Nearly £16m. forecasted to be wiped off budgeted income tax receipts
A DOWNTURN in profit forecasts at a single unnamed bank is expected to wipe nearly £16m. off budgeted income tax receipts this year.
Revealing the information in the States yesterday, Policy & Resources president Lyndon Trott said it would have ‘a material negative impact’ on the States’ financial performance in 2024.
The bank’s bad news was the latest in a series of financial setbacks for the States this year, which have included the budget reserve for the whole year being exhausted before the end of June.
‘2024 is proving to be a difficult year financially – and that is an understatement,’ said Deputy Trott.
‘While previous discussions with the banking sector highlighted that it was expecting improving profits in 2023, largely due to the rapid increase in interest rates, there has been a material downward adjustment required both to the 2023 and 2024 interim assessments for one bank.
‘This has had a combined material negative impact on States finances on the 2024 position of nearly £16m.
‘This could not have been reasonably foreseen and should assuage any accusations that this P&R only ever gets good news.’
When the 2024 budget was approved by the States, in November last year, a surplus of £24m. was projected, which included estimated investment returns of £25m. but excluded one-off capital spending items and depreciation of assets.
The States accounts for 2023 recorded a £10m. operating surplus, but a £56m. operating loss once depreciation was included.
Like his predecessor, Deputy Peter Ferbrache, whom he succeeded last December, Deputy Trott has repeatedly warned the States of the need for substantial tax rises or budget cuts to balance the books, after officials estimated that committees could be spending up to £100m. a year more than the States brings in by the year 2040.
Deputy Trott told the Assembly that there would be another update in a few weeks’ time.
‘I will be making a more detailed statement on the overall position at the end of the month using the very latest financial information,’ he said.
‘This will ensure that the States is fully up to speed ahead of the [2025] budget report being published in early October and debated a few weeks later.’
P&R must submit its 2025 budget proposals by 7 October.
They will be debated by the States at a meeting which starts on 5 November.
