Source: Channel Islands – States of Alderney
Press Release
Date: 16th October 2024
Alderney balances the books despite a fragile economy
Alderney’s senior politician presented a balanced budget to the States today (October 16th) but he warned Members that the Island was “living beyond its means”.
Policy & Finance Chair Nigel Vooght announced a revised £400,000 surplus in this year’s forecast which allowed the States to approve a 2025 Budget with no increases in Alderney Property Tax (APT) or Water Rates.
He told the States meeting:
“Despite delivering this balanced budget, we must be conscious of the simple fact that Alderney is living beyond its means as the cost of transferred services such as healthcare, education, the airport and emergency services exceed the taxes paid to the Bailiwick to help to pay for these. Despite the likelihood that income tax may increase, these services cost more than we contribute to the Guernsey Treasury.
“The 1948 agreement was set up post-war when Alderney needed expertise and resources in return for which we entered a fiscal union which initially resulted in us producing a surplus of revenue versus the cost of transferred services. This is not the case today.
“We are grateful to Guernsey for these transferred services but we must be mindful that this is not a sustainable position, especially given the financial difficulties Guernsey faces. Although we are a separate jurisdiction, we are in a fiscal union and partnership with Guernsey and must look for ways to grow our economy to generate new revenue streams.”
The immediate priority is a refurbished runway and improved air connectivity which will help make Alderney more attractive as a place to live and work, thus growing the economy and attracting inward investment. In the medium term, seeking new sustainable economic growth that will create revenue streams.
Key points in the 2025 Budget approved by the States include:
· No increase to APT in 2025
· Fuel Duty to be consistent with the States of Guernsey rate for 2025
· Document Duty pegged at 2024 levels
· No increase to Water Rates which went up marginally in 2024
An increase in investment interest and higher than expected returns from Document Duty and Property Transfer duties were key factors contributing to a revised £400,000 surplus for this year, despite an increase in the cost of services.
However, the budget for next year indicates a more modest “break even” surplus of £29,000 as operational costs are budgeted to increase by £354,000 compared with 2024, accounting for almost all of expected operating income and taxation.
Mr Vooght explained:
“Alderney is reliant on limited income streams such as APT, Fuel Duty, and Document Duty and this needs to be taken into consideration for future budgets and how we manage growing costs. Efforts to improve efficiency and reduce costs across various departments is being addressed with all budget holders.”
Meanwhile, the States’ Capital Programme is mainly funded by Alderney Gambling Control Commission (AGCC) surpluses, together with income from asset sales. Estimated AGCC gross distribution for 2025 is expected to be in the region of £1.9M, a decrease in the income from 2024 which has been maintained at £2.2M.
There is no cash allocation received from the States of Guernsey in respect of Capital funding.
Mr Vooght concluded:
“While the budget demonstrates a responsible financial approach, it’s essential to remain vigilant about potential risks and uncertainties. Factors such as geopolitical and economic fluctuations, changes in government policies and unforeseen expenses could impact future budgets.
“Recommendations for future consideration will include exploring alternative revenue sources to diversify the States’ income streams and reduce reliance on a few key taxes. We also need to continue to review and optimise operational costs to identify areas for further efficiency gains.”
His report paid tribute to the Head of Finance, Liz Maurice, supported by the Treasury team as well as budget holders for their work involved in preparing the Budget.
Ends
States of Alderney media enquiries:Alistair.Forrest2@gov.gg