Helyar presents 2024 Budget with warning about 'far-reaching' amendments
Treasury lead Mark Helyar painted a bleak picture of States finances as he presented his fourth annual Budget to the Assembly.
He warned deputies to expect a hole in States finances next year of more than £60m. and reminded them that they had failed to grasp repeated opportunities to improve finances – choosing instead to largely kick the issue into the next States.
‘This Budget report contains a report on the structural deficit... which is created when a government is spending more than the long-term average tax revenues it is receiving,’ he said.
‘The overall structural deficit in government finances, including both general revenue and social security, was £63m. in 2023 and is budgeted at £64m. in 2024.
‘That is a sizeable gap which this Assembly has now resolved that the next States will need to address. We cannot simply explain this away by setting lower targets for capital expenditure. As we have been expertly advised, this will make things more expensive in the future.’
Listen to our Shorthand States round-up of day one of the Budget meeting, with Matt Fallaize and Simon De La Rue.
Deputy Helyar and his colleagues on the Policy & Resources Committee initially hoped that States spending next year would increase by no more than inflation.
After discussion with other committees, P&R’s draft Budget includes an increase in spending of 1% above inflation, but Deputy Helyar insisted P&R was committed to keeping tight control of finances and had denied spending requests totalling £7.2m. for 2024.
‘While this does not match the ambition for no real terms increase, the call for savings has undoubtedly helped to offset some of the significant inflationary and demand challenges being experienced.
‘This difficulty in identifying savings is consistent with the Fiscal Policy Panel’s observations that we effectively provide too many services for our level of taxation.’
If deputies approve P&R’s draft Budget, most property owners will face a hike in rates, higher earners can expect to pay more tax, and smokers and drinkers will see inflation-busting increases in duties.
Its proposals also include a 7% increase in the personal tax allowance, which would raise it to £13,900, and a continuation of the pause on withdrawing tax relief on mortgage interest payments.
Deputy Helyar said P&R’s intention when drafting the Budget was to limit any further deterioration in the States’ financial position while trying to protect people in lower and middle incomes.
He arrived at the Royal Court yesterday morning uncertain whether he would even get the chance to present the draft Budget. The Bailiff invited him to do so only after the States defeated a proposal to defer the Budget until after debate on Deputy Charles Parkinson’s motion of no confidence in P&R.
‘The problems are not going to change simply because there is someone else standing here,’ said Deputy Helyar.
After speaking for 15 minutes – shorter than most Budget opening speeches – he sat down to a round of applause, a tradition on ‘Budget Day’ which had fallen out of favour in recent years.
He spent much of the time on his feet quoting words of warning from a Fiscal Policy Panel made up of economists appointed by P&R earlier this year.
These included that the island had ‘recently been travelling on an unsustainable fiscal path’, raising too little revenue, not investing enough in capital projects. and allowing reserves to diminish.
P&R’s draft Budget faces at least 15 amendments. At the end of his opening speech, Deputy Helyar appealed to States members to reject the more far-reaching efforts.
‘What is not helpful is when very far-reaching amendments, which impact the entire structure and basis of our tax system, and which could impact significantly on our economy, are put forward with no discussion or consultation whatsoever,’ he said.
‘That is not the proper way for any organisation to make safe or reasonable and well-considered decisions.
‘It is dangerous and irresponsible to over-simplify important decisions about the structure of our tax base and our economy, based purely on populism and soundbites.’
Full States coverage in Wednesday's paper.