Hospital upgrade at risk without income tax hike

Policy & Resources president Lyndon Trott said yesterday that the States’ largest capital project could be among the casualties if deputies voted against putting up income tax to 22p in the pound for at least the next two years.

‘There is no question that the funding of the much-needed modernisation of the hospital is likely to be severely impacted,’ he said.

‘I don’t want to scaremonger. But the truth is it is one of the projects which would be at risk.

‘There is absolutely no question about that, yet I think the case for the continuing modernisation of our hospital is well made.’

States members backed the next phase of the redevelopment of the PEH last year, when they believed the estimated cost was £120m., but it was subsequently revealed that they had been kept in the dark by officials who knew that the figure had climbed to £150m. Deputy Trott warned that the cost of other capital projects could also be higher if the States decided to rely on reserves, rather than increasing income tax, to plug a looming hole in public finances.

‘If you are running deficits of the magnitude that we would be if it was not for the income tax proposals, we would become very unattractive to those who want to invest in Guernsey and those who want to lend us money,’ he said.

‘There is an extant States resolution allowing us to borrow up to £200m. for the express purpose of delivering more housing, which clearly is essential. However, the cost of borrowing would be materially higher if we don’t have a budget which looks like it’s being put together by a group of fiscally responsible people.’

P&R’s draft 2025 Budget faces 19 amendments in the States next week. The senior committee has invited the proposer of each amendment to meet for private discussions on Friday.

Ahead of those talks, Deputy Trott said his committee was ‘open-minded’ about a move suggested by some States members to merge P&R’s two-year income tax rise and Deputy Peter Roffey’s GST-plus tax package from 2027.

But he ruled out any member of P&R backing an amendment from former treasury lead Mark Helyar to axe £40m. from committees’ proposed budgets next year.

‘What Deputy Helyar has failed to recognise is that in Guernsey we spend less than £13,000 on each person, whereas in Jersey it is very nearly £15,000, and we do that despite fewer economies of scale,’ said Deputy Trott.

‘That is because public services have been starved of investment over a number of years. That’s not good for our community. It means increasing class sizes for our students and extended medical waiting lists.

‘As the senior figure in our States, I’m not prepared to sit by and allow that to happen, and I’m not prepared to see us under-invest in infrastructure which is essential if this community is to remain prosperous and grow.’

P&R wrote to other committees yesterday asking them to set out the consequences of the lower budgets proposed in Deputy Helyar’s amendment in preparation of next week’s States debate.