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Government Accounts 2005-06 16 May 2006

The Treasury has released this week the draft Government's Accounts for the year to the 31st March 2006.

The Accounts released at this stage are the detailed management version compiled to the nearest whole pound and which remain subject to Audit by the Public Auditors. After the completion of the Public Audit later on in this year a less detailed and more "user friendly" financial report style version of the Accounts, produced in round thousands of pounds, will be publicly released and formally laid before Tynwald.

The Accounts reveal net revenue expenditure of £513 million, and detail capital expenditure of £102 million. The revenue surplus was £24 million before transfers to various reserves of £13 million.

More details can be found below:

Commentary on the Year

1. Balance Brought Forward

The actual balance brought forward at the 1stApril 2005 of £28.0 million was £5.6 million more than the "Probable" shown at the Budget in February 2005, with income £3.6 million up and expenditure £2.0 million down. The out-turn for 2004-05 was shown in the audited Government Accounts which were laid before the July 2005 sitting of Tynwald.

2. Income

Gross income from all sources for the year at £776.3 million was mostly in line with the various estimates and in aggregate exceeded them by £44.8 million. Within that, Treasury income at £536.6 million exceeded the estimate by £42.2 million. This was just under 1% more than the Probable Estimate shown in the February 2006 Budget and variations from that Probable are mostly due to increased receipts in respect of Income Tax and other Treasury Income. Reversing the recent trend and not withstanding the planned tax strategy, the total amount of Income Tax collected was more than the previous year and £5.1 million more than the estimate.

3. Expenditure

Net expenditure at £512.6 million was £5.7 million less than the revised estimate (the original estimate of £482.7 million plus the Supplementary Revenue Votes of £35.6 million). £10.2 million of those Revenue Supplementary Votes were for pay awards, £7.1 million were for various DHSS initiatives and a total of £16.0 million in respect of aid to and legal costs associated with the MEA. Expenditure under most heads was close to or within the approved Votes, and no Department requires Tynwald approval to a Supplementary Vote. However two heads of expenditure (the Department of Transport and Executive Government) are not overspent, but do require authority to apply excess receipts against modest excess expenditure.

4. Balance Carried Forward

In the 2005-6 Budget it was originally envisaged that the General Revenue Account would produce a surplus for the year before appropriation to reserves of £11.7 million. This estimated surplus was reduced to an estimated deficit of £23.9 million after allowing for the Supplementary Votes approved during the year. However the actual gross income of £776.3 million and the actual gross expenditure of £752.3 million resulted in a surplus for the year before appropriations of £24.0 million. From that surplus, £13.0 million was transferred to reserves, leaving a net surplus on the year of £11.0 million. The transfer to reserves comprised the Land and Property Acquisition Reserve (£2.0 million), the Housing Reserve Fund (£4.0 million), the E-Commerce ICT Fund (£4.0 million), the Public Service Employees Pension Reserve (£1.0 million), the Government Marketing Initiatives Fund (£1.0 million) and the General Development Reserve (£1.0 million). The net surplus of £11.0 million, added to the balance brought forward of £28.0 million, resulted in a carried forward balance on General Revenue Account at the 31st March 2006 of £39.0 million.

5. Other Balances

The value of internal investments rose by £10.3 million, as a result of the contributions (£44.4 million) and rolled up investment income (£7.6 million) and the approved expenditure of the funds on the E-Commerce Fund (£4.0 million), the Housing Reserve Fund (£6.2 million), the Land and Property Acquisition Reserve (£3.5 million), the MEA Standing Charges Fund (£1.1 million) the Media Development Fund (£26.1million) and other Funds (£0.8 million). Treasury's investment strategies for the larger funds which are externally invested include exposure to equities and although their market values can and have fluctuated downwards from time to time, the broad and long term trend has been upwards. Most world equity markets peaked in around December 1999 and although they have mostly been trading at lower levels ever since then a material recovery is now evident. 2005-06 was a better year for equity values and although the stated market value of the investments rose by £195.7 million, allowing for the Funds’ transactions the underlying securities rose in value by £164.3 million.

Financial Highlights
  Year to 31st March 2006  Year to 31st March 2005
  £'000 £'000
 Income Tax and Indirect Taxes529,781  476,477
 External Investments' Value1,386,188  1,190,458
 Internal Investments' Value125,502  115,201
 All Investment Income49,534  38,507
 External Debt*260,000  260,000
 External Interest paid*14,163  14,163
 Net Revenue Expenditure512,614  465,542
 Surplus for year (before)23,954  14,618
 Transfer to Reserves13,000  19,000
 Balance on General Revenue Account38,974  28,020
 Capital Expenditure101,574 43,023
 Balance on Capital Account99,609   127,640
 Loans Schemes balances19,686 22,445
 Manx Notes and Coins in circulation50,196  49,711
 Creditors37,402  20,237
 Debtors and Stores14,427  8,192
* These amounts relate solely to Bond Issues made by Treasury on behalf of The Manx Electricity Authority and the IOM Water Authority.

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