Government Plan 2023 to 2026

The Government Plan sets out the funding position for the Government, including income, and capital and revenue expenditure.

This Plan explains the financial context in which the Council of Ministers is taking action to address economic and political challenges, whilst investing in priorities and ensuring the long-term sustainability of Public Finances.

Government Plan 2023 to 2026

Government Plan 2023 to 2026 Annex

Purpose of the Government Plan

Following the general election in June 2022, the Council of Ministers developed its Common Strategic Priorities for the next 4 years. This will be supported by individual Ministerial Plans, which include more detail on how each Minister will support these priorities in 2023. The Government Plan explains the financial context in which those plans will be delivered and sets out the financial approvals that Ministers are proposing to ensure that taxpayer's money is focused on delivering of both their priorities and existing services. The plan is designed to provide adequate resources and flexibility to drive progress on the Council of Minsters' vision for the Island, whilst ensuring the ongoing sustainability of Government and States' finances.

This Government Plan explains the financial context in which those plans will be delivered and sets out the financial approvals that Ministers are proposing to ensure that taxpayer's money is focused on delivering of both their priorities and existing services. The timing of the election has reduced the amount of time Ministers have had to develop this Government Plan. Notwithstanding this, the plan is designed to provide adequate resources and flexibility to drive progress on the Council of Minsters' vision for the Island, whilst ensuring the ongoing sustainability of Government and States' finances.

Government Plan 2023 to 2026

This plan has been written in a time of great economic uncertainty, with the global economy disrupted by the ongoing effects of the war in Ukraine, the COVID-19 pandemic, and other geopolitical developments. We are forecast to see inflation at levels not seen for decades, with interest rates also rising after a sustained period of low interest rates.

These changes have resulted in significant improvement in the forecasts for Government income. However, it also results in expenditure pressures on both Government, and Islanders. This plan takes action to address these challenges whilst investing in the priorities of the new Council of Ministers and ensuring the long-term sustainability of Public Finances.

Addressing the cost of living crisis

In proposing the Mini-Budget, the Council of Ministers took immediate action to help Islanders with the cost of living crisis, agreed by the Assembly in September 2022. Personal income tax thresholds and allowances for 2023 were increased by 12%, allowing the higher allowances to be factored into the Income Tax Instalment System (ITIS) effective rates issued towards the end of 2022, keeping more money in the pockets of Islanders. In addition, immediate support was agreed for Islanders through temporary reductions to Social Security Contributions, an enhanced Cost of Living Temporary Scheme (COLTS), an increase to the Community Cost Bonus, enhancements to the Cold Weather Bonus and Payment schemes and further support for families with less than five years residence. This Government Plan sets out additional revenue measures that continue to support Islanders, by restraining overall increases in duties, where appropriate to do so:

• freezing alcohol duty on all strengths of beer, cider, wines and spirits
• increasing tobacco duty on cigarettes by Retail Price Index (RPI) of 7.9% plus 5% in line with published health policy. Increasing duty on hand rolling tobacco and cigars by RPI of 7.9% plus 6.4% and 8%, respectively, as part of a longer-term commitment to align with cigarettes
  
• freezing duties on road fuel but maintaining the commitment to channel 9 pence per litre to the Climate Emergency Fund

The cost of these measures has been partly offset by specific targeted measures to raise additional income:

• increasing Vehicle Emissions Duty (VED), most notably on higher CO2 emitting vehicles, from 1 January 2023
• increasing the minimum annual contribution for High Value Residents (HVRs) from £145,000 to £170,000
• introducing a higher rate of Stamp Duty for buy to let investments, second homes and holiday homes at 3 percentage points above the normal rate for residential property

Delivering value for money public services

As both a national and local government, the Government uses taxpayers’ money to provide a full spectrum of services to Islanders. It is essential that these services demonstrably deliver good value for Islanders, with the right services being delivered, and those services being delivered efficiently and effectively.

Following its appointment, the new Council of Ministers has worked quickly to agree its spending priorities. This Council of Ministers does not wish to repeat previous mistakes of agreeing additional expenditure before savings are delivered. To ensure that the consequences of any changes to existing funding are understood, full reviews of services will be undertaken. In the meantime a modest target for savings has been included, with the intention that further savings will be delivered, allowing funds to be reprioritised to areas that benefit Islanders most and that require additional investment.

The plan provides £53 million for the impact of inflation on the cost of public services in 2023, and also maintains commitments to fund Arts, Heritage and Culture (AHC) at 1% of revenue expenditure, to grow Jersey Overseas Aid (JOA) contributions as a proportion of Gross Value Added (GVA) and to invest an additional 2% in our health service each year. The States Grant to the Social Security Fund will also be restored from 2024.

