An amendment is being prepared to scrap Policy & Resources’ plan for day-to-day spending to rise by £8m. above the forecast rate of inflation.
Scrutiny president Andy Sloan told the latest Guernsey Press Politics Podcast that he would vote against a Budget to increase spending when public finances were facing a deficit.
He has started work on an amendment which, if approved, would at least contain spending in line with inflation, but may go further and recommend a real-terms cut.
Hear more from Deputy Andy Sloan on this week’s States preview podcast
‘The Budget from P&R is going to burn through £115m. of cash next year. We’re £115m. short – that’s 12.5% of our budget,’ said Deputy Sloan.
‘We cannot continue like this. We’re spending money with no concern about where it’s coming from.
‘I am going to have to put together an amendment. I can’t just sort of showboat and say “I’m voting against the Budget”. I am going to have to look at ways where I think we can reasonably reduce expenditure next year.’
During the previous political term, public spending increased at a faster rate than it had for 20 years. Supporters of that approach pointed to the cost of recovering from the Covid pandemic, under-investment by earlier Assemblies and the need to fund healthcare for an ageing population.
The States has become increasingly reliant on reserves built up in earlier years, as a result of annual above-inflation spending increases, low rates of economic growth, the loss of income resulting from zero-10 company tax changes and deputies’ rejecting substantial tax rises.
P&R has said that its 2026 Budget reflects a structural deficit of £77m. A key tax and spending debate is expected next summer to decide long-term fiscal policy.
Deputy Sloan criticised the rate of growth in the public sector wage bill and spending on internal services, and called for a rethink on escalating healthcare costs.
‘I’m not going to make myself particularly popular with this, but we cannot keep increasing spending money on healthcare the way we are,’ he said.
‘Health spending in 2016 was £118m. and £30m. or so from one of the social security funds. Next year we’re budgeting £261m. I cannot for the life of me see how we can justify that rate of increased expenditure. It’s not sustainable.’
Deputy Sloan had looked at a study carried out when he was employed as the States’ chief economist. It projected that public expenditure would increase due to demographic changes, but underestimated the rate of the increase. Deputy Sloan doubted that all increased spending since then could be attributed to an ageing population. ‘Health spending was projected to go up by maybe three or four percentage points. That would have been about 12% of GDP on current sums,’ he said.
‘The way it’s going at the moment, we’re talking about 16 or 17%. We’re going to have a public sector attached to a health service. We can’t afford to continue to increase it like that.’
Deputy Sloan’s general election manifesto proposed company tax changes to raise more income, a goods and service tax and cuts in public spending, and he said on the podcast that since then nothing had changed his view.
Amendments must be submitted by a week today ahead of the Budget debate which starts on 4 November.
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