Isle of Man Treasury Minister Dr Alex Allinson outlines his 2025 Budget
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00:00So we're with Treasury Minister Dr Alex Alunson discussing the 2025 budget, a
00:07budget for the working man and woman. The aim is to get more money in people's
00:15pockets. Well that's right, last year's budget was incredibly difficult for
00:19everyone. We put taxes up to deal with significant overspends in public
00:23services, especially education, health and social care. Since then obviously the
00:28rate of inflation has come down to a far more manageable level. We're beginning to
00:32see decreases in mortgage interest payments as well and so I think we're in
00:37a much healthier situation than we were but those problems in terms of
00:40government spending are still there. So what we're trying to do in this budget
00:43is control government spending, control government headcounts through the
00:46efficiency and productivity programs that have been launched by the Chief Minister
00:50but also trying to put money back into people's pockets because that's about
00:53driving not only consumer confidence but also business confidence as we've got
00:58some good forecasts for economic growth for the old man, we've got a resilient economy, we want to try to boost that as much as possible.
01:03So pretty much everybody's going to be better off under this budget because you're
01:10increasing personal allowances, you're reducing the higher rate of income tax
01:16back down from 22 to 21 percent, you're changing national insurance thresholds
01:22as well. So pretty much everybody's going to benefit. I hope that everyone of us will see the
01:27benefits of this and the significant investment that we're putting into
01:30healthcare with over £25 million extra put into that, £8.3 million
01:34into education. There will be, with any budget, there will be some
01:39people who don't gain as much. So some of the changes to national insurance
01:42thresholds, for instance, for the first time in 10 years that upper threshold
01:46has increased and so there will be some people in the margins and probably a
01:50very small number of people who are paying slightly more national insurance
01:54than they would have done in the past because although we're increasing the
01:56lower level, we're also increasing the upper level to make sure that the same
02:00percentage of people's earnings is subject to national insurance.
02:04I thought the island was struggling financially. So, a simple question, where's the money coming from for this?
02:13The money is coming from a number of sources and again, this is trying to
02:17balance a complete budget. We've had, as I said, a resilient economy, we've seen tax
02:25returns, even with the extra 2% we've put on, increasing. We've seen national insurance
02:30returns increasing, we've got stable employment, we haven't seen a huge
02:33increase in the number of people on benefits. But the key to this budget is
02:38controlling government spending. So again, with healthcare, we're putting extra
02:41resources into the Department of Health and Social Care to keep that on budgets
02:44as much as possible and also we're increasing individual departments on
02:50budgets by 2% for pay, 1% for non-pay. This will mean that they need to drive
02:55around about £25 million of efficiency savings across government to
02:59come in on budget. We'll be working with those departments throughout the
03:02year to do that. The money to pay for all this will come from general revenue, from
03:06a relatively healthy economy, but also from the investment in our
03:11reserves. We've seen our overall reserves increase since this time last year by
03:15around about £60-70 million and so the increased investment income we're
03:21getting on that has been used to pay for some of the services that we're also
03:26providing and reduce the drawdown on the total reserves. Obviously the National
03:30Insurance Fund is also increasing in size, but that's ring-fenced for specific
03:34reasons, including an allocation that goes towards funding our NHS.
03:38But your use of reserves is still critical to this budget, isn't it?
03:43It is and it's higher than I would necessarily want it. I will be honest
03:48with you, what we're doing is having a credible plan to reduce that
03:52drawdown on reserves. I made the point last year that I do not want to plunge
03:57the island into austerity. I do not want to cut back frontline public services.
04:03However, what we need to do is rationalise them, make them as efficient
04:06as possible, so they provide the services within a cost that's affordable for the
04:11taxpayer and it's getting that balance right I think is very important. Our
04:15overall reserves will continue to grow through the Medium-Term Financial Plan,
04:19our National Insurance Fund will continue to grow through the Medium-Term Financial Plan,
04:22but we're making some more adjustments in terms of taxation, National Insurance
04:26and also hopefully some of the other policies to sustain these going into the
04:31future for future generations. A key part of the budget as originally planned was
04:38to protect the National Insurance Fund, thanks to a debate and vote in the House
04:44of Keys. That's kind of gone out the window, is anything but protecting the National
04:49Insurance Fund, isn't it? Because you are now keeping the triple lock for the
04:55Bank of State pensioners for this year, you're increasing the NHS allocation
05:01from the National Insurance Fund, so actually what you're doing in the
05:06budget will bring forward, at least temporarily, the time when the fund will run out.
