Approved Government Plan and Annex 2024-2027.

STATES OF JERSEY

APPROVED GOVERNMENT PLAN AND ANNEX 2024-2027

Presented to the States on 29th February 2024 by the Chief Minister

STATES GREFFE

2024  R.34

14 DEC 2023

Government Plan

2024 -2027

GP

Government

Programme

P.72/2023 as amended and approved by the 2024-27 States Assembly on 14 December 2023

CONTENTS

Government Plan Summary  3 Foreword by the Chief Minister and Minister for Treasury and Resources  7 Economic Context  12 Sustainable Wellbeing  17 Financial Strategy  24 General Revenue Income  31 Public Sector Spending 2024-2027  48 Delivering Value for Money  55 Capital and Other Projects 2024 - 2027  59 New Healthcare Facilities Project  78 The Government of Jersey  81 Balance Sheet and States Funds  81 Financial Matters Under Development  98 Appendix 1: Key to Abbreviations  101 Appendix 2: Proposition and Summary Tables  103 Appendix 3: Supplementary Financial Tables  115 Appendix 4: Administrative Tax Measures  118

Government Plan 2024 – 2027 (P.72/2023) as amended

On 14th December 2023 the States Assembly approved the Government Plan 2024 – 2027 as amended (a list of adopted amendments is included in Appendix 2).

This document sets out:

• The final Government Plan as amended by all amendments agreed by the States Assembly, together with any necessary consequential and minor factual corrections.

• The P.97/2022 Proposition and Summary Tables, as amended by the States Assembly (see Appendix 2).

Government Plan in brief

The Government Plan is the government s budget document for the next 4 years. It sets out the income and expenditure that Ministers are proposing. It also shows how taxpayers money is spent on delivering services, infrastructure and facilities to Islanders. It builds on the Council of Ministers Common Strategic Policy and the Government Plan 2023 to 2026.

This Government Plan covers the period from 2024 to 2027.

For more information on the government s priorities for 2024, visit gov.je/GovernmentProgramme.

2024 Highlights:

General Revenue Income: Government spending on  Spending on buildings

delivering services to Islanders: and infrastructure:

£1.2bn £1.16bn £113m

New Healthcare  Increased single person  Balance in the Strategic Facilities:  tax allowance in 2024: Reserve:

£

£52m £20,000 £1.1bn

Government Plan 2024-27 - Delivering on our priorities

Tax allowances   Increasing the rate of  Improving standards of Housing and  increased by 7.7%. home ownership with  rental properties through

Cost of living £10m of government  the new landlord licensing

support. scheme.

Implementing a new  Supporting technological  £4.2m new investment in

economic strategy which  innovation through the  rural and marine sectors. Economy  will help ensure Islanders  Impact Jersey scheme.

and Skills enjoy a better standard of

living in 2040 than they

do today.

£2.6m new funding for  Expanding the free  Continuing investment in Children and  frontline services to  primary school meals  facilities, including Mont a

Families support children and  project to all States  L Abbe secondary school young people. schools. and Le Squez youth club.

Continuing to develop  Developing the Jersey  Reinstating £77m

the older persons living  Pension Saver to improve  government funding to Ageing  forum to make sure that  financial wellbeing in old  the Social Security Fund

population the older community are  age. to support the state included in government  pension.

decision making.

Continued funding for  Focus on recruitment and  £24m new funding for Health and  reduced GP fees funded  retention of frontline staff  health service pressures

wellbeing from the Health Insurance  in health and education. and public health.

Fund.

Responding to the  Delivering the first phase  Speeding up Jersey s

Climate Emergency  of the Carbon Neutral  transition to electric Environment through initiatives such as  roadmap to deliver our  vehicles through the

the ebike scheme and low  overall objective of being  Electric Vehicle Purchase carbon heating incentive. a net zero Island by 2050. Scheme.

Partnering with charities  Dedicating 1% of  Spending a total of £11.7m

and community groups  government spending  on renovating the Jersey Community to deliver activities that  to Arts, Heritage and  Opera House.

improve Islanders wellbeing  Culture.

through the community

compass scheme.

Government Finances 2024

£286m Health and Community Services

Spending by Department

in 2024:

£27m States of Jersey Police £20m Jersey Overseas Aid

*Treasury and Exchequer budget  £3m Ministry of External Relations

includes £94.9 million grants to

Social Security Fund and Long  £43m

Non-Ministerial and Other States Bodies Term Care Fund.

£113m Capital expenditure

in 2024 including:

£45.7m Estates

 £30m Infrastructure

£113m £20m  IT

 £10.6m Replacement assets

 £6.7m Feasibility and contingency

£452m expenditure from Social Security Funds

in 2024 including:

£80m

Long Term Care benefits (Long Term Care Fund)

£320m  £52m Health Pensions and other benefits  benefits (Health

(Social Security Fund) Insurance Fund)

Budget measures for 2024

Measures to support innovation and enterprise

£450,000 • 150% super-deduction for RegTech in tax incentives to grow Jersey's economy investment

• 60-day tax exemption period for short-term business visitors

• Credit-based relief for foreign tax on employment income

Personal income tax thresholds and child allowances

£1,450 £250

Increase for individuals Increase in child allowance

£400

£2,300 Increase in additional allowance Increase for married and

civil partners £ £550

Increase in childcare tax relief £600 £1,400

Increase for second earners Increase in higher childcare tax relief

Alcohol duty Fuel duty

+2p  0p

on a pint of beer per litre

(below RPI increase) (frozen for 2024)

Tobacco duty Vehicle Emissions Duty

30% +£1.38

increase for per 20 pack highest CO2

emitting vehicles

(201g/km or more)

Foreword by the Chief Minister and Minister for Treasury and Resources

Investing now and into our future.

It is our privilege as Chief Minister and Minister for Treasury and Resources to introduce the Government Plan 2024-2027, which reflects the commitment of the Council of Ministers to the well-being and prosperity of our Island community.

The proposals contained in the plan express our ambition to deliver on Islanders' current needs and invest in their future. It puts the needs of Islanders first and supports hard-working individuals and families.

This plan follows the endorsement of the Common Strategic Priorities by the States in October 2022 and builds on the foundation laid out in the Government Plan 2023-2026, as we continue to ensure the prudent and effective allocation of public funds.

We want to ensure that taxpayer's money is spent in a way which reflects our wish to meet new priorities whilst continuing to invest in existing essential services and safeguarding the long-term financial sustainability of our Island. Our focus is on encouraging consistency, resilience and maintaining a steady course with our public finances.

The Government Plan 2024-2027 is linked to individual Ministerial Plans, each developed to outline specific objectives and priorities for 2024. These Ministerial Plans execute the broader vision of this Government Plan, which is to deliver tangible improvements in the lives of Islanders and to create a community where families thrive.

Investing now

Supporting Islanders through the Cost-of-Living crisis:

• Keeping money in Islanders' pockets through increased support and allowances, with a special focus on those most affected by rising prices. Building on tax threshold increases from the previous Government Plan, we are proposing to further raise the threshold before tax is paid – for individuals to £20,000; for married and civil partners to £32,050; and for second earners to £7,950.

• Balancing alcohol duty[1] increases in a manner which recognises the health consequences of alcohol consumption and supports the hospitality industry with below inflation increases.

• After freezing road fuel duties[2] in 2023, fuel duties are frozen once again following an amendment to the Government Plan.

• Continuing to subsidise GP fees[3] through funding from the Health Insurance Fund, making healthcare more affordable for those most in need.

Improving access to housing:

• We are renovating the Assisted Purchase Home Ownership scheme, to help address the Island's housing crisis. New criteria will aim to make homeownership more attainable for a broader range of Islanders, particularly first-time buyers who require financial assistance to enter the housing market.

• Recognising the housing needs identified in the Bridging Island Plan and further supporting our policy response to the Island's housing crisis, we are investing in the Island's surface water and foul sewage drainage network. This Government Plan provides an initial investment of £15.6m to meet the needs of the project in 2024 and 2025.

• We are proposing to increase the first-time buyer stamp duty threshold to £700k, thus easing part of the financial burden and helping people to get on the property ladder.

• Improving standards of rental properties through the new landlord licensing scheme.  

• We will develop a scheme to encourage and incentivise right-sizing, to be presented to the States Assembly before 31st May 2024, with the financial implications forming part of the Government Plan 2025-2028[4]

Providing good quality healthcare for the future:

• This Government Plan proposes significant additional investment in the Island's healthcare system, with an increase in spending on health and community services from £249m to £286m.

• In addition to inflation allocations for all departmental budgets, a further £8m per annum has been provided to maintain health & community care standards.

• As part of the turnaround of health and community services a financial recovery plan has been developed and will deliver £25m in efficiencies per year by 2025.

• The financial recovery plan has developed over 50 schemes which are expected to deliver these savings, through focusing on delivering value for money in healthcare services including improved recruitment and retention of frontline staff in health.

• The recovery plan has identified a £15m structural deficit in the financing of the Health and Community Services department. The Government Plan has provided for that legacy underfunding and a further £6m in 2024 whist the financial turnaround is delivered.

• Covid-19 has shown the need for greater resilience and support for the public health function, therefore this plan provides £3m on an ongoing basis. The funding provided for the public health function is predicated upon a freeze on any recruitment within the service, whether due to increases in staff numbers or fulfilment of vacancies, until a full business case for the public health function has been produced, scrutinised, and approved by the States Employment Board.[1]

Delivering public services:

• This Government Plan funds the provision of affordable public services, supporting the sustainable wellbeing of Islanders whilst protecting services from the worst impacts of inflation.

• This includes the provision of education to our children, providing healthcare to Islanders and ensuring public safety through our blue light services and the justice system.

• In addition to the investment set out above, Ministers continue to invest in public services for islanders, by providing an additional £27m per year.

• We are also investing in long-term projects through a £113m capital programme in 2024 including infrastructure and public estate developments.

