A robust five-year financial plan will enable the Isle of Man Government to reinforce strong financial foundations while driving the aims of Our Island Plan and the Economic Strategy.
Treasury Minister Dr Alex Allinson MHK delivered the 2023 Budget in Tynwald today (Tuesday 21 February) and presented Members with a document that looks forward with purpose while addressing the challenges at hand following two years of economic turbulence.
While stressing the need to be fully aware of challenges being felt across the globe, the Minister made a commitment that Treasury’s priority was to invest in the community:
‘The revised five-year financial plan is a foundation on which to build and grow a more sustainable economy.
‘The economic strategy has ambitions to further develop the infrastructure and services of our community to plan for an estimated population of 100,000 by 2037 and to generate over £200m of additional annual income to reinvest in services and our quality of life by 2032.
‘In order to do this we must ensure our finances are strong and are able to support the strategy to invest in our people, our businesses and our island’s future.’
Supporting this approach, and in line with an announcement made by the Treasury Minister in July 2022, a £100m Economic Strategy Fund will be established in the 2023-24 financial year.
Further investment will be possible following injections to existing funds focussing on Healthcare Transformation, Project Development, and Agriculture and Forestry.
Government revenue spending for 2023/24 is budgeted at £1.2 billion, representing £15,243 for every person on the Island.
In terms of departmental budgets, Health and Social Care will receive an overall increase of £20.5m, Education, Sport and Culture £11.52m, Infrastructure £4.66m, Home Affairs £2.16m and Environment, Food and Agriculture £2.03m.
To balance the accounts, the five-year plan relies on transfers from general reserves to bridge the gap between income and expenditure, to support Government activities and stimulate the economy. Withdrawals are, however, planned to diminish as Government establishes ways to broaden its income base and increase revenue through the successful delivery of the Economic Strategy.
The Treasury Minister told Members:
‘To fully fund this investment we will, once again, need to draw down heavily on reserves to bridge the gap between income and expenditure. The Budget shows an initial annual structural deficit of £152 million which will gradually reduce over the following four years.
‘Our significant reserves have been established by previous generations and the work and effort that went into building this should never be underestimated. It is essential that we develop our economy and increase Government revenue so that we can start to replenish these reserves for the benefit of the generations to come.’
Taxation rates remain largely unaffected for the majority of people with the personal income allowance staying at £14,500 for individuals and £29,000 for jointly assessed couples, and the 10% band fixed at £6,500.
A change has, however, been introduced for higher earners whose personal allowance will be reduced by £1 for every £2 above an income of £100,000, or a jointly assessed couple’s total income is above £200,000.
The Treasury Minister said:
‘In essence this means that a person with a total income of £129,000 or over, or £258,000 or over in the case of a jointly assessed couple, will have their personal allowance reduced to zero. This progressive measure means that those who have more, pay more.’
Addressing the needs of business, Minister Allinson confirmed the National Insurance Holiday Scheme, designed to attract workers and returning students to the Island, will continue for another year with further improvements.
Workers should note that there are no changes to Class 1 and 4 National Insurance rates for 2023-24. The lower earnings limit for employed contributors will remain at £123 per week, but adjustments are being made to certain thresholds and limits.
The annual uprating of benefits is expected to raise spending by £26.4 million in 2023-24.
Maternity, paternity and adoption allowances will increase by 16.8%, while the basic state pension and Manx state pension will see an uplift of 10.1%.
Income support, child benefit, Employed Person’s Allowance and income-based Jobseeker’s Allowance will rise by 9.8% rise and carer’s allowance by 10.7%.
The Treasury Minister said:
‘Recognising the valuable role that carers play in our community, and to provide additional support to those who may have given up or refrained from work in order to look after another person, I have decided to increase the rate of carer’s allowance by a further £15 a week. This builds on the 15 per cent increase provided last year. This will result in additional spend on this benefit of just under half a million pounds a year, assisting almost 600 carers.’