Maintaining economic strength, enabling growth, supporting working families and protecting the vulnerable were the key themes when Treasury Minister David Ashford MBE MHK delivered his 2022 Budget in Tynwald today (Tuesday 15 February).
Emphasising the opportunities and challenges facing the new administration, the Minister provided Members with a comprehensive update which included a five-year financial programme focussed on fulfilling the aims of Our Island Plan.
Minister Ashford told Members:
‘As we move away from the challenges of the pandemic we must ensure we have clear sight as to how we structure our spending and investment plans to ensure that we can continue to grow our economy, support our people and invest in our future.
‘The prudent use of reserves and timely intervention with targeted financial support has ensured that we have not only protected lives and the health of the Nation but also the economy which is so essential in providing the income we need to provide the services and environment that make our Island great.’
Government revenue spending for 2022/23 is budgeted at £1.15 billion after accounting for reserve transfers.
The personal tax allowance has been raised by £250 to £14,500 for an individual and by £500 to £29,000 for jointly-assessed couples, while targeted increases have been made to benefits and allowances for parents, carers, pensioners and people with disabilities.
The 2022/23 Budget is firmly aligned with Our Island Plan and is focussed on fulfilling the aims of its core themes:
- Building great communities
- An Island of health and wellbeing
- A strong and diverse economy
- An environment we can be proud of
- Outstanding lifelong learning and development opportunities for all
This will be achieved through an indicative five-year financial plan which is published within the Pink Book. An overall deficit position, including the cost of the capital programme, is forecast to turn to a surplus by the end of 2024-25, with the position increasing each year through to 2026-27. Government income is expected to return to pre-pandemic levels by 2024-25.
Minister Ashford said:
‘Our economy is recovering strongly and, despite the global economic position, we are optimistic that there will be limited or no long-term scarring to the economy or to public sector incomes.
‘We are not ignoring the economic challenges, and, as members will be aware, we are actively engaged in developing a new economic strategy, which I plan to bring to this Honourable Court in July.’
New internal funds have been created to assist the Isle of Man Government in meeting its priorities around creating a Secure, Sustainable and Vibrant environment in line with Our Island Plan:
- a £25m Climate Change Fund will be established to help move the Island towards its target of reaching net-zero emissions by 2050
- a Project Development Fund will be created, with an initial balance of £2m, to help Departments explore initial feasibility and development work associated with capital projects
- a £2m fund will be available to support the work of the newly-created Housing and Communities Board
Existing funds, including those focussing on health and care transformation, medical indemnity, digital strategy, and agriculture and forestry, will see investment aimed at maintaining services and promoting economic development.
Supporting lifelong learning and development opportunities, the budget will see £2.74m committed to supporting additional educational needs provision within schools; and a further £15m will be allocated to support the Island’s economic recovery.
Meeting the required growth funding for health and care services will be achieved for the forthcoming financial year by using a proportion of investment income generated by the Manx National Insurance Fund. The Department of Health and Social Care will be provided with an additional £8.25m to fund Manx Care in this respect, and will have access to a further £5.08m of contingency funding to address cost pressures which may arise during the next year.
Minister Ashford said:
‘I understand that members and the public will be concerned about taking extra monies from the Manx National Insurance Fund at a time when we have already seen increased expenditure in relation to MERA and the Salary Support Scheme. However, I feel that it is appropriate to take what, in effect, is a very small sum when compared to the overall value of the fund, currently worth over £1 billion, and to invest it in our health and care services.’
‘This is a one-off withdrawal, which is appropriate in these very unusual circumstances, and should the Treasury wish to use further amounts of investment income in future years it will have to come back to this Honourable Court to seek approval.’
Placing an emphasis on sustainable finances, Minister Ashford announced a review is to be undertaken by the Treasury in order to provide a clear direction for the scope, policies and funding strategy for the National Insurance Fund.
In addition, a project to transform the Island’s social security system has been relaunched – after being paused during the pandemic – aimed at streamlining processes and modernising the way services are delivered, while ensuring it remains both equitable and affordable.
Minister Ashford revealed that providing ongoing support in relation to the pandemic has cost around £24 million during the current financial year to date through the various support schemes for individuals and businesses.