Investing in our future

Helping children & families:

• Raising childcare allowances to £3,700; with an increase in additional child allowance to £5,550, increasing childcare tax relief to £7,600, and increasing higher childcare tax relief to £19,700.

• Increasing investment in facilities, including Mont à L'Abbé secondary school and Le Squez youth club. Investing £1.7m in running additional specialist children's homes to support our most vulnerable children. Investing £2.6m in frontline services to support pandemic recovery among children and young people.

• Ministers are committed to creating an innovative and inclusive education system to ensure that we have opportunities available for all children and young people to learn, progress and prosper both academically and socially.

• Maintaining investment in the Education Reform and the Inclusion Programme, as well as Early Years and improvements in Children's Social Care, so we continue to ensure all children, young and their families, especially our most vulnerable, can thrive.

• We will review feasibility options for expanding Early Years nursery provision and childcare support to benefit all children in Jersey from nine months to three years old, with a report detailing any action plan from the Government to be presented to the States Assembly before 1st September 2024, and any financial implications forming part of the Government Plan 2025-2028.[1]

• Expanding the free primary school meals project.

Delivering New Healthcare Facilities:

• The Council of Ministers has agreed to proceed under a phased approach to delivering New Healthcare Facilities by spreading multiple projects over a longer period to manage financial and economic risk and enable greater benefit for the local economy.

• This approach allows Ministers and the Assembly the flexibility to proceed with these projects once we are confident they are affordable. It will also provide better opportunities for modern methods of construction and minimise delays in construction due to site size and accessibility.

• £52m in 2024 will allow for the development of the necessary design and planning work to a more advanced stage. We will continue to monitor expenditure carefully whilst delivering the necessary work to provide a robust proposition for the States Assembly to debate in summer next year.

• Delivering New Healthcare Facilities and getting the best possible value for Jersey, without further delay, is a top priority. We are working on the programme, which estimates that the total additional funding to deliver an acute facility at Overdale to be a maximum of £675m and a further £35m to make meaningful progress on development of the plans for future phases over this Government plan period. These are current estimates including provisions for inflation and other contingencies.

Developing our economy and skills:

• Supporting our farmers and fishers with £4.2m investment in rural and marine sectors.

• Investing in innovation and enterprise technology through the Impact Jersey scheme.

• £450,000 in tax incentives to grow Jersey's economy including:

• 150% tax super-deduction for RegTech investment.

• 60-day tax exemption period for short-term business visitors.

• Credit-based relief for foreign tax on employment income.

Creating a more inclusive and vibrant community:

• Partnering with charities and community groups to deliver activities that improve Islanders' wellbeing through the community compass scheme.

• Maintaining 1% of government spending to Arts, Heritage, and Culture.  

• Continuing to progress the redevelopment of fort regent.

• Investing a total of £11.7m for renovating the Jersey Opera House.

The Government Plan 2024-2027 is evidence of our dedication to the prosperity, well-being, and sustainable future of our Island and its residents. We are resolute in our commitment to building, investing, and supporting Islanders, both for the present and the generations to come.

Economic Context

The International Economic Outlook

The latest forecast (July 2023) from the International Monetary fund (IMF) has projected a fall in global growth from an estimated 3.5% in 2022 to 3% in both 2023 and in 2024, which remains weak compared to historical standards[1]. International growth levels of around 3% are generally characterised as very poor. Whilst growth appears to have stabilised in emerging economies, growth in advanced economies may fall in 2023, as monetary policy continues to tighten to combat inflationary pressures, before stabilising through 2024. Downside risks to the global economy include persistent high inflation, geopolitical and economic factors including the ongoing war in Ukraine, a slowdown in China's growth and financial sector turbulence.

Inflation in the UK has peaked and has been falling through the first half of 2023 (as energy and food prices ease). However, it remains above the Bank of England's target of 2% and with some concern on the trajectory of core[2] inflation, is likely to now remain so for longer than previously projected and well into 2024. As such, the Bank of England has raised the Bank Rate five times[3] in 2023 with latest forecasts suggesting that inflation will return to the target rate of 2% by the middle of 2025. Both the continuing inflationary pressures and the higher interest rates pose risks to the economy of Jersey, with interest rates also providing some opportunity for the financial services sector.

Figure 1: Economic growth forecasts for advanced and emerging and developing economies. Source: International Monetary Fund, World Economic Outlook July 2023

Jersey's Economic Outlook

Despite the poor global outlook and a weak UK economy, Jersey's economy continues to prove resilient to these negative macroeconomic pressures. The 2021 Gross Value Added (GVA) for the island was £5,132m with a particularly strong rebound from the construction sector. The size of the economy has returned to slightly below 2019 levels in 2021 and is expected to have grown strongly in 2022[4] and remain positive until 2025.

Increases in the Bank of England's Bank Rate are expected to benefit growth in the financial sector in 2022 to 2024 as net interest margins widen, however, recovery in the hospitality and other non-finance sectors may be hampered due to high input costs and other risks associated with low business investment and reduced household spending.

Following the peak of 2,290 registered individuals in May 2020, the number of people Actively Seeking Work (ASW) continues to remain low and currently stands at 610[5] as of June 2023, indicating a position of near-full employment in the Jersey economy. This reflects wider trends across Europe and the UK of high levels of employment, without significant growth in productivity or economic activity, which may keep inflation higher for longer.

Figure 2: Actively Seeking Work (non-seasonally adjusted). Source: Statistics Jersey

The Business Tendency Survey (BTS) (June 2023[6]) provides a real time indicator for business confidence and output and showed that business activity was strongly positive for the finance sector and neutral for non-finance. The hospitality sector was particularly negative as high inflation and cost-of-living affects behaviour of Islanders and tourists. High input costs and product prices were consistently felt across sectors.

Figure 3: Weighted net Balance of responses to Business Activity' question of the Business Tendency Survey, by sector. Source: Statistics Jersey

The Fiscal Policy Panel (FPP) provided an updated set of economic assumptions[7]. Real GVA growth has been uprated since its annual report in November 2022. Higher economic activity for 2022 to 2024 is largely driven by financial services profits and higher market expectations for interest rates. Inflation in Jersey peaked at 12.7% in Q1 2023 but is expected to fall more gradually. The FPP has highlighted the risk for Jersey that its tight labour market may lead to higher wages, which in turn could cause inflation to be higher for longer.

Figure 4: Economic forecast showing changes in GVA (Index 2019=100). Source: Fiscal Policy Panel

Figure 5: FPP inflation forecast (July 2023)

Figure 6: House Price Statistics- Annual House price Index, Retail Price Index and Average Earnings Index. Source: Statistics Jersey

There are ongoing issues within the economy around the affordability of housing. Figure 6 above shows the widening of the gap between wage growth and housing price growth over the last 25 years which has accelerated dramatically in the last 4 years. This causes significant pressure for the population and acts as a blocker to growth as well as causing difficulties for individuals and families. However, the FPP has forecast a cooling in house prices as mortgage costs increase, reducing the demand for properties.

Fiscal Framework

The Fiscal Policy Panel is established by the Public Finances Law, which enshrines its independence and sets requirements for it to provide an annual report on Jersey's economy and Government finances, and to inform the preparation of the Government Plan. The Council of Ministers or the Minister for Treasury and Resources can also request other reports on specific subjects.

The FPP will continue to be responsible for monitoring the application of the fiscal guidelines.

The fiscal framework remains an important pillar of Jersey's economic and fiscal policy and sets the medium and long-term aims that help to inform budgetary decision making, with particular regard to the balance of income and expenditure (i.e. budget deficits or surpluses).

The key guidelines identified in previous Government Plans are to:

• Seek to increase the Strategic Reserve over the long term and public sector net worth, while heeding the advice of the FPP on borrowing and net financial assets.

• Run a primary structural current balance or surplus in the long-term until the Strategic Reserve is judged large enough to meet its objectives.

• Borrow only to finance investment (or refinance liabilities), except under times of economic duress, and monitor the impact on net financial assets.

The Fiscal Framework continues to be kept under review and will be updated if necessary.

Sustainable Wellbeing

Island Outcomes and Sustainable Wellbeing

In the Common Strategic Policy 2023-26, the States Assembly endorsed the Island Outcomes identified during the 2018 Future Jersey consultation. The Council of Ministers has committed to strive to achieve the long-term vision of Future Jersey and work towards delivering the ten Island Outcomes arising from it. The Island Outcomes are split across three wellbeing aspects: Community, Economic and Environmental.

Similarly, the Public Finances (Jersey) Law 2019 requires the Council of Ministers to take into account the sustainable wellbeing (including the economic, social, environmental and cultural wellbeing) of the inhabitants of Jersey ("Islanders") over successive generations when preparing the Government Plan each year.

Progress over time towards the Island Outcomes and the sustainable wellbeing of Islanders over successive generations is monitored using the Island Indicators which are updated over time and published on the Jersey Performance Framework.

Jersey Performance Framework

The Jersey Performance Framework is used to report on the Government of Jersey's performance. It is underpinned by a shared ambition for the sustainable wellbeing of current and future Islanders.

The Jersey Performance Framework comprises:

• The Island Outcome Indicators; and

• The Service Performance Measures

The Common Strategic Policy (CSP) included a commitment to improve the relevance and presentation of the indicators. Work is underway to review and refresh the Island Outcome indicators and to improve their presentation on the website.

Common Strategic Policy 2023-26

In the Common Strategic Policy 2023-26, the Council of Ministers established their CSP priorities. These priorities are delivered through Ministerial Plans which are updated on an annual basis.

Ministerial Plans for 2024 are presented alongside this Government Plan. They set out Ministers' priorities and the legislative programme for 2024.

Sustainable Wellbeing and the Government Plan

This Government Plan supports the sustainable wellbeing of Islanders in a number of different ways.

When considering policy issues within their remit, Ministers take into account the well-being of Islanders and the long-term impacts of the policy. This is expressed through policy documents published by Ministers. Information on key public policies is published on gov.je. This includes a description of the policy area, links to relevant policy documents and the applicable Island Outcome Indicators that are used to track progress.

