16 July 2021
Today, the Financial Secretary, Dax Richards, delivered the 2021/22 Budget Speech for St Helena. A copy of the Budget speech is available online here: https://www.sainthelena.gov.sh/wp-content/uploads/2021/07/Budget-Speech-2021-22-16-July-2021.pdf
In his opening remarks, the Financial Secretary said:
“It gives me great pleasure today to present the Budget for the 2021/22 financial year. This budget provides for the continuation of essential public services for the year ending 31 March 2022.
“This budget sets the foundations for a recovery. Out of adversity comes opportunity and we cannot continue to do what we have always done, and think like we always have, as an Island and a community we must adapt our thinking and diversify, reducing our reliance on a particular sector.”
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 £26.79 million core budget support, £3.0 million for Airport operations and £2.0 million for Conditional Contingency funding.
The Financial Secretary highlighted:
“The 2021 Population & Housing Census has shown that we are indeed heading for a very difficult time over the coming years unless we can do more to develop, attract and retain key skills on St Helena and ultimately increase the size of the working age population.
“This will require a change in mind set and I believe that SHG policies are starting to align to reverse this trend. We must prioritise welcoming working-age Saints and their families back to the Island and we must do all we can to encourage people with the skills that we need, to come to the Island rather than trying to keep them out, simply because they do not have roots on St Helena.
“I want to assure members of the public that I am not suggesting St Helena pursues uncontrolled growth – we have seen in the past that even modest increases in the population can bring a substantial benefit.
“If we are to sustain positive economic growth we must also grow our resident working age population.”
In concluding his Budget Speech the Financial Secretary said:
“St Helena, like the rest of the world, continues to face a number of challenges particularly given the on-going uncertainty around the COVID-19 pandemic and its impact on travel and the economy. However, we have a lot to be thankful for – with no COVID-19 we have very much been able to go about our daily lives unlike most across the world. We have seen the best the Island has to offer as we have come together as a community to celebrate occasions both big and small. The adversity of the past year has given us the opportunity to hit the reset button, to diversify, innovate, and collaborate. I suggest that we can – and must – continue in this spirit for the coming year as we navigate the challenges ahead.”
The Motion to consider the Appropriation Bill 2021 now stands adjourned until Monday, 19 July, when the details of the Bill will be debated by Legislative Council.
Highlights from the 2021/22 Budget Speech include:
Public Sector Spending
- Total public spending is planned to be just over £48.5 million in this financial year. Representing a net decrease of £0.6 million (1.2%) in comparison to the previous year
- Pensions and Benefits have increased to £5.3 million, additional funds have been included in this budget to take account of the policy change that will see the removal of the ‘household’ eligibility criteria and the introduction of criteria based on ‘families’
- The Health and Social Care portfolio has been allocated £9.6 million recurrent which is an overall increase in their allocation of just under £1.0 million, this includes an increased allocation for medical evacuation flights (additional £0.5m) offset by a reduction in overseas medical referrals (£0.3m)
- The Education, Skills and Employment portfolio has been allocated £3.8 million which is an increase of £0.5 million compared to the previous year, largely due to the movement of the school bus contract from central Finance into Education (£0.3m) to reflect the true cost of the service; the introduction of Career Access St Helena; and in addition Members have agreed an additional £64K for tertiary education, which will support our goal of investing in our young people
- The Treasury, Infrastructure and Sustainable Development portfolio which brings together previously Corporate Finance, Infrastructure, Access and Economic Development budgets has a total of £14.5 million. Around £2.5 million has been set aside to maintain access to the Island via Titan Airways until the end of March 2022, this is offset however by the revenues collected
- This budget makes provision for £1.6 million of capital expenditure which will complement the funding allocated through the Economic Development Investment Programme. A significant proportion of this £1.6m has been brought forward from what was intended to be delivered in the last financial year but had to be rolled over into this year. The key expenditure lines include:
- £0.5 million for capital investment at St Helena Airport which includes a new road sweeper, some modification to the refueller and additional storage space
- £0.5 million for Health mostly to procure and install the Oxygen Plant at Bradley’s medical facility along with other essential equipment for the Health Service
- £0.5 million agreed for the refurbishment of the Fish Processing Plant in Rupert’s to support the fishing sector; and
- £125K provision for the replacement of essential equipment and furniture at the Community Care Complex.
- Other portfolio allocations have largely remained the same with small adjustments for changes in public sector salaries within their areas of business.
Financial Aid Settlement
- Total financial aid support from the UK Government for this financial year will be up to £31.79 million:
- £26.79 million core budget support
- £3.0 million for Airport operations and
- £2.0 million for Conditional Contingency funding.
Local Revenue & Taxes
- Total forecast local revenue for the year is £16.5 million which is an increase over the previous financial year largely due to additional revenues collected as a contribution to the charter flights
- 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 2.0%, meaning that the duty on a packet of 20 cigarettes will increase by 5p
- Customs duty on alcoholic beverages increased by 1.0%, meaning duty on a can of Castle Lite increased by less than 1p and on a bottle of spirit by 14p
- 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 (SEDP) 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.
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SHG
16 July 2021