THERE’S usually a moment in every Budget interview where a Minister leans back, nods gravely and admits that “difficult decisions” had to be made.
But Deputy Elaine Millar is not one for syrupy political preamble – wasting no syllables of her gentle Scottish lilt on sugar-coating, the moment comes almost immediately.
“There is a constant demand for ‘more’ at the same time as ‘stop spending so much’,” she says, hands subtly slicing the air between the two contradictory impulses. “Sooner or later, there does have to be some quite hard reckoning on that.”
The answer, she says, is “restraint”. Not of the temporary kind – pledged in December to appease the “fat government” critics (to be fair, she is far from against a trim) and forgotten by January, with a few ministerial decisions quietly topping things up – but a full-blown cultural shift.
“What we didn’t do this year, which has happened in previous years, is basically say to departments, ‘Just come in and ask us for what you want.’
“…In previous times, we did our budget every three years, and I certainly would like to get back to that, because I think it creates more financial discipline. It also creates a bit more flexibility. If people have got a budget in three years, they’ve got more room to manoeuvre around their budget, rather than dealing with ups and downs between years… So what we really focused on this year was, we said: ‘No, we’re not accommodating a whole raft of bids for new money.'”
That doesn’t mean the shutters came down entirely – big boosts are going to Health (£381m) and Children, Families, Education and Lifelong Learning (£246m), including £12m for a new for children’s homes – but it does mean that anything that didn’t fit squarely within the Common Strategic Policy (the golden set of priorities ministers agreed together when they came together), would not make the grade.
The minister is adamant that this isn’t austerity or a “cuts” budget: essential services will still function (albeit with some grumbles).
But she also does not shy away from the fact that the public service — like waistbands during lockdown — has grown dramatically.
From 2018 to the present day (a period spanning the largest reorganisation of government in living memory under then-CEO Charlie Parker, a worldwide health catastrophe and geopolitical crisis after crisis sending tremors through the Island’s financial foundations), spending has grown significantly, and headcount within a public service many already thought was too large swelled by around 2,000 roles. In June’s Labour Market report, public sector jobs rose by 230 (2.4%) while private sector roles fell by 130 (0.2%).
Deputy Millar’s diagnosis is sympathetic but unsparing: post-pandemic, the government has tried too often to be all things to all people, aspiring (but perhaps not quite reaching) to Scandinavian services at Singapore tax rates.
“…If we are to support all these things… either you have to make cuts, which we’ve tried to avoid, including essential services… or you have to look at raising revenue.”
But would it be so wrong to do so?
Jersey’s renowned political and fiscal stability – the selling point that once brought financiers flocking – is facing subtle but structural headwinds. Ageing demographics, falling household affordability, even white-collar jobs threatened by AI all risk eroding the very revenue streams the Island relies on.
The Fiscal Policy Panel has been increasingly vocal about the state of our reserves and record levels of debt, and warned that day-to-day spending is “unsustainable” without higher taxes or lower services. Meanwhile, business and political commentators too have warned that the “golden goose” of finance is losing its lustre.
Such risks were strong points of discussion at September’s All Island Media Question Time event, where Economic Development Minister Kirsten Morel revealed that discussion of the Island’s tax system, even an exploratory one, had not once reached the Council of Ministers’ table.
Confirming the statement, Deputy Millar explains: “I am absolutely certain that if I was to say, ‘I think we need to raise taxes’, a huge number of the population would be absolutely incensed, saying: ‘No, you will not raise taxes until you control your spend.’ …Everybody has a part to play in controlling the spend and being realistic about what government can do for them,” she says.
“Our success as an International Finance Centre is built on a stable, low, broad tax base… We’ve seen what’s happening in the UK more recently… When we start making changes with tax, it creates an uncertainty. It makes us less of an attractive prospect, so it is important that we maintain that position as long as we can. If we can control spending, I would like to think we can then maintain our tax system as it is.”
