Option A or Option B: what Guernsey's 2027 Budget means for your household

The States has put two spending plans in front of the Assembly. One leaves a small surplus and the other a deficit. Neither fixes the island's finances, and the gap between them costs about £240 for every islander.

Two plans, one headline

The States published its 2027 Budget on 6 October with a single headline number: a surplus. The report behind it sets out two spending plans, and the Assembly will vote on which to adopt.

Option A keeps the States' existing 1% real-terms cut to committee spending. It leaves a surplus of £4.2m before investment returns, against a £47.8m deficit in the 2026 Budget. Option B adds £15.7m of committee spending, a 1.3% real-terms rise, and turns that surplus into an £11.5m deficit. Committees asked for £33m more than Option A allows. Option B grants roughly half of it. Both positions exclude investment returns, which the report says cannot be relied on to fund day-to-day services, so they measure what ordinary revenue covers.

The £15.7m between the plans works out at about £242 a year for each of Guernsey's 64,781 residents (Bridgehead arithmetic, using the island's population of 64,781 at the end of 2023). That is the price of Option B. It is paid through a larger deficit, not through a bill that lands this year.

What Option A means for services

Option A is the tighter plan, and the tightness shows in the committees that deal with the public. Education, Sport & Culture falls 0.6% in cash terms. Home Affairs, which runs the police, fire and prison services, falls 1.6%. Health & Social Care, the biggest budget at £4,130 per islander, rises 0.9%. RPIX inflation reached 4.3% in June 2026, so a cash budget that is flat or up by less than 1% buys noticeably less.

The report does not say what stops. It does not itemise what the other £17.3m of requests would have bought, and a parent, a patient or a police officer cannot tell from the Budget which services are on the list. Under Option A, committees must find savings or cut services to live within their limit.

What Option B means for services

Option B softens most of that. Health & Social Care gets £3.1m more, which lifts its rise to 2.0% and adds about £48 per islander. Corporate Services gains £1.8m, Home Affairs £1.7m and Education, Sport & Culture £1.6m. Education's 0.6% cut becomes a 1.1% rise, and Home Affairs' 1.6% cut becomes a 2.1% rise. In practice that means fewer savings in wards, classrooms and policing in 2027.

It does not fund everything. £17.3m of requests are still declined, and the Trading Supervisory Board, Economic Development and the Development & Planning Authority are cut under both options.

The bill arrives either way

Neither plan closes the recurring funding gap, the report's measure of lasting spending against lasting revenue. The gap is £47m under Option A and £63m under Option B, down from £78m in the 2026 Budget. Closing it will take some mix of higher tax, higher charges, lower spending or borrowing, and the States group owed £403.5m at the end of 2025.

Pensions show the same pressure, and both options leave it untouched. The Guernsey Insurance Fund, which pays contributory pensions, runs a £22.9m deficit in 2027, up from £15.9m in the 2026 forecast, because social insurance benefits grow 6.8% while contribution income grows 3.5%. The Tax Reform policy letter put the Insurance Fund's long-term shortfall at about £19m of extra income a year, and the Long-term Care Insurance Fund needs a further £7m a year on the report's preliminary estimate. Neither option changes that.

Option A's surplus is also thinner than it reads. It leans on Pillar 2, the global minimum tax on large companies, which the Budget values at £79m in 2027 and which the report expects to decline as businesses adapt. Receipts do not begin until mid-2027. Our own model, which is not a States forecast, turns the Option A headline negative in 2029 if Pillar 2 fades by 5% a year. The 2026 forecast surplus of £43m was mostly one-off income. Without it the report forecasts a £2m deficit.

What does not depend on the choice

The tax and duty measures sit in the Budget as a whole, so they apply under both options.

• The personal allowance rises £650 to £15,850. At the 20% standard rate that is worth up to £130 a year.
• The cap on mortgage interest relief falls from £3,500 to £2,000 in 2027 and £1,000 in 2028, and the relief ends from 2029. At today's 20% rate, a household claiming the full cap pays about £300 more tax in 2027, £500 more in 2028 and £700 more in 2029.
• Tobacco duty rises 5% above inflation, vaping liquid carries £2.20 per 10ml from 9 November, and fuel duty and domestic property tax rise 4.3%, in line with inflation.
• The exemption on bank interest rises from £50 to £75.

For most households those lines will move the monthly budget more than the choice between A and B. The Budget was written assuming the Tax Reform package would pass, and on 2 October the States approved it by 22 votes to 17. GST of 3% starts in 2029, rising later, with income tax and social security cuts expected from January 2029, so none of it lands in 2027 bills.

Our reading

Option B is the easier vote. It spares the services people see, and £242 a head is modest against a budget of this size. Option A is the more defensible one, provided the States says what it stops. B widens the recurring gap by £16m in a year when the books are flattered by revenue the Committee itself expects to fall.

An islander who uses the health service every month has good reason to want B. An islander who expects to fund the gap through tax has good reason to want A. The Assembly owes both a published list of what Option A would cut, and the report does not give one.

The Billet d'État carrying the Budget is laid five weeks before the Assembly sits. Once it is out, each deputy's vote for A or B will go on their profile on the Bridgehead scorecard.