This Budget is the last of its kind, says Helyar
The prospect of looming deficits in government finances as early as next year was forecast by the States treasury lead yesterday as he presented what he called ‘one of the last Budgets of its kind’.
Deputy Mark Helyar warned that a predicted £33m. operational surplus for 2023 could be wiped out by poor investment returns and over-ambitious spending plans lined up by deputies through the Government Work Plan process.
‘There are significant risks to the 2023 financial position individually or in combination which could result in overall revenue deficit,’ he warned
Listen: Chloe Presland and Mark Ogier round up the first day of budget debate
Deputy Helyar highlighted the risk of revenues growing more slowly than spending in a high-inflation environment. Each 0.25% mismatch would cost the States £1.5m. in revenue spending, he said. Rising interest rates could impact negatively on the housing market, while investment volatility could negatively impact estimates of investment income, and spending pressures could outstrip budget estimates.
‘There is little scope for realising additional revenues through the existing tax system. This is the third occasion that I will say, we cannot squeeze any more pips from the current system.
‘Through many years of political dithering and indecision, we now unfortunately find ourselves at the very edge of the fiscal cliff, having to manage huge financial problems that should really have been dealt with by the assembly in better times over several past decades.
‘This is all coming home to roost at the very worst possible time to have to deal with it, and this is the reality we must face and address.’
Deputy Helyar said that in his view, the Government Work Plan contained far too many spending projects and he said it needed to be ‘reined in – we should only plan to do what we can afford to do.’
The Budget is scheduled for debate until the end of the week. Yesterday deputies rejected plans to broaden proposed TRP increases and a bid to give the cannabis industry an income tax break for five years.
A proposal to work more closely with the Government of Jersey to identify savings was supported, as was a proposal to investigate another incentive to help first-time buyers.