Guernsey States warned to get serious about plugging government defecit

Guernsey government's been warned it needs to take serious measures to plug the black hole in the States' finances.

The States are running a growing deficit, despite efforts to curb public spending.

The latest figures show that the deficit doubled between 2014- 15, increasing from £10.4 million to nearly £24.5 million

An independent review into the island’s finances claims that the States do not have a sustainable plan to fix the deficit and prop up the pension and welfare pots.

The report blames the deficit on:

• Ageing population

• Health expenditure

• Lack of economic growth.

Last year, the Health and Social Services department overspent by 5.6%, despite an increase in their budget.

Spending on agency staff alone increased by over one million pounds between 2015-16.

The current model of health service in the island is “both expensive and unsustainable”, report authors have warned.

It was the only department to overspend this financial year.

The report argues that the current model needs to be scrapped and completely overhauled in order to curb spending on health and social services.

The report claims long-term financial measures should be seriously considered, including:

• An increase to income tax of 1.1%

• A goods and services tax of 2%

• Social Security contributions

The President of the Policy & Resources Committee, Gavin St Pier, has formally recognised the existence of a structural deficit.