The Government Plan contains approvals for the Council of Ministers' income and spending proposals for the next 4 years. These take into account both the sustainable wellbeing of Islanders and the sustainability of public finances (also a requirement of the Public Finances Law).

The Government Plan approves heads of expenditure, the majority of which are used to fund the provision of public services which support the sustainable wellbeing of Islanders. This includes, for example the provision of education to our children, provide healthcare to Islanders and ensure public safety through blue light services and the justice system.

Further detail on the amounts allocated to each head of expenditure is set out in the public sector spending section of this report.

In addition, new activities that receive funding in the Government Plan are required to complete a business case. The business cases set out the objectives, benefits and performance measures for that particular activity. The business cases help Ministers to balance competing demands for funding.

Taking all this into account, the link between the three wellbeing aspects (Community, Economic and Environmental) and some of the specific activities in the Government Plan is set out below.

Risk

Alongside the sustainable wellbeing of the inhabitants of Jersey over successive generations, it is also important that the Council of Ministers take into account the risks to Jersey and to the running of the Government of Jersey when considering how best to prioritise and allocate its resources.

Community Wellbeing

Assurance on the quality and safety of HCS care. A number of reviews, including most recently a review into rheumatology services, and the Mascie- Taylor report have revealed that despite the hard work of staff, there is no effective assurance system in place, data quality is poor and serious longstanding cultural issues remain unresolved. The Mascie- Taylor report identified 61 recommendations to be addressed. These recommendations have been incorporated into a significant improvement programme for secondary care.

Ensuring we have sufficient capacity for children's residential care. Sufficiency planning to meet demand for children receiving residential care is a priority and is an identified principal corporate issue. This Government Plan therefore makes provision for the funding of an additional two children's homes to help meet the need under the Social Care Reform Programme Phase 2.

Funding has also been made available from 2024-27 to meet priorities in the Children, Young People, Education and Skills Department (CYPES) and for young people not in employment education or training.

There is also additional capital funding being made available within this Government Plan for school and educational developments.

Economic Wellbeing

The Island Outcomes on affordable living, business environment and jobs and growth have been impacted by external macroeconomic and geopolitical pressures since 2022. This is likely to remain a primary area of risk focus for governments across the world into 2024-25 according to the World Economic Forum in its most recent Global Risks Report.

Inflationary Pressures. Global and UK inflationary pressures continue to affect the Jersey economy in 2023 and are particularly impacting on the most disadvantaged in society. This is reflected in the fact that it is still currently a principal issue on the Corporate Risk register. The Government has previously put mitigations in place via the 100 Day Plan, Cost of Living Strategy Group, mini budget and the Government Plan 2023-26. This Government Plan also proposes increases to tax allowances and childcare allowances in line with increases in average earnings.

Loss of Economic Prosperity. A failure to sustain, diversify and grow could impact economic prosperity negatively. Consequential damage could be to the public finances and ability of the Government to deliver high quality and increasingly costly public services (such as health) and support. Mitigations include diversification of the local economy; delivery of the Financial Services policy framework; and the Future Economy Programme (Economic Framework). Ensuring that economic growth is a priority of government, led by the Economy Department will help mitigate these medium term and longer terms threats that the government faces.

Environmental Wellbeing

A risk of lack of capacity for liquid and solid waste disposal. The Government Plan includes mitigations through investment in liquid waste infrastructure and in other key infrastructure such as the La Collette waste site. Other mitigations include engagement with industry to reduce incoming solid waste volumes.

Corporate Performance

Like all governments, Jersey's faces the constant threat of a cyber-attack and, as a consequence, is undertaking targeted action to enhance our technology estate, data management and information security against a backdrop of increased global cyber security risk from hostile state and criminal activity. Other measures to mitigate potential loss include the establishment of the Cyber Security Centre (CERT), regular threat monitoring and horizon scanning.

The Government Plan 2024-27 makes further provision under Cyber Security Programme 2024-27 to help to mitigate the Corporate Risk of Cyber Security.

An increasing risk that there could be service disruption and an impact on the ability to provide quality services to Islanders as a result of insufficient resources allocated to property maintenance. Resources are being diverted from reactive maintenance to allow greater effort to keep Government properties compliant with legislation and statutory inspections. Assets are being managed, however there is a risk that this could result in decaying asset values. Other potential consequences are improvement and enforcement notices; health and safety incidents; harm to people/loss of property; litigation and reputational damage.

To mitigate these various risks, departments have identified the highest priorities alongside work undertaken through a Government wide condition survey of the estate. In identifying the highest priorities, additional funding is being made available to both enhance reactive maintenance budgets and renovate or replace ageing equipment and buildings to enhance their useful life and prevent further decay in the overall estate.

Effective workforce planning and recruitment and retention practice. Resourcing challenges can impact service quality and capacity, result in higher costs, and negatively affect the government's reputation as an employer. Mitigations include improving recruitment processes and systems; workforce and succession planning; alignment with the Government Plan; Exit and Be Heard surveys; People and Culture Plans and employee led networks.

Financial Strategy

Financial Principles

The Council of Ministers agreed to maintain the following financial principles to be used as a framework for decisions making in preparing this Government plan.

Tax Policy Principles

The following tax policy principles established in previous Plans continue to be used in this Plan.

Financial Strategy for 2024-2027

This plan has been prepared in the context of ongoing economic uncertainty, with the global economy still feeling the impact of the ongoing war in Ukraine, the aftermath of the Covid-19 pandemic, and other geopolitical developments. We expect to see inflation persisting at higher levels for longer, driving the expectation of interest rates remaining higher for longer than anticipated in last year's plan.

Whilst these changes have resulted in an additional improvement in the forecasts for Government income, it also places pressures on both Government expenditure and Islanders' finances.

In developing the plan, the Council of Ministers have again had to contend with significant competing pressures and have considered the recommendations from the Fiscal Policy Panel.

In particular in making their decisions, a balance between the need to:

• mitigate the impacts of the ongoing cost of living crisis.

• meet the housing needs of Islanders.

• ensure the Island can recruit and retain a suitable workforce.

• invest in the economy to ensure Islanders' future prosperity.

• protect key government services from the impacts of rising costs and provide targeted investment.

These priorities are in natural tension, both in terms of the availability of financial resource, and the impact that growth in the public sector has on the availability of labour and housing in the wider economy. The plan presented provides an appropriate balance across all of these considerations.

The financial strategy for 2024-2027 builds upon the previous Government Plan and applies the agreed financial principles to these competing priorities. The key elements of the medium-term financial strategy for the Government 2024-2027 are:

• This is an affordable and deliverable plan, with public finances balanced across the plan period.

• Following the mini-budget in 2023, this plan continues support for more vulnerable Islanders impacted by the cost-of-living and includes budget measures that are designed to give back money to taxpayers. Through increasing personal and child allowances, this plan puts back £23m into Islanders' pockets.

• The plan addresses underlying structural deficits in Health and Community services that cannot be addressed purely through the Financial Recovery Programme (FRP), which will deliver substantial efficiencies within healthcare services over the coming 2 years.

• The plan incorporates budget measures for innovation and investment in economic growth, to improve productivity and ensure our future prosperity.

• The plan includes vital investment in 2024 and 2025 in our liquid waste infrastructure, allowing the infrastructure department to rapidly progress with key projects to address existing network issues and ensure that the network has sufficient capacity to support the delivery of new homes. This is in advance of a sustainable funding mechanism to be agreed in the next Government Plan, for necessary future investment.

• There is a continued focus on ensuring that government services represent good value, through the ongoing Value for Money programme.

• Work continues to drive forward the delivery of New Healthcare Facilities for the Island. This plan includes approvals to progress with work in 2024, with proposals to be brought to the States Assembly next year pending completion of more detailed work, including a business case.

The plan also sets out longer-term strategic direction in a number of critical areas:

• It establishes the long-term financing strategy for the Carbon Neutral Roadmap, setting out how the costs of transition to net zero with be met over the next 30 years.

• The States grant[1] to the Social Security Fund will be reinstated in full during the plan. Following an amendment to the Government Plan, the grant will be reinstated at the full formula value for each year of the plan. In years 2024 and 2025, this will be part funded through a transfer of £20m from the Strategic Reserve in both of those years, to be repaid in 2027.

• It provides an update on progress in developing a sustainable model for health funding, which will include consideration of the future of the Health Insurance Fund.

Sustainable Public Finances

The Public Finances (Jersey) Law 2019 (PFL) sets out a requirement for each Government Plan to have regard to the long-term sustainability of the Island to ensure that we safeguard it for future generations.

This plan delivers budgets that are balanced across the plan. This is important to ensure that we are spending within our means and making adequate provision for the replacement of our assets. Whilst the higher interest rates now expected have improved income forecasts, the accompanying higher inflation also places additional pressures on expenditure. This plan takes actions to retain balanced budgets across the period of the plan, with a modest deficit in 2024 created by temporary baseline funding for Health and Community Services. This is then offset by modest surpluses in subsequent years, which are used to fund the capital programme.

If funds become available through additional income or reduced expenditure over the period of the plan, these will be used to reduce borrowing and/or begin to rebuild the Stabilisation Fund in line with the advice of the Fiscal Policy Panel (FPP). This has been formally recognised through the inclusion for approval of transfers to the fund, contingent on the monies being available, at the end of 2023 or 2024.

The value of the Strategic Reserve is forecast to be preserved, subject to short-term volatility, and Ministers will continue to consider options to protect and grow the fund over the long term.

Ministers are also committed to ensuring that the Social Security Fund remains sustainable for future generations. The actuarial review of the Social Security Fund was completed in May (R.96/2023[1]), with the financial projections having improved since the last review at the end of 2017. The review concludes that the Fund remains financially healthy overall, with sufficient funds throughout the 60-year projection period (under all migration scenarios except for nil migration). Current rates of contributions and benefit are forecast to be sustainable in the short to medium term (subject to sufficiently high in-migration levels).

