On 31st May, the Governor of the Falkland Islands made her annual address, state of the Nation, to the Legislative Assembly. In her speech, Alison Blake CMG reviewed last year's challenges and highlights, set out the government's and public service priorities for the year ahead, and paid tribute to the economy.
Community and stability are at the heart of the Falkland Islands Government Budget for 2023/24. The Budget recognises these two themes are essential with the global cost of living crisis and in the global recovery following the COVID-19 pandemic.
The operating budget for 2023/24 is £95.8 million (excluding internal recharges) with the main areas of investment for the coming 12 months including:
• £17.1m for health and wellbeing
• £10.2m for education and training
• £2.3m increasing government wages, including a cost of living increase for all staff (£1.1m); increments £0.3m) and additional one-off payments (£0.9m) for lower and middle earners.
• £0.2m to extend the cost of living fuel and power package
• £7.8m on protecting the environment, including funding for subvention bodies and scientific research
The overall commitment to capital projects which provide a boost to private sector activity, continues in 2023/24 recognising the top priorities in addition to a new Port Facility are a new Power Station and new waste management facility. Other significant projects and programmes of work include: improvements to the hospital and services for vulnerable people, including the completion of Tussac House in 2024, the continuation of maintenance to Stanley roads, progression of the MPA road asphalt programme, repairs and investment in new Camp roads, FIGAS improvements and new airframe and increased housing and building maintenance.
Supporting our lower and median paid employees is at the heart of this year’s budget, with all government employees receiving a pay increase for the financial year of 3%. In addition to this increase, employees who are currently on grades I to D will receive a pro-rata non-pensionable one-off payment of £1,500 alongside a step point increment. From 1 January 2024 the minimum wage hourly amount will increase from £7.73 to £8.57 and the income tax personal allowance is increasing from £15,000 to £15,960.
Weekly retirement pensions will see an increase to payments, in line with the September 2022 RPI of 6.1% from £167.55 to £177.78 from 1 July 2023.
From 1 January 2024 Retirement pension contributions will also be increased to 6.1%, again in line with the September 2022 RPI.
While fuel prices have declined, there is a recognition that usage will increase in the winter months and the global increase to cost of living means that households continue to face pressure. The temporary household fuel and power allowance will be extended through winter from 1 June to 30 September 2023, at the rate of £140 per month for those currently eligible for the allowance who are not also eligible for the winter fuel allowance. From this year, the Winter Fuel Allowance will be set annually at a defined level linked to actual Kerosene prices. For 2023 it will be based on 70% of the cost of 1,200 litres of Kerosene. This will revert to 50% in future years in line with the original policy.
The Family Allowance will be increased in line with the September 2022 RPI of 6.1% and continues to be tax free. The allowance will continue to be accessible for Falkland Islands Status holders and those with Permanent Residence Permits (PRP). From 1 July, families who have been ordinarily resident in the Falkland Islands for at least three years will also become eligible for the allowance.
Tourism remains a vital source of income for the Islands, and the Cruise Ship Passenger tax will increase from 1 July 2024 from £26 to £35. This increase will see the subvention to Falkland Islands Museum and National Trust increase to £6.50 per cruise ship passenger, enabling passengers to continue to enjoy the vast variety of exhibits currently held and further broaden the visitor’s understanding of Falkland Islands history. Alongside the subvention to the museum, the increase will also help fund the protection of the environment, including wardens at sites such as Yorke Bay, improvements to the Public Jetty and subvention to the Falkland Islands Tourist Board.
MLA Roger Spink, Government Service, Legal and Regulatory portfolio holder, said: “The challenges in maintaining a vibrant economy and lifestyle despite the effects of the war in Ukraine on the world economy have been a focus of this budget. As an Assembly we remain committed to supporting our community not only through social payments such as the extension of the temporary household fuel and power allowance and other increases to support those most affected by inflation. It was also important to support people’s ability to access a healthy lifestyle, through our health and social care services, sports facilities and our environment.”
“We recognise that our natural environment is one of the most pristine in the world and it is our job to protect it. The budget has included funding for the development of environmental schemes aligned with government strategic environment priorities, with £750k to be provided to FIDC for environmental loans and grants to be used to support energy efficiency and renewable schemes by households and businesses. A further £250k will be invested by FIG in environmental projects trialling new green initiatives, which is separate to the existing Environmental Studies Budget (ESB) grant available to the community.”
“While the cost of living crisis has affected us all, it disproportionately impacts the lower paid and it was important for the budget to reflect this. I hope that the increase to pensions, minimum wage, government wages, alongside the one-off payment to a large proportion of our employees, will be welcomed and be used to support them through the forthcoming year. We have also focused on ensuring Government is efficient and effective with some restructuring of Government’s administrative functions and identification of opportunities for efficiencies and re-investment across the organisation with £1.9 million of savings agreed, this provides assurance that we try to be as efficient as possible.”