DEC 2025

Budget (Government Plan)

2026 -2029

5

CONTENTS

Budget in Brief  3 Foreword from the Chief Minister  6 Foreword from the Minister for Treasury and Resources  8 Economic Context  10 Sustainable Wellbeing  14 Financial Strategy  22 General Revenue Income  26 Public Sector Spending 2026-2029  41 Investing in Jersey: Capital Projects 2026-2029  54 The Government of Jersey Balance Sheet and States Funds  78 Financial Matters Under Development  98 Appendix 1: Key to Abbreviations  102 Appendix 2: Proposition and Summary Tables  104 Appendix 3: Supplementary Financial Tables  117 Appendix 4: Administrative Tax Measures  128

Budget 2026-2029 (P.70/2025) as amended

On 11 December 2025 the States Assembly approved the Budget 2026-2029 as amended (a list of adopted amendments is included in Appendix 2).

This document sets out:

• The final Budget as amended by all amendments agreed by the States

Assembly, together with any necessary consequential and minor factual corrections.

• The P.70/2025 Proposition and Summary Tables, as amended by the States Assembly (see Appendix 2).

  Title

Under the Public Finances (Jersey) Law 2019, each financial year the Council of Ministers must prepare a Government Plan. To aid public understanding of the nature and purpose of the Government Plan 2026–2029, and to encourage public engagement, the report has been renamed to the "Budget 2026–2029". This does not impact upon its legal status as a Government Plan for the purposed of that Law. The Budget 2026–2029 fulfils all the requirements of a Government Plan under the Public Finances (Jersey) Law 2019.

Budget in brief

The budget sets out the income and expenditure proposals for the next 4 years. It also show how taxpayers money is spent on delivering services, infrastructure and facilities to Islanders. It builds on the Council of Ministers Common Strategic Policy 2024-2026.

For more information on the government s priorities for 2026, visit gov.je/GovernmentProgramme.

2026 Highlights:

General Revenue Income: 2026 balance in the  Government spending on

Strategic Reserve: delivering services to Islanders:

£1.34bn £1.3bn £1.28bn

Investment in buildings,  Investment in Fort Regent: Investment in preventative infrastructure, IT and  and digital healthcare: new hospital:

£1bn

(over the 4 years) +£43m +£12m

Investment in Children's Investment in  Additional nursery funding services: competitiveness:  for 2-3 year-olds

£

+£8m +£7m +£3m

Budget measures for 2026

Personal income tax thresholds and child allowances

£550  £In1c0re0ase in child allowance

£150

Increase in additional allowance

£ Increase  £200

for individuals Increase in childcare tax relief

from £20,700 to £21,250 £550

Increase in higher childcare tax relief

Alcohol duty Fuel duty

+1.0p

Increase on

+1.7p 500ml can of beer

(increasing duty with inflation)

-5.4p Increase Reduction in a  per litre of fuel

pint of draught beer

(introducing tap relief)

Tobacco duty Vehicle Emissions Duty

+80p

+£2 +£2,480

Increase Least polluting Most polluting per 20 pack

CO2 emitting vehicles

Vaping tax Reduction in higher rate of stamp duty

+£2  -1%

Reduce higher rate of stamp Per 10ml  duty on non-main residence

Government Finances 2026

£381m Health and Care Jersey

Departmental Spend

in 2026:

£35m Digital Services

£308m Capital expenditure

in 2026 including:

£508m social  benefits expenditure  from Social Security  Funds  

£353m  £59m Health in 2026 including: Pensions and other benefits  benefits (Health

(Social Security Fund) Insurance Fund)

Foreword from the Chief Minister

This Government came into office with an imperative to deliver the priorities in its Common Strategic Policy. These initiatives were the centrepiece of our first full Budget and feature again this  year  as  we  look  to  complete  this  term  of  office.  Public  health,  public  safety  and opportunities for young Islanders are high priorities in this budget.

We also made a commitment to think longer term and at the heart of our longer-term vision is the Investing in Jersey programme: a 25-year strategy to renew and regenerate our public assets. This programme prioritises investment in the Island's infrastructure - from schools and health facilities to roads, water, drainage, digital systems, community spaces and the public realm.

It will do this in a way that transcends government terms of office by creating the Jersey Capital Investment Fund. This is a vital statement of intent to safeguard funding for key capital projects and improve transparency, accountability and certainty. It is incumbent upon us to provide this clarity to the private sector if we are to work together to improve the fabric of our Island.

In line with our Common Strategic Policy commitments, significant funding is being allocated to modern healthcare facilities, with greater focus on preventative care and digital health advancements. This is important for patient care but also to address the causes of short-term budget pressures post Covid. The financial consequences of a failure to prevent ill-health are much higher in the post Covid world. This Budget begins the process of investing to change this and put the cost of healthcare on a sustainable footing for our Island.

The Budget also includes significantly increased investment in services for children and young people. As well as providing a new youth centre to serve central St Helier, we are expanding access to nursery provision for two and three-year-olds and starting a major project to rebuild Mont à L'Abbé secondary school. We have also focussed on our most vulnerable young islanders by improving financial support for the Children's Service, both for the provision of improved care and with capital investment to modernise our residential facilities.

Public safety will be enhanced with investment in the Emergency Services Control Centre and additional resources for the Fire and Rescue Service that will increase their capacity and capability to respond to changing professional standards and emerging challenges.

We are using the period after the most recent Moneyval evaluation of our International Finance Centre to boost the competitiveness of this sector. This builds on the Future Economy competitiveness programme with the aim of enhancing the Island's prosperity.

This Budget is being presented at a time of global political fragmentation, persistent inflation, and weak economic growth. This is manifesting itself in higher public service costs across developed economies. Jersey is facing similar pressures, notably from unavoidable inflation costs. That's why this Government has taken measures to curb discretionary expenditure while focusing resources where they are most needed in front-line services.

In 2026, we will deliver £9 million in savings by reducing management layers and our reliance on external consultants. We are also reducing our office footprint, making savings by consolidating Government buildings. These measures are part of a broader strategy to streamline Government operations and direct funding to the areas of greatest priority.

This Budget sets a considered course for the year ahead. While we face some real challenges, Jersey is in a strong position to respond. By focusing on essential services, investing in infrastructure, and supporting our community, we are working to ensure the Island remains a secure, vibrant and rewarding place to live, work and build a future.

Foreword from the Minister for Treasury and Resources

This year's Budget sets out a responsible and forward-looking approach to managing Jersey's public finances. It is built on the principle of balance - taking action to support Islanders today, while ensuring the Island is well-placed to meet future challenges.

This Budget has been compiled in challenging ongoing circumstances. In 2024 income fell short of our forecasts and whilst our medium-term outlook remains strong, in the short term we will have several years with less money to spend than previously expected. Whilst we are seeing inflation return to more usual levels, this is taking slightly longer than forecast, which is also placing pressure on our expenditure. These issues combined meant that hard decisions were needed simply to maintain balanced finances and protect financial sustainability.

In maintaining financial discipline, we have carefully reviewed our public finances and met the challenge without the need for significant tax increases or reductions in public services. Instead,  we  have  reprioritised  existing  allocations  and  made  decisions  to  ensure  the sustainability of public finances. We have also committed to making further savings in 2027, allowing time for thoughtful and well-planned changes to be made.

Income

These actions have meant that we have protected Islanders from the significant tax changes seen in other jurisdictions. We are increasing tax allowances to provide targeted support for Islanders at a time when many households continue to feel the effects of the cost of living. In 2026, we are proposing to uprate the main tax allowances by 2.6% to £21,250. This increase will provide £9 million in extra tax relief for 90% of taxpayers. At the same time, we are taking practical steps to discourage behaviours that risk public health by increasing duties on tobacco and introducing duties on vapes, supporting a healthier community for the long term.

However, this budget doesn't simply maintain the status quo – it recognises that investment in our Island is critical to our future and takes action now to begin to realise our vision for the future.

The introduction of Pillar Two represents an important change in global taxation with next year being the first year where income will be received in Jersey from the relevant groups. We have maintained our previous strategy, with a portion of the expected receipts from Pillar Two being reinvested in driving forward the competitiveness of Jersey's financial and related professional services sector. In a world of global uncertainty and geo-political change, this investment in international competitiveness is essential for a sector that sustains our community, funds our infrastructure and enables the public services on which Islanders depend.

Expenditure

Health and children's services remain top priorities with funding being reprioritised to these areas in 2026. Investment of £40 million in these areas will strengthen services that directly affect Islanders' wellbeing, ensuring care and support is there when it is needed most.

This plan commits to payments of £184 million from taxation into the Social Security Fund over the period, in addition to Social Security Contributions and substantial investment returns, ensuring that the Fund continues to grow faster than forecast benefit expenditure.

Alongside the investment in Health, Children and competitiveness, we are including amounts to address other key risks, bringing total investment to £52 million in 2026. We will also continue with our current plan to deliver nearly £20 million of savings in 2026, and have expanded our commitment with a further £29 million to be delivered through the management of pay and future savings in 2027. This aligns to our stated priority of curbing growth in the public sector.

Balance Sheet – Investing in Jersey

In advance of the establishment of the Jersey Capital Investment Fund, we are continuing to invest in Jersey's future through the capital programme, proposing over £1 billion for projects across 2026-2029. This includes essential projects such as safeguarding the future of Fort Regent and progressing plans for the New Healthcare Facilities, as well as investing in the Government's information and technology systems. These are long-term investments that will enhance quality of life and secure vital infrastructure for future generations.

