I am pleased to be able to share with Members the provisional 2024 financial results for general revenue. These results are provision alas they are subject to any adjustments in finalising the accounts and are as yet unaudited.
The headline results are that we had a general revenue operating deficit for the year of over £9m; and will need to cover trading entity losses of some £6m.
However, after adjusting for depreciation, the cost of non-capital project expenditure, interest and appreciation in the value of our investments, the over general revenue deficit is nearly £31m.
Now I appreciate that a statement in which I share multiple numbers can be difficult to follow. So, in going into more detail, I will focus only on the material drivers of our results.
Income
2024hasproducedamixresultinourrevenueincome lines which are £21m below the budget overall.
However, as Members will recall from previous statements,anexceptional£29mtaxadjustmentrelating to one bank impacted these results. Whilst there are other variances, this is by far the largest and the single factor driving a revenue deficit.
ETI receipts, which are the best real-time in dictator of economic performance, were short of our budget by almost £5m (or just under 2%). This was driven by a modest lag in median earnings growth compared to inflation. This lag has been offset by an increase in the number of people working in Guernsey which is great news for future revenue.
Document duty ended the year with receipts of £23m (whichis28%aheadofthebudget) helped by a handful of very notable transactions. The fourth quarter was the strongest in the Open Market since 2022 and saw a 26% increase on 2023 in local market conveyances.
Customs duties ended the year short of budget by £3m, or nearly 7%. This was driven by alcohol duty receipts staying flat on 2023 in real terms despite the 2% real termsincreaseinrates,andtobaccodutiesbeing£3.9m adverse to budget and significantly down on 2023 partially driven by the timing of imports.
Totalrevenueincomewasjustshortof£601mwhichis level with 2023 in nominal terms and £21m less than budgeted.
Turning to expenditure:
Th majority of committees spent within the cash limit allocated by the States and all but two spent within £0.5maboveorbelowtheallocatedlimit.
As forecast throughout the year, the Committee for Health & Social Care exceeded its budget. The final variance was £6.4m, or just under 3%, due to a combination of ongoing general demand pressures across the service and specific challenges relating to off island intensive and wrap around care. These pressures accelerated at the end of the year leading to spending being higher than forecast.
The only other area with a variance of over £0.5m was CorporateServiceswhichhadanunderspendof£1.3m or 1.5%, largely driven by difficulties in recruiting to vacant posts.
Recruitment remains challenging in some services and professions.Paycostsfortheyeartotalled£336mwhich is just over 1% under the budget. However, this hides the fact that there were nearly 400 vacancies on average over the year which equates to 7% of the workforce. Many of these vacancies have had to be covered through overtime or agency staff which cost more than full time employees. This means that the average hourly cost spread across all employees was 6% higher than budgeted.
All committees had vacancies through the year with Home Affairs(114FTE/17%) and Corporate Services (96FTE/13%) having the most significant recruitment challenges.
Comparedto2023thetotalworkforceincreasedby123 to 5,162, the increase being mostly in health and care services, as approved by this Assembly through budget allocation increases. This is a similar picture to the increase in 2023 which was 142 full time equivalents (about half of which were in health and care professionals).
Pressures on the budget reserve during the year, particularly in relation to sea link contingency planning, meant that it was exhausted. A significant underspend on Government Work Plan initiatives over the year helped mitigate these short-term cost pressures.
However, Members should be mindful that in many cases, this under spending simply slows the realisation of our Government Work Plan objectives.
Overall, there was a marginal overspend when all committees and central reserves are taken together amountingtojust£0.7m,whichis0.1%ofthebudget.
Over all Position
The combination of the shortfall on revenue in come and the expenditure pressures results in a Net Revenue Deficit of £9m which is a shortfall of some £21m against the budget.
In addition, we expect the unincorporated trading entities to require support of £6m based on draft figures.
Capital related cash and non-cash costs of depreciation, disposal proceeds, and revenue expensed major projects total £57m, some £20m higher than budgeted.
This is mainly due to a higher proportion of the major portfolio spend been expensed than expected. Although this worsens the in-year position, it has no impact on cash as the spend was planned.
After making these adjustments, the result is a General Revenue Deficit of £72m.
The final adjustment is for investment appreciation over the year, which I should stress is an unrealised gain based on market valuations on the 31 December.
Performance during the year was strong and substantially above our budget estimates. Returns attributable to general revenue in the year totalled £41m.
The overall result is a General Revenue deficit of £31m nearly £19m adverse to the budget. While this is the result for the year and we should not shy away from this it is worth reminding Members of the £23m of previous year adjustment, without which we would have been much more in line with the Budget over all with an over all general revenue deficit of under £10m.
Sir, I will close by saying that although I felt it was important to provide this Assembly on the draft results as soon as they were available, the final numbers for the year will be published, following audit, on 23rd June this year. It should be noted that these accounts will be fully compliant with International Public Sector Accounting Standards for the first time. The annual report of the States Investment Board will be published at the same
time.