Alderney is “living beyond its means”

Thursday 17 October 2024

Alderney’s politicians have been put on notice over spending after the latest Budget was approved.

A buoyant property market and better than expected investment interest returns pushed the island to a £400,000 surplus this year, but that is not expected to be repeated.

Alderney's members agreed a 2025 Budget where operating costs are expected to rise by £354,000 and with increases in income and taxation balancing that a break even position is expected.

But the wider picture is one where the cost of services paid for separately by Guernsey outstrip what Alderney pays to the Guernsey Treasury through income tax and contributions.

"Despite delivering this balanced budget, we must be conscious of the simple fact that Alderney is living beyond its means as the cost of transferred services such as healthcare, education, the airport and emergency services exceed the taxes paid to the Bailiwick to help to pay for these," said Policy & Finance Chair Nigel Vooght.

"Despite the likelihood that income tax may increase, these services cost more than we contribute to the Guernsey Treasury.

"The 1948 agreement was set up post-war when Alderney needed expertise and resources in return for which we entered a fiscal union which initially resulted in us producing a surplus of revenue versus the cost of transferred services. This is not the case today.

"We are grateful to Guernsey for these transferred services but we must be mindful that this is not a sustainable position, especially given the financial difficulties Guernsey faces. Although we are a separate jurisdiction, we are in a fiscal union and partnership with Guernsey and must look for ways to grow our economy to generate new revenue streams."

Alderney sees the runway refurbishment and improved air connectivity are the immediate priority in enabling economic growth.

The runway project stalled after cost predictions came in at £37m., up £13m. over what was expected when the States of Guernsey backed the project.

Alderney's 2025 Budget sees no increases in property tax or water rates.

Fuel duty will follow Guernsey's proposals.

Its routine capital programme is mainly funded by Alderney Gambling Commission surpluses.

AGCC money is expected to be around £1.9m. in 2025, down by £300,000 on this year.

"While the budget demonstrates a responsible financial approach, it's essential to remain vigilant about potential risks and uncertainties. Factors such as geopolitical and economic fluctuations, changes in government policies and unforeseen expenses could impact future budgets.

"Recommendations for future consideration will include exploring alternative revenue sources to diversify the States' income streams and reduce reliance on a few key taxes. We also need to continue to review and optimise operational costs to identify areas for further efficiency gains."