Managing our balance sheet wisely is central to this Budget. We are taking steps to preserve financial resilience, making sure borrowing and investment decisions are made prudently, with long-term affordability in mind. The Budget reflects a shift towards longer-term thinking, moving away from short-term fixes and ensuring sustainability, resilience and fairness for the years ahead.

This Budget ensures that Jersey remains a place where people can build their futures, businesses can succeed and generations can be confident that their Island is being managed with care and foresight.

Economic Context

In May 2025, Jersey's Fiscal Policy Panel (FPP) published an Economic Outlook (FPP Economic  Outlook  May  2025)[1]  setting  out  their  economic  forecasts,  assumptions  and expectations for Jersey's Economy over the Budget term. The FPP referenced a rapidly changing global economic outlook, characterised by weaker growth and exceptional levels of global economic uncertainty.

The Global Economic Outlook

The global economic outlook has weakened. Trade tariffs and increasing geopolitical tensions threaten global economic stability and are likely to disrupt supply chains, leading to increasing global inflation, as well as higher risks of financial instability.

2.0%

1.5%

1.0%

0.5%

Outturn Spring 2024 Spring 2025 0.0%

2023 2024 2025 2026 Figure 1: Economic growth forecast for advanced economies: Source: IMF

Jersey's Economic Outlook

In 2023 Jersey's economy grew strongly, by 7.3% in real terms. This growth was driven by Jersey's banking sector which benefited from improved net interest margins enabled by higher interest rates. The non-financial sectors of the economy experienced moderate growth. As part of their Spring 2025 economic assumptions, the FPP used multiple data sources to model Gross Value Added (GVA) growth in 2024. Bank profit outturn data published by the Jersey Financial Services Commission showed an 8% decrease over the year. Combined with estimated subdued growth for the rest of the economy, the FPP estimated that Jersey's economy contracted by 1.5% in real terms in 2024, following a year of 7.3% growth in 2023. The FPP forecast economic growth will remain below trend in 2025 and 2026, before returning to trend growth in 2027.

12% 8% 4% 0% -4% -8% -12%

Outturn Spring 2024 Spring 2025

Figure 2: FPP Real GVA outturn and forecast 2024-2029. Source: FPP, Statistics Jersey

Despite a projected contraction in GVA, average earnings (wages) increased in real terms across all parts of the economy in 2024 (Figure 3). The FPP forecast earnings growth of over 4% in 2025 and 2026, driven by the increase in the minimum wage. Real increases in wages are forecast for 2027-29 as well. Employment growth, in 2024, was 0.8% growth and the FPP forecast employment to remain stable over 2025-2029.

11% 9% 7% 5%

3% 1% -1%

2019 2020 2021 2022 2023 2024

RPI Public

Financial and legal activities All private sectors

Figure 3: Average Earnings. Source: Statistics Jersey

Since its peak in 2022-23, inflation has fallen steadily but has remained elevated due to relatively  high  underlying  inflation'  (RPIX)  driven  by  domestic  factors,  particularly  the increases in the minimum wage. Interest rate cuts have fed through to headline RPI which is forecast to be 2.6% in 2026. RPIX is forecast to be higher at 3.6% in 2026.

14% 12% 10% 8% 6% 4% 2% 0%

RPIX RPI CPI

Figure 4: FPP Inflation outturn and forecast 2025-29: Source: FPP, Statistic Jersey

Fiscal Framework

The Fiscal Policy Panel is established by the Public Finances Law (Jersey) Law 2019, which enshrines its independence and sets requirements for it to provide an annual report on Jersey's economy and Government finances, and to inform the preparation of the Budget. The Council of Ministers or the Minister for Treasury and Resources can also request other reports on specific subjects.

The FPP will continue to be responsible for monitoring the application of the fiscal guidelines. The fiscal framework remains an important pillar of Jersey's economic and fiscal policy and sets the medium and long-term aims that help to inform budgetary decision making, with particular regard to the balance of income and expenditure (i.e. budget deficits or surpluses).

The key guidelines identified in previous Budgets are to:

• Seek to increase the Strategic Reserve over the long term and public sector net worth, while heeding the advice of the FPP on borrowing and net financial assets.

• Run a structural current balance or surplus in the long-term until the Strategic Reserve is judged large enough to meet its objectives.

• Borrow only to finance investment (or refinance liabilities), except under times of economic duress, and monitor the impact on net financial assets.

The Fiscal Framework continues to be kept under review and will be updated if necessary.

Sustainable Wellbeing

Island Outcomes and Sustainable Wellbeing

The Common Strategic Policy (CSP) of the Council of Ministers was approved by the States Assembly in May 2024. It set out 13 priorities that were aligned with the long-term themes of the Future Jersey report[2] and the ten Island Outcomes arising from it. The Budget document sets out how the Government will deploy its finances to deliver these priorities, as well as the wide range of existing Government services that support the ongoing well-being of Islanders.

Future Jersey vision

The long-term vision for Jersey in 2037 was produced by the Future Jersey consultation and is captured by the vision statement:

"An Island loved for its beautiful coast and countryside, rich heritage, diverse wildlife and clean air, land and water. An Island where a sense of community really matters - a safe place to grow up and enjoy life. An Island that offers everyone the opportunity to contribute to, and share in, the success of a strong, sustainable economy."

Island Outcomes

The Island Outcomes are split across three wellbeing themes: Community, Economic and Environmental.

The Public Finances (Jersey) Law 2019 requires the Council of Ministers to take into account the  sustainable  wellbeing  (including  the  economic,  social,  environmental  and  cultural wellbeing)  of  the  inhabitants  of  Jersey  ("Islanders")  over  successive  generations  when preparing the Budget each year.

Figure 5: Island Outcomes

Progress over time towards the Island Outcomes and the sustainable wellbeing of Islanders over successive generations is monitored using the Island Outcome Indicators[3] which are updated over time and published by Statistics Jersey.

Jersey Performance Framework

The  Jersey  Performance  Framework  is  used  to  report  on  the  Government  of  Jersey's performance. It is underpinned by a shared ambition for the sustainable wellbeing of current and future Islanders.

The Jersey Performance Framework comprises:

• The Island Outcome Indicators published by Statistics Jersey; and

• The Government's Service Performance Measures published on gov.je

Common Strategic Policy 2024-26

In the Common Strategic Policy 2024-26 (CSP)[4], the Council of Ministers set out its priorities for delivery in its two-year term of office, which spanned all three sustainable wellbeing themes. The CSP was developed after Ministers reviewed the detailed data from a number of sources, including the Jersey Opinions and Lifestyle Survey and the Island Outcome Indicators. The individual priorities are linked to the Island Outcomes.

Ministers and their departments are guided by the Island Outcomes in delivering all of their business-as-usual activities.

Sustainable  Island Our Priorities

Wellbeing  Outcome

Figure 6: Common Strategic Policies

Sustainable Wellbeing and the Budget

The Budget contains approvals for the Council of Ministers' income estimates and spending proposals for the next 4 years. Importantly these spending allocations continue to fund the wide range of activities that Government is already delivering to provide services and support positive outcomes for Islanders, whilst also including some additional allocations needed to progress with CSP priorities.

The Budget approves heads of expenditure ("budgets"), the majority of which are used to fund the provision of public services which support the sustainable wellbeing of Islanders. This includes, for example the provision of education to our children, provision of healthcare to Islanders and ensuring public safety through blue light services and the justice system. Further detail on the amounts allocated to each head of expenditure is set out in the public sector spending section of this document. Supplementary detail for each Department is provided in the Annex to the Budget.

In their business-as-usual activity, Ministers continue to be guided by the Island Outcomes. This can take many forms. For example, when considering policy issues within their remit, Ministers take into account the well-being of Islanders and the long-term impacts of the policy. This is expressed through internal policy submissions received by Ministers, which should routinely include commentary on the effect on sustainable wellbeing.

The link between the three wellbeing themes (Community, Economic and Environmental) and some of the activities identified in the Budget is set out below.

Figure 7: Community Wellbeing

Figure 8: Economic Wellbeing

Figure 9: Environmental Wellbeing

Ministerial Priorities and Business Plans

Alongside the 13 priorities set out in the Common Strategic Policy, Ministers and departments will  continue  to  deliver  essential  public  services  and  business  as  usual  activities.  Key objectives for Ministers and departments, the legislative programme and areas of policy development are published in department Business Plans. The Business Plans also include service performance measures which show how government departments are performing in the delivery of key public services. Information on the operational activities and structure of Government departments is available online at gov.je[5]. The published 2025 Business Plans[6] cover the period up to the election in 2026, it's not therefore intended that Ministers will produce new Business Plans before the next election.

Risk

Alongside the sustainable wellbeing of the inhabitants of Jersey over successive generations, the Council of Ministers also consider key risks to Jersey and to the running of the Government of Jersey when considering how best to prioritise and allocate its resources. Many of our risks will be being managed through existing resources.

For each of the key risks on the corporate risk register (those with elevated risk scores), this section set out below how the Budget applies resources to mitigate these risks, to reduce exposure. More detail on additional funding is set out in subsequent sections, and the Annex to the Budget.

Community Wellbeing

Figure 10: Community Wellbeing Risks

Economic Wellbeing

Figure 11: Economic Wellbeing Risks

Environmental Wellbeing

Figure 12: Environmental Wellbeing Risks

Government continues to develop its long-term financial planning but already considers a range of scenarios to manage financial risk in both the medium and longer-term. We have a well-established fiscal policy, supported by the business planning process which continues to prioritise resources against the highest areas of priority and risk.

Financial Strategy

Financial Principles

The Council of Ministers agreed the following financial principles to be used as a framework for decisions making in preparing this budget.

