A Budget of Resilience
The last year has been one of the most challenging in my lifetime for a Government to manage so it was hardly surprising that this budget, the final one of the Quayle administration, was firmly focused on stabilising the local economy. It not only recognised that this is the time to allow businesses and residents to navigate through the next 12 months, but also offered encouragement about future prospects without any additional hurdles.
The key themes appeared to be stabilise and prioritise, with an optimistic view on growth.
Stabilise
No change to taxes or allowances; government spending maintained; the more vulnerable protected with a state pension increase of 2.5%.
Prioritise
A government budget is no different to a business or household budget. There is a requirement to prioritise essential spending over desirable spending and, of course, you can’t spend what you don’t have.
The Government reserves appear to be healthy but the majority of these are already allocated to future liabilities, primarily the Public Sector Pension liability and the State Pension.
It must be remembered, the Isle of Man is not in the same financial position as the UK.
The UK can assist the growth of the economy through both Fiscal Policy -wherea government adjusts its spending levels and tax rates to monitor and influence a nation’s economy – and Monetary Policy, where the Government can manage the size and growth rate of the money supply in the economy. The Isle of Man does not have control of the money supply i.e. printing money or changing interest rates, which reduces the number of tools they have to manage the local economy.
Overall, the point is that our money, which is managed by the IOM Government, has to be carefully managed and it cannot spend reserves that are required for future liabilities if we do not have a budget surplus. This budget clearly recognises this.
Key Areas of Note
- The introduction of the Strategic Infrastructure Needs Analysis which will form the basis of Government’s medium and long-term capital spend with the objective to fully understand and prioritise capital investment and maintenance.
- The first budget for Manx Care as a standalone entity, separate from the Department of Health and Social Care which will be responsible for the delivery of all health and care services.
As an IOM UNESCO Biosphere partner, we also welcomed the news an additional £5 million had been allocated to climate change.
Growth
An Economic Recovery Group is leading a response to stimulate and regenerate the economy, commissioning anew Strategic Economic Framework with a view to drive forward the Island’s economy over the next five to 10 years. I am eager to see some innovative thinking in this area if we are to achieve the continued economic growth required.
The Isle of Man has proved its worth as a destination place to live and work and it will be key to our future success that we retain this accolade to attract new residents to the island.