The annual States Grant[2] payment into the Social Security Fund will be reintroduced in 2024 and paid in full across the plan period.

The Health and Social Services Minister is currently undertaking a wide review of the Island's health and care cost, which will inform options for the future funding of our whole health and care system. This work will continue throughout 2023 with options being brought to the States Assembly in 2024.

The phased approach to providing New Healthcare Facilities is also designed to ensure that each phase of the project is only committed to once an affordable financing strategy has been determined. This protects the public finances from being over-committed, helping ensure their long-term sustainability.

General Revenue Income

The Government funds ongoing annual expenditure and investment in assets through three main sources: general tax revenues, other government income and departmental income. These three sources of revenue are paid into the Consolidated Fund.

General Tax Revenues

General tax revenues provide the main source of funding for the Government, with four main tax types.

Other Government Incomes

The Government also receives income from four other sources, as set out in the table below.

Departmental Income Sources

In addition to amounts paid directly to the Consolidated Fund, Government departments receive money from fees and charges for individual services. These amounts are included within individual net revenue expenditure allocations and are estimated at £107m in 2024. The number of different sources of income reflects the variety of services provided by the Government. This includes fees for private patients at the hospital, school fees, fees for the disposal of inert waste, planning fees, and income from rents and our sports facilities. This income is included in department Heads of Expenditure.

Special Funds, including social also receive income designated to them, as well as the investment returns on fund balances. This is then used for expenditure in line with the purpose and objectives of the funds.

Latest Income Forecasts

The Income Forecasting Group (IFG) advises on the forecasts of all States income from taxation and social security contributions. Membership of the group includes senior civil servants, the Government's chief economic advisor as well as at least two external members.

Since the summer 2022 forecast used as the basis for Government Plan 2023-2026, the IFG have produced two further income forecasts, in spring 2023 and summer 2023[1]. The summer 2023 forecast is the most recent forecast, reflecting the latest economic assumptions produced by the independent Fiscal Policy Panel in July 2023. The forecast is published alongside the Government Plan. The IFG also produced a spring 2023 forecast published as R.89/2023[2].

The global macroeconomic outlook continues to evolve in a rapidly changing environment. Since summer 2023, IFG revised forecast report the global economy has remained weak, with the continued war in Ukraine and a slowdown in China's growth contributing to the continued rising inflation.

The FPP economic assumptions reflect the latest local and international developments to July 2023. The main variations to the economic assumptions used in the IFG forecast for summer 2023 since the last Government Plan include:

• Higher interest rates and a reprofiling of the growth from financial services profits leading to further growth in 2022.

• Higher forecast inflation in 2023 and 2024, with inflation projected to fall steadily after peaking at 12.7% in Q1 of 2023 to reach 2.8% in Q4 2024. This is due to the expectation that inflation will remain higher for longer.

• Average earnings are projected to rise almost alongside inflation, due to a tight labour market keeping demand for skills high and thus wages reflecting this.

• Employment is assumed to rise consistently in the financial services sector, whilst the non-finance sector is expected to see a period of above trend growth reflecting strong post-pandemic recovery.

• Housing transactions are forecast to fall by 50% in 2023, with house prices also expected to slightly decrease by 2% in 2023, due to the impact of rising interest rates on mortgages.

The IFG's summer 2023 forecast has been developed as a central forecast' to represent the IFG's view of the most likely outcome.

The IFG's latest forecast of total States income reflects:

• The FPP's economic assumptions of July 2023 and other related economic data from Jersey.

• General revenues income outturn for 2022.

• Initial information on general revenues income for the first two quarters of 2023.

• Forecasts from Treasury for other income; and

• Market intelligence from the IFG.

The summer 2023 forecast is the latest forecast produced and covers the years 2024-27, the forecast assumes standard tax policy where relevant.

£ Millions IFG Forecast Range 1,500

 1,400 1,300 1,200 1,100 1,000 900

 800

2022 2023 2024 2025 2026 2027 Central Upper Lower Summer 2022

Figure 7: Range of IFG Income Forecast Spring 23. Source: IFG

The overall changes from the summer 2022 forecast are:

Personal Income Tax

The forecast for personal income tax has increased for each of the plan years. This is due to an improvement in tax outturn data as a result of higher economic activity, as well as the latest FPP economic assumptions with an upwards revision in the forecast assumptions driving the personal tax forecast. The forecast takes into account the policy changes as a result of the mini-budget measures in 2022, to increase personal allowances by 12%. In addition, the IFG have revised the forecast up from the central scenario. This revision is based on industry insight and expectation that remuneration across the economy will be higher than the FPP average earnings assumption. The IFG noted that higher profits in the financial sector are leading to remuneration increases that are higher than the FPP assumptions, and that pay increases in the non-financial sector may be closer to Retail Price Index (RPI) inflation.

Corporate Income Tax

Corporate income tax remains more or less in line with the summer 2022 forecast, with a reprofiling of growth in the financial services profits, now expected to grow by 50% in 2022. The forecast for corporate income tax from non-financial services has remained stable, with financial services being the majority of corporate income tax collected.

GST and International Services Entity Fees

The forecast for Goods and Services Tax (GST) has increased in each year of the plan with an increase in outturn data for 2022, expected to carry through into the forecast for 2023. The FPP's economic assumptions for compensation of employees, the main determinant of GST receipts have been revised upward and are the main driver for the increase in forecast GST receipts. The forecast also incorporates the increased receipts from the lowering of the de minimis level from £135 to £60 from 1 July 2023, as well as the registration of offshore retailers.

Impôts Duties

Impôts (excise) duty reflects a decrease in the plan years from the Summer 2022 forecast. This is driven predominantly by worse than expected receipts in 2022. The Covid-19 pandemic bought considerable volatility in the forecasting of impôts duty for the years 2020- 22 due to changes in consumer behaviour, consumption, and travel. The forecast now predicts a return to pre-pandemic long-term trends.

Stamp Duty

Stamp Duty has been revised to incorporate the updated FPP economic assumptions. The Stamp Duty forecast has decreased significantly from Summer 2022, with housing transactions forecast by the FPP to be down by 50% in 2022, as well as a 2% reduction in house prices. Transactions are currently expected to return to pre-pandemic levels by 2026, however there remains increased uncertainty around the impact of higher interest rates on the housing market.

One-off Dividend Income

The additional planned special dividend payment from Jersey Telecom (JT) included in Government Plan 2023-2026 has been reprofiled, with £10m of the £20m planned to be paid in 2023, profiled over the plan period. The payments continue to be funded through the retained proceeds of the sale of the Internet of Things (IoT) element of the company.

Budget Proposals

Income tax (personal taxation) exemption thresholds and child allowances

Income tax exemption thresholds set a limit below which an individual, married couple or couple in a civil partnership do not pay income tax or Long-Term Care (LTC) contributions. Other family circumstances may increase an individual's or couple's exemption threshold through additional allowances, namely:

• Second earner's allowance, available when spouses or civil partners who are taxed as a married couple or civil partnership are both working or receiving certain pension income, equalising their tax treatment with couples who are taxed independently.

• Child allowance, available to individuals or couples for each child until they finish compulsory education.

• Additional allowance in respect of children, available to single parents, unmarried couples, and married couples and civil partners where one is incapacitated.

• Childcare allowance, available to individuals or couples for the actual amount paid for care of a child under 12 by a registered nursery, nursery class, registered day carer or an accredited nanny, subject to the allowance cap. A higher cap is available for children under 4 years of age.

Last year, the Council of Ministers raised the income tax thresholds and child allowances by 12%, an amount greater than inflation, in support of households facing a higher cost of living. This year, Ministers are reverting to the long-standing policy to uprate the main tax allowances by the lower of the growth of June RPI and average annual earnings, as published in August. Accordingly, thresholds and allowances will increase by 7.7%, in-line with average earnings. In addition to reverting to the long-standing policy, Ministers will also increase the child allowance and childcare allowance by 7.7% in response to the higher cost of living.

Over 90% of taxpayers will benefit from the increases to the income tax thresholds (the proportion of taxpayers who pay at the marginal rate).

Income Tax Exemption Thresholds

Tax 2023  2024  Proposed  Reduction

£ Actual Proposed Increase @ 26% Single person  18,550  20,000  1,450  377 Married couple/Civil partnership  29,750  32,050  2,300  598 Second earners' allowance  7,350  7,950  600  156 Child allowance  3,450  3,700  250  65 Additional allowance in respect of children  5,150  5,550  400  104 Childcare  7,050  7,600  550  143 Childcare (enhanced)  18,300  19,700  1,400  364

Table 3: Income Tax Exemption Thresholds

The culmination of recent increases in exemption thresholds places Jersey's relief considerably higher than the personal allowances in Guernsey, the UK and Isle of Man.

Single Person Exemption Thresholds Comparison

Jersey  Guernsey  UK  Isle of Man

£ 2024 2023 2023/24 2023/24 Single person  20,000  13,025  12,570  14,500

Table 4: Single Person Exemption Thresholds Comparison

Impôts (Excise) Duties

Ministers' proposals for excise duties on tobacco, alcohol, road fuels and motor vehicles, if approved by the Assembly, will take effect at midnight on 31 December 2023.

Tobacco

Following the recommendation of the Public Health Directorate, Ministers are proposing to increase duties on tobacco products by 15.9%, which is the sum of June 2023 RPI (10.9%) and an additional 5% escalator. Cigars will be subject to an increase of 18.9% in line with existing policy to close the gap between the duty charged on cigars and cigarettes, bringing the cigar duty rate gap to £82.90 per kg in 2024, compared to £87.30 per kg in 2023.

The proposed increases in tobacco duty for 2024 would see a £1.38 increase in the excise tax on a standard packet of 20 cigarettes (from £8.71 to £10.09 per packet). The increase on hand-rolling tobacco of 15.9% sees a £5.84 increase in a 50g pouch (from £34.83 to £40.37 per pouch).