1. The Budget must take into account the sustainability, and stability of public finances.
2. Public services should be funded through balanced budgets.
3. Investment should be affordable and deliverable.
4. Expenditure and assets should be used to deliver value for money.
5. Fees and charges should be reasonable.
6. Restrained approach to borrowing should be adopted.
7. The value of our balance sheet should be preserved.

Tax Policy Principles

The following tax policy principles established in previous Plans continue to be used in this Plan.

1. Fair and sustainable
   1. Taxation must be necessary, justifiable, and sustainable
   2. Taxes should be low, broad, simple, and fair
   3. Everyone should make an appropriate contribution to the cost of providing services, while those on the lowest incomes should be protected
2. Support broader Government Policy
   1. Taxes must be internationally competitive
   2. Taxation should support economic, environmental, and social policy
3. Efficient and effective

3.1. Taxes should be easy to implement, administer and comply with, at a reasonable cost

No individual tax measure will meet all these principles. But overall, the Island's tax regime should represent a sustainable balance of them.

Financial Strategy for 2026-2029

The Council of Ministers developed a Common Strategic Policy (CSP), that focuses on delivering sensible, practical solutions to make Islanders' lives better. This Budget builds upon the foundations set out in the CSP and Budget 2025 to ensure funding is in place to deliver on real outcomes that will benefit our Island community.

The Budget has been prepared against the backdrop of heightened geopolitical risks and global economic uncertainty. Inflation levels have peaked, and are expected to return to more normal levels, albeit more slowly, along with interest rate projections. However, there remains pressure on both Government and household finances.

In 2024 our income was £17 million (1.4%) less than forecast. The updated income forecast shows continuing pressures, with income forecasts £22 million lower in total than previously anticipated across 2025 and 2026 before recovering in the latter years of the plan. At the same time, the slower reductions in inflation put upward pressure on our expenditure of over £200 million, which is only partly met by increases in income later in the plan. In the formulation of Budget 2026 we have had to adjust our plans to address the changes in income and expenditure that fall outside of our direct control and ensure that we continue to deliver balanced budgets.

In developing the Budget, the Council of Ministers have restated their commitment to the principles agreed in their CSP

• Underpinning all our work is a steadfast plan to maintain sound public finances, and prevent unnecessary expenditure, with no significant increase in spending beyond what is affordable.

• Budgets will be reprioritised where appropriate to deliver objectives.

• We will curb the growth in public sector spending and rely less on consultants, instead developing local talent within the civil service and redirecting monies saved to those areas where it is most needed.

In addition, this Budget sets the groundwork for the vital investment that the Island needs to ensure long-term sustainability, not just of finances, but also wider wellbeing and prosperity.

The financial strategy for 2026–2029 is based upon these principles and actions agreed in the CSP. The key elements of the medium-term financial strategy for this Budget are:

Income

• No significant changes to taxation, with budget measures that are consistent with established policy. We will implement duties on Vaping and introduce Tap relief, as signalled in the last Budget.

• A prudent approach to forecasting revenues resulting from the implementation of Pillar Two.

Expenditure

• Ensuring that our health service is sustainable, both by addressing immediate pressures, and by investing in preventative health and digital health, which will help to limit future cost increases as we see the impacts of the ageing population start to manifest.

• Allocating funding now to address key risks in the children's service, the fire and rescue service and to deliver free nursery education to all 2-to-3-year-olds.

• Investing in our economy through a competitiveness programme to protect and grow our finance industry, a key source of funding for public services.

• Ensuring these decisions are funded through sensible and temporary adjustments to the States Grant to the Social Security Fund for 2026 to 2029[8], whilst recognising both the need to curb and reverse recent growth in the public service, and to review the long-term sustainability of the Social Security Fund, in a controlled and well-thought- through manner.

• Adjusting the 2025 payment to the Social Security Fund to an affordable level, given the changes to economic conditions since the last Budget.

Capital

• Initiating a shift of capital planning to a longer-term view, in line with our vision for Investing in Jersey through the establishment of a Jersey Capital Investment Fund.

• Beginning this journey through the Capital Programme, with substantial investment in our Island through the new hospital at Overdale and beginning the long overdue work to restore Fort Regent.

Balance Sheet

• Continuing to maintain our enviable balance sheet, through a restrained approach to borrowing and judicious management of our reserves. Those reserves underwrite our stability and the Budget ensures that these reserves continue to grow.

• Adopting our prudent approach to Pillar Two may also give us further opportunities to grow these reserves, invest in competitiveness and enhance our infrastructure.

Sustainable Public Finances

The Public Finances (Jersey) Law 2019 (PFL) sets out a requirement for the Budget to have regard to the long-term sustainability of the Island to ensure that we safeguard it for future generations.

This plan delivers budgets that are broadly balanced across the plan. This is important to ensure that we are spending within our means and making adequate provision for the replacement of our assets.

Income is forecast to increase across the plan, although from a slightly slower base than previously forecast. This broadly covers the cost of inflation built into expenditure forecasts. The Budget proposes some above inflation increases in expenditure in 2026 but recognises the need to reprioritise and refocus spend through additional savings and a commitment to manage the pay bill responsibly. The impact of this is recognised from 2027, to ensure that adequate time is available to develop deliverable plans.

Summary Forecast Operating Balance

2025  2025  2026  2027  2028  2029 Approved  Forecast [9]  £'000  Estimate  Estimate  Estimate  Estimate 1,270,276  1,258,242  General Revenue Income  1,338,819  1,390,340  1,457,651  1,520,085 1,238,715  1,207,777  Net Revenue Expenditure  1,277,762  1,315,507  1,367,573  1,423,553 31,561  50,465  Net Operating Surplus/(Deficit)  61,057  74,833  90,078  96,532 58,934  58,934  Depreciation and amortisation  73,373  74,812  77,960  79,699 (27,373)  (8,469)  Operating Surplus/(Deficit) after Depreciation  (12,316)  21  12,118  16,833

Table 1: Forecast Operating Balance

The financial forecast includes a prudent forecast of the impact of the introduction of Pillar Two taxes for the largest multinational groups in relation to accounting periods beginning on or after 1 January 2025. There is considerable upside potential for the receipts arising from the implementation of Pillar Two, however there is also significant uncertainty as to the scale of the extra receipts and how long the Island can expect to receive such high levels of income. Accordingly spending plans have not been developed which depend upon those receipts, particularly on a recurring basis.

If receipts are in excess of the prudent forecast, we are maintaining our policy of using these receipts to strengthen our reserves, invest further in competitiveness and invest in our infrastructure, in particular part funding the New Healthcare Facilities. Safeguarding our infrastructure for future generations is at the heart of the proposed Jersey Capital Investment Fund.

This Budget has taken a holistic approach to finances, looking beyond potential siloed thinking to balance the overall benefits for Islanders of financial decisions. Our Reserves remain strong, and are forecast to grow across the period, after allowing for the proposed adjustments to the grant to the Social Security Fund.

There is, however, more to do. We need to recapitalise the Stabilisation Fund, fund much- needed infrastructure investment and reconfigure ourselves to meet the financial challenges of an ageing demographic. Work continues to develop a more detailed understanding of the longer-term  forecast  for  public  finances,  which  will  consider  the  impact  of  changes  to population size, demographics, and the economy over longer timescales. This will build on existing work, including the review of the sustainability, and affordability to both the taxpayer and users of the Island's health and care system and the planned reviews of the Social Security and Long-Term Care Fund.

General Revenue Income

The Government funds ongoing annual expenditure and investment in assets through three main sources: general tax revenues, other government income and departmental income. These three sources of revenue are paid into the Consolidated Fund.

General Tax Revenues

General tax revenues provide the main source of funding for the Government, with five main tax types.

Figure 13: Tax Types

Other Government Incomes

The Government also receives income from four other sources, as set out in the table below.

Figure 14: Other Income Sources

Departmental Income Sources

In addition to amounts paid directly to the Consolidated Fund, Government departments receive money from fees and charges for individual services. These amounts are included within individual net revenue expenditure allocations and are estimated at £134 million in 2026. The number of diverse sources of income reflects the variety of services provided by the Government. This includes fees for private patients at the hospital, school fees, fees for the disposal of inert waste, planning fees, and income from rents and our sports facilities. This income is included in department heads of expenditure.

Existing fees and charges can only be increased by more than 2.5% with the approval of the Minister for Treasury and Resources. One of the CSP priorities is to keep fees and charges as low as possible. However, some increases may be appropriate, for example to ensure user pays charges continue to reflect the underlying costs of services, subject to the impact on those paying the fees.

Special Funds, including social security funds also receive income designated to them, as well as the investment returns on fund balances. This is then used for expenditure in line with the purpose and objectives of the funds.

New Fees and Charges

A challenge for the Infrastructure department is the loss of income arising from the reduced capacity at the inert waste site. This loss of income will not result in associated expenditure savings,  resulting in a  sizeable  cost  pressure.  Over  the medium  term,  the  Minister  for Infrastructure intends to bring forward commercial waste charges to recover the costs of treatment  and  to  encourage  improved  environmental  outcomes.  To  continue  to  shelter business and Islanders recovering from the recent increases in the cost of living and doing business, £3 million of temporary additional funding has been allocated to the Infrastructure Department (as agreed in Budget 2025-2028), in advance of the introduction of charges in 2028. Work will progress such that the next Government can bring these charges forward.

