Mark Helyar said it was ‘a surprising result’ after debate late on Friday had been dominated by critics of the amendment, but hailed it as ‘a good move’ towards repairing public finances and restoring confidence in the States.
The direction for inflation-only budget increases in 2027, 2028 and 2029 will be the toughest spending policy agreed by the States for many years, if it survives an inevitable attempt to overturn it in a confirmatory vote in the autumn.
‘We need to demonstrate to the public that we are at least going to try to keep government spending where it is,’ said Deputy Helyar.
‘All we are asking for is to stop the government growing any faster than the economy. If we don’t do that, government is going to keep getting bigger and bigger, and the demands on tax are going to get higher and higher.’
The States agreed in January that committees’ budgets should increase by less than inflation, which could avoid expenditure of up to £20m. a year by the end of the political term, but the amendment approved on Friday drew social security funds into a spending freeze for the first time.
Deputy Helyar, a former States treasury lead, acknowledged that it was a challenging target, after the presidents of some spending committees warned of serious spending cuts, possibly including to the old age pension and health services, but he believed that above-inflation spending increases could not be allowed to continue indefinitely.
Watch: Matt Fallaize spoke to Deputy Mark Helyar about the successful amendment
‘The public is asking us to cut our cloth according to what they can afford to pay and that is what needs to be done,’ he said.
‘Committees will need to go and find those savings – it is as simple as that. If we don’t make a commitment to try to do that, we are never going to get any support for properly funding the services we do have.’
The amendment was originally submitted by Andy Sloan, but he was absent on urgent family matters. In a note circulated to States members, Deputy Sloan said that maintaining but not increasing spending in real terms would help rebalance the books, and allow moves to stimulate growth and competitiveness in the island’s economy.
The amendment noted that there may be exceptional circumstances for which the States could agree to suspend the spending freeze. It also exempted capital expenditure.
Deputy Helyar said that a spending freeze would make him slightly more supportive of the current tax package put forward by Policy & Resources, but he still believed the senior committee’s proposals fell short of what was needed.
‘I think the goods and services tax rate has been dropped [from 5% to 3%] as a sop, effectively to try to get it over the line, and I don’t think it will work practically to fund government services,’ he said.
The tax and spending debate was adjourned on Friday and will resume when the States meets again on 30 September.
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