Revealed: cuts, stealth-taxes and redundancies as States face £135 million deficit

Tuesday 21 April 2015

Plans for £60 million worth of staff savings and job cuts, along with £35 million worth of benefit cuts and user-pays 'stealth taxes', have been revealed this morning as ministers work to plug a £135 million black hole in States finances.

States Members and staff were briefed on the changes this morning, ahead of a briefing to the media planned for later today.

But a document seen by Bailiwick Express ahead of the media briefing sets out how ministers plan to tackle the deficit, which appears to have grown significantly since the election last year.

The report shows that last year’s tax income was below forecast, and that economists now think that finance sector profits, public earnings and job creation will all now be lower than was being predicted last July.

And it says that for the first time in years, the government might start laying people off. A voluntary redundancy scheme is set to start to reduce the public sector pay bill – currently running at £1 million per day – and ministers say that it will be used “to minimise the number of compulsory redundancies."

The problem for the States is compounded by the fact that ministers have to find another £50 million for the Health department and another £9 million for the Education department every year, just to cover much-needed investment in looking after the growing elderly population, raising pay for nurses and improving standards in schools.

Ministers’ plans also include what they call “a small number of fees and charges” – on top of ongoing plans for charges for liquid waste (ie. a sewage tax) and solid waste disposal.

The report says: “Proposals are also being considered in relation to a small number of fees and charges for certain services where the current recovery could appropriately be increased. Separately, measures are also being developed to establish an appropriate source of funding for liquid and solid waste disposal.”

But they make clear in the document that major tax changes or changes to the contribution system that funds Social Security and the Health Insurance Fund which covers some GP costs and prescriptions, remains a final option which they are holding in reserve.

The plans for benefit cuts include targeting money only at those who really need it, setting out incentives for people to get back into work and spreading the impact of the cuts across wide groups of claimants, not just on small groups.