Given the scale of the pressures faced in Health and Care Jersey, steps need to be taken now to protect our frontline healthcare services. This includes implementation in 2026 of the planned Did not attend' fees and the development of detailed proposals, that would be presented for approval by the States Assembly, for the introduction of fees encouraging the appropriate use of the Emergency Department[10] to help promote behavioural changes and reduce wasteful use of resources:

• Promoting appropriate use of the Emergency Department

It is estimated by HCJ that at present 14,000 patients a year use the hospital Emergency Department for day-to-day healthcare which would more appropriately be provided in the community by their GP. In these instances it is proposed to introduce a fee for these patients at same rate as charged by Jersey Doctors on Call (currently £77 for a resident, £97 for a non-resident), or higher. On arrival in the hospital, people who would be more appropriately cared for in the community will be encouraged to seek the right healthcare from the right provider and be redirected to a pharmacist, their GP or Jersey Doctors on Call, as appropriate. If they still wish to receive day-to-day healthcare in the Emergency Department, they will be provided with this care at a fee.

• Did not attend fees

It is estimated that patients fail to attend 12,000 outpatient appointments a year, without notifying the department and hence preventing others from accessing care. It is proposed that a non-attendance fee, initially £55 be introduced, to be paid by people who repeatably do not attend outpatients appointments. This charge represents around half the current cost of a basic outpatient appointment. It will be introduced on a phased basis as Health and Care Jersey rolls out a new system that allows people to change their appointments online, as well as by phone. Specific groups of people will be exempt, including mental health patients, children and people attending substance misuse clinics.

The Did not attend' fees will be introduced during 2026 after a period of advance public communications. However, the proposed Emergency Department fees will not be introduced until detailed, evidence-based proposals (including but not limited to ensuring that free access for genuine emergencies is not compromised and maintaining the safety and wellbeing of health care staff) have been presented to and approved by the States Assembly[11]. As noted above, the non-attendance fee will be phased to coincide with the introduction of a new system allowing people to change their appointments online. There will be an appeals process to safeguard patients and ensure no-one is unfairly charged. As the fees are intended to shift behaviours, not generate income, there are no associated income targets, and it is hoped that the need to levy the fees would reduce over time.

Latest Income Forecasts

The Income Forecasting Group (IFG) advises on the forecasts of all States income from taxation and social security contributions. Membership of the group includes senior civil servants, the Government's chief economic advisor as well as external members.

Since the previous forecast (spring 2024) used as the basis for Budget 2025-2028, the IFG have revised the income forecast (summer 2025). This reflects the latest economic assumptions produced by the independent Fiscal Policy Panel in May 2025[12]. The forecast is published alongside the Budget 2026-2029.

The global macroeconomic outlook continues to evolve in a rapidly changing environment. Global uncertainty has increased, and growth forecasts remain below historic averages in many advanced economies, including the UK. The IFG has revised down the income forecasts for 2025 and 2026, by 1% and 0.8% respectively.

The FPP economic assumptions reflect the latest local and international developments to May 2025. The main variations to the economic assumptions used in the IFG forecast for Summer 2025, since the previous Government Plan include:

• Interest rates are still expected to fall over the forecasting period. However, base rate cuts are expected to be more gradual than previously forecast. The FPP has decreased their forecast for growth in financial services profits in 2024 and 2025, based on data from discussions and meetings with industry.

• Inflation measured through the underlying Retail Price s Index (RPIX) is forecast to remain elevated until 2027 due to a mix of imported and domestic factors. Headline inflation (RPI) is still forecast to fall in 2026 driven by expected cuts to the Bank of England base rate feeding through to lower mortgage interest repayments[13]. However, base rate cuts are now expected to be more gradual due to high levels of underlying inflation.

• The forecast for average earnings has been uprated in all sectors of the economy, driven by the public sector pay deal, the transition to the living wage in the non-finance sector and higher forecast remuneration in the financial sector. However, increases in earnings are expected to become partly offset by slower employment growth.

• House prices are not expected to increase until 2026 and transactions are expected to return to pre-pandemic levels by 2026, but at a slower rate than previously anticipated.

• The IFG's summer 2025 forecast has been developed as a central forecast' to represent the IFG's view of the most likely outcome.

In addition to the economic assumptions forecast by the FPP, the IFG's latest forecast reflects.

• Taxation and duty income results for 2024.

• Initial information on taxation and duty general revenues income for the first two quarters of 2025.

• Forecasts from Treasury for other income; and

• Market and local sectoral intelligence from both the IFG and gathered buy the Economics Unit.

The summer 2025 forecast covers the years 2026-2029, the forecast assumes existing tax policy and long-standing policy for rises and changes where relevant.

67,111  Impôts Duties  67,567  67,934  68,653  69,215 50,386  Stamp Duty  43,080  47,079  50,492  53,851 1,136,497  General Tax Revenue - IFG Forecast  1,229,647  1,277,013  1,333,145  1,394,066

  Other Income

17,762  - Island-Wide Rates  18,224  18,771  19,277  19,798 25,572  - Dividend Income  10,718  10,888  11,047  11,212 27,053  - Income from Andium Homes  28,773  29,266  29,689  30,292 19,858  - Other Non-dividend Income  19,912  19,802  19,893  20,117 1,226,742  States Income - IFG Forecast  1,307,274  1,355,740  1,413,051  1,475,485 1,238,776  States Income - IFG Spring 24 Forecast  1,317,301  1,348,910  1,391,883  - -1.0%  IFG Forecast Variation %  -0.8%  0.5%  1.5%  0.0%

Table 2: IFG Income Forecast

£ Millions IFG Forecast Range  1,600

 1,500 1,400 1,300 1,200 1,100 1,000 900

2024 2025 2026 2027 2028 2029 Central Upper Lower Spring 2024

Figure 15: Range of IFG forecast: Source: IFG

The overall changes from the spring 2024 forecast are:

Personal Income Tax

The forecast for personal income tax has increased across all years compared to the Spring 2024 forecast. The increase is primarily driven by 2024 earnings growth being higher than previously expected. Earnings growth has been driven by public sector pay rises and employment growth, as well as increases in financial services.

Corporate Income Tax

2026 will be the first year in which receipts from the new Pillar Two regime will be received from in-scope groups in relation to their accounting periods ending on or after 1 January 2025.

The Corporate income tax forecast (incorporating the impact of Pillar Two) has decreased compared to the spring 2024 forecast. This is driven by lower expected profit growth in 2025 compared to the previous forecast.

Forecasting the future revenue impact of Pillar Two implementation remains a complex exercise for all 147 jurisdictions in the OECD Inclusive Framework. This Budget maintains a prudent "base case" approach to the forecast of the additional corporate income tax expected to be received from in-scope taxpayers, following implementation of Pillar Two. This is the revenue that we are reasonably confident will be raised on a recurring basis for the foreseeable future. We will continue to assess the situation as it develops internationally over the coming months and years.

Receipts from the base case have been applied in this Budget to fund the following priorities (as set out in the Public Sector Expenditure section):

• Servicing of borrowing for the NHF Phase 1 (as set out in the section "New Healthcare Facilities Programme")

• Funding investment to improve the competitiveness of Jersey's financial and professional services sector

• Funding the costs of implementing and administering Pillar Two

It is proposed that any upside revenues (i.e. receipts in excess of the base case) are used to strengthen reserves, and a contingent transfer of £50 million to the Stabilisation Fund is included in this plan. Any additional funds could be applied in future budgets to further strengthen reserves, provide investment in the competitiveness of the Island, and for investment in infrastructure, in particular meeting part of the capital costs of the first phase of the New Healthcare Facilities.

GST and International Services Entity Fees

The forecast for Goods and Services Tax (GST) has slightly decreased for 2025 only, with the later years remaining the same. The updated forecast is based on the latest FPP economic assumptions.

Impôts Duties

Impôts (excise) duty reflects a decrease from the spring 2024 forecast due in part to lower- than-anticipated excise rates in the 2025 budget following the freeze to alcohol and fuel duties in 2025. Tobacco duty has seen large fluctuations with changing consumer behaviours and remains challenging to forecast. The 2026-2029 forecast across alcohol, tobacco and fuel relies upon long-term consumption trends.

Stamp Duty

Stamp duty has been revised to incorporate the updated FPP economic assumptions. The stamp duty forecast has increased in 2025, due in particular to the sale of high-value properties in the first six months of the year. Forecasts for 2026 onwards, have been revised down, based on FPP assumptions predicting a slower return to pre-2019 housing market activity than previously expected. The forecast for stamp duty in future years remains uncertain in a period of housing market correction and remains volatile subject to individual high-value transactions.

Budget Proposals

Income Tax (Personal Taxation) Exemption Thresholds and Child Allowances

An individual does not have to pay income tax or Long-Term Care contributions if their income is below an amount called the exemption threshold. Everyone is entitled to the low-income exemption threshold, while some individuals may receive more allowances depending on their circumstances – for example, if they have children or pay for childcare.

There is a longstanding policy to increase the main tax allowances by the lower of the year- on-year growth of June RPI and average annual earnings. Last year, allowances were increased by 3.6%, based on the FPP's forecast of June 2024 RPI.

For 2026, Ministers are proposing to uprate the main tax allowances by 2.6%, in line with the growth of June 2025 RPI. This uplift will raise the low-income threshold to £21,250 and will deliver £9 million in additional tax relief to the 90% of taxpayers assessed at the marginal rate. In comparison, the UK personal allowance has been frozen at £12,570 since April 2021 and is not expected to be raised before April 2028. In Guernsey, the personal allowance was set at £14,600 for 2025.

Independent taxation for all Islanders commences on 1 January 2026. Married couples who were previously taxed as one taxpayer and would be financially disadvantaged by the move to independent taxation will be eligible for the compensatory allowance. There will be a joint filing option for those married couples who do not want to complete two separate tax returns.

