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What we can learn from the government's accounts

What we can learn from the government's accounts

Monday 20 April 2020

What we can learn from the government's accounts


Only the very enthusiastic would normally want to read the whole 262 pages of the 2019 States Accounts; but this year it is worth persevering.

There is a huge amount of useful information in there.

In 2019, total income for the States of Jersey Group (including Andium, Ports and SOJDC) was £1.3bn.

This was made up of: personal income tax of £475m, company income tax of £116m, £90m in GST, £233m in Social Security contributions, duties of one type and another of £125m, and, finally, £265m of other income.

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Pictured: Express columnist Kevin Keen inspects the States of Jersey 2019 accounts. 

Expenditure was also £1.3 billion. Staff costs were the biggest at £417m, closely followed by social benefit payments of £414 million, then other operating costs £306m million, depreciation £73m, grants £45m, money wasted on not finding a hospital site £26m, and interest on our debt £27m.

At the operating level, the States made a surplus of just £5m. This was enhanced by a good year for investments, which increased by over £400m, and a few other one-off gains. So our total assets increased by £432m.

At the end of 2019, the government owned assets of £8bn - broadly made up of £4bn of property and equipment and over £4bn of investments and cash (including the Social Security Fund of £2.2bn). Borrowings were a pretty modest £725m, including £439m of pension deficits.

 

 

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Pictured: "In 2019, total income for the States of Jersey Group (including Andium, Ports and SOJDC) was £1.3bn."

So it was a pretty strong position asset-wise, but not much money left over each year to save for that rainy day or invest in infrastructure.

Fortunately, back in the 80s, we did manage to put some cash aside, and, by the end of 2019, our rainy day fund (aka the Strategic Reserve) had grown to over £900m. But it's worth remembering that, of this, over £400m is committed for our new hospital, £100m for the Depositors' Compensation Scheme... and no doubt a lot of the stock market gains in 2019 will have evaporated.

It does not take an accounting genius to know that the numbers for 2020 are going to look very different. 

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Pictured: "A pretty strong position asset-wise, but not much money left over each year to save for that rainy day or invest in infrastructure."

Income will be down and expenditure will probably be up, so the States will almost certainly be running quite a large deficit even before the huge amounts of expenditure required to support the economy.

Few would have predicted our rainy day would be a super flu from 6,000 miles away, but I do believe we will get through and learn quite a lot along the way.

Unfortunately, though, even before the peak of this tragedy arrives, our leaders are already talking tax increases to replenish reserves built over decades.

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Pictured: What could we learn from Guernsey? 

Such actions will need to be taken with great care so as not to put our recovery from recession at great risk.

Before Ministers do start raising taxes, I would ask them to carefully consider the following.

  1. Try hard to use local suppliers of goods and services wherever they can - our economy really needs the stimulus of local purchasing. (That plea actually goes for all of us not just the States.)
  2. During the covid-19 crisis, we seem to have becomes fans of the 'Guernsey way'. What else could we learn from them, and, most importantly, how could both islands work together to save money for both communities?
  3. Look at all of the States assets to see what we really need - could some be sold to replenish the rainy day fund?
  4. If we really do need to increase taxes, let's finally finish that review of zero-ten and actually do something. (Back in 2004, company income tax was £189m - that is £282m in 2019 money, quite a way from the £116 million we actually raised in 2019.)

Good luck to Ministers and their teams in getting our economy and in turn States finances back on track.

It won’t be easy, but, as the old proverb says, 'Necessity is the mother of invention.'

READ MORE...

Government quietly publishes accounts

The 2019 Annual Report and Accounts in full...

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