States back in the black with finances on the up

Growth in tax income from higher wages and banking profits, together with committees spending less than budgeted, turned an operating deficit of £5m. in 2022 into an operating surplus of £10m. in 2023.

Policy & Resources vice-president Heidi Soulsby described the States’ financial performance as ‘encouraging’ as the 2023 accounts were released.

Though she admitted that the improvement in public finances would make it even harder to convince voters of the need for tax rises or spending cuts to deal with large budget deficits projected over the next few years.

‘The public can get inured by statements that it’s all doom and gloom,’ she said.

‘Not everything in the garden is rosy, but we need to be balanced about this.

‘Year on year, we’re balancing the books. Our income is around our expenditure, but it’s going to become increasingly difficult to maintain that.

‘The underlying structural issues are all still there – staffing, investing in capital projects, affordable housing, the long-term care insurance fund running out. We need to plan for these things – we can’t just leave them until some time when the money has run out.’

Income tax was £18m. better than budgeted. Real terms increases in tax from employment and banking profits more than compensated for a shortfall in document duty.

States committees spent nearly £12m. less than budgeted, but cost pressure on staffing, prescriptions and children’s services led Health & Social Care to overspend by £4m.

A spectacular turnaround in investment returns helped produce a net surplus of £64m. last year compared to a net deficit of £140m. the year before, although most investment returns are unrealised or re-invested.

In total, States costs increased by about 6.5%. Non-pay costs went up by 5.2%. But pay costs increased by 8.7%, ahead of the rate of inflation.

The number of staff – measured by the figure of full-time equivalents – increased by 142, just under 3% of the total, to break through the 5,000 barrier.

Deputy Soulsby denied that the States had a problem containing staff numbers and pay costs and said the 2023 figures partially reflected backdated pay and more overtime hours worked.

‘The biggest issue is within Health & Social Care. That’s where there is growing demand and where we need more staff,’ she said.

‘How do we avoid it when we need minimum staffing ratios in acute care and staff in social care to support people in our community? They are where the real demands are.

‘This is the fundamental structural issue we have got with demographics. Demand is growing and we are having to meet it.’

The 2023 accounts will be debated at the next meeting of the States Assembly, which starts on 19 June.