Committee calls for government to reduce its size and end 'systemic reliance' on reserves

Report makes 11 recommendations for change following review of Treasury, structural deficit and reserves

A Tynwald scrutiny committee warns there will be significant repercussions if government doesn't end its 'systemic reliance' on spending from the Island's reserves.

The Economic Policy Review Committee has made 11 recommendations for change after reviewing the role of the Treasury, the structural deficit and the use of the reserves.

The committee's report says Treasury treats overspending as normal and routine, and warns this will lead to future generations paying the price.

It warns that what it calls an 'overreliance' on using the reserves to fund ordinary government activity means the Island may not be in a robust position to deal with future economic shocks.

The committee highlights the structural surplus - where government has more funds coming in that it needs to run its services - in the 2019-20 financial year, and alleges that "getting back to this point does not currently appear to be a priority for the Treasury."

The review concludes that it is "neither fair nor sensible to compensate for the bloat of government by extracting more and more income from our Island's businesses and working residents".

The committee is calling for the size and scope of government to be reduced, claiming government "consistently overextends its services beyond what can be afforded", and "the scale and cost of government and its activities has grown beyond what the economy and the Island's taxpayers can sustain."

It describes the efforts by Treasury to control public spending as "limited and hands-off", and says the current structure of government needs to be looked at to ensure a more appropriate management of public finances.

Among its recommendations, the panel will be asking Tynwald to agree that the size of the public sector should not threaten the private sector, that the gap in operational public expenditure must be dramatically reduced, and that work should recommence on an alternative and more cost-effective government.

It also wants to see Treasury oversight of departments strengthened through financial regulations, tax policy to be set by the Council of Ministers instead of Treasury alone, and for personal allowances and tax thresholds to be increased to reflect the rising cost of living.

The committee's findings will be laid before Tynwald at the court's January sitting, ahead of a debate and consideration of the recommendations in March.

You can read the committee's report in full HERE.

The 2025-26 budget allowed for a total of £110.6million to be drawn from the reserves, with a view to reducing this figure to £49.7million by 2029-30.

Figures published by government in September 2025 show the reserves total value as £1.97billion.

UPDATE:

In response, a government spokesperson told Manx Radio: "The Treasury acknowledges the publication of the Economic Policy Review Committee’s (EPRC) report, which will be laid before Tynwald in January 2026.

"Over the course of this administration the Isle of Man Government has established an Operational Performance and Change Board to strategically analyse the size and scope of the public service and establish an efficiency and change programme driving at least £50 million in efficiency savings over the next five years.

"Quarterly reviews of the public service workforce have been made available demonstrating the significant investment in front line services and Treasury have been working with all departments to enable them to remain within their budgets, publishing quarterly management accounts.

"The increasing strength of the island’s reserves, now valued at over £2 billion, can be found on the Economic Dashboard.

"As the EPRC report is due to be debated at the March Tynwald sitting, it would not be appropriate to comment further at this stage. The Government will consider the committee’s views, review the evidence offered, and respond in full through the parliamentary process."