22 May 2025
St Helena Government’s (SHG) Consolidated Fund (in other words the principal monies the Government has available to spend) is made up of eight reserves, one of which is the General Reserve (GR).
Unless otherwise required by law all revenue and expenditure generated and incurred by SHG for normal “day to day” government business, is channelled through the GR. SHG’s GR is used for the general purpose of strengthening the financial position of the Government. This includes:
- facilitating capital investments and longer-term recurrent expenditure, which cannot be delivered within a single year’s budget
- delivering statutory payments which must come from the reserves legally
- enabling Government both to meet its expected liabilities and any unexpected liabilities, contingencies, events and emergencies that may arise
- funding the legal costs of litigation claims involving the Government and, as needs be making compensation payments
In July 2021, Executive Council approved the minimum balance for the GR of £5 million, but the current GR balance is already below that. This sum was considered to be a prudent amount to ensure the GR could deliver its function of insurance and ideally improve the resilience of SHG finances. Setting an approved minimum balance for the GR is also considered to be good financial management. It sets a commitment to sustainable practices whilst not setting an enforceable constraint.
Currently, the projected budget outturn for the Financial Year ending 2024/2025 is a £0.5 million deficit. This will reduce the GR balance from £4.5 million at 31 March 2024 to £4.0 million at 31 March 2025 – £1 million less than the recommended minimum balance.
One of the principal pressures on the GR balance comes from litigation claims being made against the Government. Historic issues have given rise to a number of medical negligence claims, and human rights claims linked to conditions in HM Prison, Jamestown. If those and other claims result in litigation fees or the Court orders SHG to pay significant compensation, the GR will be completely exhausted. Should the GR be entirely depleted, St Helena as a whole will face extreme financial vulnerability.
Ministers have tasked officials to explore all possible options for maintaining the GR at prudent levels notwithstanding the claims being made. Options include seeking loans as well as looking to implement measures to improve the monitoring and control of spending across all government departments.
The United Kingdom Government (UKG), has made it very clear that it will not provide any additional financial support to St Helena or SHG to cover compensation claims or the costs of litigation. Technical support is being offered by UKG to help explore alternative funding such as by way of a commercial loan. This would however place an additional financial burden on the public finances as any loan would need to be serviced and repaid over time. This would impact on the funds available to provide other essential services in future years.
Chief Minister, Julie Thomas, stated:
“I think it is very important that everyone with an interest in, or love for St Helena knows the pressures our public finances are under. My Ministers and I believe that we are obliged to make our community aware of SHG’s financial status, so everyone understands the increased financial risk we all face and how depleted our public funds are.
The immense financial pressure placed on the Government necessarily intensifies the need to scrutinise our current Government expenditure. We must carefully consider the costs, risks and liabilities of existing policies and projects and any additional policies and projects that are planned for the future. We must do what we can to safeguard the public finances. This means we must continue to take difficult decisions.
We must keep all SHG provided services and subsidies under continuous review and ensure that if they are maintained, they are maintained sustainably. This includes setting fees for services appropriately. It is a grave position to have to operate within.”
In light of the current financial challenges, SHG remains committed to ensuring the continued delivery of essential services to the community, but it is hoped that sharing our current financial position, will help you to understand the restricted financial parameters SHG are required to operate within.
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