Guernsey · Budget 2027 · published 6 October 2026
The 2027 Budget, read in full.
The Policy & Resources Committee’s proposals, with the Option A and Option B choice the press release left out, the funding gap behind the headline surplus and the committees that gain or lose.
Option A, before investments
£4.2m
surplus
Option B, before investments
−£11.5m
deficit
Recurring funding gap
£47m / £63m
A / B
The choice
Option A and Option B
The release gives one surplus. The report sets out two expenditure budgets, and the Assembly chooses between them.
£4.2m surplus under Option A
General Revenue, before investment returns, against a £47.8m deficit in the 2026 Budget. With investment returns the budgeted surplus is £31.4m, which the report says cannot be relied on to fund day-to-day services.
£11.5m deficit under Option B
Option B adds £15.7m of committee spending, a 1.3% real-terms rise, to meet part of the £33m by which committee requests exceeded the limit. Option A keeps the States’ existing 1% real-terms cut.
£47m recurring funding gap
The report’s own measure of recurring spending against recurring revenue: £47m under Option A, £63m under Option B. It was £78m in the 2026 Budget. The gap is not resolved under either option.
Executive summary, section 1 of the 2027 Budget report. Option B is set out in Appendix 2.
Behind the surplus
From the £4.2m surplus to a £47m funding gap
Table 5 in the report walks the headline number through capital underspend and cyclical adjustments to show the position on a sustainability basis. On that measure the States is still £47m short of recurring balance.
| Step | £m |
|---|---|
| Net surplus / (deficit) before investments | 4.2 |
| Social Security Funds included | −13.0 |
| Bond capital repayment | −6.0 |
| (High) / low Personal Income Taxes | 5.0 |
| (High) / low banking and company profits | 3.0 |
| (High) / low Pillar 2 revenues | −11.0 |
| Capital and project underspend adjustment | −29.0 |
| Funding gap, consolidated | −47.0 |
Capital and project underspend is the single biggest step: the accounting surplus benefits from capital being delivered more slowly than planned, which is a cash saving today but not a saving in service. The cyclical adjustments net out the extra tax the States currently takes above its trend from banking profits and personal income tax against the Pillar 2 windfall it treats as temporary.
Report Table 5, paragraphs 4.26 to 4.37. The Social Security Funds line consolidates the £13m operating deficit of the contributory funds into the Core Government position.
Behind the £29m line
The capital programme that isn’t landing
Table 5 presents the £29m as a cyclical adjustment: the uplift it would take to bring capital spend up to 2% of GDP. The report does not publish a project-by-project reconciliation of plan against delivery.
£25m routine capital unallocated
Of the Routine Capital Allocation for 2025 to 2028, £25m is unallocated at the time of writing (para 6.74). £5m of it is being redirected into Spend-to-Save (Proposition 18).
£3m major-project threshold
Anything above £3m is a Major Project. Appendix VI lists capital for individual entities but not an all-States ranking by value, and no project is explicitly flagged as delayed, rephased or deferred.
£6.5m bond interest in 2027
The 2014 £330m bond runs on. Interest in 2027 is £6.5m (Appendix VI p.101), separate from the £6m Bond Reserve contribution in Table 5.
Named 2027 capital projects, by value
- PFOS contaminated-soil removal, Airport£9.923m
- Guernsey Water infrastructure£7.643m
- QEII Gate, Harbours£0.749m
- Bailiwick Air Navigation Systems£0.215m
- Airport roof£0.15m
Major projects in flight
- Beau Sejour redevelopment. Strategic Outline Case due 2027 (para 7.4).
- Guernsey Dairy essential works. Approved April 2026 (para 7.33).
Paragraphs 6.74, 6.75, 7.4 and 7.33 of the report, plus Appendix VI (pp.132 to 141) for per-entity capital. The report’s own position is that capital spend sits below the 2% of GDP sustainability benchmark; it does not quantify a historical capital-underspend series.
The Pillar 2 windfall
How the OECD global minimum tax lands, and why it fades
A single revenue item does most of the fiscal work in this Budget. The report says it should not be relied on past the first few years.
| Year | Baseline (£m) | Uncertainty cut | Budget estimate (£m) |
|---|---|---|---|
| 2025 | 79 | 5% | 75 |
| 2026 | 85 | 10% | 77 |
| 2027 | 93 | 15% | 79 |
Receipts do not start until mid-2027, so the 2026 forecast carries the entire 2025 figure as a one-off catch-up. The 2027 estimate is £39m higher than the equivalent figure in the 2026 Budget. The report attributes the upward revision to actual receipts data from Jersey’s own Pillar 2 collection: businesses have not restructured as fast as the earlier, more cautious forecast assumed. The report also says receipts are expected to decline over time as business models adapt, and that Pillar 2 revenue should not fund ongoing commitments.
