2018 BudgetThank you Mr. President

 

I don’t normally start my speeches with a negative comment, but I am disappointed with this Budget here today. 

 

I have read through a few of Mr Cannan’s Budget speeches as a Backbencher over previous years. 

 

They were certainly full of fire, passion and a genuine desire to change the course and direction of the Isle of Man, and to tackle the big challenges we face as a community head on. 

 

I can forgive the Treasury Minister for his first Budget last year so early on in this new administration, but I was expecting this Budget to have the fire, the passion and the change of direction that the now Treasury Minister, Alf Cannan, MHK was so passionately calling for in recent years as a Backbencher. 

 

I simply do not see the Treasury Minister’s style or signature in this Budget here today. 

 

Neither does this Budget in my opinion align itself with the Council of Ministers Programme for Government in certain areas, especially around being an Inclusive and Caring Society and tackling the inequalities across our island. 

 

However, that isn’t the current Treasury Minister’s fault, for reasons that I will give later on in this speech.      

 

Mr. President – of course, there are some excellent things in this Budget here today, but I also now fully appreciate why previous Tynwald Members have asked for elements of our Manx Budgets to be voted on separately in the past.

 

It is definitely a Budget of two halves in my opinion….. 

 

I fully acknowledge that the Treasury Minister and his team on the one hand has tried to deliver a Budget that supports hard working families, especially young families and to encourage more people back to work wherever possible. 

 

At the same time I have some serious concerns, especially around those individuals on benefits or in need of additional help and support at the moment or those individuals who are now retired or on a fixed income…..

 

When I listened to the initial presentation given by the Minister to Honourable Members in the Barrool Suite recently and again listening to the Minister deliver his second Budget Speech here this morning – it really feels like “Groundhog Day”.

 

Again, to quote Mr Cannan from his Budget speech in 2015, he said the Budget was like an old broken record player, the same tune being repeated time and time again until you begin to believe it is the only tune in town….

 

Mr. President, I could simply read out my own speech from last year’s Budget debate and it wouldn’t be a million miles out of place. 

 

In fact much of what I said last year is still very relevant here today…..

 

This Budget like the previous Budget has the glossy headlines that will grab the media and public’s attention, but this time we don’t need to look below the surface to see the challenges facing this island.

 

As the Treasury Minister has already outlined, this year’s Budget is being delivered against a backdrop of continuing International, Political and Economic uncertainty, which I fully understand.

 

However, last year the Treasury Minister stated in this Court that we need to stop looking at the spreadsheets and start looking at the needs of our society first, and that this Government is calling for an Inclusive and Caring Society, and an island of Enterprise and Opportunity.

 

Mr. President – I think we all acknowledge that the Isle of Man is a very special place to live, work and to bring up families, but we cannot ignore that far too many people are in genuine need of additional help and support at this moment, especially around the payment of Allowances, Benefits and Housing.

 

We don’t need to look too far to see individuals and families across this island just about managing, and for that reason I am not convinced that this Budget has gone far enough in certain areas, a point that I also raised last year….

 

I am certain that when we look back in 12 months’ time I doubt the majority of people living here on the Isle of Man will feel any richer or have any additional spare cash in their pockets, once we take the glossy headlines found in this Budget and then subtract them against the inevitable increase in charges on the horizon, especially for those who are now retired or on a low or fixed income and therefore have very little opportunity to increase their available funds. 

 

The continuous increase of charges and the general cost of living here on the Isle of Man is also making it extremely difficult, if not impossible for some young families and young professionals to get a foot on the property ladder at the moment compared to previous generations. 

 

There was an excellent article in the UK press over the weekend on homeownership amongst young adults in the UK. The independent report shows that the chances of a young adult on a middle income owning a home in the UK have more than halved in the past two decades. 

 

An explosion in house prices above income growth has increasingly robbed a generation of homeownership opportunities and I am certain that our own owner-occupation rates here in the Isle of Man amongst our young adults have also significantly reduced in years. 

 

Therefore, I am disappointed that the Government is not taking the opportunity in this Budget to introduce further financial support to help our young families and young professionals obtain the keys to their own homes. 

