Guernsey deputies challenge P&R's two-budget 2027 approach

Treasury lead says he never believed 1% real-terms cut was possible

Guernsey’s Policy and Resources committee presented two budget options for 2027 rather than a single plan, drawing criticism from deputies who said the proposals do not do enough to support ordinary islanders. The committee’s proposals include an inflationary increase in income tax allowances, lower taxes on a pint at the pub, a £15 million fund to encourage economic growth, £6 million for initiatives to encourage States savings, and the abolition of mortgage interest relief.

Deputy Adrian Gabriel expressed disappointment with the proposals, hitting out at P&R’s plans to reduce tax caps. “I’m disappointed,” he said, adding that he “would have liked to have seen their maximum liability, their cap, increase much more.”

The criticism centered on whether the two-budget presentation complied with a States directive from the previous year to reduce real-terms spending by 1%. P&R Treasury Lead Charles Parkinson said he never believed that goal was possible. He warned that bringing a single budget with the spending cuts would produce “a flood of amendments” and argued the committee’s position was modest. “We’re only suggesting under the Option B budget half of what States committees have requested,” Parkinson said. “We’re not spending like a drunken sailor.”

Deputy Haley Camp rejected that framing. “It is clear we’re only moving in one trajectory which is let’s just keep on spending money with abandon and at some point down the road someone else can fix it,” she said. Camp said the two-budget approach showed P&R had “abandoned all spending discipline.”

Deputy Lee Van Katwyk said he and Deputy Rob Curgenven would bring a proposal to freeze fuel duty to “support struggling families.” Curgenven, who had warned the previous week that a tax reform decision would lead to higher government spending, said the fiscal position had shifted since. “We’ve got the windfall in for pillar two and obviously GST has been agreed in principle,” Curgenven said. “It just feels now that the cap is off and the spending spree is ready for Christmas.”

Deputy Aidan Matthews, who has fought to defend mortgage interest relief as previous P&R committees looked to remove it, said he would seek to reverse the planned abolition by 2029. “I think that really the best thing that we should be doing is encouraging people to be able to afford to buy their own homes,” Matthews said. P&R, working alongside the Committee for Housing, said it was developing initiatives to support first-time buyers.

Former Start Up Guernsey head Deputy Jennifer Strachan questioned P&R’s plan to introduce an entrepreneurs’ tax cap to attract new business to the island, particularly alongside the States’ decision to close the Digital Greenhouse, a centre for digital and creative start-ups. “I think they’re doing an easy thing, which is to say - here’s a tax cap, come live here,” she said. “I think the hard work is actually developing the ecosystem for entrepreneurs to thrive.”

The debate comes as the States weighs how to manage Guernsey’s fiscal position following the in-principle agreement on GST and pillar two revenue. P&R’s two-option budget will now be considered by deputies, who can amend or reject its proposals before the 2027 financial year begins.