The Medium Term Financial Plan presents for the first time a fiscal strategy that can support the delivery of the outcomes in the Policy & Resource Plan.
It will ensure the States is able to achieve and maintain a balanced budget before moving into a sustainable surplus over the next four year period, which will enable the re-building of reserves and the investment in future public services.
- A thorough and inclusive capital prioritisation process has allowed a picture to be built not only of the capital requirements in the next four year period, but beyond that. The Policy & Resources Committee is also proposing a pipeline on longer term projects which extends the planning horizon for these long-term investments.
- The ultimate objective of the capital portfolio is to support the achievement of the vision set out in the Policy & Resource Plan and the delivery of the strategic objectives for the States through investment infrastructure and systems.
- Following the revisions made in late 2017 to the calculation and quantum of Gross Domestic Product (GDP) figures, it is necessary to review the parameters within the Fiscal Policy Framework. This is a very important piece of work as it underpins the long-term fiscal strategy and the opportunity is being taken to fundamentally review the continued appropriateness of the various rules and targets that comprise the framework.
- Following consideration of the 2018 Budget Report, the States endorsed the intention to introduce a system of independent taxation which will mirror the current position on the ability to transfer unused allowances and, therefore, not change overall entitlement to allowances. Phase 1 was introduced with effect from 1 January 2018 but the full introduction of independent taxation will be enabled by the transformation of service through the Revenue Services Programme detailed within the Chief Executive's Annual Report.
Returns from Commercial Entities
- The States' Trading Supervisory Board (STSB) met its 2017 budgeted target of a return of £5 million of capital to General Revenue; this return has been transferred to the Capital Reserve to contribute to funding the current capital portfolio.
- As approved in the 2018 Budget Report, the target minimum contribution of capital returns from the States' trading assets (in additional to any dividend paid in accordance with the existing policy) is £5.5million in 2018 and the STSB has now written to the Policy & Resources Committee setting out options for the delivery of this return. As part of the 2019 Budget Report, an update will be included on the plans for delivery of the total target of £31million over the Medium Term Financial Plan period.
- As part of the estates rationalisation programme, two buildings were vacated by the end of 2017: Cornet Street (Income Tax) and La Couperderie (Education Services) which has enabled staff to be located in an improved working environment as well as contributing savings to the overall Medium Term Financial Plan target.
Social Investment Commission
- Following consideration of the 2018 Budget Report, the States directed the Policy & Resources Committee to establish a Social Investment Commission during 2018, to begin operation from 1 January 2019. Collaborative work with the third sector is underway to establish a governance framework; to identify and secure sources of funds; and to set out clear conditions for investment of these funds.
Guernsey Investment Fund
- £25million has been committed to the Guernsey Investment Fund to support the development of innovation and technology, along with £12.5million of private sector investment. This investment, which is a little over 1% of the total investment portfolio overseen by the Policy & Resources Committee, is independently managed with an investment objective to achieve a return for its investors and support business in the Bailiwick or which will benefit the Bailiwick. There is an intention to develop infrastructure and property cells in the future which would attract further investment from the States.
Funding Health and Longterm Care
- As the initial phase, options are currently being investigated for a mechanism which will allocate the Health Service Fund contributions which are collected by the Committee for Employment & Social Security to the Committee for Health & Social Care budget. This would mean that responsibility for all publicly funded health and social care services (including those that are directly commissioned by the States and those, such as prescriptions of primary care, that are subsidised) would rest with the Committee for Health & Social Care.
- As the States of Guernsey moves towards Financial Statements being prepared in accordance with International Public Sector Accounting Standards (IPSAS), there will be incremental changes in the format and presentation of the States' Accounts as the systems and processes necessary for generating the required financial information are developed. The 2017 Accounts will include changes to the formats of the principal financial statements following guidance contained within IPSAS1 (Presentation of Financial Statements) with the inclusion of Statements of: Financial Performance (previously Income and Expenditure Account); Movement in Reserves (new statement); and Financial Position (previously Balance Sheet).
Priority Based Budgeting
- A priority based budgeting approach was initiated in the first quarter of 2018 for States' Corporate Services, encompassing Finance, Human Resources, transactional 'HUB' services and Information Systems and Services (ISS). The project involved a full review of the services provided and how these might be rebalanced and remodelled in order to provide enhanced corporate services within existing resources. It will also determine the costs and benefits of developments in service provision.