14 July 2015
This Medium Term Financial Plan (MTFP) outlines the government’s income targets and spending limits to 2019 and detailed departmental spending for 2016. The plan is being proposed in two stages to allow time to ensure the States’ reform programme is changing the way services are delivered and savings measures are making permanent reductions in base budgets.
This is the first part of the MTFP. The second part, the 'MTFP Addition', will contain detailed departmental spending for 2017 to 2019, and will be published by the end of June 2016.
The Council of Ministers believes the measures proposed will place Jersey on a path to fiscal balance and address any structural deficit by 2019, in line with advice from the Fiscal Policy Panel.
The States agreed to make sustainable public finances one of the priorities as part of the Strategic Plan in April 2015. If the finances of this Island do not continue to be sustainable, then it will not be possible to fund the other strategic priorities.
The Chief Minister, Senator Ian Gorst, said “This plan supports the priorities agreed in the Strategic Plan. It provides investment in the health and social care we will need as our society ages, it funds improvements in our education system so all our children develop the skills they need to achieve fulfilling careers, and it will keep Jersey special by improving our town, preserving our outstanding natural environment, and investing in our infrastructure.
“It supports our economic recovery by setting aside funding for projects that diversify and grow our economy, and improve productivity. We will support established businesses, encourage start-ups and inward investment. This is how we can create rewarding jobs, increase living standards, and raise the revenue we need to maintain high quality public services.
“We are continuing our reform programme by simplifying processes so they focus on our customers, by using technology to reduce bureaucracy and interact with people more efficiently. These changes will help us redirect money from current budgets to focus on our strategic priorities.”
The Treasury and Resources Minister, Senator Alan Maclean, said “Taking into account our latest income forecasts and our planned programme of investment in priority areas, we need to find a total of £145 million by 2019. This plan outlines how we will fund our priorities and balance our budgets by 2019.
“We are finding staff and non-staff savings of £90 million and holding benefit spending at 2015 levels to save £10 million per year by 2019. Once we are satisfied that these savings are being delivered, we will introduce a new funding mechanism for our future health and social services, to raise up to £35 million per year.
“We are also looking to raise £10 million per year by 2019 through user pays charges for services like liquid and solid waste. This will be done once the reform programme has started to demonstrate further efficiencies and sustainable savings. Similar charges are already made elsewhere, to pay for services, improve environmental outcomes and manage demand. In this way, we will balance our budgets.”
Ministers believe this plan strikes a balance between investing the available resources in the priority areas agreed in the Strategic Plan, supporting economic recovery, raising productivity and improving our public sector.
Up to £40 million of additional annual funding for health and social services by 2019.
Up to £9 million of additional annual funding for education by 2019. £50 million shortfall forecast in the 2015 Budget was managed in 2015 by various short term measures. This gap will be closed permanently by 2019.
£70 million will be withdrawn from the Strategic Reserve to cover short term spending requirements, like our capital spending programme.
The taxpayer contribution made to the Social Security Fund to support the pension costs of lower earners will be fixed at £65 million in each year of the plan, saving a total of £20 million.
These withdrawals will fund £20 million for redundancies to reduce future staff costs; £7 million each year for e-Government and the reform of our public sector; £168 million for capital projects, including more than £55 million for Les Quennevais, Grainville, and St Mary’s Schools; and a drawdown provision of up £20 million to invest in projects that promote productivity, skills, jobs and economic growth.
£30 million will be withdrawn from the Health Insurance Fund for extra investment in health over the next four years.
£10 million reduction in benefit costs, maintaining overall benefit spend at the 2015 level to be achieved by :
- extra Income support payments for lone parents to be phased out
- Christmas bonus scheme to close at the end of this year, with some of the savings used to improve the 65+ health scheme for low income pensioners
- maintaining income support rates at their 2015 level for 2016 and simplifying the treatment of income under income support rules
These changes are aimed at promoting financial independence and ensuring public money is well targeted.
£168 million will be spent on capital projects in the next four years. The largest expenditure over the period will be:
- Transport and Technical Services have £43 million allocated for infrastructure and will use most of this on a new sewage works
- more than £55 million for Les Quennevais, Grainville and St Mary’s Schools
- £21 million to replace essential IT systems
- £8 million for the next phase of the Prison Improvement programme (when sufficient resources are available in the Criminal Offences Confiscation Fund)
Draft Medium Term Financial Plan 2016 to 2019