Just a week out before it publishes its bid to secure that money, the Policy & Resources Committee has published the States Accounts for 2025 showing a day-to-day operating surplus of £45m., a significant reversal of 2024’s £44m. deficit.
But it came caveated with a warning that £34m. of that came from one-off tax payments from the banking sector adjusting for previous years.
The committee is now saying that its annual funding gap has narrowed from £58m. to £50m. a year, but new Treasury lead Charles Parkinson said that more income was needed to balance the books.
‘It’s an established accounting principle that organisations are conservative and cautious in predicting future income, but I remain more optimistic,’ said Deputy Parkinson.
‘Having said that, it doesn’t change the fact that we need to raise more revenue.
‘We just might need to raise less than previously predicted, but won’t know for certain for another couple of years.’
Deputy Parkinson maintained that Pillar II receipts were underestimated, he believes by about £30m., but that final figure will not be known until 2027 or 2028, and that the annual deficit will prove to be lower than predicted.
But he also accepted that in the longer-term the Pillar II receipts would probably reduce.
The Accounts also reveal that the overall surplus, which includes changes in investment valuations and asset depreciation, was £106m. over the year, but investment gains of £119m. will not be realised as they reflect changes in the market value of investments, rather than cash income received by the States.
Income tax revenues were up by £110m., with nearly £40m. of that coming from Pillar II, and social security contributions rose by £16m., driven by higher contribution rates and rising wages. Income from other taxes and duties went up by £11m., attributed to higher document duty on property sales and the timing of tobacco imports.
Income as a whole rose by 14%, with income tax from individuals up £10.3m. (2.9%), and among the corporates, about 10 companies paid more than half the tax received.
But total spending was up by £70m. – £25m. of that on day-to-day spending, nearly £20m. in extra pay costs, and £17m. more in benefit payments.
Both spending and benefit payments rose ahead of inflation, which the States said ‘continued the long-term trend of the increasing cost of public services linked to increased demand’.
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