Jon Bond

Small Island, Big Ideas

Category: Community

  • Guernsey’s 2025 Accounts: The Headline Looks Good, The Small Print Is More Complicated.

    Guernsey’s 2025 Accounts: The Headline Looks Good, The Small Print Is More Complicated.

    The States of Guernsey has just released its consolidated financial statements for 2025 and the headline figure will catch your eye: a reported net surplus of £106 million.

    After years of discussion about a structural deficit and the need for fundamental tax reform, that sounds like good news. But read past the headline, and a more nuanced picture emerges – one that has significant implications for every business and resident on the island.

    What the Accounts Actually Show

    The States of Guernsey Consolidated Accounts (including the States itself, plus entities like Guernsey Water, Guernsey Electricity, Guernsey Ports, Guernsey Post, Aurigny etc.) reported:

    • Total revenue: £1.25 billion (up 14.4% from £1.09 billion in 2024);
      • Tax and social security made up £881 million
    • Total expenditure: £1.18 billion (up 6.3% from £1.11 billion in 2024);
    • Net surplus: £106.1 million (compared to a surplus of £20.3 million in 2024);
    • Net assets: £4.08 billion (up from £3.92 billion in 2024);
    • Total debt: £403.5 million.

    On the face of it, the improvement is dramatic — an £86 million swing in one year.

    Why the Treasurer Is Urging Caution

    Here is where it gets interesting. The States Treasurer’s own report, published alongside the accounts, is notably careful about what the surplus actually means.

    The £106 million net surplus figure includes £118.9 million in unrealised investment gains on the States’ £1.73 billion investment portfolio that have not been realised. Strip those out and the underlying operating position is actually in deficit.

    The Treasurer’s report goes further: “With one-off items and unrealised investment valuation excluded and after adjusting for the long-term capital investment requirement (2% of GDP), the underlying financial position of the group had a funding gap to close of some £50 million in 2025.”1

    In other words, the States’ own assessment is that on a sustainable, recurring basis, Guernsey is still spending around £50 million more per year than it earns.

    The One-Off Items That Won’t Come Back

    Two specific items inflated the 2025 figures and are explicitly flagged as non-recurring:

    • £39 million from Pillar 2 tax. Guernsey implemented the OECD’s global minimum tax on the profits of large multinational companies in 2025. The first year produced £39 million of accrued income, but critically, a significant portion of this has been recognised in the accounts now but will not be collected until mid-2027. The cash hasn’t arrived yet, and it is a new revenue stream whose future (and 2025) yield remains uncertain.
    • £34 million in one-off corporate tax receipts. These relate to banking sector tax adjustments from prior years. The Treasurer’s report is explicit: these are not expected to recur in future years.

    Together, those two items account for £73 million of the reported surplus. Without them, and without the unrealised investment gains, the position would look very different indeed. As tax expert Mike Williams has noted publicly, without Pillar 2, the structural deficit would have exceeded £100 million.2

    Despite a £106m Surplus, Cash Fell by £9 Million

    One of the most striking single facts in the accounts is this: despite the reported £106 million surplus, the States’ cash balances actually fell by £9 million during the year.

    How? Because £113 million was invested in infrastructure, assets and major projects during 2025 – capital spending on roads, water, power, ports and other long-term assets. The Group’s cash position moved from a net positive of £4.9 million at the start of the year to a net negative position of £4.4 million by year-end.

    This is a useful reminder that a surplus in the income statement does not automatically mean more cash in the bank.

    The Investment Portfolio: Good Returns, Below Target

    The States’ General Investment Portfolio, which was worth approximately £1.73 billion, delivered a return of 7.2% in 2025. That is a solid return by most measures, and it generated £118.9 million in unrealised gains that flow into the headline surplus figure.

    However, the portfolio’s target return is 8.5%, and its policy benchmark is 9.1%, so performance came in below both benchmarks. The portfolio also paid out £122.5 million during the year to fund capital investment and other commitments, keeping the overall value broadly flat year-on-year.

    The Pension Position Improved Significantly

    One piece of genuinely good news in the accounts is the pension position. The Group’s defined benefit pension liability of £44 million in 2024 has swung to a £6.1 million asset in 2025, a £50.1 million improvement. This is driven by changes in actuarial assumptions and investment performance, and it reduces a long-term financial risk that had been building for several years.