2025  2026  Proposed  Reduction

£ Actual   Proposed   Increase   @ 26% Low-income threshold  20,700  21,250  550  143 Child allowance  3,850  3,950  100  26 Additional allowance in respect of children  5,750  5,900  150  39 Childcare  7,850  8,050  200  52 Childcare (enhanced)  20,400  20,950  550  143

Table 3: Income Tax Exemption Thresholds

Excise Duties

Ministers' proposals for excise duties on tobacco, alcohol, road fuels, and motor vehicles, if approved by the Assembly, will take effect at midnight on 31 December 2025.

Tobacco

Ministers recognise that smoking represents a significant threat to the health and wellbeing of Islanders and continues to place a burden on our health care system. Having taken the advice of Public Health officials, Ministers are proposing to increase duties on tobacco products by 7.6%, which is the sum of the growth rate of June 2024 RPI (2.6%) and an additional 5% escalator. This increases the duty on a standard packet of cigarettes by 80p. Cigars will be subject to an increase of 10.6%, the sum of RPI growth and an 8% escalator, in line with existing policy to close the gap between the duty charged on cigars and cigarettes.

Alcohol

Following recent freezes to alcohol duty in 2021, 2023 and 2025 and below inflation increases in 2022 and 2024, Ministers are returning to the practice of holding alcohol duty constant in real terms by raising rates in line with RPI growth.

At the same time, Ministers are supporting Jersey's hospitality industry by implementing tap relief - a lower rate of duty on beer, cider, wine and ready-to-drink cocktails sold from large containers in pubs, restaurants and hotels. The policy was announced in Budget 2025 but not implemented then; duty rates were frozen instead.

Relief will be at a standard rate of 10% of duty charged on products dispensed from containers of 10 litres or more, and 15% on products below 4.9% alcohol by volume to incentivise responsible consumption. The increase of duty in line with RPI would have raised the duty per pint of draught beer or cider (2.8% to 4.9% alcohol by volume) by one penny from 42 pence to 43 pence but tap relief will reduce it instead to 37 pence. If the beer/cider is from a small brewery or cidery the duty will be only 18 pence per pint.

Tap relief is an administratively simple approach used in other jurisdictions to benefit both businesses  and  consumers.  This  policy  underscores  the  government's  commitment  to fostering a thriving hospitality industry, which is a cornerstone of Jersey's economy and Island life.

Fuel duty

Following the freeze on road fuel duty to assist with the cost of living in 2023, 2024 and 2025, Ministers are returning to the practice of indexing fuel duty with RPI growth to maintain its value in real terms. Fuel duty on Hydrotreated Vegetable Oil (HVO) will remain frozen to support increased uptake of this low emission transition fuel.

Proposed Changes in Excise Duties

2025  2026  Proposed Goods   Duty Rates £   Duty Rates £   Increase %

Cigarettes – per kg  876.72  943.35  7.6% Hand rolling tobacco – per kg  876.72  943.35  7.6% Cigars – per kg  808.42  894.11  10.6% Spirits 40% abv – litre per alcohol  45.46  46.64   2.6% Beer (2.8% to 4.9% abv) – per hectolitre, large brewery  73.82  75.74   2.6% Beer (2.8% to 4.9% abv) – per hectolitre, large brewery 10L or more  N/A  64.38  N/A Wine (5.5% to 15.0%) – per hectolitre  234.91  241.02   2.6% Unleaded fuel – per hectolitre  63.89  65.55   2.6%

Table 4: Change in Impôts (Excise) Duties

Vehicle Emissions Duty

Vehicle Emissions Duty (VED) is charged when a vehicle is first registered in the Island. The amount of VED payable depends on the vehicle's CO2 emissions data, with higher charges for more polluting vehicles. The increase in income (estimated at £520k) from VED proposals is transferred into the Climate Emergency Fund.

The Carbon Neutral Roadmap established the principle of annual increases to VED for all standard (non-commercial) petrol and diesel vehicles, including hybrids, with higher increases for higher polluting vehicles, until at least 2030, when the ban on the importation and registration of internal combustion engines is planned to be phased in.

In this Budget, the lowest emitting vehicle bands will be increased by 5%, mid-range vehicles by 10%, and the highest three emission bands will be increased by 15%, 20%, and 25% respectively. Commercial vehicle rates and restricted speed agricultural tractors rates will be increased in line with inflation.

Tax on vaping liquid

The 2025 Budget committed to exploring the role of taxation in reducing the consumption of nicotine. The Government will introduce a new excise duty on all vaping liquid at a rate of £0.20 per millilitre starting in 2026. The measure is designed to discourage young never-smokers' from taking up vaping. Based on average cigarette consumption patterns in Jersey, vaping products are expected to remain a less costly alternative to cigarettes, thereby supporting current and former smokers in transitioning away from smoking. The proposal provides a duty- free amount of vaping liquid that may be brought into Jersey by travellers for personal use without charge.

Reduced higher rates of Stamp Duty on non-main residence properties

The Fiscal Policy Panel's Economic Outlook of May 2025 suggested that property prices and transactions are likely to remain subdued as Jersey recovers from a period of unsustainable growth. Jersey's property market has undergone a significant correction, with the House Price Index falling by 8.2% in 2024, which the FPP notes is "the largest annual decrease since 1986." The 3 percent stamp duty surcharge was introduced to curb excess demand in Jersey's housing market. Since then, the housing market has changed significantly. A modest reduction of the surcharge is proposed, taking the surcharge down from 3 percent to 2 percent for one year.

The housing market and construction sector will be closely monitored, to inform a further review of the additional stamp duty in future Budgets.

Stamp Duty for Right-Sizing Homes

The Government will undertake an investigation to establish a stamp duty holiday for those who are purchasing properties to down-size, alongside a framework to accurately track these transactions. A down-sizing transaction will be defined as one that involves those who are selling their current home to purchase a home with fewer bedrooms. The purpose of this stamp duty holiday will be to further incentivise right-sizing to increase the supply of family homes[14].

Civil penalties for incorrect GST returns

The Revenue Administration (Jersey) Law 2019 (RAL) provides for civil penalties where a taxpayer carelessly or deliberately provides an income tax return that is materially incorrect. These penalties currently do not apply to incorrect GST returns, which are subject to a separate penalty regime. For parity across tax types, it is proposed to expand the civil penalty regime to cover incorrect GST returns. The change is not expected to have a significant net fiscal impact.

Fiscal impact of tax measures

In total, new measures and annual adjustments are expected to generate an additional £45,000 in revenue relative to the summer 2025 forecast of the Income Forecasting Group. That forecast assumed income tax allowances and excise duties would increase in line with inflation (plus the tobacco escalator), except for Vehicle Emissions Duty (VED), which is set each year at the Council of Ministers' discretion. Compared to freezing allowances and duty rates, budget measures leave £6.7 million in Islanders' pockets.

Proposed  vs £'000   vs forecast status quo

New tax measures

Tap relief  (275)  (270)

Tax on vaping liquid  467  467

Civil penalties for GST  -  - Annual tax adjustments

Personal allowances incl. child allowances, increase 2.6%  -  (9,000) Reduced higher rate of stamp duty – non-main residence properties  (667)  (667) Alcohol duty, increase with inflation  -  565 Tobacco duty, increase with inflation + escalator  -  1,100 Fuel duty, increase with inflation  -  620 Vehicle Emissions Duty increases  520  520 Budget proposals  45  (6,665)

Table 6: Summary of Budget Proposals

Update on tax reviews and potential future measures

Interest Deductions for Landlords

Following an amendment to Government Plan 2024-2027, Revenue Jersey has carried out a public consultation in 2025 on the case for removing the ability to claim deductions for interest paid in respect of residential properties in Jersey that are rented out.

Any Ministerial decision on the matter will take account of the feedback from the consultation, as well as the timing and cumulative impact on Jersey's housing market of any potential change.

Fuel Duty Replacement Policy

The vehicles seen on Jersey's roads are changing in response to global carbon reduction ambitions and an evolving global market. In response to Government policies and Islanders' own choices, receipts of road fuels duty are expected to decline.

However, it will still be necessary for the Government to meet the costs of road maintenance and improvement along with the wider costs arising from road and vehicle usage.

The income currently earned from road fuels duty will also be needed to support wider policy initiatives, such as the sustainable transport policy and the Carbon Neutral Roadmap, as well as contributing to the funding of other essential services.

In time, alternatives will need to begin making up the funding lost from declining fuel duty. Alternative charges may include a form of vehicle ownership charge and a road user charge. Ministers decided to pause work in 2024 on the basis that the data showed that fuel duty receipts were in steady decline only. The position will remain under review.

Carbon Tax or Charge on Private Aircraft

In 2024, Ministers committed to exploring an appropriate carbon tax or charge on the operation of private aircraft. Since then, Ports of Jersey has introduced a decarbonisation charge, effective from 2026, which applies to all private and business aviation over 3 tonnes operating at Jersey Airport. The charge is based on the aircraft's maximum take-off weight and may be reduced through sustainable practices such as the use of sustainable aviation fuel and the minimisation of empty journeys. In light of this development, Ministers have decided not to pursue a separate measure under the excise duty system at this time.

Review of International Services Entity (ISE) fees

The ISE regime is a simplified administrative framework that allows entities providing financial services mainly to overseas clients to pay an annual fee in place of standard GST. A simplified ISE form and updated guidance were introduced in 2025, and further work is underway to streamline the legislation and fee structure while maintaining overall revenue neutrality.

International Tax Reform – OECD Pillar Two

The Organisation for Economic Co-operation and Development (OECD) has developed a two- pillar global framework to address the tax challenges arising from the digitalisation of the economy. Jersey has actively engaged in this process, participating in the OECD Steering Group of the Inclusive Framework on Base Erosion and Profit Shifting and in other relevant OECD forums. The international tax reforms are targeted and limited in scope, focusing on the world's largest multinational enterprises (MNEs). Detailed information is available at the Government of Jersey OECD Pillar One and Pillar Two webpage.

