Tynwald Told To End Reliance On Reserves

The Isle of Man's spending habits are under fire. A parliamentary committee says the government has been patching holes with savings for too long, leaving the island exposed unless it changes course. The Economic Policy Review Committee — led by MHKs Jason Moorhouse, Kate Lord-Brennan and John Wannenburgh — examined the Treasury, the growing structural deficit and how reserves have been used. They found the island runs a structural shortfall of roughly £100 million and warned that current spending is larger than residents can sustainably support. Their report lists 11 recommendations. Among them are calls to raise personal tax allowances and adjust tax thresholds to help households during the cost-of-living squeeze. At the same time, the committee wants the Treasury to take a much more proactive role in cutting costs and ensuring value for money, arguing the public service is delivering more than the island can afford. A notable political shift is proposed: the committee suggests moving responsibility for tax policy away from the Treasury and into the hands of the Council of Ministers — the 10-person cabinet — so decisions better reflect broader government priorities. It also urges the Cabinet Office to rethink government structures after the 2026 House of Keys election to create a leaner, more accountable administration. The report is frank about labour market measures too. It says the planned rise in the minimum wage, from £12.25 to £13.46 in April, risks being effectively a cost on businesses and may deliver less benefit to the lowest earners once higher tax contributions are taken into account. Wider concerns feature as well. The committee fears the public sector has grown to a point where it could crowd out private enterprise, and recommends updating the recruitment control framework. It criticises past Treasury efforts as too passive in safeguarding financial health and calls for the sustainability of public finances to be restored. The recommendations will go before Tynwald for debate in March. The government has already told the committee it set up an operational performance and change board to examine the size and role of public services, and that Treasury is working with departments to keep within budgets while publishing quarterly management accounts. The administration says it will study the committee’s proposals and reply through normal parliamentary channels. For islanders, the discussion points to an inevitable balancing act: cut the public-sector cloth or keep dipping into reserves and hope the next set of accounts are kinder. --- Managing your business finances? TaxAce provides smart online accountancy services for UK businesses with flexible monthly plans. Image and reporting: https://www.bbc.co.uk | Read original article