States records £22.1m surplus

After transfers to reserves and to cover losses at Aurigny’s parent company Cabernet, out of a financial position for 2017 that was £113.9m better than anticipated, a total of £22.1m. surplus is available for use.

The overall surplus was attributable to £69m. in the General Reserve, £28.5m. in the Capital Reserve and £16.3m. in the Core Investment Reserve.

Policy & Resources president Gavin St Pier said higher-than-budgeted surpluses signalled a stronger economy and high employment rates.

‘In respect of the General Reserve the surplus, after adjusting items, was £67.9m. which is £33.1m. higher than originally budgeted and £17.9m. more than the revised forecast included

in the 2018 Budget Report,’ he said.

‘These figures indicate the strength in our economy with growth in earnings and an increase in the number employed leading to higher income tax receipts, coupled with 2017 being a strong year for document duty receipts with a substantial increase in the volume of transactions.’

The capital surplus has helped to meet financial targets, however Deputy St Pier said it was also indicative of a failure to progress capital projects. That reserve had a balance of £240.2m. at the end of 2017.

‘It is a concern that actual expenditure incurred on programmes and projects in 2017 was only £8.2m.’

‘If we are to deliver the vision of Future Guernsey – great today, better tomorrow, we must invest in the island’s infrastructure and capital plans should be accelerated where possible to ensure that our public services have the infrastructure they need and our economy benefits from this investment.

‘It is vital that we do not merely maintain and replace existing assets, but we must invest to enable transformation of how we deliver our services and, increasingly importantly, to facilitate and drive growth in our economy.’

£22.1m. of the general surplus has been made available for appropriation and the 2019 Budget Report will include proposals to invest this.

Deputy St Pier said this sum would be used to help delivery of agreed priorities in the Policy & Resource Plan, increase personal income tax allowances, provide greater support for future economic development initiatives and further rebuild the Core Investment Reserve, which was depleted in the years in which deficits were recorded.

‘Whilst the financial position recorded in 2017 is undoubtedly very pleasing and positive, reflecting improvements in the fiscal and economic cycle, there were a number of non-recurring items which contributed towards the increased surplus including exceptionally strong investment returns.’

‘The current Medium Term Financial Plan set out a fiscal strategy designed to ensure the finances of the States can support the delivery of the outcomes set out in the Policy & Resource Plan. Delivery of the plan will ensure that the States are able to achieve and maintain a balanced budget before moving into a sustainable surplus enabling the re-building of reserves and the investment in future public services in support of achieving the agreed outcomes.’