But avoiding revenue-raising has resulted in what many would see as the Budget equivalent of sofa-raiding.
Among the eyebrow-raisers in Budget 2026-2029 is that Pillar Two corporate tax receipts – the so-called “windfall” expected from global tax reforms – will now support day-to-day spending, despite previous commitments to rebuild the Island’s battered rainy-day funds.
The Strategic Reserve is currently below 20% of GDP and is due to fall to 18% as £277m is used to fund New Healthcare Facilities, far short of economists’ advice recommending reserves of between 30% and 60% to protect against “shocks”.
While the Minister says she would “really, really like to be putting money into those funds”, she notes that remaining payments from the frozen 2019 Prior Year Basis tax bill will be used as a top-up.
“There are still people that pay the 2019 debt – that will go into the reserve. It’s not perfect, but it is an asset which will go into that fund… If we do have additional monies from Pillar Two, those will go into reserves.”
The biggest controversy, of course, is the decision to temporarily reduce the annual States grant to the Social Security Fund – the pot that pays out pensions and benefits – by £50 million per year.
It’s not the same as “plundering” – Deputy Millar bristles slightly at the mere mention of the word – but “reprioritising”, she says.
No current or near-future pensions are at risk.
The Minister argues that the formula for setting how much money normally goes in was set to ensure the fund reaches a “critical mass”. Now, the fund is so “healthy” that, “if no money went into the [now nearly £3bn] fund at all – if there was no employer contributions, no employee contributions – we could pay pensions and benefits for seven years”.
“We’re not aware of other jurisdictions that have that amount of reserve funding for pensions… You have a very, very well-funded pot of money. It actually doesn’t need more,” the minister says.
“It’s like a household putting money into the savings account and then not being able to pay the electricity bill.”
The approach has caused considerable discomfort among the mild-mannered and lexically tempered economists of the FPP, who went so far as to claim it was “not prudent” (ouch) to make such a decision prior to the completion of a full actuarial review into future pension liabilities.
Former Bailiff Deputy Sir Philip Bailhache is pushing for a smaller reduction, arguing that Ministers are breaking previous “solemn undertakings” and jeopardising intergenerational fairness.
But the government will not be budging – in any event, the measure is temporary, Deputy Millar says. This is not a signal that the once-golden rule not to ‘mess’ with the pension fund is a thing of the past.
Asked if this is a sign the Island is effectively scraping the barrel when it comes to funding sources to keep those reserves topped up, the Minister is defiant.
“I don’t think so. We have not had the income that we expected or that we’d forecast, because particularly profits in the banking sector had not held at the level that we saw in 2023. We are forecasting income to lift up as the plan goes forward. So from 2026 to 2029, we will see income forecasts increasing – that will take some of that pressure off. And as we continue to look at how we contain spend, that will also help.”
“Help” the balance sheet, perhaps, but could there be unintended consequences, warn services ranging from care regulators to Asian Hornet hunters – the latter of whom have expressed fears the Island may have to abandon the fight against the invasive stingers.
Emergency services have also sounded the alarm.
Fire chief officer Paul Brown recently warned the service was short of PPE by international safety standards, while the Jersey Police Authority went so far as to call for an urgent budget rethink, owing to concerns that current funding would threaten public safety.
But Deputy Millar said there had been “extensive” consultation about the Budget – the fire service will get the PPE they need, there will be support for the Emergency services Control Room, while of the SoJP she remarks: “The Chief of Police is content he has funding for next year, but we will have to have some hard conversations next year about what the police need and how that’s funded.”
She will not, therefore, be supporting a Scrutiny bid to redirect nearly a quarter-of-a-million from health to tackle the police’s “significant cost pressures”.
While “restraint” demands uncomfortable departmental trade-offs, Deputy Millar says that Islanders should not feel any discomfort – unless, of course, they vape/smoke (+£2 vaping tax per 10ml or +80p tobacco duty increase per 20 pack of cigarettes), drive a polluting car (+£2,480 vehicle emissions duty on the most polluting vehicles) or attend A&E without seeing their GP (£77 charge).
