Candidate hits back after Treasury dismisses his claim about imminent bankruptcy

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A general election candidate has hit back after the Treasury dismissed his claims about the perilous state of the Manx economy.

Richard Falk, a former Conservative councillor on Worthing Borough Council in Sussex who quit local politics in England midway through his term of office, was responding to a story on page 14 of today’s Manx Independent and reported here.

Douglas Central candidate Mr Falk’s response echoes the concerns he raised in last week’s Examiner in the questionnaire when he suggested that the island should ‘deal with our alarming financial situation and prevent the island from progressing towards bankruptcy’.

After reading Mr Falk’s comments and seeing his election literature, which includes the legend ‘Falk or bust’, Isle of Man Newspapers contacted the Treasury for a comment.

The comments from the Treasury formed the basis of our Manx Independent story.

A statement from Mr Falk reads:

‘They [the government] have massaged the figures relating to the general reserve, and readers can check this for themselves. Download the detailed Government accounts (dark blue books) for 2012/13 (which contains the restated and final figures for 2010/11) and 2014/15.

‘In each case, look carefully at the balance sheet on page 22. Between 2010/11 and 2014/15, the reserve fund fell from £420,466,000 to £342,068,000 and internal funds and reserves from £101,239,000 to £78,069,000 – a modest decline totalling £101,568,000.

‘Between 2010/11 and 2014/15, our current assets – mainly made up of short-term deposits and cash at bank and in hand, plus a small amount of debtors, stocks and works in progress – declined from £943,682,000 to £649,271,000.

‘This could mean that we had switched cash into long-term investments — but we did not. In 2010/11, long-term investments were £1,162,141,000 and in 2014/15 were £1,205,737,000 – meaning that they have not even kept pace with inflation.

‘In other words, the amount of money we have on hand to spend fell almost £300,000,000 in four years whilst the reserve declined by just over £100,000,000. The only conclusion that can be drawn is that the Government redefined the general reserve in a cynical attempt to mask the decline.

‘Former Treasury Minister Eddie Teare himself admitted that we are heading for insolvency in an answer to Alf Cannan in the Keys last November: “The actual true reserves are in the region of £1⁄2 billion. The other reserves are what we call hypothecated. So they are set aside for, for example, the Public Sector Pension Reserve and the National Health Insurance Reserve. The National Health Insurance Reserve is about £750 million. The Public Sector Pension would be just over £200 million. So between those there is about £1 billion. So that leaves us with about £500 million in total. The burn rate: you can actually work it out. If we continue to drawdown at £78 million to £80 million a year, you have got six to seven years.”

‘Mr Teare says we have six to seven years from last year. I say we have four years. The Isle of Man Government is now saying that we are in no danger at all, and people should not vote for anyone who rocks the boat and tells the truth. I intend to send them a clear and unequivocal message at the polls.’

During the requisition meeting for the constituency rival Chris Thomas also questioned many of Mr Falk’s assumptions.

In a response to the story on Mr Falk, Mr Thomas says: ‘Public finances are fragile, but government reserves are as large now as they were in 2011 and external auditors have signed off government accounts.

‘That’s undeniable.

‘What has reduced since 2011 is the government’s ‘net assets’, down as much as the public service pensions actuarial liability is up. Admittedly the Public Service Employees Pension and Reserve Funds have been drawn down by £100 million, and the Media Development Fund has halved in value, but this has been offset by an increase in in the National Insurance Fund and in the Manx Currency Account.

‘Isle of Man NI Fund is bedrock for state pensions and social security. Economic growth needs to be made more useful by raising people’s incomes and making money go further. Confidence is key in this.

‘Negotiations are on-going to reduce benefits and increase contributions inside a cost envelope surrounding public service pensions. Audited government accounts for the most recent financial year should be available with the first Tynwald order paper. Unaudited accounts have been published for some time.’

In a comment on our story Mr Falk says: ‘The Isle of Man Government is running scared. When did you last see them and their pliant colleagues in the press attempting to head off a challenge by a particular candidate? They know that if I get in I will be able to spotlight their incompetence and their economic mismanagement mercilessly.’

Mr Falk is mistaken if he believes that the story came about because of collusion between the government and Isle of Man Newspapers.

It was Isle of Man Newspapers that contacted the Treasury for a comment.

Our reporter had seen his comments in his manifesto about imminent bankruptcy and, as a responsible journalist, tried to verify them or find out what the Treasury thought about them.

The other candidates standing in Douglas Central are Kurt Buchholz, Ann Corlett, Sara Hackman, Michelle Inglis and Chris Thomas.

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