The Treasury Minister has told Gef that the island’s finances are in a secure position and indicated where he sees gov spending priorities post pandemic.
Despite claims by some people online, Alf Canan said the island was financially well prepared for this lockdown, saying ‘absolutely, we can afford it’. He added: ‘We will do what is necessary to protect the health of the nation.’
‘The last circuit breaker, which was on a similar basis when we started, ending up costing us an estimated £20m. So I expect that this circuit breaker, if it was to last between 21-28 days to cost us £20m.
‘If we take that as the direct cost now for a month’s lockdown and bear in mind that is the direct cost of support. What is more difficult to compute is the impact that may be incurred by our income tax receipts and also in the medium term, how that may impact on VAT. We have taken some precautions from the Budget we delivered in February to deliver provisions for that, but it is too early to say how that will play out exactly.’
As revealed in the budget, gov reserve investments have bounced back to pre-Covid levels. However, Mr Cannan says it is too early to make accurate predictions as to how the stock market will behave in the medium to long term.
He said: ‘We have forecast a moderate growth into our Budget for 2021/22 and we think we will see some improvement on this year’s financial performance. In terms of the reserves, I think we have a portfolio that is well spread, both in terms of United Kingdom stocks and in international stocks and markets and I would hope for a positive return. Although one is very cognisant of the fact these are potentially very difficult economic winds at the moment. Although a return to a better economic output as countries get the virus more under control will hopefully have a better impact on our reserves but it is very early days yet.’
Mr Cannan said that while the situation is ‘not a welcome position’, the island’s finances are in a stronger position than some feared they could have been 12 months ago.
The gov has set aside £100m for economic recovery. The Treasury Minister believes about £30m in this financial year from the fund. But it is what happens next that will start to move into focus as the island and the world starts to look beyond the pandemic.
He added: ‘I think the deeper underlying issues that may come forward as a result of this pandemic are going to have be incorporated into the gov’s thinking for the medium term. I think there’s gonna have to be a complete rethink of the programme for government, which will obviously happen with the new parliament. But we’re also going to have to look carefully at the financial plan in terms of paying for some of the critical priorities around climate change, health and education but also picking up on the focus on where investment is needing to be direct to assist the island’s stability and economic growth in the short to medium term.’
The Treasury Minister confirmed that moving forward housing is going to be a ‘critical issue’ for the gov to get to grips with.
He said: ‘We’ve got to recognise that the housing market has developed in the last year in terms of levels of interest, acquisitions, the pricing structure seems to have changed and we’ve got to make sure that our young people can have opportunities to get onto the housing ladder in as reasonable a manner as possible. We have to be focussing on the options that are available for them and think carefully about what schemes can be forward to assist them with that. I do think it’s an important matter and I would like the government to work towards developing some form of property assistance scheme within the next six to 12 months.’
The Treasury Minister said that while the gov has money set aside for combating climate change, it will require a private and public funding structure moving forward.
He said: ‘I would like to see schemes coming forward this year in terms of helping to adapt housing to meet our climate change targets and in terms of the bigger picture, so in renewable energy and electricity generation. I’m looking forward to proposals, which will probably come from the MUA, about what options are available for us.’
Given the close nature of the two recent lockdowns, Mr Cannan said it is ‘too early to say’ where the island’s unemployment figures will go. However, he expects that it will increase in the short term at least, as some people will have registered for job seekers’ instead of using MERA to provide them with the support they need during lockdown.