The Budget, she notes, includes several cost-of-living cushions for those who need help most, including a £550 increase in personal income tax thresholds (from £20,700 to £21,250) and childcare subsidies.
But what of ‘Middle Jersey’ — the not-rich, not-poor cohort allegedly hollowing out?
New pressure group Value Jersey is determined to make them politically impossible to ignore. Deputy Millar, however, is cautious – open to the conversation, but wary of slogans.
“I don’t have enough information about what that group says it needs, what Middle Jersey looks like,” she says. “Some people say they are struggling, then you look at their income and think, ‘That looks like a really big number.’ So, if you have got that income, how can you be struggling? That’s what we need to drill down to. Is it the cost of housing?”
“At what point do you stop being Middle Jersey?” she asks rhetorically. “If you don’t qualify for Income Support, that suggests you have money to the system.”
It is one of the reasons she will not Deputy David Warr’s plan to reinstate mortgage interest tax relief from 2027 – she would rather “target relief where it is most needed”, rather than to those who own their own homes.
While expecting clashes over how “restraint” has been exercised in practice, Deputy Millar hopes some will see seeds in the Budget that will pay future dividends.
Fort Regent — the eternal political headache — finally appears to have a regeneration timeline (with the help of £43m in borrowing). Deputy Sir Philip Bailhache wants to block the borrowing, replacing it with a temporary 1% GST rise ringfenced for the project. He said the “plain truth” was that Jersey cannot afford to restore Fort Regent without tax rises.
Deputy Millar pushes back. She says that, even at a time when “discipline” is called for, the public is passionate about the project – evidenced by the thousands who took part in the consultation – and wants to see it move forward.
The government has also laid strong future foundations in other ways recently: one way is through its £1.5m for Loganair to quickly start flying following Blue Islands’ collapse. Deputy Millar is confident that the routes it is taking over are “profitable” and no further funding will be needed. In any event, she would not support a “public” airline.
Lack of monitoring of Blue Islands’ performance after its £10m covid loan – from which £8.5m was drawn down – was alleged by the Comptroller and Auditor General, but the Minister refutes this.
She also maintains that discipline extends beyond the Government’s own books to the large publicly owned companies that now carry hundreds of millions in borrowing. With Andium Homes, Jersey Development Company and Ports of Jersey off the States’ consolidated balance sheet from 2025, some critics have suggested the Island risks “hiding” liabilities the taxpayer ultimately stands behind. Millar rejects that analysis.
“The idea that there is not scrutiny over them is misplaced,” she says.
And the debt picture, she insists, remains safe: “Andium’s debt, from memory, is something like a quarter of the value of its assets. So if there was a call on that money… there are more than enough assets to sell to repay that debt.”
She believes our ALOs do not act in a “speculative” way, but seek to create opportunities for the future.
One upcoming opportunity arises from JT’s recent acquisition of Manx Telecom, reportedly worth £500m. As well as providing resilience to the network and important economies of scale, she hints at a potential future windfall – but declines to provide specifics.
Just six months to go until an election, there is a curious omission in the Budget: no big vote-winners. No glossy policy “treats” for mass applause.
Yet Deputy Millar does not appear to mind. She is pleased with the result – and proud of her ministerial colleagues’ work to date.
She thinks they have “achieved quite a lot” and that, while having previously been undecided on whether to run again, she “would like to come back and try to do more”.
And what of the newly restored, Island-wide mandate — the Senator seats she herself helped revive?
Here she laughs — a little ruefully.
“I feel slightly hoisted by my own petard,” she jokingly admits.
“I thought, ‘oh my goodness, if this wins, people are going to expect me to stand as a Senator.’ I hadn’t really thought about it [ahead of the matter being debated in the States Assembly]… Am I the first?”
There’s the pistol.