Alcohol

Jersey has amongst the highest levels of alcohol consumption across OECD countries. At the same time, the hospitality industry continues to face challenges. Following last year's alcohol duty freeze, Ministers are proposing to strike a balance between the public health

goals of ensuring that the price of alcohol does not become cheaper relative to other goods and the Government's support of the hospitality industry by raising duties by 4.5%[3], which is 6.4 percentage points below the growth in RPI.

Fuel duty

Following the freeze on road fuels duties in 2023 to help with the cost of living, fuel duties are once again frozen in 2024[4] following an amendment to the Government Plan.

Ministers remain firm in their commitment to allocating 9 pence per litre from fuel duty receipts into the Climate Emergency Fund.

Proposed Changes in Impôts (Excise) Duties

2023  2024  Proposed Goods   Duty Rates £ Duty Rates £   Increase %

Cigarettes – per kg  696.54  807.29  15.9% Hand rolling tobacco – per kg  696.54  807.29  15.9% Cigars – per kg  609.24  724.39  18.9% Spirits 40% abv – litre per alcohol  43.50  45.46  4.5% Beer (2.8% to 4.9% abv) - per hectolitre  70.64  73.82  4.5% Unleaded fuel – per hectolitre  63.89  63.89  0%

Table 5: Changes in impôts (excise) duties

Biofuels

Ministers propose to reduce fuel duty by 9 pence per litre on specific biofuels to support the transition to greener transportation. The reduction in fuel duty only applies to Hydrotreated Vegetable Oil (HVO) which is available locally as a renewable diesel. Other types of biofuels, including fuels blended with fossil hydrocarbons, will not benefit from the reduction. The cost to the Exchequer would be approximately £85,000 per annum.

The 9 pence per litre reduction of fuel duty on biofuels is representative of the 9 pence per litre hypothecated to the Climate Emergency Fund.

Vehicle Emissions Duty

Vehicle Emissions Duty (VED) is charged when a vehicle is first registered in the Island. The amount of VED payable depends on the vehicle's CO2 emissions data, meaning that the charges are higher for the most polluting vehicles.

From 2024, it is proposed that electric vehicles (EVs) and hybrid vehicles that emit small amount of emissions are subject to a nominal VED charge in support of fairer tax contributions in respect of all emitting vehicles. A new band of 1-50g of CO2 will be introduced, which will charge VED at a rate of £35.

VED charges will increase for nearly all vehicles, with the greatest increases applying to the most polluting vehicles. From 1 January 2024, the highest emission band will be increased by 30% with lower increases for vehicles in the less polluting bands. The Government will continue to keep VED rates under review in future years to encourage the importation of more efficient petrol and diesel vehicles, as well as EVs.

Budget Measures for Innovation and Enterprise

Jersey businesses continue to attract global talent and pioneer advancement across a range of sectors. However, like businesses across the globe, they face a rapidly evolving technological landscape, a shifting regulatory environment and increasingly tight labour conditions. This fast pace of change brings great possibility and future opportunity for Jersey, but only if we are all properly prepared – businesses, Government, Regulators and Islanders, working together.

Later this Autumn, the Government will be publishing a Future Economy Programme that will explore these themes in more detail. In the meantime, Government Plan 2024-2027 introduces a set of initial tax measures that are aimed at:

1. Removing tax obstacles, providing tax certainty and reducing cost for all Jersey businesses with inbound and outbound staff. Staff mobility has become an increasingly common feature of the modern world of work and this is particularly the case for a small island economy; and
2. Fostering investment in technology with the aim of improving business productivity. A unique pilot tax incentive is being launched to encourage Jersey's regulated financial services businesses to invest in productivity-enhancing technologies related to regulatory compliance. This should boost productivity in this key sector, benefitting the broader Jersey economy.

Supporting Staff Movement for All Business Sectors

This Government recognises Jersey's global connectedness, acknowledging the need to provide greater tax certainty and support for internationally mobile workers coming to Jersey and for Islanders seeking opportunities to expand their businesses abroad.

For those coming from abroad to work for Jersey businesses, the measures in this Government Plan will offer clarity and ease of tax administration.

For Islanders whose business takes them beyond our shores, there will be enhanced relief from double taxation and red tape, to make it more worthwhile to share knowledge and expertise abroad and help expand Jersey export markets.

Specifically, the package offers:

• Certainty of treatment for short term business visits to Jersey. Non-Jersey residents and their employers currently face administrative challenges in tracking and fulfilling their tax responsibilities for brief employment duties performed in Jersey. The Government is working with businesses to refine the details of a proposal that will create a 60-day exemption period for short-term business visitors. Clear day boundaries for short term business visits are a common feature of many tax administrations. They are aimed at easing employer tax compliance for the shortest staff visits while also ensuring that tax is collected on activity that exceeds the minimum annual day limit.  

The measures in this Plan will encourage business travel to the Island that will have meaningful economic benefits to the businesses themselves and ancillary benefits to other sectors of the economy such as Jersey's hospitality industry.

• Credit-based unilateral relief from double taxation for Jersey residents. Government Plan 2024-2027 also proposes to allow workers resident in Jersey with foreign employment income to keep more of their earnings. For earnings in countries with which Jersey does not have a double taxation agreement, Jersey-based employees will be able to deduct eligible foreign taxes from Jersey tax due on that income under a new credit-based tax regime.

Regulatory Technology (RegTech) Super-Deduction

In last year's Government Plan, the Government committed to considering increased capital allowances to incentivise investment in assets that would improve the Island's productivity.

Government Plan 2024-2027 is proposing to introduce a pilot programme for enhanced expense deductions targeted at businesses which are facing the headwinds of an evolving regulatory environment and disruptive technologies.

A new 150% RegTech Super-Deduction will be targeted at entities that invest in eligible technologies to comply with regulatory obligations overseen by the Jersey Financial Services Commission. Eligible technologies will include those designed to automate, optimise, and streamline compliance with regulations related to:

• Financial crime, including Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT), and Counter-Proliferation Financing (CPF).

• Cyber risk, identity, privacy protection and data and information management and security.

• Regulatory reporting and analytics.

• Compliance management.

• Other requirements of the JFSC for risk management, fraud prevention, and conduct.

By investing in technologies that free up resources otherwise devoted to regulatory compliance, these businesses can focus their creativity on high-value strategic ambitions to ensure the Island's sustainable growth and continued prosperity.

The outcomes of this initiative will be reviewed after two years of operation. In the meantime, the Minister for Treasury and Resources will oversee a wider review of the way in which tax incentives such as this can support other industries on the island with different tax profiles. This work will be coordinated with the Future Economy Programme.

The package of measures set out above provides £450,000 of tax relief annually to affirm the Government's commitment to championing innovation and enterprise. By empowering our mobile workforce and supporting firms investing in technological advancements, the Government is committed to nurturing a thriving business environment where Jersey businesses can realise their future potential.

Stamp Duty Thresholds for First-Time Buyers

The rates of Stamp Duty for first-time buyers were last changed in 2019. Since then, the House Price Index has increased by around 40%. The Minister for Treasury and Resources is proposing an increase to the first-time buyer upper threshold in-line with that increase, to support those who are trying to get on the housing ladder.

In addition to increasing the upper threshold, it is proposed that the 1% rate for first-time buyers is extended to ensure that minimal Stamp Duty is charged on lower value transactions. No changes are proposed to the nil rate, which means that no Stamp Duty is charged on transactions of £350,000 or below.

These proposals would mean that the Stamp Duty charged on first-time buyers who are purchasing a property for £500,000 would reduce from £8,000 to £1,500. Further examples are provided in Table 9 below.

To fund these proposals to help aspiring first-time buyers, the Council of Ministers will, as agreed in the States Assembly debate on 13 September 2023 (Proposition New Stamp Duty Rates' (P.63/2023[5])), propose modest increases to some of the Stamp Duty rates for higher value properties, in the Draft Finance (2024 Budget) (Jersey) Law 202-.

High Value Residents (HVRs)

In July 2023, the States Assembly voted to approve version 5' of the HVR tax system. The changes included an increase to the minimum annual income tax required to be paid from £170,000 to £250,000.

Summary of Budget Proposals

Proposed £'000   vs Forecast[6]Personal allowances incl. child allowances  (3,864) Alcohol duty increase  (1,500) Tobacco duty increase  595 Fuel duty freeze  (2,700) Biofuel duty reduction  (85) Vehicle Emissions Duty increases  426 Innovation and enterprise  (450) Codifying remittance basis[7] 100 Stamp duty – first time buyers[8] -

Budget Proposals  (7,478) Table 10: Summary of Budget Proposals

Increased Collections: Domestic Compliance

Revenue Jersey continues to develop its annual published compliance programme[9], in line with its published compliance strategy, and to improve its capabilities, for example in assessing and identifying tax risks. Building on existing results (additional revenues from its compliance activities), Revenue Jersey is projecting an additional £16m in collections from activities devoted to audit, enforcement, and other compliance work. This adds to the £15.5m projected in the 2023-2026 Government Plan. Together, the additional collections are expected to contribute £31.5m to general revenues in each year of the Plan.

Additional Tax Measures to be Considered in Future Plans

Long-term Financing Strategy for the Carbon Neutral Roadmap

The Long-term financing strategy for the Carbon Neutral Roadmap includes the need to raise additional revenues to allow the funding of the transition to net-zero over the next thirty years. More detail is provided in the section on the Long-Term Financing Strategy for the Carbon Neutral Roadmap.

Mortgage Interest Deductions for Letting Properties

Following an amendment[10] to this Government Plan, Ministers will examine the case for removing mortgage interest tax relief in respect of letting properties. This work will be subject to the outcome of the Fiscal Policy Panel's review of Jersey's housing market which will be published in 2024, a full consultation process, and consideration of the timing and cumulative impact upon Jersey's housing market.

