They sanctioned an increase in committee budgets of inflation plus 1.3% and rejected the alternative proposal which would have reduced spending by 1% in real terms.
The Assembly also backed amendments to Policy & Resources’ original proposals which will freeze fuel duties at their current rate, maintain mortgage interest tax relief at its present level and add inflation-only increases to alcohol duties as well as property rates, amid growing concerns about cost-of-living pressures.
P&R member Andrew Niles said the 2027 Budget was based on ‘fiscal good sense’ and put the States on the right track to stimulate the economy and repair public finances.
‘The way we change things and the way we grow our economy in the future is more important than savings, and yet we focus a lot on savings,’ he said.
‘I don’t think we need to beat ourselves up as much as we do. We are getting there, although we need to do more, and we need to grow faster.
‘Economic growth must be at the centre of everything that we do. But growth, savings and better government all come from the same place – good decisions made as simply as possible with outcomes delivered quickly.’
An initial sum of £15m. was set aside to fund economic growth projects during the rest of the States’ term, but P&R’s claim to have led a ‘Budget for growth’ faced criticism.
‘Calling it a Budget for growth feels like a veneer lacquered on towards the end of the Budget process... I’m afraid this is not a Budget for growth,’ said former treasury lead Deputy Gavin St Pier.
His party, Forward Guernsey, voted for real-terms spending cuts and then abstained on the successful proposal for a 1.3% real-terms uplift in budgets, after seeing its own amendment for a real-terms expenditure freeze defeated earlier in the week.
Deputy Sasha Kazantseva-Miller accused Forward Guernsey of ‘political posturing’ and backing ‘potentially an austerity budget which might be counter-productive’.
Deputy Niles said that most of the four-day debate had been about a proposal to increase spending by 1.3% in real terms compared to an average of nearly 4% a year since 2020.
Scrutiny president Andy Sloan, arguably P&R’s most prominent critic in the first 16 months of the political term, congratulated the senior committee on slowing down spending growth but claimed it had not gone far enough.
‘You cannot keep growing spending faster than the economy – it’s unsustainable and yet here we are doing it again,’ said Deputy Sloan.
‘Just after the tax reform debate, where we increased the general level of taxation on the population, we have a budget which increases expenditure, and not from long-term demographic pressures... this budget increases the number of [public sector] posts by 70.
‘We are expanding the size of the States through this very first action after agreeing GST. I think that is wrong. And we are burning through £75-80m. of cash next year which we don’t have.’
Despite the States voting for a real-terms Budget increase overall, the Health & Social Care Committee, which faces the greatest cost pressures, will receive £2m. less than it requested next year, which was likely to force up charges for some services.
‘This £2m. gap is certainly challenging but potentially achievable, and to address that funding gap a number of actions will have to be considered, including increases to Emergency Department fees,’ said Deputy Oswald.
However, he was confident that the agreed budget would cover the escalating cost of off-island acute care, about which HSC remains in talks with National Health Service providers.
Education, Sport & Culture member Sarah Hansmann Rouxel urged the States to recognise that cutting budgets would leave the largest committees ‘unable to fulfil the roles this Assembly expects without serious consequences for services’.
In the last of the 28 Budget amendments debated, the Assembly rejected Deputy Jayne Ozanne’s proposal to set up an annual cash payment to low-income households which are just above the cut-off point to receive Income Support.
Deputy Niles pledged that P&R would lead changes necessary to stimulate economic growth and make efficiency savings.
‘That change has to be led from the top and this is the top,’ he said.
‘When we come back next year, we should be able to show that we have listened and that we understand better how to deliver our services with a whole lot more efficiency, not through simple cuts but through better delivery.’
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