THE APPROPRIATION BILL 2004
MR SPEAKER, HONOURABLE MEMBERS
1. THE PURPOSE OF THIS BILL IS TO AUTHORISE THE WITHDRAWAL OF £39,051,340 FROM THE CONSOLIDATED FUND FOR THE SERVICE OF THE FINANCIAL YEAR BEGINNING
2. THE DRAFT ESTIMATES FOR 2004/05 REFLECT THE BUDGET STRATEGY AND POLICY APPROVED BY EXECUTIVE COUNCIL. THIS FOLLOWED A COMPREHENSIVE BUDGET PROCESS. AS WAS THE CASE LAST YEAR, HONOURABLE MEMBERS HAVE EXAMINED BUDGET SUBMISSIONS FROM MANAGERS IN DETAIL IN TWO SEPARATE MEETINGS OF THE STANDING FINANCE COMMITTEE AND AMENDMENTS HAVE BEEN INCORPORATED AT EACH STAGE. THE
At this stage I should draw attention to the budget strategy for 2004/05 WHICH WAS APPROVED BY EXECUTIVE COUNCIL IN NOVEMBER OF LAST YEAR. THIS INCLUDED THE FOLLOWING ELEMENTS:
· A TARGET SURPLUS OF £2 MILLION
· INFLATION TO BE MET FROM EFFICIENCY SAVINGS WHILST MAINTAINING SERVICES BROADLY AT EXISTING LEVELS
· THE CONSOLIDATED FUND BALANCE TO BE A MINIMUM OF 2.5 TIMES ANNUAL OPERATING EXPENDITURE (EXLUDING INTERNAL AND CAPITAL CHARGES)
· capital expenditure to be limited to £15 mILLION in any rolling 3-year perioD
· any new capital proposals only to be considered for 2005/06 onwards
· a review of user-pay policies
4. following the worst illex season on record, and the decision to make substantial refunds of licence fees, it was clear that the budget surplus target set in november was unrealistic. it was accepted that a deficit result in both this year and next year was unavoidable but it was agreed that measures should be introduced in a phased approach to minimise the extent of the deficit and the negative impact on the economy.
5. AS USUAL, BEFORE DEALING WITH THE DETAIL OF THE 2004/2005 BUDGET, I WILL BRIEFLY REVIEW THE CURRENT FINANCIAL YEAR. THE DRAFT ESTIMATES SHOW THAT THE OUT-TURN AT
AT THIS TIME LAST YEAR IT WAS FORECAST THAT THE BALANCE OF THE CONSOLIDATED FUND AT
AT
AS ADJUSTED, FOLLOWING THE RECENT BUDGET MEETINGS OF THE STANDING FINANCE COMMITTEE, TOTAL REVENUE FOR 2004/2005 IS FORECAST AT £40.3 MILLION AND THE SUBMISSIONS FOR TOTAL EXPENDITURE ARE INSERTED AT £43.3 MILLION. THIS RESULTS IN AN ESTIMATED BUDGET DEFICIT OF £3 MILLION.
AS JUST MENTIONED, OPERATING REVENUE IS INSERTED IN THE DRAFT ESTIMATES AT £40.3 MILLION WHICH IS £½ MILLION HIGHER THAN THE REVISED ESTIMATE FOR THIS FINANCIAL YEAR. THIS REVENUE FORECAST INCLUDES FISHERIES INCOME INSERTED AT £17.6 MILLION. ALTHOUGH THIS FIGURE, WHICH IS THE BEST ESTIMATE AT THIS TIME, IS £1.7 MILLION MORE THAN THE REVISED ESTIMATE FOR THE CURRENT YEAR, IT IS £10.8 MILLION LESS THAN ACTUAL RECEIPTS IN THE PREVIOUS YEAR. ACHIEVING THE FORECAST INCOME NEXT YEAR AND THUS LIMITING THE DEFICIT POSITION TO £3 MILLION VERY MUCH DEPENDS ON WHAT THE FISHERY PRODUCES AND IN PARTICULAR THE ILLEX FISHERY. DEPENDENCE ON THE MAJOR CONTRIBUTION TO REVENUE FROM THE
THIS BRINGS ME TO THE DRAFT ESTIMATES OF OPERATING EXPENDITURE WHERE A TOTAL £34.5 MILLION IS INSERTED. FOLLOWING ADJUSTMENTS MADE AT THE RECENT BUDGET MEETINGS OF THE STANDING FINANCE COMMITTEE THIS FIGURE IS £3 MILLION LESS THAN THE REVISED ESTIMATE FOR THE CURRENT YEAR. NO PROVISION HAS BEEN MADE FOR PAY AWARDS. IN THE CURRENT YEAR THE PAY AWARDS PROVISION WAS £561,000. NO PROVISION HAS BEEN MADE FOR AN
FUND TRANSFERS OF £4.8 MILLION ARE INCLUDED IN THE DRAFT ESTIMATES. THIS IS £4 MILLION GREATER THAN THE CURRENT YEAR AND REPRESENTS A TRANSFER TO A NEW SPECIAL FUND TO BE CALLED THE CAPITAL EQUALISATION FUND WHICH IS PROPOSED TO BE ESTABLISHED UNDER THE FINANCE BILL BY A REDESIGNATION OF THE SINKING FUND.
