Second annual financial surplus achieved in a row

Thursday 01 March 2018

Public finances ended 2017 with a surplus of more than £23m., according to provisional figures revealed by the President of the Policy & Resources Committee during this week's States meeting.

Deputy Gavin St Pier outlined the States of Guernsey's financial position as at the end of last year, although he made it clear that the figures are provisional and still subject to final adjustments and audit.

The audited accounts are published in May each year. 

The £23m. surplus is a significant achievement given the 2017 Budget planned for public finances to break even. It is the second successive year that the island has recorded a surplus, after eight years of running a deficit.

Deputy St Pier said 2017 was a "very good fiscal year that highlighted really encouraging signs of renewed strength in the island’s economy".

However, he gave an unequivocal answer to anyone who might ask whether the positive financial result means government will stop its focus on restraint and public service reform:

"The answer is an emphatic no, but they’d also be asking the wrong question. The questions we should be asking instead are: how much of this surplus should we using to rebuild the reserves depleted in the years when we ran deficits?" he said.

"Should we using some of these funds to replenish the Future Guernsey Economic Fund to enable greater support for future economic development initiatives?  Does this mean that we can help relieve the tax burden on hard-pressed working families?  Can additional resources help delivery of our agreed policy priorities in the Policy & Resource Plan by enabling the acceleration of transformation?

"These are the questions which the Policy & Resources Committee now finds itself in the fortunate position of needing to consider and in due course we will bring recommendations to the States."

The headline numbers relating to year-end public finances are: 

•          States revenue income has grown to almost £430m, an increase of some £23m, or 5½%, over the 2016 revenues. 2017 was an exceptionally strong year for income tax receipts, which grew by 4% on a like-for-like basis.

•          Committees have collectively underspent against their budgets by just over £5m. This is a 1.5% nominal reduction against the expenditure recorded in 2016.

•          The States has also, following approval by the Assembly in November, re-instated the full transfer to the Capital Reserve to £42.9m.

Regarding the surplus itself, Deputy St Pier said: "Fortunately, in recent years, we have not had the harshest austerity that has been experienced by other governments elsewhere; but we are now reaping the benefits of fiscal discipline and control.  It has not been easy – either practically or politically – and it is not over.  But we can take pride in having delivered on our promises to taxpayers."

"At the same time we have invested in our economy through the commitments made from the Future Guernsey Economic Fund including to the Digital Greenhouse, Locate Guernsey and Guernsey Finance.  We have underwritten our confidence with a commitment of £25m to the Guernsey Investment Fund to support the development of innovation and technology.  With more people working in our economy, corporate tax receipts and property transactions increasing, we have evidence that economic strength is delivering stronger revenues; public service expenditure restraint continues; and we have put in place rigour and discipline in planning for our future through the Policy & Resource Plan. These are all reasons to be cheerful; these are reasons to be confident."