Thank you for giving your permission for this Statement to be made – and allowing a little extra time to allow me to do so.
The purpose of the Statement is twofold: to advise Members of the expected financial outturn for the States for 2025; and to update Members on developments since the Committee’s Statement in November on poor project management.
When former Deputy Trott stood at a similar time last year to share preliminary financial results for general revenue for 2024, he had unwelcome news to give with an in year overall deficit of nearly £31m with significant downward adjustments to tax from banking profits.
I am fortunate to be able to share better news. Strong receipts in 2025 have reversed that position and I can report an overall net surplus for the year of £36m. This is very welcome news, but I would not be doing my job properly if I advise members of some of the risks with these numbers.
Before I go any further, I should stress that these are the provisional 2025 financial results for general revenue. Provisional because they are subject to further adjustment in finalising the accounts and are as yet unaudited.
To ensure clarity and transparency I have shared with Members a summary table and brief analysis. I will contain my analysis today to the material numbers and what they mean.
Income
2025 was a good year for our revenue income lines which are a total of £57m above the allocated budget.
A key component of that is income tax from banks with revenue £37m more than budget. However, of that £37m, £11m relates to a voluntary disclosure from one bank which had calculated an underpayment of tax over the preceding 7 years. Consequently, that £11m includes a hefty interest surcharge. A further £12m relates to tax from 2023 which was assessed and paid in 2025. Therefore, £23m of the £37m in additional revenue is exceptional and it cannot be built into our baseline and relied on in future years. It’s a windfall, significant for this year, but unlikely to be repeated next year or in future years, and not significantly material to the long-term financial position of the States. Fortunate though this is 2025, it does highlight the inherent volatility in the tax from corporate profits generally, banking profits in particular drawn from a very small number of banking taxpayers, given there are only 21 licensed banks.
Given the reliance on banking profits (even more so with the introduction of Pillar 2) and the volatility in profits, we are working with the major banks and the GFSC to ensure we get more timely information in the future, which will seek to avoid large historic adjustments, which has now happened two years in a row - albeit as it happens - in opposite directions. However, it is evident that the banks have themselves found accurate forecasting a challenge in an unusual period where uncertainty has been high and interest rates have shifted very quickly. With interest rates coming down, we need to expect that to be reflected in future banking profits.
ETI receipts, which are the best real-time indicator of economic performance, were favourable to budget by about £7m (or just under 2.5%). Again, at first blush a very encouraging outturn but we need to be aware that most of this variance arose in Q4 receipts – a bumper quarter. It is therefore likely to have been driven by a strong round of bonus payments, which would be consistent with a better than expected result for the finance sector – but, again, cannot be safely assumed as part of our baseline for 2026 and beyond. As forecast throughout the year, Document Duty receipts were strong in 2025, and the final position was receipts of £27m compared to a budget of £16m. This has been driven by a 27% increase in the number of local market transactions compared to the previous year, with particularly high transaction numbers between May and October. Document duty is inherently and notoriously volatile and difficult to forecast.
Finally, in relation to income, there were strong receipts from tobacco duty at the end of the year. This does not mean our community are smoking more. Tobacco imports are subject to duty on arrival. Imports are lumpy and can be influenced by the timing of duty increases.
For 2025 Customs Duties ended the year £3m, or nearly 6% ahead of budget.
So, in total revenue income was just short of £716m in total and 9% above budget.
Turning to expenditure:
Most Committees spent within the cash limit allocated by the States.
As forecast throughout the year, the Committee for Health & Social Care’s expenditure exceeded its budget. The final overspend was £3.3m, or just over 1%, due to a combination of general demand pressures across the service and specific challenges relating to off island intensive and wrap around care.
The next highest overspend was the central Corporate Services function, which exceeded its budget by £2.6m.
£2m of this was driven by costs in the digital & technology area following the decision to change our IT contract arrangements. Insurance cost pressures continued in 2025 at just over £1m more than budget. But the Policy & Resources Committee is now leading a comprehensive review of our insurance arrangements better manage our cost and risk in this key area.
The Committee for Employment & Social Security was £1.2m (or 1%) better than budget due to lower income support costs than budgeted. The expenditure was, however, broadly in line with 2024 on a real terms’ basis.
Recruitment remains challenging in some services and professions. Pay costs for the year totalled £351m which was in line with the budget. However, this hides the fact that there were over 300 vacancies on average over the year which equates to 6% of the workforce. Many of these vacancies have had to be covered through overtime or agency staff which cost more than full time employees.
All Committees had vacancies through the year with Home Affairs and Corporate Services having the most significant recruitment challenges, although both these areas did have reduced vacancies on the 2024 average.