 

I am also disappointed that the Budget does not provide any additional financial support to help our University Students, in order to try and encourage more of our Manx students back to the Isle of Man after finishing their studies. 

 

I know the Treasury Minister when summing up will state very clearly that this is a fair Budget, a steady Budget given the current financial position of our island, but I just can’t see the change of direction in this Budget or in his previous Budget and to use Mr Cannan’s own words once again from 2016 – this is definitely not a Budget for the next generation.

 

I also expect the Minister to highlight that income levels and other tax receipts for this financial year have increased by £13.2 million more than originally forecast and that this is backed up by unemployment levels that remain extremely low at 0.8% as recorded in December 2017.

 

The current low unemployment level is positive news, but also brings its own challenges as the Isle of Man continues to explore new ways of increasing our working population.

 

At the same time we must ensure that Manx workers are given the right level of protection, training, opportunities and skills to maximise their true potential here on the Isle of Man.

 

Mr. President – I am sure the Minister also knows that for every penny he gives in support for hard working families or towards the most vulnerable in our society here today, it will cost each and every one of us much more through increased charges being imposed by Government Departments, Utility Companies or simply because of the general increase in the cost of living here in the Isle of Man in recent years and for those costs being forecasted to increase during the next financial year…

 

In respect of the additional tax receipts, I do have to question if these receipts are coming from just one or two key sectors within our finance industry and if the ordinary man or woman in the street have actually had a pay rise in recent years…  

 

There are also clear signs that the wealth gap here on the Isle of Man is increasing further and that we are becoming a society of Haves and Have Nots… and that is a serious concern for such a small Community and a small island such as ours…  

 

Mr. President – as I have already mentioned, it is a Budget of two halves and there are some good and positive headlines found in this year’s Budget.

 

Therefore, I certainly wish to take this opportunity to congratulate the Treasury Minister and his team for continuing to increase the Personal Tax Allowance this year from £12,500 to £13,250 or £26,500 for couples before they pay a single penny in income tax.

 

This puts an extra £6.5 million back into the pockets of hard working families, especially those people on a low income.

 

The Personal Tax Allowance here on the Isle of Man has increased by £2,750 for individuals or £5,500 for a couple over the last two years, for which I congratulate the Treasury Minister and his team. 

 

It has also lifted an additional 1,700 people out of the income tax system altogether, and that is on top of the 3,300 people taken out of the tax system altogether as part of the Budget in 2017.

 

Mr. President – I would also like to take this opportunity to thank the Treasury team for making available £750,000 at the start of this month by way of a “Winter Bonus”, which was gratefully received by around 2,300 Pensioners, Disabled People and other Low Income earners.

 

The additional £1.5 million made available in this Budget for pre-school credits will most definitely support young families by way of funding credits totalling £3,420 per child per annum or sufficient to fund around 20 hours of child care per week prior to entering primary school. 

 

I also applaud the Treasury Minister for being prudent and showing good financial management around the revenues we raise through Customs & Excise, in order to restrict the growth level to only 3% over the five year financial plan period. 

 

It is also an extremely bold decision by this Treasury Minister in announcing here today the introduction of new legislation that allows members of the public greater access to their pension funds in the future.   

 

Individual pensions are hard -earned over a lifetime and built up over many years of work.

 

It is right that the Isle of Man follows other jurisdictions in giving those freedoms for people to choose how and when they have access to their pension funds. 

 

However, my only concern is that this Government is taking full advantage of potential short term tax income gains, but leaving behind a potential legacy for future governments and generations to address. 

 

I sincerely hope that the Treasury Minister and his team will also publish clear independent guidelines in the near future, in order to ensure that the individuals can make informed decisions through clear guidance that will empower savers and ensure that they are clear on their retirement income options before they make any decisions about what to do with their pension funds.

 

That said, I am disappointed that there are no proposals within this Budget that actually encourage more people to start saving for their retirement, and at a younger age as this is one of the biggest financial decisions people will take in their life.

 

The 5 year Capital Programme worth more than £428 million to invest in the island’s infrastructure is another glossy headline. I see it simply as a rolling five year programme with an extra £40 million added to this year’s Budget on top of the £388 million Capital Programme Investment scheme announced by the Treasury Minister last year….