THE DRAFT ESTIMATES FOR TRANSFER PAYMENTS AMOUNT TO £3.9 MILLION. THIS IS £768,000 LESS THAN THE REVISED ESTIMATE FOR THE CURRENT YEAR AND IS THE RESULT OF DOWNWARD ADJUSTMENTS TO GRANTS, SUBVENTIONS AND ASSISTANCE IN SEVERAL AREAS. THE MAIN AREA AFFECTED IS
THE PROVISION FOR
THE PROPOSED CAPITAL EXPENDITURE FOR 2004/05 TO BE MET FROM THE NEW CAPITAL EQUALISATION FUND IS £4.2 MILLION. THIS IS £2.3 MILLION LESS THAN THE REVISED ESTIMATE FOR THE CURRENT YEAR AND IS THE RESULT OF SUBSTANTIAL ADJUSTMENTS MADE AT THE RECENT BUDGET MEETINGS OF THE STANDING FINANCE COMMITTEE TAKING INTO ACCOUNT PROPOSALS FROM THE PUBLIC WORKS COMMITTEE. THE PROJECTED CAPITAL PROGRAMME OVER THE NEXT THREE YEARS, NET OF CAPITAL RECEIPTS, AND INCLUDING ESTIMATED CARRYOVERS OF UNDERSPENDS FROM THE CURRENT YEAR, IS £12.9 MILLION. THIS IS WELL WITHIN THE MAXIMUM OF £15 MILLION APPROVED AS PART OF THE BUDGET STRATEGY. IT SHOULD BE NOTED THAT GREATER EFFORT HAS BEEN DEDICATED TO ESTABLISHING THE 2004/05 ESTIMATE THAN TO SUBSEQUENT YEARS. THE PROJECTIONS ARE SHOWN FOR FINANCIAL PLANNING PURPOSES ONLY. THEY ARE NOT APPROVALS TO SPEND AT THIS STAGE AND FURTHER WORK WILL BE REQUIRED TO FIRM UP THE PROJECTIONS.
AT THIS STAGE I CAN REPORT THAT THERE IS NO PROPOSED REDUCTION IN THE CAPITAL BUDGET FOR CAMP ROADS. THIS IS PROJECTED AT £1 MILLION PER ANNUM TO CONTINUE THE SCHEME AT THE CURRENT PACE. HOWEVER, FOR NEXT YEAR, IT IS PROPOSED THAT THE COST OF A REPLACEMENT BRIDGE FOR THE CHARTRES RIVER AND THE PURCHASE OF A MOBILE CRUSHER SHOULD BE MET FROM THE £1 MILLION ALLOCATION.
WHEN I REPORT BACK FROM SELECT COMMITTEE I WILL PROVIDE AN OVERVIEW ON WHAT THE CAPITAL PROGRAMME FOR NEXT YEAR CONTAINS.