Finally, the allocated budget reserve was largely spent during the year - although the expenditure in relation GWP initiatives and service developments was significantly below budget. This can be attributed to the change in government in the year.
Overall, there was a small overspend when all committees and central reserves are taken together. This amounted to £4m or 0.6% of the total budget.
Overall Position
The combination of the stronger position on income and the more limited expenditure pressures, resulted in a gross Revenue Surplus of £73m - which is £53m better than budgeted. Of course, several adjustments need to be made to this figure to arrive at the net surplus. These include accounting for the losses of the unincorporated trading entities, project spending, depreciation and interest.
The adjustments of note are:
Firstly, the cost of revenue expensed projects was £11m less than anticipated. However, as this is mainly down to the timing of projects this is less of a good news story and more another manifestation of the States’ challenge in managing projects – of which more later.
And secondly, 2025 was another good year in investment markets for the increase in value of the States’ invested reserves with returns attributable to general revenue totalling £33.7m. But, of course, whilst it feels good and gives a nice warm glow, it is of course only a snapshot of unrealised gains based on market valuations on the last day of the year.
The bottom line, as I said earlier, is an overall General Revenue Surplus of £36m.
The welcome additional revenue in 2025 more than compensates for the poor performance in 2024. It’s a useful contribution to our depleting reserves but does not, without wider reform, change their trajectory. The 2024 and 2025 experiences highlight that having such a high dependency on whether banks have a good or bad year is neither sensible nor sustainable, especially given that the performance of individual banks will fluctuate from one year to the next, depending on their business models and on global as well as domestic factors. That is not a basis on which to build sustainable and reliable public finances.
This statement has been given to ensure the States has the draft results as soon as they are available – as we have committed to keep the States informed on our financial performance. The final numbers for 2025 will be published, following audit, on 2nd June this year.
The Committee also undertook to keep members updated on the matters that I raised during my statement in November; in particular the progress in respect of the investigation on the original MyGov programme.
The investigation into the original MyGov programme is detailed and complex, covering decisions made over many years across multiple roles and governance structures. It will conclude within the next six to eight weeks, and every aspect is being thoroughly examined. Following this, it is intended that a further Statement will be made to the States.
It is understandable that, when major programmes fail, there are, rightly, calls for accountability – and in the November Statement and the questions following it, on behalf of the Committee, I gave assurances that accountability would be ensured.
But accountability cannot be a witch hunt and must be based on evidence. This investigation is about establishing the facts and then acting on them.
As the Policy & Resources Committee has already assured the community and the States, the findings will be shared and addressed. Failures in governance, judgement, or oversight will be confronted. Where individual responsibility is identified, appropriate action will follow. Systemic issues will be corrected.
Our Committee understands the desire for immediate conclusions – we desire them as much as anyone else - but this must be done properly. If we do not or act in haste, we risk compounding a miserable situation and exposing the public purse to further costs.
However, I can reassure that changes are already underway now to support stronger controls. Sir, whilst many of the following comments pertain to the Chief Executive and his leadership and management of the civil service rather than the mandate of the committee per se, they remain, I believe, pertinent to this Statement given it is P&R that sets the Chief Executive and the President who lines manages him. I should also make clear that the Committee endorse and approve the Chief Executives actions and decisions.
The Chief Executive and his team are reviewing — and where needed revising — how Senior Responsible Officers are appointed to major programmes. Too often, regardless of the scale or complexity of a project, those duties have been combined with demanding operational roles, a model that is simply not sustainable or effective for high risk, high value projects.
Major programmes require focused leadership, with Senior Responsible Officers who have the time, authority, capability and capacity to ensure effective delivery.
The Policy & Resources Committee has also proposed and agreed with the Chief Executive, to strengthen the Portfolio Oversight Board with appropriate external expertise. Experience in Information Technology shows how specialist advice and challenge improves oversight, assurance and decision-making. Major capital and transformation programmes similarly require deeper expertise.
The island has considerable local talent with this experience that wants to volunteer to help their community. This is an opportunity to draw on it for the benefit of the programme portfolio. The process of recruiting that talent is beginning and this should also be taken as an open invitation for those with appropriate experience to get in touch or for Members to suggest candidates.
This is about reinforcing internal capability and upskilling it with the benefit of others’ experience. Our responsibility is to ensure the right capability, experience and challenge are in the right place so major programmes are delivered effectively.
One of the Chief Executive’s clearest findings from his extensive work to date is evidence of a structural misalignment between Civil Service leadership and political objectives, most visibly in how accountability operates through Principal Committees. The lines between political mandate and executive delivery are not as clear as they must be.
