Tynwald’s Economic Policy Review Committee (EPRC) held its first post-Budget review on Monday March 13.

The Committee – chaired by Claire Christian MHK, with Jason Moorhouse MHK and John Wannenburgh MHK – took public oral evidence from Treasury Minister Hon Dr Alex Allinson MHK and interim Chief Financial Officer David Catlow in a move to seek clarity, transparency and direction regarding the 2023-24 Budget.

In summary:

• Treasury believes there are no significant risks with a new quarterly approvals process for capital schemes, and hopes this will reduce inefficiencies and streamline work. The Committee queried if the process might hinder decision-making, and Member’s ability to consider a full pipeline of future projects.  
• The 5,000 new jobs target outlined in the Economic Strategy are in the main private sector jobs, and not that of the public or civil service.
• Treasury expressed support for digitalisation, providing service users with convenience, and to ensure low public sector workforce growth.
• Treasury are prepared to make ‘hard choices’ to secure the Island’s economic wellbeing, including that of a moratorium on capital projects if needed.
• Despite the Committee’s hope for frequent transparency with regards to the governance of the £100 Million Economic Strategy Fund, the Treasury plans to report on a yearly basis – with the Committee supporting more regular updates.
• There are no future plans for corporation tax at this moment, separate to that of any global minimum rate led by the OECD.
• ‘Based on calculated assumptions’ the Treasury is ‘fairly confident’ that annual structural deficits would reduce in later years, but this was dependent on increasing government revenue through the Economic Strategy.
• Treasury hope budget process reform will give greater flexibility on major financial decisions in future Budgets.

The session covered a wide range of areas, with the Committee pressing the Minister on how best to balance issues of ‘economic inequality’, the need to achieve long-term economic stability in an unstable climate, and grow the Island’s active working population.

Mrs Christian questioned the Minister on timescales for establishing a Major Projects Unit (MPU) and what, meanwhile, the Treasury was doing ‘to ensure value for money and delivery of capital projects.’ The Committee was assured that no major capital projects − notably proposals to build the new Castle Rushen High School − would be delayed ahead of the MPU’s formation, although no target date was confirmed.

Against the background of growing financial pressures on households, businesses and the wider Isle of Man economy, the Chair questioned whether there were ‘any radical contingency plans’ − such as a moratorium on capital projects − to counter a potential ‘worst case scenario’. In his reply Dr Allinson confirmed that should government revenue become ‘heavily stretched’ then such a moratorium might be considered.

Turning to the government’s Island Plan and Economic Strategy ambitions that aimed to see population growth reach 100,000 by 2037, Mr Moorhouse asked what percentage of a projected 5,000 new jobs would be government posts, to which the Minister replied that the aim was, in the main, to create private, not public sector jobs. His reply prompted Mrs Christian to seek clarity on whether there were plans to increase the Civil Service workforce to accommodate any increased demand for public services − such as doctors and teachers – in light of anticipated population growth. The Minister advised that, succession planning aside, Departments would advise on any increases (separate to the 5000 new jobs) and no such plans were currently envisaged for the Treasury, due to digitalisation.

The Committee queried governance and public transparency arrangements for the £100 million Economic Strategy Fund aimed at stimulating the Manx economy. It was unclear if spending outcomes would be reported monthly (the Committee’s preferred option), or annually. It was, however, the Committee’s understanding from the Minister that final details were under consideration, and likely to be annual.

Moving onto cost-of-living pressures on households, Mr Wannenburgh asked the Minister, what, if any, further government support measures were under consideration, to which Dr Allinson replied that the government would ‘respond in the most appropriate way’ adding that it was unable to ‘prop up’ the economy indefinitely.

Turning to annual structural deficits (the amount by which a government’s spending is more than it receives in taxes in a particular period, whether the economy is performing well or not) Mr Wannenburgh observed that the government’s £1.2 billion total expenditure was ‘quite a figure’, to which Dr Allinson replied that ‘based on calculated assumptions’ he was ‘fairly confident’ that the deficits would reduce in later years, but this was dependent on increasing government revenue through the Economic Strategy.

In closing, when questioned by Mr Wannenburgh, the Minister assured the Committee that the government was prepared to make ‘hard choices’ to secure the Island’s economic wellbeing, adding that the 2023-24 Budget had set the tone for more progressive budgets in the future. Dr Allinson also took the opportunity to thank Members of Tynwald for their valuable pre-Budget interaction, prior to the debate in Tynwald.  

In bringing the review to a close Mrs Christian said the session had been ‘insightful’. She continued:

‘This was the first time our Committee had held a post-Budget review. Scrutiny is vital to the functioning of our democracy and I’m pleased by the level of response and interaction from the public, businesses, bodies and groups.  Much depends on revenue growth in these challenging times, and the Committee will be closely following the government’s fiscal ambitions and rollout of the Island Plan and Economic Strategy. Our Island enjoys a hard-won reputation for financial stability and the Committee is hopeful that it can be sustained in the long term. The Manx economy affects everyone and the Committee will continue to constructively challenge and contribute to ensure the Island has a prosperous future.  Our next hearing will be scheduled following the Minister’s statement in July.’

Other topics prompting robust questioning by the Committee included greater democratisation of the budgetary process, strengthening public and business engagement, population impact analysis, potential reform of the Revenue Sharing Agreement, inflationary pressures and triple-lock pension arrangements.

To listen again to the session, visit the Listen Again page on the Tynwald website.

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For further information contact:
Tynwald Economic Policy Review Committee
C/o Clerk to the Committee
Tel: 01624 685510
Email: committees@tynwald.org.im
Website: www.tynwald.org.im/committee/EPRC
Twitter: @tynwaldinfo