Treasury Minister Alfred Cannan today delivered a ‘Budget of resilience’ that aims to provide a platform for economic recovery from the Covid pandemic.

He told Tynwald his fifth annual Budget – the last of this administration – was set against the most challenging backdrop in years.

It is estimated that the pandemic will cost the public purse more than £200m this financial year including lost revenue, increased spending, and drawdowns from reserves.

This has resulted in a budgeted surplus of £12m for 2020-21 being turned into a forecast £74m deficit.

But Mr Cannan said this was significantly less than feared back in April.

And he said it highlighted the resilience of the Manx economy and public finances, with reserves standing up well and broadly at the same level as before the pandemic.

This, he said, has enabled government to provide more than £108m of direct Covid crisis support to protect jobs and stabilise the economy.

Government revenue spending for 2021-22 is budgeted at £1.161bn, representing £13,740 for every person in the island – an increase of 3.3%.

A small surplus of £0.2m is forecast for the year, and taxation rates and allowances remain unchanged.

Mr Cannan told Tynwald: ‘Now is not the time to put up taxes.’

‘Against the economic backdrop of the pandemic, we are fortunate to be able to deliver a budget that not only maintains spending on public services without having to increase taxes, but which also provides new, focused investment in health and social care.

‘That we are able to do this is testament to the resilience and strength of the Manx economy, our public finances, and the Manx people.’

There is £18.8m of new revenue spending on public services, with the largest increase allocated to improving health and social care services.

Manx Care, a new arms-length body that will take over the delivery of health and social care services from April 1, is set to receive an additional £15m.

Manx Care will, however, be tasked with delivering efficiencies of 1% of its budget in its first year of operation.

The government’s commitment to achieve net zero carbon emissions by 2050 also features prominently in the Budget.

There is £10m for climate change mitigation and environmental initiatives as well as £6.25m for climate change adaptions, which includes £2.25m for flood defences.

Some welfare benefits will see an uplift, with above inflation increases of 15.6% for contributions towards nursing home costs, 2.5% for the basic state pension, and 2.5% for the Manx state pension.

Incapacity benefit, bereavement support, carer’s allowance, and jobseekers’ allowance will increase by 0.5%. The level of other benefits has been maintained.

Mr Cannan said planned changes to welfare payments for lone parents will be postponed for a further 12 months while the local economy recovers.

The public sector pay budget has been capped at 1% rather than the forecast 2%.

Mr Cannan said the outcome of pay negotiations is not yet known but there was a need for public sector pay restraint.

The government’s capital programme includes an additional £15m for new schemes, taking the total programme to £182m.

Government’s focus, however, will be on delivering schemes already approved. A total of £19.9m, for example, is allocated to the new £38m Liverpool ferry terminal – although that is marked ‘subject to review’.

The Treasury Minister has also confirmed that a new Major Capital Projects Board will be established in the Cabinet Office to oversee and manage major or complex projects.

Only £10m of the £100m Economic Recovery Fund has been paid out so far. Funding from the scheme this year and next could total £40m.

Approvals made so far include £1.4m to accelerate the roll-out of fibre broadband; £3m in additional funding to encourage more people to take up higher education; and £1.75m for the Manx Restart Scheme, which aims to reduce unemployment.

The Minister concluded: ‘We find ourselves operating in a changed world, but this Budget will provide the stability and targeted investment needed for the future.’