The Institute of Directors (IoD) Isle of Man has delivered a blunt verdict on the state of the Island’s economy and governance: local business leaders are losing patience with an over-grown, wasteful government that seems unable to rein in spending or understand the private sector it depends on.

According to the IoD’s latest Policy Voice survey, two-thirds of members (66%) now feel pessimistic about the Island’s economic outlook over the next year. This is a sharp rise from 51% just a year ago. While business leaders remain confident in their own companies, confidence in government has collapsed.

Bloated Public Sector

Perhaps the starkest finding is that 91% of respondents believe the public sector is too large. The report calculates that if the Isle of Man had the same public-sector headcount per capita as Jersey or Guernsey, we would need 1,163 fewer civil servants – a saving of more than £100 million a year. Instead, taxpayers continue footing the bill for an inflated bureaucracy while frontline services struggle.

No Grip on Costs

Treasury’s much-touted pledge to cap departmental staff cost increases at 2% has already been shredded. Pay awards in 2024/25 overshot by £48.7m. Public sector wages are now more than 20% higher than those in the private sector, with the pensions burden looming over taxpayers like a ticking time bomb.

Unsurprisingly, 81% of IoD members do not believe government will stick to its own cost controls.

Calls for Reform

The IoD survey found overwhelming support for sweeping political and structural reform:

  • 85% back a major reduction in the Island’s 21 local authorities – long derided as a costly relic for an Island of just 84,000 people.
  • A large majority want electoral reform, with Island-wide voting to focus debate on national issues rather than parish-pump politics.

As one respondent put it, “The current Government comes across as a rudderless mess … the only growth happening is in civil servant headcount.”

Disconnect from Business

Seven in ten business leaders believe Government does not understand the economy, up from 60% last year. Fewer than one in ten feel that Government engages effectively with their sector. Concerns about over-regulation, skills shortages, failing transport links, and rising compliance costs dominate the complaints.

IoD Message: Enough Is Enough

IoD Isle of Man Chair Steve Billinghurst summed up the mood: businesses are resilient, but “growing frustration with the scale and structure of government and a perceived lack of focus on economic growth” is undeniable. The Institute plans to put reform at the centre of its 2026 election manifesto.

Disclosure: Michael Josem is a member of the Institute of Directors.