The Guernsey Budget - 2017

The Guernsey Budget - 2017

Guernsey Budget 2017, routine or radical? 

Earlier this month the President of the Policy & Resources Committee, Gavin St Pier, delivered the 2017 Budget Report.

Describing it as balanced, responsible, fair, progressive and realistic, which is a lot for any single Budget to achieve, there are elements of all these in what is at first sight an unremarkable set of proposals.

It does seek to balance the books in the short term, something that hasn’t been managed for the nine years previously. The removal of personal allowances for high earners and changes to document duty meet the criteria for progressive and fair, and will not be criticised by many. The increases in the usual suspects were to be expected, if at the higher end.

And whilst more could have been done to deal with difficulties facing those moving to the Island, there was at least one measure to help and it would have perhaps been unrealistic to expect more.

However, in one respect the Budget should be seen as truly ground breaking, being the proposed cut in revenue expenditure by three per cent next year, followed by five percent in each of the following two years, although this will not apply to the total amount of public expenditure.

If you asked anyone working for a Local Authority in the UK the last few years, ground breaking is probably the last word (or two words) they would use. But in a Guernsey context it is remarkable. There are many statistics that could be thrown at this.

Since the turn of the century, Guernsey’s revenue has increased by 50 per cent. Over the same period, revenue expenditure has increased by 83 per cent. In the last 16 years (which of course included the financial crash), in every year but one spending has increased in cash terms (there was a £100K reduction in 2007 compared to 2006).

There is a widely held, and frequently heard, view that the States of Guernsey ‘needs to get its own house in order’. This is a sign of an attempt to do so, and in that sense it is a very radical move.

Or at least it might be. One Budget document does show actual reductions in future years, with planned expenditure for 2020 at £345m compared to £372m for this year. If not ‘3,5 and 5’  it is an actual reduction over a four year period of just over 7 per cent.

But rather confusingly, in the Budget report itself which describes the targets as “exceptionally challenging”, it goes on to say: “However, meeting such a challenging target for the reform of services currently provided will be imperative to deliver the savings required to reinvest in public services – either in meeting increased demand or funding new or enhanced services.” So is there to be a saving or a reallocation?

And it didn’t take long for a number of our deputies to cast doubt on their own ability to achieve this, one senior politician describing the proposed savings as totally unrealistic whilst the President of the Scrutiny Management publicly cast doubt on being able to make this level of saving. If you expect to fail…

It will undoubtedly be challenging. Brexit provides an uncertain backdrop to next year’s proposed 2.5 per cent increase in revenue. And it seems Aurigny will continue to be a challenge. But if the proposed reduction in revenue expenditure can be achieved, this Budget can rightly be seen as a radical one.