Pillar Two introduces a global minimum corporate income tax of 15%, applicable to MNEs with annual global revenues of at least 750 million. The minimum effective rate is calculated using the OECD Model Rulesspecifically based on financial statements and determined on a country-by-country basis.

On 22 October 2024, Jersey's States Assembly unanimously adopted legislation to implement the OECD Pillar Two 15% minimum tax for large, in-scope multinational enterprise (MNE) groups, applying to accounting periods starting on or after 1 January 2025. The law introduced an Income Inclusion Rule (IIR) and a 15% Multinational Corporate Income Tax (MCIT) but did not include the OECD Undertaxed Profits Rule (UTPR). Jersey's existing corporate income tax regime will continue to apply to all other companies, with over 95% of local businesses unaffected and remaining within the current system.

Jersey maintains its strong commitment to providing taxpayers with an agile, internationally competitive business and tax environment, certainty for taxpayers and alignment with global standards.

Pillar Two also establishes treaty-based rules to ensure certain payments from developing countries are subject to a minimum tax rate of 9%. Only one of Jersey's double tax agreements falls within this scope, and any changes would be made via a bilaterally negotiated protocol if required.

Forecasting Pillar Two Tax Receipts

The implementation of Pillar Two in Jersey will increase tax revenues from in-scope Pillar Two groups in relation to their accounting periods ending on or after 1 January 2025. Tax receipts will be included in the Budget from 2026 (i.e. a year in arrears in common with existing Corporate Income Tax).

Forecasting the future revenue impact of Pillar Two implementation is a complex exercise for all 147 jurisdictions in the OECD Inclusive Framework. The Pillar Two regime is still in its inception phase and the pace and manner of its roll-out varies across the globe. Future Pillar Two revenues are contingent on both the implementation of Pillar Two by other jurisdictions and on the behavioural responses of multinational groups affected by Pillar Two.

Therefore, Jersey has developed a "base case" approach to the forecast of the additional corporate  income  tax  expected  to  be  received  from  taxpayers  in  Jersey,  following implementation of Pillar Two. This is the revenue that we are reasonably confident will be raised on a recurring basis for the foreseeable future. We will continue to assess the situation as it develops internationally over the coming months and years.

Forecast Additional Pillar Two Taxes

2026  2027  2028  2029 £'000  Estimate  Estimate  Estimate  Estimate Base Case Forecast Pillar Two  49,000  48,000  52,000  55,000

Table 7: Pillar Two Forecast Revenues

Liquid Waste Charges

As set out in previous Budgets funding for future liquid waste infrastructure is intended to be met through the introduction of liquid waste charging in 2028. This Budget includes an estimate of £10 million to be raised through liquid waste charging in 2028 onwards. Receipts will be paid into the Consolidated Fund through general revenue income. Government Plan 2024 – 2027 previously gave approval for the application of existing resources for work on the development of a user pays' charge in relation to all aspects of waste. Details of the charging mechanism and proposals will be included in future Budgets, alongside all other necessary arrangements for charges to take effect.

Domestic Compliance

Revenue Jersey continues to develop its annual published compliance programme[15], in line with its published compliance strategy, and to improve its capabilities, for example in assessing and identifying tax risks. Building on existing results (additional revenues from its compliance activities), Revenue Jersey is projecting an additional collection from activities devoted to audit, enforcement, and other compliance work. Together, the additional collections are expected to contribute £31.5 million to general revenues in each year of the Budget.

Summary of General Revenue Income Forecast, incorporating Budget Measures

Table 8: Income Forecast, including additional income measures

Public Sector Spending 2026-2029

This Budget proposes £1.28 billion of spending in 2026 on delivering services to Islanders.

Revenue Heads of Expenditure

The Budget is required, by the Public Finances Law, to set out the proposed amount to be spent from the Consolidated Fund by each head of expenditure, after allowing for any estimates of departmental income. Heads of expenditure within this Budget relate to each Government of Jersey department, Non-Ministerial and other States bodies, and a separate head of expenditure for the Central Reserve. Expenditure has been allocated to departments for 2026, and estimates produced for 2027 to 2029.

Departmental heads of expenditure are aligned according to lines of accountability under the Public Finances Law. Expenditure is approved in this manner to ensure that there is clear accountability, both at political and officer levels. The departmental expenditure limits for 2026 incorporate both existing resource requirements and new funding, but exclude pay-inflation, which is held centrally in reserves. Whilst this is generally aligned to Ministerial portfolios, there are some differences, and a Ministerial mapping is provided as part of the Annex to the Budget.

Children, Families, Education and Lifelong Learning , £246m

General public services and other ,  Health and Care Jersey ,  Social Benefits (ESSH & States

£441m £381m grant) , £159m

Figure 16: Departmental Net Revenue Expenditure (excluding reserves)[16]

The above chart illustrates the proportion of Government net revenue spending in 2026[17], on Health  and Care  Jersey  31%  (2025:  28%),  Children, Families,  Education,  and Lifelong Learning 20% (2025: 20%), tax funded social benefits 13% (2025: 14%), and other public services 36% (2025: 38%). General public services and other, includes all other departmental and non-Ministerial functions listed in Table 9.

14,107  People Services  13,297  13,268  13,227  13,227 175,502  Education and Lifelong Learning  187,771  189,282  189,781  190,021 50,077  Children and Families  57,935  58,064  58,734  58,453 109,135  Employment, Social Security and Housing  113,275  116,405  119,577  122,552 62,900  Infrastructure  63,239  59,869  59,494  59,494 11,763  Environment  11,757  12,106  12,106  12,106 322,065  Health and Care Jersey  380,962  387,562  394,265  401,102 22,221  Jersey Overseas Aid  21,844  22,726  23,566  24,427 42,425  Justice and Home Affairs  36,633  37,661  37,641  37,643 30,185  States of Jersey Police  31,367  31,346  31,346  31,346 3,407  Ministry of External Relations  3,443  3,443  3,443  3,443 37,016  Economic Development, Tourism, Sport & Culture  38,038  38,290  38,517  38,523 10,886  Financial Services  11,942  11,917  11,917  11,917 46,699  Treasury and Exchequer  46,543  47,793  47,475  47,480 69,821  Grants to States Funds  63,128  93,608  96,501  99,302 10,000  Living Wage Transitional Support  10,000  -  -  - 13,783  Past Service Pension Liability Refinancing  -  -  -  - 9,000  Financing Costs  33,449  43,533  47,967  47,976 1,106,970  Departmental Net Revenue Expenditure  1,177,507   1,219,633   1,238,316   1,251,771  

  Non-Ministerial and Other States Bodies

3,800   Bailiff 's Chambers  3,961  3,963  3,966  3,966 1,196  Comptroller and Auditor General  1,187  1,215  1,247  1,289 9,968  Judicial Greffe  10,714  10,430  10,434  10,434 14,015  Law Officers' Department  14,754  14,754  14,754  14,754 913  Office of the Lieutenant Governor  949  949  949  949

784  Official Analyst  815  865  865  865 3,324  Probation  3,475  3,543  3,472  3,472 10,932  States Assembly  11,719  11,400  11,485  11,485 2,616  Viscount's Department  2,721  2,721  2,721  2,721 47,548  Non-Ministerial Net Revenue Expenditure  50,295  49,840  49,893  49,935 1,154,518  Departmental and Non-Mins Total  1,227,802   1,269,473   1,288,209   1,301,706  

  Reserves

34,197  Central Reserve (including inflation provisions)  49,960   57,338   90,668   133,151  34,197  Reserves Expenditure  49,960   57,338   90,668   133,151  

- Future Savings  -   (11,304)  (11,304)  (11,304)

1,188,715  Net Revenue Expenditure  1,277,762  1,315,507  1,367,573  1,423,553 58,934  Depreciation and amortisation  73,373  74,812  77,960  79,699 1,247,649  Net Revenue Expenditure after Depreciation  1,351,135  1,390,319  1,445,533  1,503,252

Table 9: Revenue Heads of Expenditure

The budget for a Jersey Public Services Ombudsperson in the Cabinet Office head of expenditure, totalling £398,000, has been ring-fenced to ensure that this budget should not be

used for any other States' purpose than the Jersey public Services Ombudsperson, to ensure that this undertaking is incorporated into the workstream of any new Government and funded accordingly[20].

Future year departmental estimates do not include provisions for inflation or allocation of future savings (which will be confirmed in subsequent Budgets). Inflation by nature cumulative, and the provision consequently increases in each year of the plan and is held in the estimates for the Central Reserve.

From 2026, a single Head of Expenditure collecting all financing costs has been included. This includes Financing Costs relating to:

• the New Healthcare Facilities programme, which were previously funded through the strategic reserve

• redevelopment of Fort Regent

• Past service pension liability refinancing

• Overdraft costs (including costs of balance reduction)

Budget transfers between heads of expenditure are summarised and listed in more detail in the Annex to the Budget. This includes budget transfers into Health and Care Jersey of £22 million, including the transfer of the ambulance service, public health, strategic health policy, digital health, as well as treasury and people services resources.

Within in the Cabinet Office head of expenditure for 2026 resources should be made available for the development of policy mechanisms to address empty residential properties, should it be required[21].

Changes to Revenue Expenditure

The Budget proposes £1.28 billion of spending on delivering public services to Islanders in 2026, an increase from 2025 driven largely by inflationary pressures, funding for investment in the CSP as well as Health and Care Jersey.

