26 June 2020
Today, the Financial Secretary, Dax Richards, delivered the 2020/21 Budget Speech for St Helena.
In his opening remarks, the Financial Secretary said:
“Over the last three Budget Speeches I have commented on the challenging times facing our community and, specifically, our economy. It seems this will continue to be a common thread for some time to come.
“Whilst our economy had shown signs of stabilising during the last financial year as Airport Project related activities came to an end and tourist numbers were showing a steady increase, we have a significant new challenge arising from the Coronavirus pandemic (COVID-)19 which has devastated economies large and small across the globe.”
The Budget presented today is the product of collaborative working between Elected Members, officials and other key stakeholders including the UK Government.
The Budget is presented following agreement of the Financial Aid settlement of £28.3 million core budget support, £3.5 million for Airport operations and £2.5 million for COVID- 19 preparedness.
The Financial Secretary highlighted that:
“Whilst it is important to recognise that there are many challenges ahead, we must also celebrate the positive outcomes that we have achieved in these difficult times.
“The signing of a contract with Google in December 2019 to provide a branch on the Equiano cable to St Helena has the potential to be a ‘game changer’ for our Island’s economy if utilised to its full potential. This vital infrastructure investment will provide a virtual link between St Helena and the rest of the world to complement the improved access made possible by the UK Government’s investment in our Airport and hopefully translate into less reliance on UK aid.
“The signing of the contract with PASH global at the end of May 2020 was another monumental step forward for the Island as we look to achieve the goals set out in the Energy Strategy of generating 100% of energy from renewable sources. Whilst the investment will give stability to price of energy for the foreseeable future, the ultimate aim is to reduce the cost of living on the Island by lowering energy bills for residents and businesses. These two key work streams have the potential to change the economic climate on St Helena and bring real benefits to the community.”
In concluding his Budget Speech the Financial Secretary said:
“Through this Budget this Government has demonstrated its commitment to providing essential services, protecting the most vulnerable members of society and creating an environment to foster future economic growth.
“Much progress has been made but much work remains. I am confident, Mr Speaker, that working together, alongside our partners in HMG, St Helena will reach the destination to which it aspires.”
The Motion to consider the Appropriation Bill 2020 now stands adjourned until Monday, 29 June 2020, when the details of the Bill will be debated by Legislative Council.
Highlights from the 2020/21 Budget Speech include:
Public Sector Spending
- Total public spending is planned to be just under £49.1 million in this financial year. Representing a net increase of £3 million (6.5%) in comparison to the previous year
- £2.5 million of this increase is mainly related to funding set aside for COVID-19 budget support
- Pensions and Benefits payment which includes provision for the Basic Island Pension (BIP) and Income Related Benefits (IRB) will increase by £535,000 and includes £200,000 set aside to fund any changes resulting from the review of the Social Security system
- Spending on Health, Education and Social Care will remain broadly the same as the previous year
- £250,000 has been allocated for upgrading and replacing essential IT equipment and £500,000 has been included to upgrade the fish processing plant and the purchase of associated equipment
- In 2020/21, the inflation expectation is 2.2%.
Financial Aid Settlement
- Total financial aid support from the UK Government for this financial year will be £34.29 million
- £28.3 million core budget support,
- £3.5 million for Airport operations and
- £2.5 million for COVID-19 preparedness.
Local Revenue & Taxes
- Total forecast local revenue for the year is £14.0 million
- Limited changes in Tax policy allowing the previous year’s changes to be embedded and giving time to assess whether the policy changes are achieving the intended outcomes
- Customs duty on tobacco and tobacco products increased by 3.9%, meaning that the duty on a packet of 20 cigarettes will increase by 9p
- Customs duty on alcoholic beverages increased by 2.9%, meaning duty on a can of Castle Lite increased by 2p and on a bottle of spirit by 41p
- No change to the tax rates for this financial year,
- Corporation Tax rates will remain at 25% or 15% for those businesses who are supporting the delivery of the Sustainable Economic Development Plan as outlined last year
- The personal allowance will remain at £7,000 and the first £18,000 of taxable income taxed at 26% and 21% for those businesses supporting the SEDP and for income over £25,000 this will be taxed at 31% or 26% of those businesses supporting the SEDP.
The full Budget Speech is available on the Corporate Finance page of the SHG website at: https://www.sainthelena.gov.sh/directorates/corporate/corporate-finance/
26 June 2020