P&R faces a fight over mini-Budget

The senior committee is working up proposals to postpone or cancel capital projects after the Assembly rejected adding 2p to income tax and left a new £55m. hole in States finances over the next two years.

But deputies from the left and right in the States want P&R to look beyond cutting infrastructure spending and to balance the books with new taxes and charges, or reductions to committees’ day-to-day budgets.

Peter Roffey said it would be ‘myopic’ for P&R to focus only on shelving capital projects and urged it to reach out to other States members to find an alternative way forward which would include raising more revenue.

John Dyke has called on the senior committee ‘to compromise and find a balanced package’ which would include some day-to-day spending cuts.

P&R yesterday quelled speculation among some States members that it was considering another bid for a temporary increase in income tax to 22p in the pound.

‘Income tax will not feature in the committee’s proposals in the New Year and any suggestion to the contrary is untrue,’ said P&R president Lyndon Trott.

He added that the States had agreed a Budget for 2025 after a four-day debate earlier this month – a clear indication that P&R considered annual income and expenditure to have been settled at that meeting.

Deputy Trott also reissued a previous statement which made it ‘unequivocally clear’ that P&R was now focused on reviewing the States’ portfolio of infrastructure projects – made up of one-off capital items – as the way to balance the books next year and the year after.

Even before losing its income tax proposal, P&R had warned of new figures indicating that States finances had worsened by £100m. in the past 12 months.

‘Frankly, for P&R to gamble on the vanishingly unlikely prospect of the Assembly backing an income tax hike, with no obvious plan B, was slightly reckless,’ said Deputy Roffey.

‘But we are where we are and it now behoves the whole Assembly to support P&R as best we can and try to address the temporary shortfall in revenues.

‘Given the States’ abject failure to invest sufficiently in the island’s infrastructure over a number of years, I think it would be myopic to consider only that side of the balance sheet.

‘I hope both P&R and other members will seek innovative ways to raise extra revenue, at least to replace part of the £27m. a year which the rejection of an income tax hike has forgone.’

Deputy Dyke agreed that cutting capital spending alone would be the wrong approach for the island.

‘P&R needs to compromise and find a balanced package, coming forward with some cost savings, some reorganisation of the capital programme and some revenue raising,’ he said.

The first States meeting after Christmas is scheduled to start on 22 January.

Deputy Dyke hoped the partially unfunded budget could be sorted out as rapidly as possible.

‘This has to be dealt with. It can’t be left. I wonder if they could call an extra meeting for earlier in January,’ he said.