05:11Yeah, I mean I was in the opposition of debating part of the budget before the
05:16budget this year and there was a very clear message from the elected members of
05:20the House of Keys that they did not want a break, a difference between paying
05:27our traditional state pension and the new Manx pension, so I have listened to
05:35that, we've changed some of the legislation and obviously changed about
05:4010 figures in the pink book to bring that into being. In the short
05:45term that will make very little difference, with that change it's for
05:48about £1.4 million extra revenue coming out of the NI Fund, but as I've
05:52said we've seen more money coming into the NI Fund. In terms of the NHS
05:57allocation, that's dealing again with money coming into the fund and the
06:00allocation of that income rather than drawing down on the fund, but you're
06:04absolutely right, we've known since 2007 that if we do nothing that that National
06:09Insurance Fund could be at jeopardy and could run out by 2047. I brought forward
06:13proposals in this budget that weren't accepted by members of the House of
06:17Keys, they wanted to pause those changes, they wanted more time to look at other
06:22methods that could be used to sustain that fund, but the need to sustain that
06:26fund for the long-term benefit of people of the Isle of Man now and in the future
06:29is absolutely imperative, so I will be coming back with a motion in April
06:33to again re-explore that, we will be going out for consultation with the
06:37people of the Isle of Man to inform and listen to them about their asks
06:43for what the National Insurance Fund should be in the future and then
06:47hopefully be able to bring back some some policies that have
06:50consensus backing either next year or the year after.
06:54There's no guarantee that you'll win a vote in April?
06:58We live in a democracy and what I think is absolutely
07:02fiscally prudent and responsible has to be supported by members of the House of
07:06Keys and I respect that, I think it was quite useful to have that debate
07:12outside of the budget because that debate could theoretically have
07:16derailed the entire budget just on that one key issue, the one uprating of one
07:22benefit out of the whole budget which is £1.3 billion, but I
07:28think there were some very good points made during that debate, I think
07:31there was a lot of passion made in that debate in terms of the need to protect
07:35pensions but also the need to have an affordable pension scheme going forward
07:39and that's what we now need to take to the people of the Isle of Man.
07:42How has it not derailed the budget?
07:45The key parts of the budget in terms of revenue coming in and
07:50expenditure going out are largely unchanged, the increase in the
07:56uprating of the Manx State pension from 2.2% to 4.1%
08:03means that an extra £1.4 million will come out of the NI fund,
08:08that does not affect the rest of the general revenue, that doesn't affect the
08:12capital programme, that doesn't affect any other part of it. When I said that I felt
08:16that the changes to that were integral to the budget, it was very much in terms
08:21of responsibility and sustainability which is about the overall long-term
08:26government finances, but the changes that we've made to the NHS allocation
08:30for instance are only baked in for five years, they are a temporary measure, only in
08:342027 we'll have the next actuarial review of the National Insurance Fund
08:38and then can use that springboard for the discussion of policies to sustain it in the long term.
08:43So every government department is going to get more money this year and ManxCare is going to get more money,
08:51nothing like as much as it did last year, will it be enough?
08:55I think that's a very good point, every department has got more money, is it
09:00enough for what they necessarily want to do? I'd probably say no, I think when you
09:04look at government spending you can always spend more money in a range of
09:08different services, what we are trying to do is make sure that money is affordable,
09:12that those budgets are put into the right areas that drive forward what
09:17people will experience, what they'll benefit from government. In terms of
09:21healthcare spending there is no blank check, there can't be, because the
09:25healthcare budget now is the largest part of our overall budget, it's even
09:29larger than our benefits, 80% of that is pensions, so it's a huge part of our
09:34budget and obviously we've seen the pressures on healthcare spending both
09:37here and across, and unexpected cost pressures can really derail those
09:41budgets and cause significant over-expense that can threaten the whole
09:44government finances in general, not just that one department, so it's
09:48absolutely right we put the right resources in, the right attention to
09:52allow the department and ManxCare to be on budget, to analyse their spend each
09:57month and where they are going off budget to rebalance that as much as
10:00possible, but we also have to be realistic with the amount of pressures
10:03that they're under in terms of staffing, drug costs and the cost of sending
10:08people off the island for what can be very expensive treatment in the UK.
10:12And finally just on the capital budget, I think many people in the south of the island will perhaps be disappointed about the status given to
10:22Castle Rushen High School, I think in the Budget Pink Book it's still there as design and feasibility, you know funding for a business case, when's this thing going to get built?
10:34Actually the day before the budget we've got a meeting with the project
10:39management unit of the DOI, with all the local MHKs to go through the
10:45progress so far, we've actually decided on the way forward, the budget is there,
10:51it's not in the Pink Book at the moment because what we need to do is go out to
10:54get the design right, to put it through planning, to get it costed and then it
10:59will be coming through as a capital bid hopefully this financial year, I want to
11:03see that developed, it is one of my key priorities being a previous Education
11:08Minister, for the last decade we've been saying that it needs to be done and it
11:12should be delivered, I want to be part of that process that actually does that
11:15in this administration. We have a school here with still buckets collecting rain.
11:20Absolutely, it's unacceptable not just to the people of the south but to the
11:24people of the island in general, building a new school in the south as an
11:28investment in the children of this nation is investment in the future of
11:32this nation and should be absolutely key, part of this budget though is also
11:36looking at increasing capacity in places like Balasella, Henry Bloom Noble in
11:39terms of primary schools as well and we are putting over £800,000
11:43into putting a new roof on St Ninian School that they need but actually doing
11:48it right so we've got the right insulation and solar panels on that to
11:52drive down the costs of that school operating. There is a lot of impetus
11:55behind it, we are really trying as much as we can to learn the lessons of for
12:02instance the Liverpool landing stage to make sure that we get the contract right
12:06the price baked in right and we build what is needed for that community what
12:10is needed for that island but within the cost that is allocated by Tim Walton's.
12:14Thanks very much Minister.