Transition to International Public Sector Accounting Standards continues

The States of Guernsey Accounts 2022 are published today and continue the transition to International Public Sector Accounting Standards.  The States has committed to making this transition in phases, given the significant resource requirements involved.  As a result, there are a number of changes and new inclusions in these latest Accounts.

Fixed assets are included for the first time, reflecting the value of things like States-owned land, buildings, vehicles and equipment.  This also means that depreciation of these assets is included in the accounts, and in 2022 this totaled around £30m.

Another significant change is the incorporation of Social Security Funds. 

These changes in how the Accounts are presented have the benefit of showing the States overall financial position, rather than having different aspects separated out.  In the 2023 Accounts, Trading Entities continue to be presented separately but these will be incorporated in the future as the transition to International Public Sector Accounting Standards continues.

2022 overall deficit is £135m

The overall operating deficit - the difference between its expenditure and its income – was £3m in 2022.  However, once depreciation, interest payable and received, and investment losses are included, the overall deficit is £135m. 

2022 was a particularly bad year for investments as markets were impacted by global events, including the war in Ukraine, rising energy prices and in turn, rises in the cost of living.  In December 2022, global equity markets were down 7.6% over the year.  UK Government bonds recorded a negative return of 23.8%.  The return on Guernsey’s investments of -11.63% is therefore not out of step with the weakness seen in markets, despite Guernsey having a well-diversified portfolio of investments.

Investments should be kept in context, as losses in one year can be recouped as markets bounce back.  The same is true for good years (such as 2021) when investments perform well.  A much more long-term view is taken for the performance of investments.

Staff numbers remain static

The number of full-time equivalent (FTE) employees was 4,896, an increase of 31 on the previous year (0.6%).  A number of areas saw small decreases in the number of FTEs, however this was offset in particular by additional nurses and medical consultants which reflects the continuing rise in demand for health services. 

4,896 is considerably below the total number of FTEs the States budgeted for, which was 5,200, meaning there are a significant number of vacancies as a result of recruitment challenges.

Deputy Mark Helyar, Treasury lead for the Policy & Resources Committee said:

“We have an operating deficit of £3m meaning we’re already not bringing in enough to cover costs.  The continuing rise in demand for health services is impacting our public finances now, this is not a problem for the future anymore.  International recruitment challenges and the impact of the war in Ukraine add to the already very difficult situation we’re in.

What is positive is that we continue to move forward in our transition to International Public Sector Accounting Standards.  And as we get nearer to completing the transition, I hope it puts to bed the myth that the Accounts, which are independently audited, aren’t accurate or cannot be relied upon.  This has never been the case, but it’s become a way of distracting from the genuine problem of our deficit which we must deal with urgently.”