(4,872)  Adjustment from previous Budget  (2,081)  (1,618)  1,648  - 30,205  Inflation  40,864  33,958  34,735  33,274 32,429  Formula Driven/Technical Growth  24,876  13,816  13,470  8,859 38,666  Other Expenditure Growth  53,151  1,374  1,028  12,198 (20,304)  Savings  (20, 163)  (29,216)  (466)  -  1,238,715  Net Revenue Expenditure  1,285,362  1,296,076  1,365,922  1,421,904 (50,000)  Adjustment to the SSF States grant  (7,600)  19,431  1,651  1,649 1,188,715  Net Revenue Expenditure (after states grant)  1,277,762  1,315,507  1,367,573  1,423,553

Table 10: Changes to Net Revenue Expenditure

1,600 1,400 1,200 1,000 800 600 400 200 0

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Expenditure Expenditure Forecast Income

Figure 17: Income and expenditure trends before depreciation

Growth Allocations

Table 11 has been updated to reflect amendments 23, 32 and 36. Amendment 23 allocated additional  growth  funding  to  cover  cost  pressures  within  the  States  of  Jersey  Police. Amendment 32 allocated growth funding to the Environment department to reinstate the 2026 budget approval in line with 2025. Amendment 36 reduced several growth items and increased savings to be able to fund amendment 32.

Budget 2025 included growth in expenditure to support the delivery of the CSP, increasing from £5.8 million in 2025 to £8 million in 2026. This has been maintained in this Budget but is not presented in the table above.

In line with the CSP, where possible existing allocations have been reprioritised to deliver objectives. Additional funding has been allocated to departments to accelerate delivery of specific CSP priorities, to deliver existing States decisions, mitigate principal risks and provide further investment into our Health Service. These allocations are summarised below, with further details included in the Annex to the Budget.

To deliver our CSP, this Budget increases our investment into nursery and childcare provision – extending provision of 15 free hours (term-time) to all 2–3-year-olds.

During 2026 the Minister for Education and Lifelong Learning will collect, collate and analyse the necessary data to explore the feasibility of provision of free school meals to all non-fee- paying primary schools and additional households, including, but not limited to, single-parent families and, if feasible, households that would otherwise qualify for Income Support were

they not owner-occupiers of a mortgaged residence, reporting to the Assembly prior to the end of 2026[24] .

It is also clear that the successful implementation of Violence Against Women and Girls legislation will require addition resources for the Police and other departments, who are already seeing increased demand in these areas. The financial implications will be considered as part of the proposition proposing the new legislation and will be included in Budget 2027. In order to support this, a draft proposal and expenditure for the new Violence Against Women and Girls legislation will be published in advance of April 2026 alongside a progress report of Recommendations implemented up to 1st May 2026, as part of the 2026 Violence Against Women and Girls: Annual progress Report[25].

The Budget also allocates funds to support Islanders and strengthen communities, through the provision of targeted support to expand eligibility for the Pension Plus scheme, help struggling parents with the cost of the new school year, accelerate the delivery of the Disability Strategy to improve access to services and activities for disabled islanders who may face barriers to inclusion, and work to develop a workplace pension that gives all workers the right to an occupational pension.

To ensure that the tax measures set out in this Budget can be implemented, approvals for implementation and administration for both Pillar Two and a Vaping Tax have been included. In both cases the revenue raised exceeds these costs. Approvals have also been included to meet the costs of previous decisions, including assisted dying and changes to teachers' terms and conditions.

The Council of Ministers considered areas where risks to Islanders were beyond the risk appetite of Government, and consequentially have included investment to mitigate these risks, providing for additional capacity and capability of the fire and rescue service, and improvements to the emergency services control room. There is also substantial funding for pressures in the children's service, to make improvements ensuring that provision is at the standard Islanders expect.

The plan also invests in our health service – to address short term pressures, the impact of longer-term demographic changes and investing now to improve our services and reduce future costs. The service continues to see ongoing pressures in costs, both from continued rising demand for health and care services and above inflation increases in the costs of service delivery. These have been partially offset by the Financial Recovery Programme (FRP), however additional investment of £15.6 million is still needed.

It is common across many jurisdictions that the costs of healthcare are rising as populations age, and this Budget provides funding to invest in prevention – stopping people from becoming ill. Whilst this is an increased cost now, it will both save on the costs of treating preventable illness in the future and improve the health of Islanders. The Minister for Health and Social Services will produce a roadmap for delivering preventative health outcomes through a phased, evidenced-led, whole-system approach. The Minister will involve the Wider Determinants of Health Ministerial Group in delivering the roadmap to ensure ministerial accountability for the delivery and outcomes of the roadmap[26].

During 2026, the Minister for Health and Social Services will publish a Women's Health Strategy, which will be informed by the Women's Health and Wellbeing Joint Strategic Needs Assessment 2024[27].

This Budget also increases funding to ensure we have a modern digital environment that ensures that healthcare professionals have the right information available at the right time, wherever care is provided. Provision has also been made in the last year of the plan to ensure that the costs of running the new facility at Overdale are properly provided for, in line with the Outline Business Case.

Given the importance of our finance industry to the Island, it is vital that we create an environment where it can thrive. We will reinvest a portion of the receipts from the introduction of Pillar Two into a programme designed to enhance and improve our competitiveness in this key area. This will be informed by ongoing work to review our competitiveness, and so funding will be held in the Central Reserve initially and will be allocated in year to relevant heads of expenditure as appropriate.

In accordance with Article 10 of the Public Finances (Jersey) Law, the Budget also provides for £0.8 million of revenue expenditure growth requests received from Non-Ministerial departments, including one-off funding in 2026 to meet the additional costs of running the election.

It is essential to the sustainability of public finances that we run balanced budgets, where day- to-day expenditure is covered by taxation. Where new expenditure is proposed it must be affordable, with an identified funding source. It was already indicated in Budget 2025 that investment in competitiveness would be funded through additional Pillar Two receipts. Implementation costs for revenue measures are proposed to be funded through additional revenues. Additional savings of £5 million per annum have been included in 2027 to facilitate the reprioritisation of funds.

Council of Ministers have also carefully considered the relative needs for investment in children and health, and given the pressing need propose a temporary adjustment to the States grant to the Social Security Fund for 2026 to 2029, which will fund both ongoing revenue and capital. This avoids the need to raise new taxation or make substantial expenditure savings in the short term.

Inflation

It's both prudent and good financial management to plan for the impact of economic influences on Government finances. As such, we have set aside amounts to cover inflationary pressures on pay (held centrally), social benefits and non-pay expenditure.

In their latest set of economic assumptions[28], the FPP has revised upwards their expectations for inflation in Jersey, this is expected to be driven through higher import costs and inflation generated on-island. Inflation as measured by RPI is forecast to remain between 2.6% to 3% over the plan period, slightly higher than the previous set of economic assumptions published in May 2024. The slower drop in inflation has meant provisions for inflation have been increased, to avoid real term cuts to departmental budget.

2.6% of non-pay expenditure inflation has been allocated directly to departments in 2026, based on FPP assumptions, with additional funds for HCJ reflecting in part higher healthcare inflation.

The States Employment Board (SEB) entered into a multi-year pay deal with all pay groups in early 2024, resolving the pay dispute with teaching unions and giving certainty to employees until 2026. The inflationary provisions for pay, include an additional 1% above the FPP assumption for RPI in 2026, agreed in the 3-year pay offer by the SEB.

Provisions are held in the Central Reserve for pay inflation and non-pay inflation for future years. Once, the 2026 pay award is finalised, pay provisions will be allocated from Central Reserve to departmental budgets.

Inflation is by nature cumulative, and so this amount grows throughout the plan. There remains a reduced, but still significant amount of uncertainty around levels of inflation. If inflation is higher the provision in the plan may not be sufficient to meet the cost of the agreed pay award, and the additional costs would need to be met from within the overall budgeted approvals in the plan. Higher inflation would typically also lead to increased levels of income and non-staff expenditure in future years.

Technical/Formula Driven Growth

The Budget also allocates a further £24.9 million to a number of areas of expenditure that are determined by pre-agreed formulae. These include:

• an annual 2% increase in Health budgets to maintain service standards and meet the costs of health care inflation. In 2026 a further 1% has been allocated as part of the £15.6 million deficit funding matching allocations in the UK NHS, whilst the work on sustainable healthcare funding is progressed.

• maintaining the Jersey Overseas Aid (JOA) budget at 0.3% of GVA.

• formula driven increases for the States grant to the Long-Term Care Fund (as set out in the sections "Long-Term Care Fund"). Adjustments to the States grant to the Social Security Fund are considered separately in the section below.

• maintaining budgets for arts, culture and heritage across government at 1% of revenue expenditure in total (following a review of arts, culture and heritage spending).

• financing costs, including overdraft charges based on projected cash balances in the Consolidated Fund, hospital financing costs, Fort Regent Financing costs and financing costs on the pension bond.

• technical adjustment to increase budgets for Financial Services for the regulation of non-profit organisations

Arts, Culture and Heritage Funding

Following approval of Funding for arts, culture and heritage (P.69/2024), the Council of Ministers amended the proposed Budget 2025– 2028 and undertook to review spending across Government to ensure that total expenditure on arts, culture and heritage is captured when considering the 1% of revenue expenditure funding target. There is no single budget for arts, culture and heritage funding with departments working together to common aims such as support for the arts, culture and heritage sectors.

Whilst there is no universal definition of what constitutes arts, culture and heritage spending, Government expenditure has been reviewed against arts spending for Arts Council England, heritage spending as classified by UNESCO Institute for Statistics and cultural spending as defined under the UN Classifications of Functions of Government Statistics.

