Budget transfer of ESC Estates Management Services to Property Holdings.

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A decision made (18/12/2006) regarding Budget transfer of ESC Estates Management Services to Property Holdings.

Subject:	Budget transfer of ESC Estates Management Services to Property Holdings
Decision Reference:	MD-ESC-2006-0074	Exempt clause(s):		n/a
Type of Report (oral or written):	Written	Person Giving Report (if oral):		n/a
Telephone or e-mail Meeting?	n/a	Report File ref:		ESC/Governance/Ministerial Government/Ministerial Reports/20061204 Ministerial Report – EMS Property Holdings
Written Report – Title:	Transfer of ESC Estates Management Services to Property Holdings Department	Written report – Author:		J. Littlewood, Head of Finance.
Decision(s): To approve the following transfers from the Education, Sport and Culture Department to the Property Holdings Division of the Treasury and Resources Department: a. 9.54FTE staffing with effect from 1 October 2006. b. A revenue budget of £3,769,395 for 2006 and £3,761,333 for 2007 together with total expenditure incurred in 2006 to date and open orders. c. Capital projects budgets as shown at Appendix A of the report in the sum of £35,063,641 (£35,273,641 less the projected savings of £150,000 on d’Auvergne and of £60,000 on Langford, which it has been agreed with the Treasury and Resources Department can be applied to ICT funding in 2007). This decision revokes the previous decision on the 4th December 2006 relating to the financial and manpower transfer.
Reason(s) for decision: In June 2005, the States approved the creation of the Property Holdings to be responsible for the administration of all States property. The above transfer is a necessary stage in the creation of this new organisation. In October 2006, The Treasury and Resources Minister approved the transfer of budgets between Education, Sport and Culture and Treasury and Resources Departments. This proposal has no additional financial or manpower implications on the States.
Action required: To transfer the identified budgets and balances to Property Holdings.
Signature:			Date of Decision: 18 December 2006

Budget transfer of ESC Estates Management Services to Property Holdings.

Education, Sport and Culture Report
Subject:	Transfer of ESC Estates Management Services to Property Holdings dept
Exempt Clause:	n/a	Date:	11 December 2006

Author:	John Littlewood – Head of Finance

1. Introduction

The purpose of this report is to seek the Minister’s approval for the budget, staff and service transfer of the Estates Management Services section to the new States Property Holdings department.

2. Background

In June 2005 the States agreed to the creation of a new Property Holdings department to be responsible for the administration and maintenance of all States property with the exception of social rented housing and property owned by the trading departments.

A Director was appointed in September 2005 and the following sections have so far been transferred to the new department:

1 Jan 2006 Architectural Services section of Transport & Technical Services

1 Jan 2006 Property Services section of Planning & Building Services

1 Aug 2006 Public Buildings + Markets from Transport & Technical Services

In addition the non social rented land and properties from Housing have effectively been transferred pending further budgetary information.

With effect from 1 October 2006 the Estates Management Services section has effectively been operating under the auspices of States Property Holdings. The Capital Projects team transferred to Oriel House in October to allow building alterations to the former music block at the d’Hautree site to take place pending the arrival of staff from other States departments.

Estates Management Services are responsible for the management and maintenance of 74 properties with :

· A total revenue budget of £3,769,395 (2006) – see table 1

· A current capital budget of £31,768,823, of which £9,384,080 remains unspent as at September 2006.

· 9.54 FTE staff including the capital projects team

It is proposed that the 9.54 FTE ESC civil service posts transfer to States Property Holdings (1 post currently vacant). These posts comprise :

1 FTE Head of Estates

1 FTE Maintenance Manager

3 FTE Maintenance Officers (1 post vacant)

1 FTE Estates Administrator

0.75 FTE Estates Clerk

1 FTE Head of Capital

1 FTE Capital Projects Manager

0.79 FTE Capital Projects Administrator

The costs of the 2.79 FTE Capital Projects staff are recharged to various ESC capital projects and no revenue budget will be transferred for these staff.

There are no manual worker posts being transferred as all of the maintenance work carried out by the Estates Management Services section is undertaken by external contractors.

