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£23m budget surplus – but ‘unsustainable gap’ remains

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THERE will be an ‘unsustainable gap’ in public finances unless further reforms of the public sector are made, the States chief executive has said, despite the States reporting a £23 million budget surplus last year.

Charlie Parker, States chief officer

According to the States annual financial report, which was published yesterday, high tax and investment returns had led to the additional surplus.

However, States chief executive Charlie Parker warned that unless the public sector reform programme which began last year was delivered in full, the Island faces a deficit in the coming years.

The report revealed that the Island’s rainy day fund – the Strategic Reserve – had grown by £20 million last year due to better than expected investment returns.

Meanwhile, increased income tax, GST and stamp duty returns meant States income was up by £30 million on the previous year.

In the report, Mr Parker said: ‘The strong public finances in 2017 mask a real structural deficit that will arise if we do not deliver the remainder of the efficiencies, savings and revenue-raising measures. In short, there is an unsustainable gap between revenue and expenditure that must be addressed by 2019 and beyond.’

The report also said that States departmental spending had increased by one per cent.

Mr Parker added: ‘We are working to improve how the organisation works, by restructuring and modernising, investing in new services and skills, becoming more commercial and customer focused, and by having clearer objectives and accountabilities.

‘We are aiming to build a public sector that is more effective, efficient and delivers outstanding, value for money services, where information about the performance and financial activity of the States of Jersey is clearer and more transparent.’

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As part of the 2015-2018 States Strategic Plan, the government set out five key policy areas for improvement and targeted funding. These were to preserve sustainable public finances, to make improvements in health, education and to St Helier and to increase economic growth.

Former Chief Minister Ian Gorst, who was last week replaced by Senator John Le Fondré, said: ‘I am pleased to report that we made progress on them all, both during our term of office and in the past year. I want to thank all of Jersey’s public servants for their work over the past year in serving our Island.

‘We made more progress in some areas than in others, as much of our focus last year was necessarily diverted to dealing with two critical issues – the negotiations by the UK to withdraw from the European Union and the report of the Independent Jersey Care Inquiry.’

He added that these two areas, combined with the £466 million new hospital project, the agreement of the States to fund higher education tuition fees and the £45 million new Les Quennevais School would likely put some strain on public finances.

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