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£56.5 million mini-budget proposals unveiled

02 August 2022

An extensive package of measures to address the cost of living crisis has been lodged by the Minister for Treasury and Resources and the Minister for Social Security. The package will put almost £15 million back into Islanders’ pockets this year and almost £42 million in 2023.

The mini-budget, which is one of the key priorities in the Chief Minister’s 100 day plan, includes:

  • An above inflation increase of 12% in Income Tax thresholds and allowances, including Child Allowances, Additional Allowance and Child Care Tax Relief, from 1 January 2023
  • A temporary reduction of 2% in Social Security contributions from 1 October to 31 December 2022:
  • Class 1 employee paid contributions decreasing from 6% to 4%
  • Class 2 self employed or unemployed paid contributions decreasing from 12.5% to 10.5%
  • Doubling the Cost of Living Temporary Scheme (COLTS) from £20 to £40 per person per month, from August to December 2022
  • Doubling the Community Cost Bonus (CCB) from £258.25 to £516.50 in October 2022 and encouraging more eligible Islanders to take up the CCB 
  • Increasing Income Support components in January 2023 to reflect the September 2022 RPI figure
  • Temporarily increasing cold weather payments to £70 a month from October 2022 to March 2023.

Pensioners will also see an increase in the Old Age Pension rate in October 2022 by the June 2022 RPI-pensioners of 7.7%.

The Minister for Treasury and Resources, Deputy Ian Gorst, said: “During the election campaign the rising cost of living was one of the main issues raised on the doorstep and our 100 day plan committed us to introducing this mini-budget. 

“Its key aim is to address the current cost of living crisis for Islanders and particularly those who are being hardest hit. For example, the tax threshold changes alone mean that a single person earning £10 an hour would see an increase in their take home pay of £520 next year, while a married couple, with two children, who are both earning £12 an hour, would be £1,243 better off.”

The Minister for Social Security, Deputy Elaine Millar, said: “My aim is to make sure we are continuing to support lower income Islanders and giving them the additional help they need with the rising costs of living. 

“As part of this we are taking immediate action by doubling the value of the COLTS temporary scheme from £20 to £40 per person, from August to December. This means, a household of two adults and two children will now receive £160 per month. There are over 11,000 Islanders receiving payments from this scheme, and I want to make sure we are providing them with the additional help they need.  COLTS is a temporary scheme that will finish in December, but I will be lodging regulations in September to provide for an extra income support uprate from 1 January 2023 to provide extra targeted help to low income households.

“I am also presenting proposals for debate that if approved will double the value of the Community Costs Bonus, set cold weather payments at £70 a month for this winter and reduce social security contribution by 2% from October to December.

“Finally, I will be drawing up plans to provide support in early 2023 for Islanders with children, who have less than five years residency.”

In addition to this package of measures:

  • The Employment Forum has been asked to consider increasing the Minimum Wage to £10 per hour from October 2022 and up to two-thirds of the median wage from January 2023
  • Ministers will be encouraging private sector landlords and estate agents to avoid inflationary rental increase if possible
  • A scheme will be developed to provide free period products to those who need them
  • Funding will be provided to community organisations to set up advice and support services.

Also included in the changes that will be debated by the States Assembly in September, is the deferral of the registration of offshore retailers to charge GST at source and the reduction in the de minimis level from £135 to £60, from the start of 2023 to 1 July 2023.  The change has been made following requests from some offshore retailers for more time to introduce changes to their systems.

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