Freeze on fuel duty and tax cut on pints agreed

Income tax allowances will go up by the level of inflation, fuel duty will be frozen and tax on a pint at the pub will be cut in 2027 as the States of Guernsey agreed a budget of more than £716m in spending.

Policy & Resources (P&R) had offered politicians two alternative budgets, one with 1% real terms spending cuts, known as option A, and the other with an extra £15m, or option B. Option B was approved.

There were 12 amendments asking for extra spending but only one passed.

The approved budget includes £15m for initiatives aimed at simulating economic growth.

Home Affairs warned there would be cuts after it failed to get an extra £2.28m-£3.94m to maintain frontline services such as police and fire.

P&R treasury lead deputy Charles Parkinson accused committees who were asking for more money on top of the budget of "parachute packing".

"They, I think, have reluctantly agreed to the money allocated under option B, but they're worried that option B might not get through," he said.

"So they were trying basically to say if it's option A, can we also have this money?

"So that's why I called it a sort of parachute amendment, they're just worried that the States might not give them the money that's allocated under option B."

P&R had wanted to abolish mortgage interest relief, but a successful amendment by deputy Aidan Matthews meant it was frozen at its current level of £3,500 and its withdrawal scrapped.

Alcohol duty will rise by inflation, rather than a proposal by P&R's to rise by inflation plus 2%.

There was confusion during the debate when Health and Social Care President George Oswald stood up in support of the move, despite the above inflation increase being the recommendation of his committee.

The one spending amendment that was successful was to give Action for Children an extra £57,000 as part of a service level agreement it has with the States.

Changes are due to come into effect from 1 January 2027.

Deputy Lee Van Katwyk, who voted for option A, said now was the time to show the government had fiscal restraint.

"As a new deputy, I refuse to be swept awake by with a spending tsunami," he said.

"If we do not do it now, we do it never and my son will pay for it."

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