Paragraphs 3.5 and 4.4 of the report. The uncertainty cut rises from 5% in 2025 to 15% in 2027, which is the Committee’s own acknowledgment that confidence in the estimate falls as the horizon lengthens.
Who gains and who loses
Committee net expenditure, 2026 to 2027
Table 11 of the report. Option A is the States' existing 1% real-terms cut. Option B meets part of the £33m by which committee requests exceeded the limit, so most committees get a little more. The sort below is the Option A delta against the authorised 2026 budget.
| Committee | 2026 base (£’000) | Option A (£’000) | Option B (£’000) | Δ A | Δ B |
|---|---|---|---|---|---|
| States' Trading Supervisory Board | 1,924 | 1,631 | 1,631 | −15.2% | −15.2% |
| Economic Development | 12,728 | 11,567 | 11,959 | −9.1% | −6.0% |
| Development & Planning Authority | 1,430 | 1,350 | 1,350 | −5.6% | −5.6% |
| Policy & Resources | 15,304 | 14,673 | 15,834 | −4.1% | +3.5% |
| Royal Court | 2,823 | 2,707 | 2,862 | −4.1% | +1.4% |
| Home Affairs | 45,752 | 45,037 | 46,695 | −1.6% | +2.1% |
| Law Officers | 8,254 | 8,184 | 8,224 | −0.8% | −0.4% |
| Education, Sport & Culture | 96,536 | 96,001 | 97,606 | −0.6% | +1.1% |
| Pooled Budgets | 1,248 | 1,240 | 1,248 | −0.6% | 0.0% |
| Environment & Infrastructure | 17,848 | 17,765 | 17,765 | −0.5% | −0.5% |
| Scrutiny Management | 626 | 623 | 623 | −0.5% | −0.5% |
| Corporate Services | 95,688 | 96,348 | 98,158 | +0.7% | +2.6% |
| States' Assembly & Constitution | 128 | 129 | 128 | +0.8% | 0.0% |
| Health & Social Care | 265,250 | 267,525 | 270,644 | +0.9% | +2.0% |
| Employment & Social Security | 4,593 | 4,674 | 4,674 | +1.8% | +1.8% |
| Housing | 9,387 | 9,586 | 9,726 | +2.1% | +3.6% |
| Overseas Aid & Development | 5,608 | 6,203 | 6,246 | +10.6% | +11.4% |
Health & Social Care is 0.9% above the 2026 base under Option A and 2% under Option B. In cash terms the Option B uplift for HSC is £3m, the single biggest difference between the two options. STSB, Economic Development and the Development & Planning Authority are cut under both options.
Report Table 11, paragraph 6.27. “Authorised” 2026 is the original 2026 Budget as adjusted during the year for Budget Reserve releases, inter-committee transfers and savings. The Social Security line here is the small General Revenue element only; the formula-led contributory funds are reported separately in the report.
The £33m the release does not mention
Where the committees’ asks go silent
Committees submitted bids £33m above the Option A limit. Option B accepts £15.7m of them. The remaining £17.3m is not itemised anywhere in the report, which is itself a scorecard point.
£33m asked
Combined submitted bids above the Option A target (exec summary).
£15.7m into Option B
The uplift the Option B expenditure budget concedes, item by item in Table 11.
£17.3m unaccounted
The gap between the full £33m of asks and Option B. The report does not say which committees asked for what inside this residual.
Option A to Option B gap by committee (what Option B accepts)
| Committee | Option B uplift (£’000) |
|---|---|
| Health & Social Care | 3,119 |
| Corporate Services | 1,810 |
| Home Affairs | 1,658 |
| Education, Sport & Culture | 1,605 |
| Policy & Resources | 1,161 |
| Economic Development | 392 |
| Royal Court | 155 |
| Housing | 140 |
| Overseas Aid & Development | 43 |
| Law Officers | 40 |
| Pooled Budgets | 8 |
Health & Social Care takes the biggest Option B uplift, £3.1m in cash. The Budget Reserve and the formula-led Employment & Social Security contributory funds absorb a further share of the £15.7m that does not appear in Table 11; the balance against the £33m ask stays invisible.
