Big projects at risk as P&R starts mini-Budget

Developments are now at risk at The Guernsey Institute, Princess Elizabeth Hospital and Alderney Airport as the Policy & Resources Committee will have to submit an emergency mini-Budget in the next few weeks.

The senior committee was left reeling on Friday evening when the States agreed a partially unfunded 2025 Budget.

Deputies approved day-to-day spending of £650m. but rejected P&R’s proposal for a temporary 2p increase in income tax to generate additional revenue of nearly £60m. over the next two years.

• Listen to reaction and analysis to Friday’s vote on our Shorthand States podcast

‘The consequences are that we will have to return and make significant changes to the money we spend on hospitals and schools and airports and the like,’ said P&R president Lyndon Trott.

‘P&R has a role to make some sense of this and make recommendations to the Assembly on public spending to do with infrastructure.

‘There are going to be some very disappointed people. There are going to be disappointed people in Alderney, there are probably going to be disappointed people within the education system, and there are almost certainly going to be disappointed people working in healthcare. To them, P&R apologises, but we’re left to pick up the pieces and we’ll do our best.’

He said prospective States investment in new housing projects may also need to be scaled back or ditched.

• Watch: Matt Fallaize spoke to P&R president Lyndon Trott after Friday’s Budget vote

P&R has all but ruled out using the island’s diminishing reserves to plug the black hole left in public finances in 2025 and 2026.

It said that would not be allowed under the States’ existing fiscal rules. It is understood that more than one member of P&R has said privately that changing those fiscal rules to accommodate the Assembly’s failure to balance its budget is a red line they are not prepared to cross.

Immediately after the Budget debate, Deputy Trott ruled out resigning, claiming there was ‘too much work to be done’ ahead of June’s general election, but he was scathing about the States agreeing a partially unfunded budget, calling it ‘unprecedented’ and ‘tantamount to reckless’.

‘I am disappointed but we live in a democracy and that’s how it’s rested. But this is just the start. There will be all sorts of bleating in the New Year when the consequences of today’s actions are fully understood,’ he said.

‘This cannot go on any longer in a well-respected international finance centre which to the outside world looks like it’s incapable of looking after its own affairs.’