    The Bigger Picture: A Structural Problem That Has Not Gone Away

    The 2026 Budget, published before these accounts, already acknowledged a structural deficit of £77 million that will persist until fundamental tax reform is implemented. The 2025 accounts do not change that assessment, if anything, they illustrate exactly how fragile the revenue base is.

    Deputy Gavin St Pier, the former P&R Committee’s treasury lead, has previously pointed to a fundamental vulnerability: approximately 75% of Guernsey’s public revenues come from personal income tax and social security contributions from the working-age population. That is an unusually narrow base for a government of this scale, and one that is vulnerable to demographic change, economic slowdown, or any shift in the financial services sector.

    What About the GST Debate?

    Our previous blog post about GST highlights the complexities of GST, but even since then the landscape has shifted. These accounts create the real risk that any tax reform will again be kicked down the road by the States Assembly.

    The tax reform picture has shifted since the Budget. The GST-plus package of a 5% goods and services tax combined with income tax cuts to 15% had been the expected solution. However, as of late May 2026, Guernsey Press is reporting that four of the five senior P&R Committee members oppose GST-plus and the committee is now developing an alternative plan.

    The final proposals are expected in a policy letter on 8 June, with a States debate in July. Whatever the outcome, fundamental change to Guernsey’s tax system is now a matter of when, not if. The numbers in these accounts make that clear.

    What Does This Mean for You?

    For businesses and individuals in Guernsey, the 2025 accounts are a useful prompt to consider a few things:

    Tax change is coming. Whether it is GST, higher income tax, extended corporate tax rates, or some combination, the fiscal reality documented in these accounts makes reform inevitable (even if delayed). Planning ahead, understanding your personal and business exposure to likely scenarios, is worth doing now, before the States makes its decision in July.

    Corporate tax rates may change. The possibility of extending the 10% intermediate corporate income tax rate to GFSC-regulated professional services firms is still in play. If you run a regulated business, this could affect your tax position from 2027 or 2028.

    Capital investment is continuing. The States spent £113 million on infrastructure in 2025. That spending supports the local economy, but it also means ongoing capital requirements will keep pressure on the public finances regardless of what happens with the revenue side.

    The Pillar 2 income is not guaranteed. The £39 million recognised in 2025 will not be collected until mid-2027, and the long-term yield of this new tax on multinational profits is inherently uncertain. It should not be counted as stable, recurring income.

    Talk to me

    The next six months will be defining for Guernsey’s fiscal future. Whether you are a business owner thinking through the implications of tax reform, an individual planning your finances ahead of possible changes, or a regulated firm concerned about corporate tax rate changes, my Accounting firm Evans Bond can help you understand your position and plan accordingly.

    Visit our website for more info.

    Jon Bond is Founder and CEO of Evans Bond Limited, an accountancy and advisory practice in Guernsey, and principal of Melius Consulting Limited – a business consultancy. He is also a non-executive chairman of CI Co-op and NED at Sark Shipping. The views expressed here are his own.

    1. States of Guernsey Accounts 2026 ↩︎
    2. Guernsey Press 20th May 2026 ↩︎

  • 2025: £16m deficit to £100m Surplus?

    2025: £16m deficit to £100m Surplus?

    The States of Guernsey are having a tough time not just managing the financial position of the island’s government, but even measuring it.

    The 2025 budget was set for a £16m loss after capital expenditure. This week, the Guernsey Press reported that 2025 would be published with a headline surplus of somewhere between £105m and £106m. Given the total income in the original 2025 budget was £687m, this swing of around 17% of projected revenue is substantial — and it deserves unpicking, because not all of it is what it first appears.

    So what has actually happened?

    Two windfalls, not one

    There are two distinct income surprises at work here, and they need to be treated separately.

    The first emerged back in February, when Deputy Gavin St Pier updated the States on the provisional 2025 figures. General revenue came in £57m above budget. The headline driver was banking income tax, which beat expectations by £37m. But St Pier was careful to flag that £23m of that £37m was exceptional – £11m came from a voluntary disclosure by a single bank that had calculated a seven-year underpayment, and another £12m was 2023 tax assessed and paid late. “It cannot be built into our baseline and relied on in future years,” he said. At that point the provisional surplus was around £36m, and the full-year audited result is due in June.

