £177million (11%) to £1.726bn.

This, Treasury Minister said, was "mostly in the form of spending by departments to deliver services to islanders".

"In addition to the £59 million relating to inflation, this increase also reflects the States Assembly decisions in the Government Plan to invest £53 million into those services," she said.

£32 million was allocated to Health Department during the year, with the Minister remarking: "The ongoing challenges to our Health Service have been evident, leading to the establishment of a Financial Recovery plan. It was necessary to allocate additional funding of £32 million in the year to meet the financial pressures whilst the plan is implemented."

£255 million was spent on infrastructure projects.

Better prepared for a 'rainy day'?

The Accounts also showed that there had been growth in the Strategic Reserve – known as the 'Rainy Day Fund' – taking it to £1.1 billion. The Social Security Reserve also grew, to £2.1 billion.

...hold on, there's a big deficit?

The accounts showed that there was a £144m deficit – though these have been seen since the covid pandemic first struck due to the additional spending needed to respond to the crisis and the big hit that the economy took.

This year's deficit was, however, more than double last year's.

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Pictured: How the deficit position has changed over the years.

"As we have moved out of the pandemic, deficits have continued primarily due to the ongoing suspension of the States Grant to the Social Security Fund (impact of £77 million), which meant that some contributory benefits were met from investment returns rather than taxation," the accounts explained.

"In 2022 this was offset by a significant operating surplus in the Consolidated Fund as general revenue income exceeded forecast, whilst in 2023 the fund was at break-even, as set out later in this section. Revenue Expenditure relating to capital and other projects (£30 million) is also included in 2023.

"The overall deficit also includes impairments of the Social Housing stock as a result of a downward valuation held by Andium Homes of £31 million. This is due to the impact of restricted rents and economic factors in the valuation method, and not the quality of the stock."

What does the future hold?

According to the Treasury Minister, "the Government Plan 2024-2027 anticipates deficits amid inflationary pressures, but also outlines a path towards balanced budgets, with a targeted return to a surplus in the latter years of the plan. This strategy stresses the importance of sustainable public finances, emphasising tax funded day-to-day expenditure, allowing investment returns to be reinvested to strengthen our reserves and invest in infrastructure."

Follow Express for more updates and analysis of the 2023 Accounts...

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