Further areas of Government spending previously not considered, including, funding for the Jersey Music Service, Public Libraries and Community Compass Scheme, have been include in the calculation of arts, heritage and culture spend. After these budgets have been taken into account the total spending on arts, culture and heritage equates to 1.2% of overall Government spending, in excess of the 1% target. Budgets for arts, culture and heritage funding will increase in future years, with inflation allocations for pay and non-pay. The Education and Lifelong Learning Head of Expenditure includes funding in the sum of £670,000 for promoting and teaching the language of Jerriais. This will be specifically ringfenced, for one year, for this purpose and, also, further work will develop and renew the Jerriais language strategy, which expires in 2025[29].

Further details of budgets use to support arts, culture and heritage funding are included in the annex.

In order to ensure that budget allocations for arts, culture and heritage are managed in a simple and transparent manner, the Minister for Treasury and Resources shall work with the Minister for Sustainable Economic Development during 2026 to consolidate all relevant Government spend under the head of expenditure for Economic Development, Tourism, Sport and Culture within the Budget (Government Plan) 2027-2030. This consolidation would not impact or include the funding provided to the Bailiff 's Chambers as part of arts, culture and heritage funding and would exclude funding for entities such as Jersey Library and Community Compass, which are considered to fall outside of the scope of the arts, culture and heritage funding line[30].

Adjustments to the Grant to Social Security Fund

The Social Security Reserve has grown significantly in recent years, driven primarily by good investment returns. Under current projections, the fund will remain healthy for several decades. The original purpose of the Reserve, to smooth the impact of the ageing demographic and support intergenerational fairness will be more than served, which has previously prompted the FPP to recommend a review of the purpose and objectives of the fund. This should be informed by the actuarial review planned for 2026.

Alongside the regular actuarial review of the Social Security scheme as at 31/12/2025, the Minister for Social Security will instruct the independent actuary to undertake a full review of the current funding policy of the scheme as established in the late 1990s. The review will include the outcome of the decisions taken at that time and an assessment of the current position.

Whilst a healthy Social Security Reserve is something the Island should be proud of, continuing to grow the Fund today whilst other areas of government need investment is a sub-optimal allocation of resource. This Budget proposes sensible, temporary reductions to the States Grant to allow resources to be reprioritised to these needs, whilst safeguarding the Fund, ensuring that its size is maintained and that it can fulfil its purpose so that it can fulfil its purpose for future generations.

Adjustments to the grant to the Social Security Fund

2025  2026  2027  2028  2029 Amended   £'000   Estimate Estimate Estimate Estimate 90,368  States grant formula value  97,027  94,272  99,727  100,876

- Rebase grant at £50m and index with AEI  (46,659)  (42,073)  (45,877)  (45,377)

90,368  Rebased States Grant  50,368  52,199  53,850  55,499

  One-off grant adjustments;

(10,000)  Better business support – Budget 2025  (10,000)  -  -  - (50,000)  Amendment to Budget 25  -  -  -  -

- Capital funding  (17,600)  -   -   -  

30,368  Rebased States grant (after one-off)  22,768  52,199  53,850  55,499 Table 12: Adjustments to the States Grant

Following the Covid-19 pandemic the reinstatement of the States Grant in 2024 was predicated on the income forecast at that time. With lower amounts of income received in 2024, and lower forecasts for 2025 and 2026, this context has changed, accordingly this Budget proposes a reduction in the grant in 2025 to reflect this.

Healthcare and children remain our critical priority, and this Budget proposes immediate investment in these key areas. This is enabled by the proposed temporary rebasing of the States grant to £50 million in 2026, index linked across this plan to enable the review of the mechanism to fund the Social Security Fund moving forwards. A further one-off adjustment of £17.6 million is proposed to support funding for the capital programme in 2026, including the children's services estate (Loving Homes) and refurbishments across the hospital site (Health Services Improvement.

In addition to the actions set out above, and in support of the CSP, last year the Assembly agreed to an adjustment to the States grant in 2025 and 2026 in order to provide one off funding to support the transition to a living wage. For these two years, the value of the States grant is reduced by £10 million. The £20 million released is wholly allocated to support packages to both employers and employees during the transition to a living wage. If the full allocation is not required, the balance will be returned to the Social Security Fund.

Delivering Savings to Allow Reprioritisation

1,000  Arm's Length and Regulatory Organisations  -  -  -  - 1,719  Office Consolidation  1,715  481  466  - 3,133  Growth Reductions  -  -  -  - 6,000  Roles  9,000  -  -  - 452  Non-Ministerial and Other Bodies  -  -  -  - 8,000  Financial Recovery Programme (HCJ)  9,000  -  -  -

- Pay Management  -  17,431  -  -

- Additional Savings[31] 448  -  -  -

- Future Savings  -   11,304  -   -  

20,304  Total  20,163  29,216  466  -  

20,304   Budget 2025 Savings Profile  24,000   2,500   466   -  Table 13: Saving Proposals

The CSP outlines the Council of Ministers' approach and commitment to reprioritise budgets where appropriate to deliver objectives, curbing growth in the public sector, relying less on consultants and preventing unnecessary expenditure.

Budget 2026 continues with that approach to fund priorities; the Budget includes proposals to deliver savings over the plan period which will reduce spending. In addition to the savings proposed in Budget 2025, further role savings of £5 million are proposed from 2027 onwards. Savings previously unallocated to departments have been reprofiled to allow departments to focus on the delivery of existing allocated targets, giving time for a robust plan to ensure full delivery in 2027. Where possible these plans will be delivered in 2026 to generate capacity and ensure full delivery in 2027.

Reduction in roles through removing management layers, removing extraneous activity and reduction in consultancy

Departments have progressed with plans to deliver against this £15 million role savings target set in Budget 2025. The 2025 role savings target of £6 million is forecast to be delivered in full by departments overall, with departments progressing towards delivery of the £9 million roles savings target in 2026. Of the role savings delivered so far, the majority of role savings that have been met to date are from removing unfilled vacant posts, minimising both financial costs and the human impact.

Reduce Office Footprint

The move to the new government offices enables the consolidation of the overall office estate delivering ongoing revenue savings, through lower Government running costs. Due to existing lease terms and conditions savings will be realised over a number of years, commencing in 2025 with £4.4 million fully realised by 2028.

HCJ Financial Recovery Plan

Cost increases within  the Health  and  Care  Jersey  department's  control continue  to be addressed by Financial Recovery Programme ("FRP"), which was first put in place in 2023 to help reduce HCJ's deficit through improved planning and control, more effective use of staff and resources, improved procurement and contract management, and optimisation of income generation. The FRP delivered £3.2 million savings in 2023 (against a £3 million target) and £6.8 million of recurring savings in 2024 (against a £5 million target). The FRP is due to deliver a further £8 million of savings in 2025, and £9 million of savings in 2026.

Pay Management

Since 2018, full time equivalent employees have increased from approximately 6,000 FTE to 8,000 FTE by the end of 2024, with staff costs having risen over the same period from £418 million to £659 million over the same period. Budgeted staff costs for 2026 are estimated at over £700 million.

In line with their Common Strategic Policy, the Council of Ministers have committed to curbing the growth in the public sector. In recognition of this a provision is held within the Central Reserve to exert downward pressure on pay growth and curb the growth in the pay bill. This will help ensure the sustainability of public finances, delivering value for money for the taxpayers, taking into consideration workforce priorities and efficiencies.

Noting the savings to be made in 2027 we will work closely with colleagues and unions to control the overall cost of pay, ensuring that pay is balanced with productivity to avoid economic instability and inflationary pressures. This will encompass the challenge of developing sustainable pay strategies that retain and motivate public sector workers whilst managing significant savings to ensure sustainability in public finances.

Future Savings

The growth in the public sector in recent years has been well-documented. This growth has been agreed by successive Assemblies, but we are increasingly seeing the challenge of balancing growing revenue spend against the need to invest in our Island and maintain our strong balance sheet, to ensure that we enjoy both sustainability and stability.

However, new expenditure is being used to deliver services or the priorities of government and reducing spending consequentially will have impacts. Understanding where the growth has occurred, and what benefit it has delivered must inform any decisions in terms of future reductions. This could include reviews of both what we deliver, and how we deliver it.

Delivering savings at the level proposed in 2027 is deliverable but will require choices to be taken in the next Budget, informed by robust analysis.

Depreciation

Depreciation represents the cost of using Government assets in the provision of services. It is included when calculating whether the Government is running a surplus or a deficit, which follows FPP advice, and helps to ensure that the need to continue to invest in assets is

adequately recognised in planning. The increase in depreciation during 2026-2029 reflects an estimated  uplift  in  asset  values,  because  of  assets  being  either  created  or  replaced.

Reserve Head of Expenditure

This Budget includes a single Central Reserve head of expenditure. As well as a provision of £5 million for unforeseen expenditure in year. In addition, this reserve incorporates centrally held items such as provisions for inflation that have not been allocated to departments.

Within the Central Reserve, funds earmarked in the General Reserve are held outside of operational expenditure limits, and can be used to meet modest unforeseen pressures, or to provide advance funding for urgent expenditure in the public interest. In each year, amounts are held to manage fluctuations in benefit expenditure due to economic changes, and to allow one-off funding for emerging issues.

In recent years, reserves have relied upon underspends largely in the capital programme to top up reserve funds. However, with the rightsizing of the capital programme and pressures on public finances, particularly in health, the ability to carry forward unspent budgets into reserves is becoming increasingly limited.

The Central Reserve includes unallocated growth, where the exact amount or timing for spend is still uncertain. This includes funding for investment in competitiveness, assisted dying and monies to rebuild contingency for expected court and legal costs as a result of major incidents and ongoing sanctions cases.