Treasury minister defends final budget of Cannan administration

Chris Thomas rejects "election giveaway" claims and says tax changes will boost growth

The treasury minister says there are “no losers” in his Budget, as he defended the final Pink Book of the Cannan administration.

Chris Thomas appeared on Manx Radio Breakfast 48-hours after unveiling the Budget in Tynwald, describing it as “the Budget that needed to be done” - regardless of it being delivered in an election year.

Although the document was largely drafted under his predecessor Alex Allinson, who was removed from office a month before Budget day, Mr Thomas confirmed he made one significant alteration during the 36-hours he had to finalise it: tripling the proposed personal allowance, from £750 to £2,250.

Personal tax allowance

The personal tax allowance is the amount of income someone can earn before they begin paying income tax. By increasing it, more income is protected from taxation.

Mr Thomas says the change will take 3,600 people out of the tax net entirely and allow others to keep more of what they earn. He believes the move will stimulate economic activity, arguing that when individuals retain more disposable income, spending and investment tend to rise.

In Tynwald, some MHKs accused him of producing an “election Budget” featuring unfunded giveaways.

Mr Thomas rejects those characterisations, saying the measures would have been appropriate at any point in the administration and would ideally have been introduced earlier.

Despite the tax changes, the treasury minister acknowledged significant financial pressures ahead - particularly in healthcare.

He warns if spending continues to grow at the same rate seen since the creation of Manx Care, annual healthcare costs could rise from a projected £475 million at the end of the current five-year plan to around £650 million.

Reserves

Ramsey MHK Lawrie Hooper accused Treasury of relying too heavily on reserves and dipping into the National Insurance Fund, describing it as a “slippery slope”.

Mr Thomas responded that Mr Hooper’s analysis was mistaken. He claims the National Insurance Fund holds around £1 billion, with a further £200 million influenced by market performance - not the £1.6 billion figure cited by his colleague.

He stressed that Treasury operates prudently and that funds are set aside to repay government bonds.

However, he also emphasised a broader point, that the Island cannot continue drawing down reserves without consequence.

Government spending has largely been supported by the interest generated on reserves, except during crisis periods such as the Covid-19 pandemic. Mr Thomas says drawing down on the capital itself would be fiscally unsustainable.

Castle Rushen High School

Southern MHKs voiced concern over the absence of firm commitments for a new Castle Rushen High School in the Budget, prompting some to vote against the Pink Book.

Ministers had previously suggested construction could begin as early as this summer, but Mr Thomas says that timeline can no longer be guaranteed.

He discussed historic difficulties with capital projects, delays between Tynwald approval and cost confirmation which have led to inflationary pressures even before work has begun.

While unable to provide a revised start date, he confirmed the new school remains a priority, saying it was top among 30 capital schemes under consideration.

Controversy vs responsibility

Asked whether he would have removed any controversial measures in an election year upon his appointment to Treasury, Mr Thomas said doing so would have been “irresponsible”.

He defended the Island’s Budget process: “Why would you interfere with a carefully argued, analysed and prepared framework if you only have 36 hours to turn it around?”

TV Licences

Responding to Manx Radio listener Anne about whether over-75s would be required to pay the BBC licence fee, Mr Thomas explicitly said they will not.

Relationship with the chief minister

Mr Thomas has previously been a vocal critic of Alfred Cannan, and was dismissed from his role as infrastructure minister in 2023.

Despite that history, he insists their working relationship remains strong.

Referring to political contrasts within government, Mr Thomas remarked that one cannot have “Tony Blair at one end of the table and Boris Johnson at the other end and expect everything to go swimmingly”.

However, he believes the refresh of the Island Plan and Economic Strategy had made a “huge difference” for him, adding he is “delighted” to be working with the chief minister again.