States accounts reveal 'black hole' has shrunk

GUERNSEY’S fiscal ‘black hole’ shrank last year, latest figures have revealed.

GUERNSEY’S fiscal ‘black hole’ shrank last year, latest figures have revealed.

Treasury and Resources yesterday published the States Accounts for 2012.

It shows that departments’ spending last year reduced in real terms and that the overall financial position of the States is improving.

At the start of the year Treasury predicted the island would be left with a £27m. deficit at the end of 2012.

However, after increased income and less-than-expected expenditure, the black hole was down to £20m.

That represented a reduction of more than £4m. from the position at the end of 2011, when it stood at £24.3m.

‘While this is relatively good news, and shows that the States’ finances are now heading in the right direction, there is nothing to be complacent about,’ deputy Treasury minister Jan Kuttelwascher, pictured, said.

Comments for: "States accounts reveal 'black hole' has shrunk"

Disgruntled

I have no doubt poor management and excessive redundany payments can reverse this trend.

Island Wide Voting

As we're only 20M in the red let's blow 55M million on sea defences to combat an expected three foot rise in sea levels,24M on our waste infrastructure and many more millions on paying someone else to burn our rubbish forever, and several hundred thousand on re branding our planes

Neil Forman

IWV

Another book of numbers for you.

http://www.gov.gg/CHttpHandler.ashx?id=83539&p=0

Page 30.

Spartacus

Before we start arguing over this read Minister St Pier's statement at the beginning. Last paragraph.

Spartacus

Neil

Wow that's excellent news I didn't realise they were holding States assets off balance sheet. We are even richer than I thought!

So the liabilities under FRS17 have changed mainly due to a change in the discount rate assumption and this means the accounting liabilities have increased by around £200M under FRS17.

I reckon this increase will be addressed by a combination of the following :

1) Voluntary severance offer to existing employees

2) Acceptance of the joint working group recommendations to change to a CARE scheme and other changes for all new staff sooner rather than later.

3) Changes in the method of calculating the discount rate as announced in 2013 by the national statistitian.

4) The Sates will need to decide how to proceed in relation to existing employees and they will need to decide whether to increase the contribution rate or leave it as is, however in my humble opinion they will need all the relevant information which can only be provided by an up to date actuarial valuation.

The next valuation is due to be prepared as at 31.12.13 and I imagine would encompass all of the above considerations. If a decision is made based on the 2013 actuarial valuation, I predict the current funding level will not need to change and that the contribution rate will stay the same.

That's just my layman's guess I could be wrong.

I hope they don't bow to media pressure to rush things as they might then preempt the outcome of the 2013 actuarial valuation which would result in flawed decision making.

Neil Forman

Spartacus

Yes the assets they are hoping to sell, cue more outrageous spending.

If you put the liabilities on the balance sheet as you are obliged to under FRS17 it will tell a different story. I think Minister St Pier is right to be worried. That deficit is now at £503,975,000, a rise of £122,449,000 for the year.

I think the voluntary severance package was really offered to tackle this.

This scheme needs to be closed to new entrants NOW.

We shall see what the 2013 actuarial valuation says.

Spartacus

Neil

I agree that the voluntary severance package is most likely designed to turnover staff to limit the future pension liabilities. They know they can't just take away contractual pension rights, it has to be voluntary.

The value of the fund has increased from £896.5M to £979.5M. Investment performance was 2.7% in excess of the benchmark. The fund is doing really well.

The increase in FRS17 deficit is caused by the recession according to Bethan Haines, so I suspect that is very much a temporary situation which could be handled by restoring the contribution rate to previous levels as required to fulfill the short term obligations and maintain current funding levels until such a time as the recession ends.

Obviously if they can persuade people to leave the scheme it would help to avoid that but still keep the pension pot nice and fat however they might need to sell some of those States assets to fund all the compensation payouts which would be required to achieve that goal.

I'm not surprised Gavin is worried.

Island Wide Voting

Neil

Tempting as it is to wade through your link I'm afraid the Book of Numbers is more Pepe Le Pew's territory

PLP

Sorry IWV but I'm too busy reading Lamentations! ;-)

Neil Forman

IWV / PLP

Very good;-)))

markB

That is good news, so let’s splash out to celebrate and build something we really can’t afford or need.

Spartacus

Like an abattoir for example! ;-)

Jon

Page 19 is what worries me, why is there 50 more staff earning £70k+ last year than the year before?

Neil Forman

Jon

Good question!

Pension bumping before it is tackled????