 

In last year’s Budget the Minister announced a Capital Expenditure Budget of £88 million and as we heard this morning only around £49 million was actually spent, which is disappointing.

 

In this year’s Budget, I am pleased that the Minister is providing £116.7 million for Capital Expenditure and if we are to improve the overall quality of our infrastructure and the services being provided today and for future generations then we need to get these projects out of the Budget, through planning and implemented as soon as possible. 

 

Just looking through Capital Approvals for 2018/19, there are some amazing projects potentially on the horizon including a new Castle Rushen High School, and a new Science and Technology Block at the QEII that will continue to deliver a first class teaching environment for our students.

 

An upgrade of the NSC Pool Hall to improve facilities for our athletes and general public, a joint Douglas Fire and Ambulance Station fit for the 21st Century and not forgetting a new Acute Adult In-Patient Facility and a Day Care Service at Eastcliffe, which supports the Government’s key aim of providing for an inclusive and caring society. 

 

Funding of £30 million for the Liverpool Landing Stage will certainly secure our sea links and support our tourism sector. 

 

I am proud to be associated with our tourism sector and we have some fantastic projects coming online over the next few years, including a new and exciting Premier Inn Hotel, a full refurbishment of the Mount Murray Hotel and an extension being added to the Ramsey Park Hotel, and fingers crossed for the development of the Lord Street Site in Douglas, just to name a few….

 

Mr. President – with over £51.9 million worth of schemes already approved by Tynwald, it is vitally important that these schemes are implemented during the next financial year and for this Government to continue to work in partnership with the Construction industry.

 

As I pointed out last year, according to the Construction industry themselves, far too many Government schemes come online at the same time, which has led to a skills and labour shortage at times and an industry that is busy one year and quiet the next.

 

We need to ensure that there is a clear timeline for projects coming online over the next five years.

 

Mr. President – I have only managed to highlight a few of the many positive headlines in this year’s Budget, but this is a Budget of two halves and I also have some serious concerns regarding this year’s Budget. 

 

One of my biggest concerns remains the Isle of Man Health Service, which is starting to put serious pressure on other services that the Isle of Man should be delivering at this time, in order to ensure that we truly are a Special Place to Live and Work…..

 

If we exclude Noble’s Hospital just for a moment, I am not entirely sure if this Department is still underfunded or simply a department full of inefficiencies and a department that cannot control its spending and the budgets. 

 

We cannot ignore the fact that the Department of Health & Social Care has had an additional investment of £11 million in last year’s Budget and a further £5.5 million outlined in this Budget.

 

This is on top of the Supplementary Vote of £9.9 million in 2016, £11.1 million in 2017, and £9.5 million in January 2018.

 

In the past 12 months, I have seen no evidence of the strong cost controls or the delivery reduction of the £10 million to meet the remainder of the ongoing costs within the Department that the Treasury Minister announced during last year’s Budget Speech.

 

I have a strong feeling that the Department of Health will still be applying for a further Supplementary Vote at the same time as the Treasury Minister presents the independent report before this Court in January 2019.

 

An additional £5.5 million into the Health Service during this financial year with £3 million of that being given to Noble’s Hospital is excellent news, but I have to question if this is enough…..

 

The Isle of Man Government Detailed Accounts for 31st March 2017 confirm that the Budget for Noble’s Hospital in 2016/17 was £77 million, but the actual spend was around £95 million, less £3 million from income generated. This meant that the hospital was overspent by around £14.5 million.

 

So setting the Hospital Budget at £87.6 million during this financial year is definitely a step in the right direction and it will certainly take some of the pressure off the new Health Minister compared to the previous Minister, but even with an increased budget the hospital is still facing a massive challenge, and I genuinely can’t see the hospital coming in on budget at £90.6 million, less £2.9 million worth of potential income for this coming financial year….

 

Looking at page 56 of the Isle of Man Budget it does appear that the Department of Health and Social Care is forecast to spend around £218 million for the current financial year for 2017/18, but the Treasury Minister here today has only set the Department Budget for 2018/19 at just £216 million.

 

This is around £2 million less than the Department actually spent during the last financial year, and that is a serious concern….

