Savings and a review of spending have been promised as Policy & Resources highlighted a £2m shortfall between States revenue and expenses for the year.
Deputy Gavin St Pier, Vice-President of P&R, updated States Members on the government’s financial position up to the end of August this morning.
He said income tax and other contributions are expected to raise slightly below what was predicted in the budget for 2025.
This is despite an additional £9m expected to come in from new global corporate tax rates, and up to £8m extra from document duty due to a 31% increase in local market sales this year.
Deputy St Pier warned that there is uncertainty around these figures since no cash from the enhanced corporation tax will be banked until 2027, and because document duty is “inherently unpredictable”.
He said there have been additional spending pressures within Health & Social Care, inflation and with “substantial change” to the States’ digital and technology services.
At HSC, problems are linked to staffing including overtime and the use of agency staff, as well as an overspend on off-island treatments, totalling an extra £2.8m
Deputy St Pier said changes to the States’ IT – including the termination of the contract with Agilisys and move to a multi-company approach – was a “necessary operational response to performance issues with the previous contract”.
Other committees and States boards have jointly underspent by £5m over the year to date and, other than HSC, spending can be managed within the approved budget, he added.
Deputy St Pier that subsidies to support the losses of States companies such as the ports have also contributed to the deficit, however the value of the subsidy is lower than first forecast due to improved performance.
He told States members that while the performance of the States overall was stronger than predicted, difficult decisions need to be made to balance the books.
“It still confirms that we are spending more than we generate on a day-to-day basis before allowing for investments in assets and infrastructure. This is a challenging starting point to putting together a budget for 2026,” Deputy St Pier said.
“We have examined all routes to additional revenue raising and confirmed to Committees the cash limits we’ll be recommending for next year. It is probably no surprise that no-one is getting everything they asked for.
“I have no doubt that nobody will be happy with everything that’s included. We must raise revenues where we can find scope – and, frankly, the scope is extremely limited. We have no choice but to fund essential public services and some of the pressures I have spoken about today are already being spent, so cannot be avoided, meaning we have no option but to budget for them next year.
“However, Members and the public should also be assured that there will be initiatives to deliver savings in 2026 as well as a fresh, but much needed look, at our whole expenditure budget .
“While I don’t expect Members to be overjoyed by what they read in the Budget Report, I hope they will appreciate the need to balance the books – and the difficult decisions that entails for everybody in the States of Deliberation.”
The States’ budget for 2026 will be published on 7 October.