Liquid Waste Charges

The need to invest in our liquid waste infrastructure has been clearly articulated in the bridging Liquid Waste Strategy[11]. The scale of investment needed for this critical work requires a suitable funding mechanism, and in 2024 the Minister for Infrastructure will develop proposals for the use of waste charges to meet these costs, to be debated in a future Government Plan. In line with the proposition Medium term financial plan addition for 2017-2019 (as amended)' (P.68/2016[12]), the States are asked to approve the application of resources for work on the development of user pays' charges in relation to all aspects of waste charges, including commercial and domestic liquid and solid waste.

Taxing Vaping Products

The Government is committed to safeguarding the health of Islanders and minimising the harmful effects of nicotine consumption in all its forms. We will undertake a study of the potential role for taxation both in reducing the consumption of nicotine and other potentially harmful e-liquids by vaping (particularly among young Islanders) and also maintaining revenue receipts to help meet the social costs of vaping.

With vaping's growing popularity there has emerged a diverse range of products that differ in design, chemical composition, health implications and environmental consequences. This complexity warrants an evidence-based review to arrive at a balanced and effective taxation framework that works in concert with the Government's regulatory and awareness strategies set out within the Government Plan and Ministerial priorities.

Progress of Tax Reforms and Reviews

Independent Taxation

Successive governments have been clear in their ambition to provide equality of tax treatment for all people regardless of their marital status.

Following the States Assembly's votes in July 2023 on proposition removal of compulsory independent taxation for existing married couples and civil partnerships (P.32/2023[13]), Ministers are working to provide an option for couples who were resident in Jersey and who were married or in a civil partnership before 1 January 2022 to file a joint tax return.

Ministers intend to amend their own proposition draft income tax amendment' (P.41/2023[14]) and to secure the Assembly's agreement by the end of 2023 to deliver Independent Taxation on a universal basis for the 2026 year of assessment. A Compensatory Allowance will be available for those married couples and civil partners who have previously had access to the Married Man's tax allowance and who would otherwise be financially disadvantaged by this change.

International Tax Reform

For the past several years, the OECD has been working to establish a new global tax framework, aimed at addressing the tax challenges arising from the increasing digitalisation of the economy. The Government of Jersey has been closely engaged throughout every step of this process through Jersey's seat in OECD fora.

On 8 October 2021, the OECD/G20 Inclusive Framework – of which Jersey is a founding member – released a statement on a two-pillar solution, in which 136 jurisdictions, including Jersey, joined the political consensus on the new tax framework.

The proposed elements of these pillars are targeted and limited in scope, focussing on the world's largest Multi-National Enterprises (MNEs). The October announcement was an important political stepping-stone and established the Building Blocks for the tax reform process. But significant further technical work is ongoing and implementation plans remain to be developed. Jersey remains actively involved in these discussions.

If ultimately agreed by Inclusive Framework:

• Pillar One of the Building Blocks will create new profit allocation rules for the world's largest Multi-National Enterprises (MNEs), with global turnover in excess of 20bn and profitability in excess of 10%. The Pillar 1 rules will exclude Regulated Financial Services. For the very small and targeted number of MNEs globally that are impacted by Pillar One, certain of their profits would be re-allocated to market jurisdictions; and

• Pillar Two of the Building Blocks will introduce a new framework of taxation whereby Multi-National Enterprises (MNEs) that are in scope (those with global revenues of at least 750m) would pay a Minimum Effective Rate of taxation of 15 percent, with an important carveout for certain investment entities (such as funds). This Minimum Effective Rate would be calculated in a specific way based on financial statements and on a country-by-country basis. In addition, a treaty-based rule ensures that double tax agreements do not prevent certain payments made from developing countries from being taxed at a rate of at least 9%.

Pillar One is a political commitment that will likely require Jersey to introduce legislation, notwithstanding the minimal practical impact. However, Pillar Two is a common approach, giving Jersey options regarding how, if at all, a global minimum tax would be implemented in Jersey.

The Government is engaged in extensive stakeholder engagement and data analysis – locally and internationally – to understand potential impacts of the various policy options. However, it is not possible at the present time to clearly predict what MNE behavioural effects may be, given that impacts will depend in part on what other jurisdictions do with implementation and the timing of those actions. As no political decision has been made by the States Assembly on Pillar Two, this Government Plan contains no estimate of any potential impact the reform measures may have. This position will be kept under review for future Government Plans as decisions on implementation are made.

On 19 May 2023, the three Crown Dependencies made a statement on an intended approach to implementation of the OECD Pillar Two global minimum tax framework for large multinational groups. Each Island intends to implement an Income Inclusion Rule (IIR) and domestic minimum tax from 2025, while continuing to monitor global implementation.

Fuel Duty Replacement Policy

Jersey's progression toward net zero will have an impact on the make-up of the road vehicle fleet as it changes in response to our carbon reduction ambitions and a changing global market. As the fiscal and policy measures, and people's own choices, start to take effect receipts of Road Fuel Duty will decline, and the Government's income could reduce by up to £26m. It will still be necessary for the Government to maintain roads and fund other essential services related to road use and to off-set the emissions that cannot be reduced through new and existing policy levers.

In 2024, the Government will undertake policy work to devise an alternative duty charge which, over time, will begin to make up the funding lost from Road Fuel Duty. Alternative duty charges considered include a form of Vehicle Ownership Charge or a Road User Charge. It is not expected that a new charge could come into effect until 2026 at the earliest (with the law passing to give effect of the change in 2025).  

Stamp Duty Review

As part of the ongoing stamp duty review, Ministers will continue to develop policies and technical amendments throughout the 2024 – 2027 Government Plan period. The review will consider the wider Housing Strategy and whether there is a role for stamp duty as a fiscal lever to achieve the aims of the strategy.

Work will commence in 2024 to consider introducing group relief from Stamp Duty to companies transferring Jersey property between themselves. The relief, referred to as Group Relief', would only be available to companies that are owned or controlled by the same beneficial owner. Currently, Stamp Duty would be charged on the transfer of property between entities, irrespective of whether they are related entities.

Enveloped Property Transaction Tax has introduced a similar form of relief for connected parties.  

Summary of General Revenue Income Forecast, incorporating Budget Measures

£'000  Estimate  Estimate  Estimate  Estimate States Income - IFG Forecast  1,166,570  1,219,002  1,254,501  1,299,468 Additional Income Measures

- Increased Collections: Domestic Compliance  31,500  31,500  31,500  31,500

- Budget Measures[15] (7,481)  (6,906)  (6,361)  (5,851)

- Interest Tax Relief (Letting Properties Only)[16] -  -  -  1,900

States Income after Income Measures  1,190,589  1,243,596  1,279,640  1,327,017 Table 11: Income Forecast, including additional income measures

Public Sector Spending 2024-2027

This Government Plan proposes £1.16bn of spending in 2024 on delivering services to Islanders.

Revenue Heads of Expenditure

The Government Plan is required, by the Public Finances Law, to set out the proposed amount to be spent from the Consolidated Fund by each head of expenditure, after allowing for any estimates of departmental income. Heads of expenditure within this Government Plan relate to each Government of Jersey department, Non-Ministerial and other States bodies, and a separate head of expenditure for the Central Reserve. Expenditure has been allocated to departments for 2024, and estimates produced for 2025 to 2027.

Departmental heads of expenditure are aligned according to lines of accountability under the Public Finances Law. Expenditure is approved in this manner to ensure that there is clear accountability, both at political and officer levels. The departmental expenditure limits for 2024 incorporate both existing resource requirements and new funding, but exclude pay- inflation, which is held centrally in reserves. Whilst this is generally aligned to Ministerial portfolios, there are some differences, and a Ministerial mapping is provided as part of the Annex to the Government Plan.

Children, Young People, Education and Skills , £206m

Health and

General public services and  Community  Social Benefits (incl States other , £404m Services , £286m grant) , £204m

Figure 8: Departmental Net Revenue Expenditure (excluding Reserves)

The above chart illustrates the proportion of Government net revenue spending in 2024, on Health and Community Services (26%), Children, Young People, Education, and Skills (19%), tax funded social benefits (19%), and general public services (36%). General public services and other, includes all other departmental and non-Ministerial functions listed in Table 12.

Table 12: Revenue Heads of Expenditure

Changes to Revenue Expenditure

The Government Plan proposes £1.16bn of spending on delivering public services to Islanders in 2024, an increase from 2023 driven largely by inflationary pressures and the reintroduction of the States grant in 2024.  

As we emerge from the pandemic, approvals relating to the Covid-19 response and recovery (£25m) have been removed or incorporated into ongoing departmental budgets. Other changes to growth already approved in Government Plan 2023-2026 are included. Detail on these changes can be found on page 104 in last year's Government Plan.

In the context of a high inflation environment and impact on government spending, an additional £70m has been provided for inflation (covering staff, social benefits and other costs) in 2024. Inflation is expected to fall in later years of the plan, but additional amounts are provided to maintain departmental budgets in real terms.

This plan also seeks to further invest £51m into initiatives that support the delivery of Ministerial priorities, this is in addition to £14.6m of formula related growth arising from previous commitments.

The States grant to the Social Security Fund, will be reinstated in 2024 after being suspended since 2020 to offset the impact of Covid-19 on public finances. The reintroduction of the States grant[1] will be phased with a £20m reduction in 2024 and 2025, with the value of the Grant in 2027 increased by £40m when Government finances are forecast to be in a stronger position.

Table 13 below shows how expenditure changes in each year of the plan.

Value For Money Savings  (14,350)  (10,000)  (10,000)  -  Adjusted Base  1,162,591  1,199,402  1,202,037  1,224,405 Reprofile of States Grant to Social Security Fund[2] -    -    -   -  Net Revenue Expenditure  1,162,591  1,199,402  1,202,037  1,224,405

Table 13: Changes to Net Revenue Expenditure

Figure 9: Income and Expenditure Trends before Depreciation

Inflation and Formula Driven Growth

It is both prudent and good financial management to plan for the impact of economic influences on Government finances. As such, we have set aside amounts to cover inflationary pressures on pay (held centrally), social benefits and non-pay expenditure.