 

I have taken the opportunity to speak to Treasury officials and I am pleased to hear that Noble’s Hospital is working on various cost savings schemes at the moment, including the Ramsey District Cottage Hospital reconfiguration, savings around Core Services, a Digital Strategy implementation, NHS supply chain procurement initiatives and a Drug Dispensing Strategy to name just a few.

 

Like Mr Cannan stated last year, I am under no illusions as to the tough challenges facing our Department of Health and Social Care at the moment, but the motion approved in January’s Tynwald sitting to have a fundamental review of the Department’s services and funding cannot happen soon enough in my opinion.

 

Mr. President – This Government and the Department must have the financial costs for our Health Service under full control, especially before the Pension Revenue Liability Reserves run out in 2022/23.

 

At that point we will be paying around an extra £45 million per annum towards our Pension Costs, which will be in addition to the £52 million being paid in 2022/23 by Government Departments as the employer. 

 

If not already happening, then in the near future these two major financial concerns will seriously start to affect public finances and possibly start affecting frontline services.  

 

Increasing the Basic State Pension by only 3% in this Budget is extremely disappointing and it does not go far enough in my opinion, but I have to accept that the Isle of Man continues to follow the UK’s so-called triple lock uprating of the state pension at the moment.

 

A 3% increase represents an uplift of just £3.65 per week plus any small increase in SERPS and Graduations, along with Manx Supplement which has been frozen in this Budget.

 

Unfortunately, it is simply not enough to help our Pensioners and it does not go far enough to cover the continuing increase in living expenses here on the Isle of Man, especially for those individuals now retired and on a low income pension, as I have already outlined. 

 

Neither can I ignore the fact that the 3% increase in the Basic State Pension given by the Treasury Minister here today has already been taken by the Infrastructure Minister for those individuals who happen to also be retired and living in Social Housing.

 

The Infrastructure Minister announced last December that a 3.1% increase in Social Housing rents from April 2018, and I have to seriously question how this further increase on top of several other Social Housing rent increases in recent years without any form of assessment of a tenant’s ability to pay actually fits within the current Programme for Government as an Inclusive and Caring Island. 

 

Mr. President – just running though the Welfare Benefit Payments list for 2018/19, I fully acknowledge that the Treasury Minister has tried to increase most benefits in this Budget.

 

I guess my only concerns relate to the level of increase, which does not reflect the overall cost of living here in the Isle of Man at the moment, especially for the most vulnerable in our Society. 

 

The latest Isle of Man inflation report dated January 2018 also highlights the inflationary pressures impacting on the island, which are also making it a daily struggle for many pensioners and families.

 

The Consumer Prices Index is currently at 3.8% and most categories have increased over the past 12 months, including Oil and other fuels, which have increased by 13.8% over last the year, along with Communication costs up 10.9% and Food and Non Alcoholic items increasing by 4.5%.

 

In addition, most households can also expect further increases in most Government services over the next 12 months as the Treasury Minister continues to implement his blanket uplift of 2% to all Department income targets including fees and charges to reflect the impact of inflation and growth. 

 

The Treasury Minister has again also capped any pay increase to 1% in this Budget, which I am not entirely against, but if pay awards exceed more than 1% then this will put additional pressure on already stretched Department Budgets who will be expected to find these costs through additional savings and efficiencies or a reduction in the services being provided. 

 

These are all genuine pressures being pushed down and they are seriously affecting household budgets across our island as income levels simply cannot keep up with the costs of living here on the Isle of Man at the moment.

 

People are sick and tired of these continual increases in charges year on year, especially when the levels of service being provided by this Government, our Utility Companies and other Service Providers are reducing year on year.  

 

Finally, with regards to the additional £1.1 million per annum for the Department of Infrastructure to address the state of our roads, although this announcement is welcome news for road users, I am sure that the Treasury Minister and the DOI MInister will agree that the roads on the Isle of Man are in a very sorry state and need major investment. 

 

The roads into and around Onchan, for example, are like a patchwork quilt, and those are just the good ones….

 

As I have already said this is a budget of two halves….

 

On reflection, I will be supporting the Budget here today, but only by the narrowest of margins, because in my opinion this Budget fails to address many of the economic and social challenges facing this island at the moment and does little to set this island on a fair course for future generations.