Revenue expenditure would reach nearly £749m., an increase on this year of 4.3%, or £8m. in real terms, if the States approves the draft 2026 Budget published today by the Policy & Resources Committee.
P&R insisted it was limiting spending growth as much as it could, after accepting requests from committees for an additional £12m. on top of inflation but rejecting their bids for a further £16m., and proposing a new £4m. savings target.
Watch: Matt Fallaize speaks to P&R president Lindsay de Sausmarez
‘Committees are keen to have a look at expenditure bottom-up and implement any reforms, but that wasn’t available to them given the time since the general election,’ said P&R president Lindsay de Sausmarez.
‘We have identified £4m. as the first tranche of savings we think realistically can be delivered. We didn’t want just to pluck an arbitrary figure out of the air. We have based it on some thought. We also didn’t want just to impose arbitrary cuts on committees, which has been a tactic used in the past.
‘I should stress this is the first year of a continued programme and it will be quite structured and there will be accountability around that.’
Deputy de Sausmarez said that some of the new savings in 2026 would come from reducing the number of cases ‘where we know the answer to something but commission a report to tell us exactly that anyway’, which she said had become a ‘cultural habit’ in the States.
A small portion of the overall growth in spending would be funded by above-inflation increases in a range of existing taxes, including property tax and duties on tobacco, fuel and vehicle registrations, and restarting the phased withdrawal of mortgage interest relief, which had been frozen by the previous States. A new tax on vaping products has also been proposed.
These tax-raising measures are expected to raise an additional £2.6m. in 2026, but about half that sum would be returned to taxpayers by increasing personal income tax allowances by £600 to £15,200.
P&R’s draft 2026 Budget estimates that the States would end next year with an operating deficit in day-to-day spending of just over £9m. and a structural deficit, which includes one-off capital spending requirements, of £77m.
The States has up to four days to debate its 2026 Budget. The meeting will start on 4 November.
A landmark tax and spending debate is expected during 2026 on long-term policies to deal with the structural deficit, following a review led by Deputy Charles Parkinson. A goods and services tax will be introduced unless the Assembly agrees an alternative.
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