A report examining the proposed financials and projects of the Government Plan has been published today by the Corporate Services Scrutiny Panel. The Panel’s review details a total of 31 findings and makes 15 recommendation following examination of:
- 27 projects and capital projects from the previous Government Plan (2020-23), such as Migration Policy; government’s Modernisation and Digital department; Supporting OneGov; and delivering effective financial management,
- 12 new projects and capital projects for 2021, such as Migration Policy Implementation; government’s Commercial Services Restructure; the re-organisation of the unit which supports Ministers; the re-organisation of the government communications department, and Office and IT Modernisation,
- 8 efficiency and rebalancing measures, such as the centralisation of government technology functions; the reduction of cash handling fees by increasing non-cash payment options; and the increase of tax revenues through the continued enhancement of domestic tax compliance.
The Panel has, through a RAG rating system, allocated a total of 17 green projects, 18 amber and 4 red status. An amber status means that the Panel has reviewed the project and has raised concerns about it, either regarding the content of the business case or the level of funding requested. A red status means the Panel has serious concerns about the project, either in relation to its level of funding or general intent.
The Panel’s remit also necessitated the scrutiny of income-raising measures, government expenditure and borrowing plans, as well as use of reserves, contingencies and fiscal soundness of the plan.
As a result of its review, the Panel has brought forward three amendments to the Government Plan in relation to projects and efficiencies which it has rated as red as follows:
Stamp Duty
The Panel has highlighted the potential risk of a larger than forecasted budgetary deficit due to ongoing COVID-19 impact, and as such believes that actions to raise further revenue are needed to mitigate risks and build better contingency. As such, the Panel proposes to increase the Stamp Duty rates for residential property at the upper-end of the market (properties over £2 million), the Panel advocates that those purchasing properties at this value will likely be in a financially strong position and that increased Revenue of £335,000 can be used against the COVID-19 debt.
Child Tax Allowance and Childcare Tax Relief Allowance
The Panel believes that help should be given to families struggling with the rising cost of living. Families may also be faced with additional financial burdens such as childcare and associated upkeep costs due to the pandemic these, struggles clearly impact the government’s strategic priority to “Put Children First”.
Therefore, the Panel is proposing an increase in tax allowances for those with children by 2%. This would be the first increase for child allowance since 2011. This is also in light of the Island having seen a 20.6% rise in inflation in the same length of time. However, the Panel highlights that it has taken into account the impact of COVID-19 on government finances and has therefore not asked for a larger increase before the completion of the review on Independent Taxation which may alter the allowances in 2022.
In addition, the Panel believes that by raising the childcare tax reliefs for the first time since 2017, the government can further help to meet its strategic priority to “Put Children First”. This is particularly important to help negate the financial impacts of COVID-19 and will help to generally improve the cost of living within Jersey. The Panel has proposed that these tax reliefs for parents with children in childcare also be increased by 2%.
The Panel highlights that its amendments to child allowances and childcare tax reliefs are supported by the Children’s Commissioner who emphasises that any lever available which may combat child poverty should be explored to better protect, respect and fulfil children’s rights in Jersey. The Commissioner also confirms that the United Nations Convention on the Rights of the Child (UNCRC) was extended to Jersey in 2014 and that the State must provide support and “take all appropriate measures to ensure that children of working parents have the right to benefit from child-care services and facilities for which they are eligible”.
Senator Kristina Moore, Chair of the Panel, said “The COVID-19 pandemic has caused an unprecedented crisis around the globe. The financial toll has pushed many economies further into debt as governments manage uncertainty. Therefore, it is genuinely understood that there are no easy answers or textbook responses to progressing from pandemic to recovery, and the Panel has undertaken its review of the Government Plan 2021-24 with this in mind.
“However, we have found that financial planning has been optimistic during this uncertain period with a risk of further budgetary deficit. As our economic advisor states in their report “during the course of the plan, key assumptions around a number of critical income and expenditure components may need to be revisited and this may materially change the overall bottom-line position on future deficit” there is also a lack of contingency planning. Furthermore, evidence of the return of investment in some projects is still lacking, causing the Panel concern at a time when the government is borrowing to pay for coronavirus actions; and with future external financing likely needed to pay for capital projects such as the new Hospital.”
Government of Jersey News Release.