Our way is only one which is financially sustainable – P&R
OPTING for anything other than Policy & Resources’ chosen means of dealing with the States funding crisis would be financially unsustainable, the committee has said.
While P&R’s funding and investment report was trailed last week in a media briefing, the full report, published today, gives more information about the three scenarios P&R has come up with and offers members the chance to vote on each of them.
But the senior committee makes it clear that its choice will be 'scenario three', once again including a GST, which also adds proposals to borrow £350m., to help fund a broad range of capital projects, including the transformation of secondary education and the next phase of the modernisation of the PEH, at a total cost of over £500m.
Members will be asked to back a GST rate of 5% on most purchases, or 6% if food is excluded.
This scenario would also provide £2.5m. of extra funding each year for new services.
All three scenarios would bring in an additional £25m. of tax revenue per year from companies and motoring, with current levels of States’ spending cut by £10m. a year.
Before any of the scenarios are voted on, the States will be asked to accept some core items as the bare minimum that must be done, such as investing up to £95m. on 17 ‘in flight’ capital projects.
These do not include phase 2 of the PEH or the full education programme, but would see enough funding for the completion of PEH phase 1 and the modernisation of primary and secondary school digital equipment and infrastructure.
Also included is funding for the affordable housing development programme and projects that are nearing completion, such as the refurbishment of Footes Lane.
Eight further projects will go ahead as planned even if members only opt for scenario one. Among these is a children and families’ hub, and housing and flood defences at the Bridge.
But both the transforming education programme and phase two of the PEH modernisation would be pushed into the list of ‘pipeline’ projects.
However, these two would be added to the ‘do as planned’ list if scenario two is accepted.
While scenario one is costed at £190m. and does not include additional borrowing, two would likely cost £440m. and need an additional £200m. to be borrowed as well as using the health service reserve.
This reserve can be used only for spending on items that meet certain criteria and if members opted for this P&R warns that the reserve would be depleted in 2024.
As a result, ongoing costs for Health and Social Care’s initiative to reduce waiting lists and fund NICE TAs would have to come from general revenue.
P&R’s view of scenarios one and two is that although their limited additional revenues and cost savings would lead to an improved position, ‘the surpluses are not sufficient to cover capital expenditure requirements at 2% or even 1.5% of GDP and therefore do not provide a financially sustainable position and will still require further revenue raising to be agreed in the next term.’
Option two would also put pressure on the next Assembly to come up with a way of getting the island’s finances back on track.
The committee remains steadfast on the need to secure significantly more income to fund public services.
‘The three scenarios presented to the Assembly in this policy letter are all affordable in the short to medium term, however, only Scenario three provides a sustainable pathway back to long-term permanent balance – the guiding principle of the States’ own fiscal framework.’
The funding and investment plan is due to be debated by the States in October.