    The second surprise, announced more recently and not yet in the audited accounts, is an estimated £39m of accruals from Pillar II, the new OECD global minimum tax.

    These are different in character, and it matters that we treat them as such.

    What is Pillar II, and why does the timing matter?

    Pillar II is the OECD’s global agreement to ensure large multinational companies pay a minimum effective tax rate of 15% wherever they operate. Guernsey implemented it from January 2025, applying to multinational groups with annual revenues of €750m or more. Because Guernsey’s standard corporate tax rate is 0% for most companies, most in-scope entities would previously have paid nothing here. Pillar II captures the difference between what they paid and the 15% minimum.

    Originally, Guernsey expected Pillar II to raise around £10m a year. By the time the 2026 Budget was set in October 2025, that estimate had been revised sharply upward to £40–45m. The £39m accrual in the 2025 accounts reflects that revised expectation.

    But here’s the critical note: an accrual is not a cash receipt. The 2026 Budget documents confirm that Pillar II cash will not arrive until 2027. The States is booking income in its 2025 accounts based on a best estimate of what multinationals owe — income that hasn’t yet been collected, from companies that are, almost by definition, highly mobile. Tax expert Mike Williams made exactly this point at the recent public presentation, warning that without Pillar II income the island’s structural deficit would be over £100m rather than the estimated £77m.

    So the honest description of the £105m figure is roughly: £36m of actual surplus (itself partly built on one-off banking windfalls), plus £39m of accrued but uncollected Pillar II receipts, plus investment returns and other items. The audited accounts due in June will give us the precise final breakdown.

    The structural picture hasn’t changed

    The more important number is one that the surplus headline obscures entirely: Guernsey still has a structural deficit estimated at £77m.

    That figure represents the gap between what the States routinely spends and what it routinely earns, once you strip out the one-offs — the banking windfalls that won’t repeat, the Pillar II accruals that may or may not materialise in full, the investment returns that were strong in 2025 but lost £140m in 2022. The 2026 Budget, approved last November, projects a deficit of £48m before investment returns even with the new Pillar II receipts baked in.

    Deputy St Pier put it plainly: “Having such a high dependency on whether banks have a good or bad year is neither sensible nor sustainable.” With only 21 licensed banks in Guernsey, a handful of individual institutions can move the States’ income by tens of millions in either direction, year to year. That’s not a tax system – it’s a lottery.

    What the surplus doesn’t tell you about spending

    Buried in the provisional figures is a number that deserves more attention than it gets: pay costs for 2025 totalled £351m.

    That’s up from £318m in 2024, a 10.4% increase in a single year, in a year when Guernsey RPI was running at around 3.4%. The States’ own presentation noted that over 300 vacancies existed on average throughout the year, around 6% of the total workforce, most of which were covered by overtime or agency staff, both of which cost more than permanent employees.

    Health and Social Care overspent its budget again, by £3.3m. Corporate Services overspent by £2.6m, largely from costs associated with the exit from the Agilisys IT contract. The same two areas, the same story, as in 2023 and 2024.

    The pay bill has now grown from approximately £130m in 2006 to £351m in 2025 — a 170% increase over nineteen years, against cumulative inflation of roughly 85% over the same period. The workforce has grown by approximately 1,400 people.

    A good year that changes nothing

    That’s the honest assessment. 2025 will be reported as a surplus, and there’s genuine good news in there — document duty receipts were strong at £27m versus a £16m budget, driven by a 27% rise in local market property transactions. Employment tax receipts beat budget by around £7m. These are real signals of economic activity.

    But the swing from a budgeted £16m deficit to a reported £100m+ surplus is almost entirely explained by factors the States cannot control or reliably repeat: a banking sector that had an exceptional year, a single bank paying seven years of underpaid tax at once, and an accounting accrual for new international tax revenue that won’t arrive as cash for another two years.

    The 2026 Budget acknowledged this directly, noting that the States continues to operate a structural deficit that will not be resolved until tax reforms are implemented. Those reforms, whether GST-plus, corporate tax changes, or some combination, remain undecided, with a States debate expected in July.

    A one-year surplus built on windfalls is not the same as a sustainable public finance position. The States knows this. The question is whether the rest of us understand it too.