Principal Committees hold the democratic mandate: they set policy, determine priorities and are publicly accountable for outcomes. Yet senior leadership structures do not always mirror this. Some senior officers work across multiple committees remits or are aligned in ways that do not reflect where political accountability sits.
The Chief Executive notes three risks from this misalignment: committees may feel they lack a single senior officer clearly accountable for their priorities; officers may face competing demands across different mandates; and staff may be uncertain about where ultimate accountability lies.
He has therefore concluded that the simplest and most effective change is to return to a model where there is much stronger officer alignment to the Principal Committees. This is not about recreating the past, but restoring a straightforward principle: one Principal Committee, one accountable officer.
This realignment will not be a disruptive restructure. It will be introduced gradually so roles can be adjusted carefully, delivery remains stable, and the organization avoids unnecessary upheaval. The intention is steady alignment, not instability.
Separately, a further lesson from reviewing major transformation programmes is that when initiatives drift, we must intervene much earlier and more decisively.
Too often, the instinct has been to persist, believing that more time, funding or adjustment will resolve issues. But experience shows that drift rarely corrects itself.
The original MyGov programme began with strong ambition, but as complexity grew, optimism replaced evidence. Perseverance was assumed to be a strategy, rather than pausing to reassess and, if necessary, reset. There is a difference between resilience and reluctance to confront reality. In that spirit, the Chief Executive has with P&R’s agreement temporarily paused the digitization programme that succeeded MyGov, including the launch of the new gov.gg website. This is not due to a repeat of earlier failures; the current programme has delivered more substantive progress than its predecessors. The pause is not a judgement on effort, nor is it a sign of failure.
However, activity is not the same as clarity of outcomes. Before continuing, we must be able to define precisely the benefits the programme will deliver, how they will be measured, and the full financial commitment required.
The test is straightforward: will it improve access to services, reduce failure demand, enhance the public’s experience, lower costs over time, and build public trust? At present, the link between investment and measurable community benefit is not clear enough. Over the coming months, we will take stock, confirm intended outcomes, assess costs, and set a sequencing plan. Only with a robust case - clear in value and affordability - will we move forward again.
We will not hesitate to take similar action, if required.
I want to turn now to the Revenue Service.
A detailed assessment has been completed by the Director of Revenue Service Operations, appointed in November 2025. It has been shared with the Chief Executive and his leadership team and will come to the Policy & Resources Committee on next week. I understand that the analysis is candid, and the position is stark.
The decade long Revenue Service Transformation Programme was formally closed in May 2025 after £24 million of investment. While new core systems were delivered, some functionality is still incomplete, several integrations remain unresolved, and essential processes continue to rely on manual workarounds. The scale of the current challenge is evident in the backlog.
However, the Chief Executive and his team are confident that the new Director is setting out a credible, pragmatic route back to stability: fixing fundamentals, restoring timely processing, and rebuilding confidence with customers and professional advisers.
This will take time, but with clarity, consistency and support, it is achievable.
Finally, it is acknowledged that there is a time and place for specialist contractors and consultants; their expertise can be valuable for technical challenges or independent insight. Even an organisation the size of the States cannot permanently employ specialists for the infrequent times their expertise may be needed. However, through the 2026 Budget and his personal objectives, the Chief Executive was tasked with reviewing — and reducing — spending by £4m. This is not just a financial exercise, but one of discipline and accountability. He remains confident of achieving this target principally by focusing on consultancy spend.
All new requests for consultancy or contractor support are now reviewed by senior leadership will require the Chief Executive’s approval. There will be no automatic renewals or passive extensions.
Much greater transparency is also being recommended by the Chief Executive. It is his intention to publish details of all consultancy engagements later this year, detailing where consultants are used, why they are engaged, what they deliver, their cost and the value they add.
High levels of consultancy use have not only financial implications but cultural and capability impacts. When external resource becomes the default response to complex problems, opportunities for staff to develop expertise, lead major work and build institutional knowledge are eroded. Capability cannot grow if it is continually outsourced.
We have talented public servants. A resilient Civil Service requires investing in their technical skills, leadership ability and confidence to take on complex delivery. That means creating space for teams to lead, strengthening development and succession planning, and being deliberate about when external support is genuinely needed. Consultants should transfer knowledge — not retain it.
Sir, to reiterate my closing comments from November, the Chief Executive is committed to this reform and the Policy & Resources Committee is committed to the openness and transparency needed to rebuild trust. The Committee will keep the States of Deliberation informed through its General Statements and as necessary additional Statements such as this one. In the meantime, I will attempt to answer any questions Members may have.