Chris Thomas MHK pledged to inject ’stability, security and confidence’ in the public finances as he set out his first Budget as newly-installed Treasury Minister this morning.

The biggest rise in the personal tax allowance in recent years, an extra £45m for the under-pressure health service, more money to bolster island security and a new focus for capital spending were among his headline announcements.

Emphasising financial discipline and investment in services, he warned of the risks of relying on reserves to balance the books,

But his Budget will require a £126m drawn down from reserves.

The personal tax allowance will increase by £2,250, rising from £14,750 to £17,000, putting hundreds of pounds extra in taxpayers’ pockets and lifting around 36,000 out of the tax net.

Announcing the widely anticipated rise in the personal tax allowance, the Treasury Minister announced: ‘[It] will increase most taxpayer’s take-home pay, taking about 3,600 people out of the tax net, and is aimed to boost disposable income and the local economy. It will make many taxpayers nearly £500 better off each year.’

He added: ‘I am pleased to announce an increase in the personal tax allowance from April of £2,250 so that individuals will start paying on annual earnings over £17,000 and jointly assessed couples from £34,000. This is triple the £750 proposed until the budget revisions took place a few weeks ago, and that proposed £750 rise was already triple the only other rises since 2021.’

Mr Thomas told Tynwald: ‘This financial plan sets a pathway towards reducing the island’s reliance on general reserves despite a continuing need for significant public expenditure.’

Monthly scrutiny panels and the forthcoming introduction of priority-based budgeting were highlighted as ways of maintaining stability and driving greater efficiency in Government spending into the future.

Setting departmental pay and non-pay budgets below inflation expectations is expected to deliver results more immediately.

‘I estimate that this means £5.6m of savings will be achieved [in 2026-27] and £29m over the medium term if there is adherence to the plan,’ the Treasury Minister informed Members.

While government spending continues to rely on the use of reserves to fund spending, this is forecast to diminish over the next five years, with a surplus forecast from 2028-29 onwards.

Some £126m of reserves will be used to balance the Budget in 2026-27, reducing to £93.9m next year, and then £76m, £55.6m and to £35.8m in 2030-31.

Despite their planned use, the island’s reserves are forecast to grow from £1.95bn in the coming financial year to £2.22bn in 2030-31.

The Department of Health and Social Care (DHSC) will receive an additional £45m, driven by demand for services delivered by Manx Care and increasing the DHSC annual budget to £412m.

This rise marks the first departure from the funding formula set out following Sir Jonathan Michael’s independent review of island health services, leading Mr Thomas to warn: ‘Healthcare is important but the sustained and substantial increase in costs in recent years remains a significant risk to the achievement of our medium-term financial plan.’

Further investment in services will see £4.4m more for the childcare strategy, vocational training assistance and apprenticeships and £2.8m for the continued provision of vital infrastructure and transport services.

An additional £5.8m will be available to bolster island security, while community safety will be supported through capital funding committed to the Island’s emergency services for vehicles and equipment.

The Treasury Minister said: ‘This additional revenue budget and capital funding should provide stability and security in line with the 2025 prioritisation of the Island Plan.

‘But we also need a solid boost of confidence. Confidence to secure jobs, confidence to increase private investment and confidence to export and grow the economy.’

Pensioners will continue to benefit from the Triple Lock commitment and will see an increase of 4.8% in their pensions. The Basic State Pension will increase to £184.90 a week and the Manx State Pension to £263.55 a week.

Mr Thomas said the capital budget will focus on maintenance rather than new big projects - a move that could stall progress on major schemes like the replacement Castle Rushen High School.

Mr Thomas told Tynwald that if they were to increase capital expenditure beyond the £50m allocated they would have to consider alternative financing options or draw down more reserves