    Jon Bond is a non-executive director of the Channel Islands Co-operative Society and a director of Sark Shipping. He runs Evans Bond, an accounting and advisory firm based in Guernsey and is principal of Melius Consulting Limited. He writes at jonbond.biz.
    The views expressed here are his own.

    Sources: States of Guernsey Budget 2025; Guernsey Press, 20 May 2026; The Quarry, 25 February 2026; BBC Guernsey; States of Guernsey Budget 2026; gov.gg/pillar-two; P&R Committee update, June 2025. Audited 2025 accounts due 2 June 2026.

  • Why Co-operatives Still Matter, And Why This Week’s Meetings Prove It

    Why Co-operatives Still Matter, And Why This Week’s Meetings Prove It

    There is a moment at every co-operative annual meeting that you don’t get at a shareholder AGM. It’s the moment when an ordinary member – not an analyst, nor an institutional investor, nor a board appointee – stands up and asks a question that the leadership actually has to answer.

    This week, the Channel Islands Co-operative Society holds its Annual General Meetings – Tuesday in Guernsey and Wednesday in Jersey, and with it, elections for one director per island.

    I sit on the CI Co-op board as a non-executive director and Chairman, so I have a particular interest in both the process and the principle. But I want to use this moment to say something broader about why co-operatives deserve more attention and more credit than they typically get.

    What a Co-operative Actually Is

    It sounds simple, and the simplicity is the point. A co-operative is an organisation owned and governed by its members – the people who use it, work for it, or both. Profit, where it exists, serves the membership and the mission rather than external shareholders. Decisions are made through democratic structures, not concentrated in the hands of those with the largest financial stake.

    That model is older than most modern corporations. The Rochdale Pioneers established the principles in 18441. And yet in a world that has spent 180 years being told that shareholder primacy is the only serious model for running an organisation, the co-operative continues to thrive – quietly, durably, and often in places where it matters most.

    There are over three million co-operatives worldwide, with more than a billion members. They employ 280 million people2. The largest consumer co-operatives turn over billions (The 300 largest cooperatives and mutuals generate USD 2.79 trillion in turnover). The model is not a historical curiosity, it is a living, functioning alternative – and in many communities, the only serious one.

    The Seven Principles

    The International Co-operative Alliance defines seven principles that guide co-operative organisations globally3. They are worth spelling out, because they are more radical than they sound.

    Voluntary and open membership. Co-operatives are open to anyone who can use their services and is willing to accept the responsibilities of membership. No discrimination, no exclusivity.
    Democratic member control. Members govern. They elect representatives, set policy, and have a genuine voice in how the organisation is run. One member, one vote — not one share, one vote.

    Member economic participation. Members contribute to and democratically control the capital of the co-operative. Surpluses are allocated to members in proportion to their transactions, not their financial stake.

    Autonomy and independence. Co-operatives are self-governing. Where they enter into agreements with external bodies – including governments – they do so on terms that preserve their democratic control.

    Education, training and information. Co-operatives invest in the knowledge and capability of their members, elected representatives, managers, and employees.

    Co-operation among co-operatives. The movement is not purely competitive. Co-operatives actively work together – locally, nationally, and internationally. Though this is done within the legislative restrictions.

    Concern for community. Co-operatives work for the sustainable development of their communities. Not as a marketing strategy. As a founding commitment.

    Read that list and ask yourself how many of those principles are embedded in the governance of the organisations that shape most of our economic lives.

    Member Participation — The Thing That Makes It Real

    Of all these principles, the one that co-operatives live or die by is democratic member control.

    Participation is the engine. Without it, a co-operative’s democratic structures become formalities. The AGM becomes a rubber stamp. Elections go uncontested. Decisions that should belong to the membership get made, in practice, by a small group of people the membership barely knows.

    This is not a hypothetical risk. It is a pattern that has played out in co-operatives around the world — not through bad faith, but through the entirely human tendency to let processes atrophy when they feel comfortable and stable.

    The antidote is genuine engagement. Members who turn up. Members who vote. Members who stand for election. Members who ask questions that require real answers.

    That is harder to sustain than it sounds. Life is busy. The connection between casting a vote for a co-operative director and the quality of your weekly shop is not immediately obvious.

    And yet it is real — because the people in those governance roles make decisions that shape the organisation, its investment, its values, and its relationship with the community it serves.

