Pillar 2 revenues being used to fund expenditure

2025.11.25

3.1   Deputy J. Renouf of St. Brelade of the Minister for Treasury and Resources regarding Pillar 2 revenues not being used to fund recurring expenditure (OQ.261/2025):

Will the Minister explain the reasons behind the Government's decision to change the decision that Pillar Two revenues would not be used to fund recurring expenditure, as outlined in the Budget (Government Plan) 2025-2028?

Deputy M.E. Millar of St. John , St. Lawrence and Trinity (The Minister for Treasury and Resources):

As explained in the proposed Budget document, the Budget was prepared in a challenging economic environment. Forecast growth in income was reduced. Inflation was forecast to remain higher for longer, increasing expenditure pressures. These changes meant that tough decisions were needed. That included removing the transfers to the Stabilisation Fund planned from the base forecast to Pillar Two, which in effect allows us to meet ongoing expenditure without raising taxes and making additional cuts to services without proper planning before doing so. However, part of the base case is still being used to enable the new healthcare facilities through funding financing costs and to invest in competitiveness. If receipts are in excess of the prudent forecast for Pillar Two, we will be maintaining our policy of using those receipts to strengthen our reserves, invest further in competitiveness and invest in our infrastructure.

3.1.1   Deputy J. Renouf :

In their recent report, the F.P.P. (Fiscal Policy Panel) said: "The commitment made in Budget 2025 to use relatively certain Pillar Two revenues to replenish the Stabilisation Fund has been abandoned." So the money that was going to go into the Stabilisation Fund is now going to go on general expenditure even though that money is relatively uncertain still. In line with that, we are of course taking money from the Government grant to the Social Security Fund. Is it fair to say that the Government has raided every single pot that it possibly can just to keep current expenditure ongoing, rather than tackle expenditure itself?

Deputy M.E. Millar :

No; we would like of course to put more money into the stabilisation reserve and the Strategic Reserve. We are very clear that that is a sensible desire, and we would like to do that. We will aim to do that with what we get from Pillar Two.

[10:30]

But, as I said in my original answer, we have a spending. We do not want to increase taxes, nor do we want to cut services. If I could just make the point now about spending; I think that we are up to 34 amendments to the Budget, and I believe that not a single one asks us to cut spending.