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Why this Medium Term Financial Plan is right for Jersey

1/7/2016
Blog Post
Senator Ian Gorst
Chief Minister

The first Medium Term Financial Plan took us from 2012-2015 and focused on tackling the legacy of the global financial crisis. To a large extent, it succeeded – we have considerable reserves, minimal debt and assets of nearly £6 billion. Now that we are surrounded by uncertainty in the UK and the EU, we need to ensure that we maintain this strength, and that’s what this Medium Term Financial Plan aims to do: to keep Jersey successful by planning prudently for the future, while supporting economic growth and the essential services that we need right now.  That means focusing the available funds on priority services, like health and education, while still balancing budgets by 2019.

This plan also recognises the need to boost economic growth and diversification, essential for creating the jobs and the future income we need to pay for the services we need. Achieving that will require some investment, and investment means we need to save or raise money from other sources.

We have already begun the process of saving; since I became Chief Minister in November 2011, through the Comprehensive Spending Review, successive budgets and public sector reform £85 million has been taken out of department budgets; £38 million of that in 2016.

In part, these savings have been made through a reduction in government staff.  In 2015 we saw a net reduction of 165 full time equivalent posts, and 114 people have left the organisation through voluntary redundancy since the scheme opened in 2015. While I appreciate that reducing the number of people we employ can be difficult, it is very important to enable us to move money to the areas where is needed most, and to help restructure the public sector and make it more efficient.

Every department is taking this very seriously – across the whole of the States of Jersey, people are reprioritising, finding efficiencies, making sure the organisation is working as well as it can.  This includes using Lean techniques as part of our reform programme and bringing teams together to enable better cooperation.

And while we are reducing headcount in the public sector, we are getting islanders back to work in the private sector. Since last year we have seen the highest ever number of people in paid work. We have invested money in the economy, spending more on services and capital projects than we take out in tax.

The good news is, this activity is working. The latest indicators show the island is recovering from the global downturn. In 2014 our economy grew by nearly 5%, GDP per head went up 3% and average earnings were up by 0.9 percentage points more than inflation between June 2014 and 2015.

This plan moves funds into the agreed priority services. Health and Social Services will be receiving annual growth funding of almost £40 million by 2019, and education £11 million. £168 million has been allocated to capital projects over the four years of the plan, including £56m for school buildings, £43m for sewage works and £21m for IT systems. And we will be funding projects that boost economic growth or productivity.

The Fiscal Policy Panel has validated this approach - supporting the economy in the short-term, investing in the services and infrastructure that support growth in the medium-term, and balancing our books at the right time. 

I am confident that this plan supports our priorities. It means we can invest in the health and social care we need as our society ages, and fund improvements in our education system so all of our children can reach their potential and develop the skills they need to achieve fulfilling lives and careers. It will keep Jersey special by improving our town, preserving our outstanding natural environment, and investing in our infrastructure. It will also continue to encourage innovation in island businesses and inward investment, so we can sustain a healthy job market, low unemployment, high quality public services and an island with strong public finances that islanders are proud to call home.

Over the coming weeks, in the lead up to the States Assembly debate about the Medium Term Financial Plan, we will be going over the facts, figures and explaining the thinking behind our proposals. We will be doing our best to respond to questions, as well as creating an FAQ area that addresses matters of concern.  We will also be hosting public drop in sessions every Friday lunchtime to cover different aspects of what we have proposed. 

Of course, there are some difficult decisions that we need to make to deliver this plan, not least regarding the health charge. But they have been carefully considered in the context of our priorities and we believe this plan is the right one to secure Jersey’s future.

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