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General News
Government Accounts 2006-07 15 May 2007

1. The Treasury has released this week the draft Government’s Accounts for the year to 31 March 2007.

2. 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 in this year a less detailed and more ‘User Friendly’ financial report style version of the Accounts will be released and formally laid before Tynwald.

3. The Accounts reveal:

  • Treasury income of £606m.
  • Net revenue expenditure of £528m
  • Capital expenditure of £69m.
  • Revenue surplus of £78m before transfers to various reserves of £59m.

4. The Accounts show continued strength in the Government’s finances. Treasury Income has significantly exceeded estimates for the year, predominantly due to Customs receipts. The agreement reached with the United Kingdom in respect of sharing Customs revenue is expected to reduce the volatility of Customs receipts in the future and the estimate for 2007-08 (as shown the Budget) is £421m, or £17m lower than actual receipts for 2006-07. However, Departments’ net expenditure also exceeded the amount shown in the 2006-07 Budget, mainly as a result of public sector employees’ pay awards. Treasury has taken the opportunity presented as a result of the net surplus for the year, to transfer significant additional amounts to various Government reserves and funds in order to meet expected requirements in future years, such as pensions obligations.

5. More detailed comment and statistics for editors are attached. For any further information, please contact:

  • Mr P M Shimmin, Chief Financial Officer, tel. 685 586.
  • Mr C McGreal, Financial Controller, tel. 686 543.
  • Mr S Clague, Chief Accountant, tel. 686 292, e-mail simon.clague@gov.im

COMMENTARY ON THE YEAR

1. Balance Brought Forward.

The actual balance brought forward at 1 April 2006 of £39.0 million was £12.1 million more than the "Probable" shown at the Budget in February 2006, with income £5.2 million up and expenditure £6.9m down. The out-turn for 2005-06 was shown in the audited Government Accounts which were laid before the July 2006 sitting of Tynwald.

2. Income.

Gross income from all sources at £868.0m (2006 : £776.3m) was generally in line with the various estimates for Departments and Other Bodies but in aggregate exceeded them by £91.0m, mainly due to Customs receipts (£65.6m higher than estimate). Within that, Treasury income at £606.4m (2006 : £536.6m) exceeded the estimate by £76.0 million, again largely due to the Customs receipts. The total amount of Income Tax collected was higher than the previous year for the first time in four years.

3. Expenditure.

Net expenditure at £528.2m (2006 : £512.6m) was £4.7m more less the revised estimate (the original estimate of £522.1m plus the Supplementary Revenue Votes of £10.8m). £7.7m of those Revenue Supplementary Votes were for pay awards and the next largest single vote was £2.9m for DHSS Reciprocal Healthcare Agreement with the United Kingdom. Expenditure under most heads was close to or within the approved Votes, although the Department of Health and Social Security will require a further Supplementary Vote of £1.7m in addition to those obtained during the year. In addition, although the Department of Transport has not overspent its net

4. Balance Carried Forward.

In the 2006-07 Budget it was originally envisaged that the General Revenue Account would produce a surplus for the year before appropriation to reserves of £8.3m. This estimated surplus was reduced to a deficit of £2.5m after allowing for the Supplementary Votes approved during the year. However the actual gross income of £868.0m and the actual gross expenditure of £789.8m resulted in a surplus for the year before appropriations of £78.2m (2006 : £24.0m). From that surplus, £59.0m (2006 : £13.0m) has been transferred to reserves, leaving a net surplus on the year of £19.2m.

The transfer to reserves comprised the Government Marketing Initiatives Fund (£4.0m), the Land and Property Acquisition Reserve (£5.0m), the Housing Reserve Fund (£4.0m), the E-Commerce ICT Fund (£4.0m), the General Development Reserve (£2.0m), the Capital Fund (£10.0m), the Medical Indemnity Fund (£2.0m) and the Public Service Employees Pension Reserve (£28.0m). The net surplus of £19.2m, added to the balance brought forward of £39.0 million, resulted in a carried forward balance on General Revenue Account at 31 March 2007 of £58.2m.

5. Other Balances.

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. In 2006-07 the stated market value of the investments (net of transfers into and out of the funds) rose by £189.2m (13.7% increase, net of transfers).

The value of internal investments rose by £68.4m (net of expenditure), as a result of the contributions, rolled up investment and other income exceeding the expenditure of the funds on items such as the E-Commerce Fund (£3.2m), the Housing Reserve Fund (£7.8m), the internal invested portion of the Public Sector Employees’ Pension Reserve (£13.9m) and the Media Development Fund (£35.9m).

A PDF containing the Financial Highlights and General Revenue Account can be found below.

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