AT THIS JUNCTURE I MUST POINT OUT THAT THERE ARE POSSIBLE COST PRESSURES FOR WHICH NO FINANCIAL PROVISION HAS BEEN MADE IN THE ESTIMATES. FOR INSTANCE, PROVISION HAS BEEN INCLUDED FOR INDEPENDENT CONSULTANCY ADVICE ON THE REPLACEMENT OF THE CAMP TELEPHONE SYSTEM BUT NO FUNDING HAS BEEN INSERTED FOR THE ACTUAL REPLACEMENT. THIS IS LIKELY TO BE A SIGNIFICANT EXPENDITURE ITEM. FURTHERMORE, NO FINANCIAL PROVISION IS INCLUDED IN THE ESTIMATES FOR THE CONTINGENT LIABILITIES SET OUT IN THE STATEMENT TO THE ANNUAL ACCOUNTS. IN THE EVENT ANY OF THESE LIABILITIES MATERIALISE IT WILL BE NECESSARY TO RECONSIDER EXPENDITURE PRIORITIES. there are also initiatives identified in the islands plan for which no specific funding is allocated. for example, the redevelopment of core communties in camp BEYOND THE ONGOING DEVELOPMENT OF GOOSE GREEN, and the development of a deep water port. AS I MENTIONED EARLIER NO ALLOCATION HAS BEEN MADE IN THE DRAFT ESTIMATES FOR AN ISLANDS PLAN RESERVE. IN PREVIOUS YEARS SOME OF THE EFFICIENCY SAVINGS HAVE BEEN SET ASIDE FOR THIS PURPOSE. FOR THE FORTHCOMING YEAR ALL SAVINGS IDENTIFIED HAVE BEEN APPLIED TO REDUCE THE PROJECTED DEFICIT. THEREFORE, ALTERNATIVE SOURCES OF FUNDING, SUCH AS EDF GRANTS, WILL NEED TO BE SECURED BEFORE THE GRoWTH INITIATIVES CAN BE IMPLEMENTED.
TURNING NOW TO REVENUE MEASURES:
18.1 The tax system was extensively reviewed last year and a simplified, new tax regime was introduced FROM 1 January 2004. It is therefore not considered to be appropriate at this time for structural changes to be made, nor to amend the tax rates currently in operation.
18.2 A principle adopted by the approval of the taxation policy framework was to keep user pay charges under review and to expand that concept in preference to adjusting existing taxes or introducing new taxes. Although it may prove necessary to increase revenue from taxation in subsequent years, for the forthcoming year the budget proposals are focussed mainly on the user pay principle.
18.3 IT IS PROPOSED TO INCREASE CUSTOMS IMPORT DUTY ON TOBACCO PRODUCTS BY 10%, IN LINE WITH THE HEALTH OF THE NATION STRATEGY. THESE INCREASES WOULD, FOR EXAMPLE, ADD AN EXTRA 18P ON A PACKET OF 20 CIGARETTES AND AN EXTRA 55P ON A 50 GRAMME POUCH OF TOBACCO. THIS WOULD RAISE ADDITIONAL REVENUE OF £28,000.
18.4 NO INCREASE TO THE CUSTOMS IMPORT DUTY RATE ON ALCOHOLIC BEVERAGES IS PROPOSED.
18.5 IT IS RECOMMENDED THAT the PASSENGER levy SHOULD BE INCREASED FROM £10 TO £15 FROM 1 jULY 2004 TO RECOVER ADDITIONAL MARINE PORT SECURITY COSTS. A LOWER LEVEL levy OF £5 IS ALSO PROPOSED FOR THE SAME REASON IN RESPECT OF PASSENGERS ON VESSELS WHICH CALL AT PORTS IN CAMP ON THE SAME VOYAGE. CURRENTLY NO PASSENGER levy IS PAYABLE IN THESE INSTANCES.
18.6 THERE IS NO PROPOSAL TO INCREASE THE RATE OF EMBARKATION TAX. THIS WAS INTRODUCED AT A RATE OF £10 PER PASSENGER FROM 1 jANUARY 2000 AND INCREASED TO £20 FROM 1 MARCH 2003 TO RECOVER ADDITIONAL COSTS OF AIRPORT SECURITY.
18.7 Customs Entrance and Clearance fees were increased by 10% on 1 July 2002 and again by the same percentage from 1 July 2003. It was previously agreed that fees would be increased by 10% per annum for three years and it is therefore proposed that they be increased accordingly from 1 July 2004.
18.8 Customs service fees were increased from £29.30 to £30.30 per normal hour of duty on 1 July 2003 using the approved formula. If the proposal to freeze pay for FIG employees IS CONFIRMED, there will be no requirement to review the rate for 2004/05.
18.9 Harbour dues were increased by 3% from 1 January 2004. Executive Council agreed to a review of charging arrangements in respect of customs fees and harbour dues as part of the budget process. Unfortunately, a working group has not been formed and the Collector of Customs estimates that the task will take a considerable amount of time. The issue could also be clouded by the potential creation of a port authority. The review should concentrate on making charges fairer. It is therefore proposed that no changes be made to harbour dues until the review has been carried out.
