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Deputy Gavin St Pier, President of Policy & Resources makes Statement

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Thursday 02 March 2017

On the need for continued financial restraint despite 2016 surplus.

Deputy Gavin St Pier, President of the Policy & Resources Committee, said:

'As I made clear when confirming our year-end surplus of £15m, in terms of our long-term financial outlook we are by no means out of the woods yet.

That we ended 2016 in surplus is a significant achievement to be celebrated, however substantial fiscal challenges remain so it is crucial that we continue with firm financial discipline and pay restraint. Many of the factors that contributed to the surplus were one-off in nature and many of the pressures remain.  As such, we must not take our foot off the pedal in our collective efforts to drive down the cost of providing public services.

The States as a whole agreed, as part of the 2017 Budget, that all committees apart from Health & Social Care would reduce spending by 3% this year. The Policy & Resources Committee is receiving regular updates on how this is being met and we are confident those targets are achievable.

In addition to this year's target, our Committee outlined in the Budget report that we believe the States should be seeking further reductions of 5% in both 2018 and 2019. It is important to clarify that the 5% reductions are collective aims for the States as a whole, and have not been levied on any committee at this stage. The States will have an opportunity to consider the matter in June during the debate on phase 2 of Future Guernsey, the Policy & Resource Plan, which will include a proposed medium term fiscal strategy for the period of the Plan up to 2021. Following this debate, detailed proposals for reductions in 2018 and 2019 would then be included in the relevant Budget Reports and would be subject to States debate and approval.

At this stage, the Policy & Resources Committee has no reason to revise the estimates set out in the 2017 Budget. However, work is now being carried out to consider the extent of any underlying improvement and what that may mean for the 2017 position and beyond.

We are under no illusion that a 5% reduction in States spending in 2018 and 2019 will be a challenging target. I have said many times that delivery will only be possible through real change and transformation to the way public services are provided. The Public Service Reform agenda, which is being led by the States Chief Executive and his senior team, is imperative if we are to deliver the savings required to reinvest in public services - either in meeting increased demand in certain areas or funding new or enhanced services. Further exercises to benchmark and baseline the budgets for the three largest committees, Health & Social Care, Education, Sport & Culture and Home Affairs will enable us to identify and plan for changes in the delivery of services. 

Last year's financial surplus was evidence that we are heading in the right direction, but we must continue with true joint working across services and the political committees if we are to secure sustainable public finances in the long term.'

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