3.8% of non-pay expenditure inflation has been allocated directly to departments (after allowing for inflation on departmental income capped at 2.5%). The allocation of non-pay inflation is based on the Fiscal Policy Panel assumption for RPI(X) published in July 2023, which adjusts RPI by excluding the cost of mortgage interest payments. Inflation does not affect all elements of spend equally, and we have maintained central provisions based on areas where there is a risk of inflation at higher levels, for example fuel and chemical supplies.

In determining an appropriate level of pay provision, the Council of Ministers have considered a range of factors, including the cost of living, average earnings in the wider economy and the impact on public finances. Further work to develop a more detailed pay strategy is needed, but the pay provision is designed to give adequate resource to develop an offer which enables suitable ongoing remuneration of public servants in the wider economic context. This could include differential awards between pay-groups and pay-levels, along with reviews of current terms and conditions. Previous provisions for the impact of parental leave have been included in the overall allocation, as the ongoing impact should be resolved as part of the wider pay strategy.

Inflation is, by nature cumulative, and so this amount grows throughout the plan. There remains a significant amount of uncertainty around levels of inflation. Higher inflation will typically lead to increased levels of both income and expenditure.

The Government Plan also includes a number of areas of expenditure that are determined by pre-agreed formulas: an annual 2% increase in Health budgets to maintain service standards and meet the costs of health care inflation, staged increases in the Jersey Overseas Aid (JOA) budget to 0.3% of GVA by 2025, and maintenance of spending on Arts, Heritage and Culture to 1% of government expenditure.

Revenue Growth Funding

This plan proposes additional funding for departments to meet the immediate priorities identified by the Council of Ministers where it's not possible to reprioritise existing resources to meet them. This funding totals £48m in 2024 over and above amounts included in previous plans and is in addition to departments' existing budgets. Additional funding is provided to address service pressures across all areas of government, including significant additional funding for health, education and children's services. We are also continuing to invest in our economy and financial services to ensure our future prosperity.

The States Employment Board (SEB) will have a continued focus on strategic workforce planning, which will consider how any headcount implications of the growth should be managed to reduce the impact on the wider labour market, in conjunction with the Value for Money programme. Furthermore, the focus on strategic workforce planning, will seek to review and where possible rationalise the number of funded posts that continue to remain vacant.

Further to an amendment to the Government Plan, additional funding of £3m[1] has been provided for agriculture and fisheries through the rural and marine support schemes.

Table 14 provides a summary of this additional funding by department (including amounts held centrally). Further information on the proposed additional expenditure can be found in Appendix 3, and the Annex to the Government Plan.

Jersey Overseas Aid  -  -  -  -

Justice and Home Affairs  1,994  2,184  2,228  2,272

States of Jersey Police  237  327  304  283

Ministry of External Relations  134  134  134  134

Economic Development, Tourism, Sport & Culture[4] 5,250  5,250  5,250  5,250

Financial Services  1,496  1,505  1,460  1,435

Treasury and Exchequer  5,976  6,476  6,476  6,476

Non-Ministerial Departments  1,319  1,246  1,206  1,284

States Assembly  842  834  834  834

New Revenue Expenditure  51,177  45,044  43,597  43,513 Table 14: New Revenue Expenditure Growth

Ongoing Risks and Pressures in Health and Community Services

In the aftermath of the Covid-19 pandemic, the Health and Community Services department is facing a range of challenges including financial pressures of up £35m. This is driven by both factors in the direct control of the department, and structural factors outside of their direct control. A team to deliver a Financial Recovery Programme (FRP) has been put in place in 2023, and a comprehensive plan is expected to be produced by the autumn of 2023. It will also be essential to ensure that central functions are aligned to support the department in resolving some of the operational challenges. As a part of delivering the FRP, this funding will be used to maintain existing healthcare services that are facing further inflationary, activity and efficiency related cost pressures. Examples of these services are mental health placements, social care packages, high-cost drugs, off-Island care, expansion beds and cancer services.

The recovery plan will identify opportunities for improved efficiency and effectiveness of services to help reduce costs and ensure that the service can be delivered within the revised cash limits, reducing spend by £25m a year by 2025. The Council of Ministers have recognised that the delivery of these savings will take time, and it is anticipated that not all structural elements can be resolved without impacting healthcare services and patients. A further £21m has therefore been allocated to the department in 2024, reducing to £15m in 2025 onwards to maintain healthcare services.

Value for Money

The targets set by this Council of Ministers in the Government Plan 2023-2026 have been maintained, with £14.4m[1] being delivered by departments in 2024, and a further £10m in each of 2025 and 2026. The Council of Ministers have considered the advice of the FPP in setting this amount and are content that efficiency savings at this level should be achievable in an organisation of this size on an annual basis, and so inclusion is in no way speculative. Including the reduction in departmental budgets ensures that officers are incentivised to develop suitable plans and can be held accountable for their delivery.

These targets are a minimum reduction in overall expenditure, and the Council of Ministers will look to simplify operations, prioritise services according to Islanders' needs, improve efficiencies across government, and review the effectiveness of government administrative processes in order to achieve such efficiencies. This will allow funding to be reprioritised into areas needing further investment, or further reduce overall spend. This work is part of the longer term VFM programme.

Depreciation

Depreciation represents the cost of using Government assets in the provision of services. It is included when calculating whether the Government is running a surplus or a deficit, which

follows FPP advice, and helps to ensure that the need to continue to invest in assets is adequately recognised in planning.

The increase in depreciation during 2024-2027 reflects an estimated uplift in asset values, as a result of either assets being created or replaced.

Reserve Heads of Expenditure

This plan simplifies previous practice through the inclusion of a single Central Reserve Head of Expenditure. As well as a provision of £7m for unforeseen expenditure in year (including £2m ring-fenced for social benefits), this now incorporates centrally held items such as provisions for inflation that have not been allocated to departments.

The Central Reserve is held outside of operational expenditure limits, and can be used to meet unforeseen pressures, or to provide advance funding for urgent expenditure in the public interest. In each year, amounts are held to manage fluctuations in benefit expenditure due to economic changes, and to allow one-off funding for emerging issues.

Furthermore, £10m was allocated in the reserves in 2022 for assisted home ownership schemes, and any amounts not used in 2023 will be carried forward within the reserve for the same purposes.

Delivering Value for Money

In this Government plan, the Council of Ministers reiterates its commitment to driving Value for Money in everything Government does, in the delivery of services as well as through its investment in projects and service improvements.

The Value for Money (VFM) programme strives to engender a strong and positive financial management culture across the organisation and a mindset of continuous improvement. Such a culture will enable departments to plan and deliver cashable savings as well as improved productivity and reliability of its services ensuring that taxpayers, service users and Islanders receive better value for money outcomes.

It is also recognised that a productive public service will build public trust but also delivers wider benefits for our Island and our economy. To be successful in this regard, it is recognised that the Government and its services need to engage with employees, service users and customers, to better understand their experiences and needs to achieve congruous outcomes.

We must re-build trust by delivering a professional Government based on integrity, strategic thinking and clear communication whilst ensuring delivery of value for money to the taxpayer.

The objective by 2027 is to have restored trust and accountability in Government by focusing on two outcomes:

• Trusted, reliable and value for money public services.

• Government that is responsive, compassionate, and accessible, and public servants are supported to do their best work.

Objective  Restoring trust and accountability in Government for 24-27

A government that is responsive, Trusted, reliable and

Outcome  compassionate, and accessible.

value for money

by 2027  Where public servants are supported to

public services

do their best work.

In addition, the Government will seek to work jointly with Guernsey where possible. Guernsey-Jersey joint working aims to promote the sharing of expertise, resources, and best practices for the benefit of both jurisdictions and their respective populations. The Guernsey- Jersey partnership shall encourage open dialogue, constructive feedback, and the sharing of best practices to achieve the stated objectives.

Programme Delivery

In simple terms, improving efficiency means that Government is able to spend less and achieve the same or spend the same and achieve more and improve outcomes, carrying out activities faster, or with fewer resources or to a better standard.

The programme will drive these outcomes through the following approaches:

1. Cashable savings targets and delivery plans for each department.
2. A continuous improvement framework.
3. A series of focussed thematic reviews and best value deep-dives.

Cashable Savings

The Fiscal Policy Panel has recommended that efficiencies should be sought regardless of the stage of the economic cycle, but also noted that "efficiencies can be difficult to deliver" and as such should only be relied upon if there is a clear plan for delivery.

Cashable savings targets have been allocated to departments as part of the departmental net revenue expenditure budgets and are detailed, for 2024, in the table below. Departments will ensure delivery plans are in place which will be tracked, monitored and reported through the programme to Council of Ministers and stakeholders for transparency and scrutiny. Detail for future years will be provided in future Government Plans.

Day to day departments make decisions to live within their departmental expenditure limits, ensuring there are controls and rigorous spend validation across their budgets and headcount.

The targets, in Table 16, are a minimum reduction in overall expenditure, and the Council of Ministers will look to simplify operations, prioritise services according to Islanders' needs and improve efficiencies across government. This will allow funding to be reprioritised into areas needing further investment, or further reduce overall spend. This work is part of the longer term VFM programme, expected to deliver full year impacts from 2024.

The FRP within Health and Community Services (HCS), will identify opportunities for improved efficiency and effectiveness of services to help reduce costs and ensure that the service can be delivered within departmental budget limits. The programme will deliver recurring savings of £25m by 2025, with £14.4m delivered in 2024. This will, bring departmental spending back into line with budgeted approvals (after structural gaps in the departmental budget have been remedied). The savings in 2024 exceed the VFM target for HCS, which has been factored into the deficit calculations.