    This Week: CI Co-op Annual Meeting

    Which brings me to Tuesday and Wednesday.

    The Channel Islands Co-operative Society annual members meeting sits at the heart of how the CI Co-op governs itself. This week it does so on both islands – Guernsey and Jersey – with elections for one director in each.

    These are not ceremonial positions. Co-op directors are responsible for the strategic oversight of an organisation that is genuinely woven into daily island life. The shops, fuel, pharmacy, funeral, employment, charitable giving and partnerships with local community groups – CI Co-op is not simply a retailer. It is embedded in the islands – social and economic – in a way that a supermarket owned by a distant holding company simply is not.

    The director elections are the moment when that ownership becomes tangible. When the abstract principle of member governance becomes a real choice made by real people about who they trust to steward an organisation that serves their community. When the board and executive come alongside members for open and honest dialogue.

    What is so encouraging is that there are a large number of candidates in each island – seven in Guernsey and 11 in Jersey.

    If you are a CI Co-op member, you have a vote. That vote is not a formality. It is the thing that distinguishes this organisation from every other place you could spend your money.

    Why This Model Matters for the Channel Islands

    Guernsey and Jersey are a community of 170,000. At this scale, the abstract becomes real very quickly. The CI Co-op has a membership of over 128,000. That’s 75% of the entire population of the Channel Islands.

    When a large organisation in the islands makes a decision – about investment, employment, its relationship with the community – it is felt. Not as a statistic, but as a tangible impact on you or someone you know.

    The co-operative model is unusually well suited to environments where scale is small and relationships are dense. The accountability it builds – through membership, elections, democratic governance – is not a constraint on good decision-making. It is a condition for it.

    I have sat in CI Co-op board meetings and felt the difference that community accountability makes to the quality of deliberation and care for the community. You are not deciding for abstract shareholders in a spreadsheet. You are deciding for people who shop with you, who work for you, and who live alongside you. That changes the conversation.

    A Note on Standing for Election

    If you are a CI Co-op member and you have ever thought about standing for the board – this week is a reminder that the path is open.

    Co-operative governance needs people with a range of backgrounds and perspectives. It needs people who care about the organisation and its community, who are willing to invest time in understanding how it works, and who will ask honest questions in the boardroom.

    The skills needed aren’t particularly unusual. Commercial judgment, community awareness, a commitment to the organisation’s values and a willingness to be genuinely independent when the situation requires it.

    If that sounds like you, in any future cycle, I’d encourage you to explore it seriously.

    Co-operatives Are Not Nostalgic. They Are Necessary

    There is a temptation to frame co-operatives as a charming historical alternative, the kind of thing that works in theory but can’t compete with the efficiency of shareholder-driven capitalism.

    The evidence doesn’t support that framing. Co-operatives have survived depressions, wars, and repeated predictions of their irrelevance. They have done so because they solve a problem that shareholder-driven organisations structurally cannot: they align the interests of the people who run the organisation with the people the organisation is supposed to serve.

    That is not a minor advantage. In a world increasingly concerned with who benefits from economic activity and who doesn’t, it is a foundational one.

    The CI Co-op annual meeting this week is a small, local, practical expression of a very large idea. One member, one vote. Governance that belongs to the people it serves. An organisation accountable to its community because it is owned by its community.

    I think that’s worth turning up for.

    Guernsey meeting begins at 6.30 pm at St Pierre Park on Tuesday 19th May;
    Jersey meeting begins at 6.30 pm at Radisson Blu on Wednesday 20th May.

    The CI Co-op Annual General Meeting takes place this Tuesday and Wednesday. If you are a member, check your correspondence for details of how to participate and how to cast your vote in the director elections.
    Jon Bond is a non-executive director of the Channel Islands Co-operative Society and a director of Sark Shipping. He runs Evans Bond, an accounting and advisory firm based in Guernsey and is principal of Melius Consulting Limited. He writes at jonbond.biz    .
    The views expressed here are his own.

    1. In 1844 a group of 28 artisans working in the cotton mills in Rochdale established the first modern co-operative business, the Rochdale Equitable Pioneers Society https://ica.coop/en/rochdale-pioneers ↩︎
    2. https://ica.coop/en/cooperatives/facts-and-figures ↩︎
    3. https://ica.coop/en/cooperatives/cooperative-identity-values-principles ↩︎