States: "New Black Hole is £50 million"

Tuesday 17 February 2015

Ministers are forecasting a £50 million black hole in public finances by 2019 and have told States departments they need to trim their budgets every year to avoid major cuts or tax rises.

Departments have been told to meet ambitious efficiency savings target of 1.5% every year until 2019 to keep the finances from slipping into the red – but they have agreed some money for pay rises and an annual 2% increase in health spending.

Ministers have also told departments to come up with a “Plan B” to cut another £30 million so that they can stick with plans to spend more on health, education and social care.

Updated figures released late yesterday afternoon show the size of the hole in the States finances, which is roughly equivalent in spending terms to the entire Home Affairs department, or in tax terms to the combined income from duty on cigarettes, alcohol and fuel.

Treasury Minister Alan Maclean said that a report on what the cuts and efficiency savings would look like would go to the Council of Ministers next month.

He said: “We know we are facing some challenges in the coming years, if we want to invest in the priority areas identified in our strategic priorities.

“We have already asked departments to find £12m in efficiency savings this year, which is one of the measures identified when we presented Budget 2015 to the Assembly last year.

“Now we are looking at a number of different scenarios to determine what effect different levels of savings would have on the public sector and its services. Final figures will be presented with the next medium Term Financial Plan.”