Tynwald members have been warned that difficult decisions need to be made to address serious financial challenges facing the island.

MHKs and MLCs have been invited to a pre-Budget briefing when Treasury Minister Dr Alex Allinson will set out the scale of the challenges ahead.

Following the Budget in February, government will be bringing forward an updated Island Plan to Tynwald in March. In an email updating members about the Island Plan, Chief Minister Alfred Cannan said: ‘Honourable members will be aware that government is facing some significant financial challenges as we look to balance the budget.

‘This will inevitably require some tough decisions to be made as to how we prioritise going forward.’

Mr Cannan said it was important that members understood the fiscal position that will be raised in the Budget, ahead of looking at the Island Plan the following month.

Dr Allinson told the Examiner: ‘There have been significant extra costs to government due to general inflation, but also particular pressures over the cost of medicines and raw materials.

‘Wage increases for those departments who employ a lot of staff on UK-determined sets of pay and conditions such as nurses, doctors, teachers and firefighters have also exceeded budget predictions and individual departments have struggled to contain these costs within their allocated budgets.’

The island is running a structural deficit this year of some £150m, as the Manx economy continues the long recovery from the impact of the Covid pandemic. The deficit was forecast at £74.2m before Covid hit but climbed to more than £200m during the height of the Coronavirus emergency.

In his Budget speech last year, the Treasury Minister said there was no choice but to draw down heavily from reserves if cuts in services were to be avoided and bridge the gap between income and expenditure.

A new taxation strategy was due to have been presented at the December Tynwald but this has now been delayed to next month, with a further debate on it in March.

Announcing the delay, the Treasury Minister said there was a need to ‘widen the taxation base’ to help raise sufficient income to pay for essential public services.

He told Tynwald: ‘We must balance the money we receive against the aspirations of our Island Plan and delivery of extra funding for public services. The Budget will need to raise sufficient revenue to gradually eliminate our dependence on drawing down reserves.’

The Chief Minister told the Examiner: ‘Tynwald will be well aware of our fiscal pressures so it seems sensible to deal with the budget first so that politicians are fully aware of our financial pressures before determining any adjustments to the Island Plan.’