Executive summary and Table 11 of the report. The £33m is stated in the summary; the Option A to Option B deltas are visible per committee, but no document in the Budget pack ranks every committee’s original ask.
Outside the surplus
Trading entities: the losses the headline leaves out
General Revenue is only part of the picture. The States' unincorporated trading entities are inside the consolidated accounts but outside the £4.2m, and Aurigny sits outside both.
| Entity | 2025 actual | 2026 Budget | 2026 forecast | 2027 Budget |
|---|---|---|---|---|
| Guernsey Ports | -2,051 | -1,427 | 319 | -332 |
| Guernsey Waste | -720 | -1,545 | -1,971 | -1,871 |
| Guernsey Dairy | 58 | -315 | -223 | -301 |
| Guernsey Water | 700 | 916 | 606 | 1,701 |
| States Works | 1,016 | 686 | 382 | 605 |
| Total | -997 | -1,685 | -887 | -198 |
Only States Works and Guernsey Water are expected to pay their own way in 2027. The Budget sets a £5.7m impairment for incorporated trading entities, all of it Aurigny. Last year the impairment was £9.7m: the airline continues to make a loss, the States’ Trading Supervisory Board is working on a long-term funding plan, and in the meantime Policy & Resources is topping up Aurigny’s liquidity to keep flights running. The report does not publish a cumulative impairment figure.
Report Table 12 and paragraphs 7.7 to 7.13. “Impairment” is the accounting charge the States takes against the value of its investment in Aurigny.
What backs the headline
Reserves, investment returns and borrowing authority
The report does not publish opening or closing balances for the General Revenue Reserve, Core Investment Reserve or Guernsey Insurance Fund. These are the flows it does disclose.
Budget Reserve, 2027
£26.7m
Option A, up from £16.9m in the 2026 Budget. Option B takes it to £30.1m. In 2026 the Reserve released £5.5m to cover pay settlements.
Investment returns, 2027
£97m
£24.243m General Revenue, £63m Social Security Funds, £10m other. The report says these cannot fund day-to-day spending.
Revolving credit, standing
£100m
Short-term liquidity line (glossary p.80). Separate from the £330m 2014 bond.
Borrowing authority held
£200m
Delegated authority to raise up to £200m of new external borrowing (up to 40 years), plus a further £150m facility earmarked for Guernsey Housing Association. No new borrowing is proposed in 2027.
Budget Reserve: paragraph 6.79 of the report. Investment returns and interest expense: Appendix VI (pp.101, 105) and Appendix II Table 2 (p.86). Delegated authorities: para 99 of the report. The absence of a consolidated reserves balance sheet in a Budget report is unusual for a jurisdiction with a £330m bond outstanding.
Where the money goes
The pay bill behind every committee cash limit
States pay costs are £365.7m in 2027 under Option A. The report publishes a 2026 Forecast breakdown by pay group but does not allocate 2027 by category or service area.
Pay bill by group, 2026 Forecast (£m)
| Pay group | £m |
|---|---|
| Established Staff | 139.3 |
| Nurses & Medical Consultants | 118.7 |
| Teachers & Lecturers | 61.4 |
| Public Service Employees | 20.8 |
| Police | 11.7 |
| Fire | 4.6 |
| Border Agency | 4.2 |
| Prison | 4.2 |
| Home Support Staff | 3.6 |
| Crown Officers & Judges | 2.2 |
| Other | 3.9 |
| Total pay bill | 374.7 |
Vacancy assumption
Established Staff are budgeted at a 7% vacancy rate. Falling below it is itself a Health & Social Care overspend risk in Appendix II.
Pay settlement
The 2027 pay settlement is held inside the Budget Reserve, not published as a percentage. States Members’ pay rises each 1 July by the March RPIX, which was 4% in March 2026. Each extra 0.5% on the pay bill costs £2m.
Note 4 of Appendix VI (p.105); pay sensitivity from Appendix II Table 4 (p.88). The 2027 Option A pay-bill total is published; the per-group split is only published for the 2026 Forecast.