Value for Money Savings

2024  2025  2026  2027 £'000   Estimate   Estimate   Estimate   Estimate  

Cabinet Office  2,907  -  -  - Children, Young People, Education and Skills  2,737  -  -  - Customer and Local Services  207  -  -  - Infrastructure  705  -  -  - Environment  172  -  -  - Health and Community Services  3,986  -  -  - Jersey Overseas Aid  -  -  -  - Justice and Home Affairs  572  -  -  - States of Jersey Police  422  -  -  - Ministry of External Relations  50  -  -  - Economic Development, Tourism, Sport & Culture  1,870  -  -  - Financial Services  145  -  -  - Treasury and Exchequer  577  -  -  - States Assembly  -  -  -  - Non-Ministerial  -  -  -  - Unallocated Future Savings  -   10,000  10,000  -  Value for Money Savings[1] 14,350  10,000  10,000  -  

Table 16: Value for Money Savings

In accordance with the recommendations of the Corporate Services Scrutiny Panel, as set out in S.R.20/2022 a report published alongside the annual report and accounts will[2] –

1. include a report on all Value for Money savings which were made during the duration of the previous Government Plan; and
2. (identify and provide full details of the monitoring process that has been undertaken on the Value for Money programme during the duration of the previous Government Plan.

Continuous Improvement Programme

Efficiency and effectiveness are not only about more for less cost, but also concerned with better services. Given the relative size of Government spending, the annual public purse, a more productive Government will also have benefits for the wider economy.

The VFM programme includes a refreshed focus on continuous service improvement and increased productivity. Supported by training and tools, staff will be able to identify and remove wasteful and unproductive processes which impact on services often creating delays and negatively impact of service user experience.

Thematic Reviews and Best Value Reviews

The programme will continue its thematic deep dives, established in 2023, which aim to support departments in the delivery of their VFM targets. In 2024, Health & Community Services will continue to be a priority given the significant programme of delivery agreed in 2023, along with a new focus on the Department for Children, Young People, Education & Skills. Other areas of focus will include the role and function of the centre of Government, Government of Jersey (GoJ) Estates Rationalisation Strategy and cross-cutting elements of the departmental workforce strategies.

Best Value Reviews are also a fundamental part of the VFM programme. Reviews will be conducted in specified services, to confirm there is alignment between the Government's strategic priorities and service delivery outcomes, while considering for example, appropriate resources to deliver desired outcomes and appropriate form of service delivery.

Capital and Other Projects 2024 - 2027

Introduction

The Capital Programme sets out expenditure on the development and replacement of the Island's assets, including Estates, Infrastructure, Equipment and IT. It is essential that we continue to invest in the replacement and maintenance of our Island's assets so that we can deliver the services that Islanders need. This does not include the capital plans of the States of Jersey Development Company, Andium Homes and other State-Owned Entities, who will also be investing significantly across the plan period.

The allocation of funding to projects is on a cashflow basis and approvals are annual even though a four-year view of cashflow is presented. For Major Projects the first year of expenditure is approved with the total cost of the project also presented for approval where required. No property disposals have been included in the plan, but under the Public Finances Law the Minister for Treasury and Resources can approve changes to funding allocations for projects through the application of property receipts or other income.

In some cases, projects in delivery from previous plans may incur some costs in 2024 due to unforeseen delays. Heads of Expenditure established in previous plans will continue to allow for this.

Affordability and Deliverability

In developing an updated capital programme for this Government Plan, both the affordability and deliverability of the programme have been key considerations.

• Affordability – government must have sufficient funds to pay for the capital programme – in particular, a forecast positive Consolidated Fund balance must be maintained over the four years of the Government Plan.

Spending at the level envisaged in the Plan substantially exceeds the rate of depreciation on existing assets so this capital programme should contribute to a net increase in Government's asset base. While that should help to strengthen the foundations upon which the Island's public services are built, there are inevitable limitations from an affordability perspective. In some cases, it has been necessary to seek out opportunities for alternative funding solutions to enable the level of ambition set out in this capital programme.

• Deliverability – the programme should take into account the internal and external capacity constraints. This includes the capacity of the market to deliver the work (for example the capacity of the construction industry), and the government's internal capacity to develop and manage the projects. It also includes other practical factors such as the time necessary to secure planning approval.

Since coming into office in July last year the Council of Ministers has sought to bring a sharper focus to ensuring that capital spending plans that are set out in the Government Plan are deliverable.

Over a period of several years the Government has tended to allocate a higher amount in aggregate to Capital Projects than departments have been able to spend. This has tied up tens of millions of pounds of taxpayers' money that could have been productively invested in other projects. It also presents challenges for the wider supply chain surrounding Government's capital expenditure as suppliers need a reliable forward pipeline of potential work in order to plan their activities.

To mitigate these risks, further efforts have been undertaken this year to ensure that the programme is set within boundaries that have proven to be deliverable in previous years. Government's capital programme is complex and there will still be risks that cannot be mitigated and cause delays to individual projects. However, the work that has taken place around deliverability should help to ensure that a high proportion of capital projects deliver in line with their original planned cash flow profile.

Longer Term Capital Planning

Alongside work to ensure capital projects are more deliverable, this government has sought to bring a longer-term focus to capital planning. An initial 10-year pipeline of future project requirements was established to support decision-making for the capital programme in this Government Plan and the intention is to mature this work into a 25-year outlook for project investment that will be published in 2024.

The development of longer-term planning will facilitate a more strategic approach to capital planning, helping to ensure that individual projects are properly reflective of the supporting policies and strategic frameworks. It will also support richer engagement with the Island's supply chain and enable the creation of longer-term partnerships that allow the suppliers to expand their capacity based around a reliable pipeline of future projects.

A greater long-term focus will also complement work that is on-going to conduct a strategic review of the Government's land and property holdings. This will seek to establish a more complete understanding of the Government's future estate needs as well as financial implications appropriately maintaining and replacing estate assets over a long-term horizon. Developments in estates management and enterprise asset management will support this project, as will the planned condition survey of the States Estate.

Project Gateways

•Feasibility  

Strategic  funding in  Outline  Full

Outline  GP Business  Included as a  Business  Project moves

Case  Case  project with  Case

(SOC) •Ifnuftourrme s  (OBC) costings (FBC) into delivery

years totals

Projects typically require high levels of funding to spend over multiple years. Project planning requires decisions to be taken on the basis of estimates and successful delivery can be subject to several risks. To help to ensure that governance processes support value for money, it is important that decisions can be taken to stop or amend a project throughout the decision cycle. Accordingly, planning for projects follows a three-stage approach that helps to control the inherent risk and uncertainty involved in seeking to determine cost and resource requirements often several years in advance of project commencement.

- Stage 1: Strategic Outline Case (SOC) – projects first enter the programme following the completion of a SOC. This is an early-stage business case that also provides high-level estimates of likely financial and resource requirements. In accepting a SOC, the Government will commit funding and/or internal officer time to further feasibility work that aims to develop a more detailed and comprehensive business case. Government Plan allocations for future years will be informed by the potential cost implications, but, as costings are still elementary, no express commitment is made to deliver the project until a more detailed Outline Business Case has been prepared and agreed.

- Stage 2: Outline Business Case (OBC) – the OBC is the principal planning document for projects. It is drafted after detailed policy and feasibility work has been completed and thereby allows for a robust estimate of likely expenditure and resource requirements. After the OBC is approved, a project can generally be reflected in the Government Plan with assigned costings, for the Assembly's consideration.

- Stage 3: Full Business Case (FBC) – while OBC costings are the Government's best estimate of financial requirements developed following detailed policy and

feasibility work, they are still uncertain and based on assumptions. Changes in circumstances within the supply chains, the emergence of competing priorities, or wider economic change can give rise to unforeseen additional costs or reduce the anticipated benefits that will accrue from the project. The FBC allows a final decision point once actual commercial terms have been agreed, and the project is ready for implementation. If the FBC is accepted by Ministers, the project will move into delivery.

Major Projects

The Public Finances Law 2019 defines major projects' under Article 1 as follows:

1. a capital project the duration of which, from start to finish, is planned to be of more than one year and the total cost of which is planned to be of more than £5m; or
2. a project that has been designated as a major project under an approved government plan

Major Projects are separately identified within each section of the programme.

Grouped Heads of Expenditure

Grouped Heads of Expenditure were introduced in the Government Plan 2022-2025. Grouped Heads improve flexibility, allowing Accountable Officers to manage individual projects within a wider programme so that any individual delays or changes to project expenditure can be managed within the approved financial envelope. It is only possible to adopt this approach where the projects concerned support similar outcomes.

In future years where the exact timing and amount of funding required is uncertain, a single amount has been included, with an indication of which projects may be funded from it. More detailed allocations are made in future Government Plans. This approach gives clear visibility of future projects, without the inclusion of figures where the amount or timing of spend remains uncertain.

Major Projects are not included in a grouped head of expenditure once the total expenditure for the project has been agreed in a Government Plan. However, some projects planned for future years of a grouped head of expenditure may ultimately become Major Projects (if the estimated costs exceed £5m). For example, a replacement school would almost certainly become a major project but would remain in the New School and Educational Developments grouped Head of Expenditure until the timing and costs are better understood.

A section was added to the Public Finances Manual in 2023 which sets out further requirements in terms of managing these budgets.

Decarbonisation of Government

Jersey's 2050 net zero target, and interim 68% reduction in CO2e emissions by 2030, requires the Government to decarbonise heat within its Estate. We have begun this process, and from 2024 existing heating systems that break down or are at the end of their life will be replaced by low carbon systems wherever possible, and only low carbon heating systems will be specified for all new Government of Jersey-owned or leased property.

This will be factored into all future projects in the Capital Programme.

The Capital Programme

Investment in capital and other projects is important for ensuring the sustainability and improvement of the Island's public services. Projects support the creation, improvement and extension of assets that enable service delivery.

The Capital Programme in this Government Plan allocates £373m to projects across 2024- 2027 to invest in the Island's critical infrastructure, the public sector estate, and Government's information technology systems. It also enables the replacement of essential equipment and other assets.

Table 17 provides a breakdown of the key thematic areas of spend within the Capital Programme, each of which is set out in further detail in the sections that follow.