18.10 THE CUSTOMS & IMMIGRATION DEPARTMENT CURRENTLY ISSUES A NUMBER OF CERTIFICATES AND PERMITS FREE OF CHARGE. IT IS PROPOSED THAT AN ADMINISTRATION CHARGE OF £5 BE INTRODUCED FOR THE ISSUE OF EC MOVEMENT CERTIFICATES, CERTIFICATES OF ORIGIN AND WILDLIFE EXPORT PERMITS, ETC TO OFFSET THE COSTS INVOLVED.
18.11 Vehicle Licence Fees were last increased by 5% with effect from 1 July 2003. A £10 increase is proposed for cars and it is proposed THAT other categories of vehicles be increased by the same percentage from 1 July 2004 AS FOLLOWS:
| Motor vehicle not exceeding 500 kilos | FROM £35.00 | TO £39.00 |
| Motor vehicles exceeding 500 kilos but not exceeding 3,400 kilos including those designed and constructed as agricultural tractors. | FROM £80.00 | TO £90.00 |
| Motor vehicles, other than agricultural tractors, exceeding 3,400 kilos. | FROM £127.00 | TO £142.00 |
| Trailers to be drawn by vehicles EXCEEDING 3,400 KILOS. | FROM £29.00 | TO £33.00 |
This proposed increase would raise additional income of around £19,000.
18.12 THE POSTMASTER HAS RECENTLY REVIEWED POSTAGE RATES AND INCREASES FROM 1 JULY 2004 WERE APPROVED BY THE STANDING FINANCE COMMITTEE FOLLOWING REFERRAL FROM EXECUTIVE COUNCIL ON 24 MARCH 2004. THE REVISED RATES OF POSTAGE ARE SET OUT IN THE POST OFFICE (AMENDMENT) ORDER 2004 WHICH HAS BEEN PUBLISHED IN THE GAZETTE AND WAS LAID ON THE TABLE THIS MORNING. NO FURTHER CHANGES ARE THEREFORE RECOMMENDED AT THIS TIME.
18.13 it is proposed to introduce a minimum charge of £20 per annum for water supplied from the stanley water supply to metered properties from 1 july 2004.
18.14 it is proposed to introduce a refuse collection charge in stanley of £90 per annum per small bin and £270 per annum per large bin in respect of non-domestic premises from 1 july 2004.
18.15 it is proposed that a service charge should be introduced for domestic premises in stanley to amalgamate the current water charge and a refuse charge. this should be set at £250 pEr annum or £125 for pensIoners from 1 july 2004. unlike the water charge it is proposed that the service charge should be payable by tenants of government housing, including sheltered accommodation. the service charge to be payable by 30 september but payment may be made by monthly instalmentS of £21, or £10.50 for pensioners, from 31 july. for tenants of government housing the service charge to be added to the rent. to alleviate financial hardship for tenants on low income, the service charge will be treated in the same manner as rent under the government housing rent rebate scheme. to relieve other householders on low income the rebate scheme for the current water charge will continue to be available for the service charge. together with income from metered water supplies, income from the proposed service charge wOULD recover the cost of producing potable water, but the service charge would need to be £15 higher to recover, in full, the cost of refuse disposal.
18.16 as government housing rents are lower than in the private sector, the policy in recent years has been to increase rents by more than the rate of inflation which last year was 2%. all properties are now subject to a points-based system to determine relative rentals. as a result of increases in previous years the majority of properties are now at their points based rents. taking into account the proposed service charge WHICH will become payable by tenants, no general increase in rents is proposed. however, there are still a small number of properties with rents below the points based level and it is proposed that an increase of up to 10% should be applied
in respect of these properties from 1 july 2004. it should be noted that this increase will not apply to sheltered housing as it is already subject to an approved staGed increase.
18.17 to continue the move to full cost recovery it is proposed to increase the funeral charge from £550 to £600 from 1 july 2004.
18.18 it is proposed to increase the charge for cemetery plot reservations from £2 to £50 from 1 july 2004.
18.19 it is proposed to introduce a range of user pay health service charges from 1 july 2004. the charges have been reviewed by the health and medical services committee and, if approved by the select committee, a list of the charges will be published. it is intended that there would be appropriate safeguards to ensure that the charges do not cause financial hardship. the new charges should raise additional income of £90,000.
18.20 As well as the introduction of various charges for Health Services it is proposed that subsistence for medical patients referred overseas should be stopped from 1 July 2004. Safeguards under the welfare system are already in place to alleviate financial hardship where appropriate. The cost of travel and accommodation would continue to be met from the Health Services budget.
