States records £45m surplus despite funding gap

The part of Guernsey States funded primarily by taxes and responsible for delivering public services has recorded a surplus of £45m in its 2025 annual accounts.

The wider States Group which includes businesses such as Guernsey Water, Electricity and Post, Aurigny and the ports and the Guernsey Housing Association, reported an overall surplus of £106m.

However, The Policy and Resources Committee said that the longer term picture showed a funding gap of £50m which is down from £58m in 2024

Lindsay de Sausmarez, President of Policy and Resources, said: "On the one hand, the accounts are good news, income in 2025 exceeded our expectations. What's also positive is that the funding gap has reduced."

The annual accounts record money that has come in and out in a single year, including one-off tax payments and investments, this is the surplus but it does not translate to money in the bank.

The surplus is £9m more than the £36m reported in February. The majority of the money (£34m) has come from one-off tax payments from the banking sector which are adjustments from previous years.

This type of income would not be expected in future years and follows a loss of £44m in the public finances in 2024.

However, the shortfall in the States, which represents the amount needed to keep the infrastructure running in the long term has only improved by £8m since 2024 and sits at an estimated £50m.

Deputy de Sausmarez said: "It feels a bit paradoxical that there's a funding gap, or structural deficit, when the 2025 accounts show a surplus, but that's because they're two different things.

"2025 was a strong year for investments so on paper that increased our income, but in reality, that doesn't translate into money in the bank because their value would only have been realised if all of those investments were sold, which most (quite sensibly) weren't.

"Our accounts show by how much our assets such as our infrastructure have depreciated in a year, but that's a lot less than what we need to spend on maintaining and improving our infrastructure so that it's fit for purpose.

"That amount we'll need to spend in future is obviously not included in the accounts, but is included in the funding gap calculations."

However, as they do not contribute to paying for the public services provided by the States, it wants to focus on recurring income such as taxation and social security contributions to improve the States' financial position.

Deputy Charles Parkinson, Treasury Lead for Policy and Resources said: "The key message for me personally is that while there is undeniably a need for the States to raise further revenue to meet the increasing needs for essential public services, I believe that the receipts from Pillar 2 for 2025 have been underestimated by about £30m, but we will not know the final figure until 2027 or 2028."

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