The latest look at the public purse shows the States overspent their budget by £7million as the threat of a heftier deficit looms on the horizon.
Although the deficit currently stands at £7million, the publication of the government's Accounts for 2018 today involved warnings of a far bigger black hole of around £40million forecasted by 2023 - and one of £27million by the end of this year.
In his foreword to the States Annual Report and Accounts 2018, the Chief Minister John Le Fondré warns that “there are still difficult choices ahead” as he renewed his call for the public service to make £30million worth of savings.
“These are not one-off efficiencies, but a permanent reduction to the costs of the public service. The public service has made significant progress in identifying these efficiencies, and more information about them will be shared in due course.
Pictured: The Chief Minister has warned "difficult choices lie ahead."
“But efficiencies alone are not enough. We also have difficult choices to make about the services that we continue to provide and the revenues that we raise to fund them,” the Chief Minister urges.
The 302-page document shows a very different picture to 2017’s accounts which saw the States rounding off the financial year £23million in the black.
In the face of the £27million Future Hospital ‘write-off’, injections into the island’s university funding scheme and other costs, the government expenditure was up £80million from the previous year and, overall, expenditure outstripped income by £2.4million.
Pictured: £65million of the increased overall expenditure on last year came from Government Departments.
Although the Treasury say that the Medium-Term Financial Plan (MTFP) “planned to run deficits from 2016-2018, with a return to balanced budgets in 2019,” but the latest report from the Fiscal Policy Panel (FPP) has advised that the Government should be running surpluses, especially as the UK heads for the uncertainty of Brexit.
The final quarter of 2018 saw the States Account take a hit of £95million due to market changes revaluing long-term investments, but the Treasury say that the beginning of 2019 has more than made up for this loss.
In her foreword to the accounts, Treasury Minister Deputy Susie Pinel explained that this market “drop” represented “the single biggest impact on group financial performance” in 2018.
However, to allay concerns about the downturn, the Deputy continued: “While this may seem concerning, the long-term nature of our investment strategy and the maturity of the Common Investment Fund means that fluctuations can and do occur,” as well as promising that projections indicate “robust” investment returns for the next three to five years.
Pictured: The returns on Government investments compared with the rate of inflation.
In terms of income, the Minister explains that one of the biggest drivers of income was a tax revenue of £635million - £8million of which came from chasing down tax debtors.
Looking at the balance sheet, the States’ assets of £7.8billion outweigh their liabilities of £1billion. It’s this “strength” in assets which the Treasury say could pave the way for the States to start borrowing to fund investment as well as exploring alternative ways to tackle expenditure such as inviting third-parties to invest in capital projects, as Express previously revealed.
Pictured: The Accounts show a "strong" set of Government assets.
These kinds of “transformative” measures, the Department says, will be crucial in order to shrink the predicted deficit in the coming years as the island heads for further “uncertainty”.
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