States spending last year will outstrip income by £31million, latest figures show, as economic performance, a health overspend, and one-off bank adjustments bite hard.
Policy & Resources President, Deputy Lyndon Trott outlined the condition of public finances in an update to the Assembly this morning, with losses also anticipated at the unincorporated trading entities, which include the ports, dairy, and waste, of £6m.
The States corporate tax income take has taken a £29m. downward adjustment because of one bank, something that was already flagged.
“Now, whilst there are other variances, this is by far the largest single factor driving a revenue deficit,” said Deputy Trott.
“ETI receipts, which are the best real time indicator of economic performance, were short of our budget by almost £5m., or just under 2% in percentage terms, and this was driven by a modest lag in median earnings growth compared to inflation. This lag has been offset by an increase in the number of people working in Guernsey’s private sector, which is great news for future revenue.”
In a good sign in the housing market, document duty ended the year with £29m. in receipts, 28% ahead of budget, “helped by a handful of very notable transactions”.
Customs duties ended the year short of budget by £3m., or nearly 7% .
This was driven by alcohol duty receipts staying flat on 2023 in real terms, despite the 2% real terms increase in rates, and tobacco duties being £3.9m adverse to budget and significantly down on 2023, partially driven by the timing of imports.
Total revenue income for last year is just short of £601m, which is level with 2023 in nominal terms, and £21m less than budgeted.
What is happening on spending?
On the spending side, most committees were within their budgets.
However, Health & Social Care produced a £6.4m. overspend because of demand pressures “across the service” and off-island intensive and wrap-around care.
Corporate Services underspent by £1.3m. because of a high level of vacancies.
“Pay costs for the year totaled £336m which is just over 1% under the budget,” said Deputy Trott.
“However, this ties the fact that there were nearly 400 vacancies on average over the year, which equates to 7% of the total workforce.
“Many of these vacancies have had to be covered through overtime or agency staff, which cost more than full time employees. This means that the average hourly costs spread across all employees was 6% higher than budgeted.”
Home Affairs department had vacancies of 114 full time equivalents, which represented 17% of their budget, and corporate services, 96 full time equivalent vacancies, which is 13%.
Compared to 2023 the total workforce increased by 123 to 5,162.
The increase was, overwhelmingly, in health and care services.
In 2023, there was an increase of 142 full time equivalents, about half of which where in health and care.
Spending on sea link contingencies exhausted the budget reserve.
“A significant underspend on government work plan initiatives over the year helped mitigate these short term cost pressures. However, members should be mindful that in many cases, this under spending simply slows the realisation of our government work plan initiatives.”
Overall, there was an overspend when all committees and central reserves are taken together, of around £700,000.
Capital costs were £20m. higher than budget because of spending coming forward earlier than expected on some major projects.
Investment returns were above budget estimates, and although they are unrealised gains they get attributed to the general revenue picture to the tune of £41m. to leave the total £31m. deficit – £19m worse than what was in the 20245 Budget.