In developing the plan, it became apparent that additional funding was required in some areas of Government, and £61 million of growth has been allocated in 2023. Many of these areas will required further investment in future years of the plan, but Ministers have constrained this growth until it is clear how such additional investment would be affordable over those future years. Amounts have also been included for the ongoing costs of Covid-19, whilst the Plan also provides for the removal of remaining borrowing for Covid-19 consequences.

Investing in our Island

The Capital Programme is vital to ensure that Government has the assets required to effectively deliver quality public services. In recent years Government has consistently spent less on capital than allocated in budget provided, and Ministers have considered both affordability and deliverability in developing the programme.

In total £141 million has been allocated to capital projects in 2023, with £363 million planned across the 4 years of the plan. This represents an investment in our infrastructure, increasing the value of our assets and building our balance sheet. Existing projects have been more realistically profiled to ensure that taxpayers’ funds can be used effectively and are not tied up unnecessarily. New investment in the Opera House and development of a therapeutic children’s home has also been included, enabled by the one-off special dividends from JT in 2023 and 2024.

It is clear that more investment is required, for example in our drainage network and sports estate. However, this needs to be paid for, and any proposals in future Government Plans will be accompanied by a suitable funding strategy.

Sustainable public finances

The Public Finances (Jersey) Law 2019 (PFL) sets out a requirement for each Government Plan to have regard to the long-term sustainability of the Island to ensure that we safeguard it for future generations.

This plan delivers budgets that are balanced across the plan. This is important to ensure that we are spending within our means and making provision for the replacement of our assets. The impacts of Covid-19 on the public finances have been lower than forecast in previous Government Plans, and the prudent application of underspends in 2021 and 2022 means that we will be in a position to eliminate the borrowing required for Covid-19 by the end 2022, four years in advance of the previous target. This is an enviable position and reduces future pressure on public finances.

If funds become available through additional income or reduced expenditure over the period of the plan, these will be used to begin to rebuild the Stabilisation Fund in line with the advice of the Fiscal Policy Panel (FPP).

The value of the Strategic Reserve is forecast to be preserved, subject to short-term volatility, and Ministers will continue to consider options to protect and grow the fund in future government plans. These will also be impacted by the outcomes of the review of the Our Hospital project and any changes to the costs or funding strategy. This Government Plan does not include any new borrowing proposals and in fact reduces Covid-19 borrowing to nil. Pending the outcome of the review into the Our Hospital project, the Plan carries forward the existing borrowing approval of £756 million.

Ministers are also committed to ensuring that the Social Security Fund remains sustainable for future generations. It is planned that the annual States Grant payment into the Social Security Fund will be restored to its full value from 2024 onwards. The cost of providing old age pensions will increase with the ageing demographic but the Fund is still forecast to hold four times annual spend by the 2070s. The results of the full actuarial review of the Social Security Fund will be published in 2023 and will inform a full review of the fund in the next Government Plan.

The Health and Social Services Minister is currently undertaking a wide review of the Island’s health and care cost, which will inform options for the future funding of our whole health and care system. This work will continue throughout 2023 with options being brought to the States Assembly in 2024. It will include reform of the arrangements that underpin the Health Insurance Fund.

Sustainable wellbeing

The Council of Ministers has taken sustainable wellbeing into account through the development of the Common Strategic Policy 2023 to 2026, Ministerial Plans and the Government Plan 2023 to 2026.

The Common Strategic Policy 2023 to 2026 sets out our shared ambition and our 7 priorities for change.

Housing and cost of living

Improve access to, and supply of, good quality affordable housing, and help people to achieve a decent standard of living.

Economy and skills

Develop a more sustainable, innovative, outward-facing and prosperous economy and help people acquire the right skills throughout their lives; we want Jersey to be an attractive place for everyone to achieve their potential.

Children and families

Help all children and young people to have the best start in life, recognising that the early years have a lasting impact, and that being loved, being listened to, and receiving a good, rounded education are essential to future life chances.

Ageing population

Enable people to live active, independent, healthy lives as they live longer.

Health and wellbeing

Provide and regulate good quality healthcare and social services, promoting better health and wellbeing underpinned by improvements in public health.

Environment

Protect and enhance our environment so that everyone can continue to enjoy its benefits, moving purposefully on a path to net zero emissions.

Community

Create a more inclusive, vibrant community where people feel respected and able to flourish, as well as safe and protected.

The Ministerial Plans set out specific priorities for delivery by individual Ministers in 2023 and beyond.

The Government Plan 2023-2026 sets out the income and expenditure that will support the delivery of the Common Strategic Policy and Ministerial Plans in 2023.

The Common Strategic Policy, Ministerial Plans and Government Plan reflect the issues that are most important to Islanders as expressed during the election, were informed by data and evidence, and demonstrate our focus on the economic, social, cultural and environmental wellbeing of Islanders both now and in the future.

The Council of Ministers’ policy on population will be published in June 2023, and will be included in future Government Plans in line with P.116/2021.