In context
How the £4.2m compares with what the States has set itself
The report's own comparison with the 2026 Budget. A longer run of surplus / deficit before investments is a known gap on this page and will be added as the past Budgets are transcribed.
| Position | £m |
|---|---|
| Budget 2026 (approved Nov 2025) | −47.8 |
| 2026 forecast | 43.0 |
| 2026 forecast, non-recurring stripped out | −2.0 |
| 2027 Budget, Option A | 4.2 |
| 2027 Budget, Option B | −11.5 |
The 2026 forecast surplus of £43m is largely one-off: about £45m of it is extra bank income tax, Pillar 2 revenue relating to 2025 and document duty on a single large property transaction. Without those the report forecasts a £2m deficit. The 2027 Option A surplus is about £39m below the 2026 forecast for that reason.
For islanders and businesses
What the Budget does, measure by measure
Allowance £15,850
Up £650, in line with inflation. The threshold at which allowances are withdrawn stays at £85,000, so its real value falls.
Charitable relief £50,000
Up from £10,000 per person. The most a charity can gain from a single donor rises from £2,500 to £12,500.
Mortgage interest relief phased out
The cap on eligible interest falls from £3,500 to £2,000 in 2027 and £1,000 in 2028. The relief ends from 2029.
Growth fund £15m
Paid from Pillar 2 revenue (up to 10% of receipts), with £5m in 2027. Policy & Resources and Economic Development jointly shortlist proposals. Investment areas: finance sector strategy 2035, early years and childcare, air connectivity, cyber security. Time-limited, Pillar 2-compliant, and cannot be used to compensate for the tax itself.
TRP freeze
Hostelry, retail and warehousing rates frozen. Domestic and most other commercial rates rise with inflation. Commercial car-parking land rises 15%.
Tap relief
Reduced alcohol duty on qualifying draught beer, cider and wine sold through the hospitality sector. Other alcohol and tobacco duties rise in real terms.
Vaping duty
£2.20 per 10ml of liquid, as agreed in the 2026 Budget, introduced straight after the Budget debate.
Entrepreneur tax cap
Endorsed in principle to attract entrepreneurs. The detailed design is still to be worked out by Policy & Resources and Economic Development.
Spend-to-Save
£5m from unallocated routine capital plus £1m from the Budget Reserve, to fund upfront investment that delivers recurring savings.
The report forecasts real growth of 0.5% in 2027. RPIX reached 4.3% in June 2026 against a 3.4% forecast when the 2026 Budget was prepared, which is why the real-terms position of a frozen cash figure in this Budget is tighter than it looks.
A note on what this depends on
Assumptions and what could change
- The Budget was prepared on the assumption that the States’ Tax Reform proposals are approved. The Policy & Resources Committee says it will bring amendments if the Assembly decides otherwise, which would change several of the figures above.
- Pillar 2 receipts do not start until mid-2027. The 2027 estimate carries a 15% uncertainty cut, and the report says these revenues are expected to fall over time as business models adapt.
- Three cyclical items make the headline position look better than its sustainable equivalent: unusually strong banking and personal income tax receipts, and a capital underspend treated as a one-off cash saving.
- The £33m of unmet committee demand sits inside the Option A choice. Under Option A the committees must find further savings or service reductions; Option B lets about half of it through.
- The report’s own guidance is that investment returns, Pillar 2 receipts and one-off income cannot fund day-to-day expenditure, which is why the £47m funding gap, not the £4.2m surplus, is the measure the Committee itself asks the States to weigh.
- Amendments and debate positions are not on this page yet. The Billet d’État carrying the Budget is laid five weeks before the Assembly sitting; once the Scorecard has it, each amendment will attach to the deputies who sign it and each deputy’s Option A or Option B vote will attach to their profile. The report itself names no deputy.
States of Guernsey Budget 2027 (full report); gov.gg/budget; 2027 Budget for growth (media release, 6 Oct 2026).
Inside the £13m line
A long-term care surplus holding up a pensions deficit
Table 5 brings the Social Security Funds into the Core Government position as one £13m line. Inside it, the Long-Term Care Insurance Fund runs a surplus; the contributory Guernsey Insurance Fund — pensions — runs a deeper deficit than last year.
Contributions income is £261.18m. Social insurance benefits (pensions and others) take £230.778m; Long-Term Care benefits take £36.845m; administration is £6.768m. The old Health Service Fund was discontinued in January 2022; its balance is now earmarked within the General Revenue Reserve as the Guernsey Health Reserve.
Appendix for the Committee for Employment & Social Security Contributory Funds (p.143); Table 4 of Appendix II (p.88) on the ageing-population pressure on contributory costs. The report does not publish fund balances, only operating positions.