Government in denial about challenges facing businesses, employees & economy
22 February 2024
The Island’s biggest business network says the Budget shows Government is ‘in denial’ about the harsh realities being experienced by the majority of Island businesses, and their employees.
Isle of Man Chamber of Commerce says it is yet another missed opportunity to address many long-running issues which the organisation has highlighted for several years as being barriers to economic growth.
In more detail, Chamber has 5 major concerns:
- Overall, the Budget will not drive economic growth or address the main challenges that businesses in many sectors are facing (i.e. rising costs, labour and skills shortages). The tax changes announced will increase these disparities. This makes the Isle of Man a less attractive option for workers from overseas – a crucial point in the context of employers needing to recruit in order to address labour and skills shortages, and in terms of meeting the Government’s own target of increasing the economically active population. We also need to consider that many experienced and highly qualified professionals in critical roles with Island businesses right now have plenty of options to relocate to competitor jurisdictions. This Budget is unlikely to help employers address any of these challenges.
- The Isle of Man is facing a demographic time-bomb that could explode in the next decade. Data from the UK and USA shows that for every 5 ‘Baby Boomers’ who retire, only 2 from ‘Generation Z’ are replacing them – and anecdotal evidence Chamber has gathered suggests that the same trend is happening here.
- It increases the tax-burden for many workers, especially single people and those on lower and middle incomes, at the same time as increasing the budgets for all Government departments. This, says Chamber, shows Government’s continued failure to focus on making departments more efficient and providing better value for money, rather than increasing spending.
- In his closing comments to the Budget debate we were pleased to hear Treasury Minister rubber stamp the important work of the recently established Skills Board and are keen to hear more about the support he will enable to progress the key actions.
- In short, the Budget is an example of Government being more focused on input than output in terms of the service delivery of departments. Chamber – as it has done since it published a Business Manifesto in the run up to the 2021 IOM General Election – has been calling for Government to do more to improve efficiency across all departments i.e. removing duplication across departments, focussing on delivery not producing more strategies and replacing paper with digitised services.
Chamber does acknowledge some positives in the Budget:
- Help for workers needing childcare (i.e. the additional funding of £3 million has been provided to the Department of Education, Sport and Culture for 2024-25 to assist with the initial implementation of the Child Care Strategy);
- A review of procurement regulations to maximise benefit to the local economy, while continuing to satisfy the requirements of international Free Trade Agreements.
We have today engaged with our membership to gain their feedback which will be shared next week.