The proposed 2006 revenue budget transfer is :

	2006 Original	Proposed Additions (Note 1)	Add 2006 Budget transfers (Note 2)	2006 Adjusted Budget	Less Maintenance savings for 2006 not allocated (Note 3)	2006 Budget to be transferred
	£	£	£	£	£	£
Staff	358,985			358,985		358,985
Supplies & Services	73,100	10,000		83,100		83,100
Administration	9,100	3,000		12,100		12,100
Utilities	2,100			2,100		2,100
Prem. Maintenance	3,308,662		102,448	3,411,110	(98,000)	3,313,110
TOTAL	3,751,947	13,000	102,448	3,867,395	(98,000)	3,769,395

Table 1

Note 1 Proposed Additions :

3 leased vehicles (leasing and running costs) 3,000

Cleaning 4,000

Utilities, Stationery and Postage 3,000

Total proposed additional budget £13,000

Note 2 2006 Budget transfers have been made to authorise payment for the following :

St Martin’s School conservatories 20,000

D’Hautree site works 80,000

Youth Service minor works 21,610

St John playground works 3,400

General maintenance transfers to schools (16,500)

Estates Management Services transfers (6,062)

Net budget transfer to EMS £102,448

in 2007 this sum will be removed from the base budget and the remaining balances adjusted for the 2.5% inflation allocation provided in the 2007 cash limit for ESC. It has been agreed that efficiency savings for 2007 will not be taken into account as although these have been calculated on the gross ESC budget, PHD have significant savings to make in 2007 and these have not been pro-rated back to the departments who are retaining an element of property costs.

Note 3 Maintenance Savings to be transferred to Property Holdings :

2005 total premises maintenance budget * 5,493,100

total maintenance savings for ESC 139,605

2006 EMS maintenance budget 3,751,947

add : additional maintenance budgets to be transferred 102,448

3,854,395

Maintenance savings to be transferred:

139,605 x	3,854,395	= £97,957
	5,493,100

*Education, Sport and Culture have so far absorbed the 2006 maintenance saving, but as the budget is being transferred the saving will have to be applied. The saving was based on a 2005 premises maintenance budget of £5,493,000 which included Minor Works and some of the costs of the Technical Team of the Sports Division. As only the Estates Management Services section is being transferred, the saving has been pro-rated to reflect this reduced transfer.

2007 Budget Transfer:

2006 base budget 3,751,947

add : proposed additions 13,000

less : maintenance savings 2006 (97,957)

add back : proportion of maint budget savings 2,603 (re temp transfer)

total base budget 2007 transfer 3,669,593

add 2½% inflation 91,740

proposed 2007 budget transfer £3,761,333

3. Other premises related budgets not transferring

Insurance Although the responsibility of the Estates Manager there is some work to do to establish the on-going costs of insurance following the appointment of new insurance agents, and the budget transfer for this item will not take place for 2006. Further work will be done in this area during 2007.

Rates Minimal rates payments are made at present, comprising Staff Housing and some St Helier car parking spaces located in school grounds. There is currently no budget for these items and they are paid from general Primary and Secondary central budgets. Further work will be done during 2007 to identify an appropriate transfer.

Minor Works The proposed transfer does not include and funds relating to minor works budgets in schools (approx £750,000) – these are formula funded allocations within the schools AWPU formula and are ring-fenced to be used for :

minor internal decoration

minor repairs and maintenance

minor improvement works and enhancements

Sports Division Technical Team The technical team and associated budgets in the Sports Division are not proposed to be transferred as they deal exclusively with sports premises and equipment maintenance, show set-up and take-down, minor works etc.

4. Capital Projects

The currently active capital projects under the control of the ESC department are shown at Appendix A. It is proposed that the Capital Projects team and the projects listed are transferred to the States Property Holdings department.

It must be noted, however, that the department has assurances that predicted underspends of £150,000 on the d’Auvergne project and £60,000 on Langford will be made available for ICT related projects in 2007 – it is proposed that these budgets are not transferred at this stage but will be retained on the original capital votes by ESC pending the outcome of the projects – at which point they may then be transferred to the ICT projects.

5. Service Level Agreement / Partnership Agreement

At present an SLA is not in place, however, assurances have been received from the Chief Officer of States Property Holdings that the revenue budget transferred for 2006 and 2007 will remain allocated wholly to Education, Sport and Culture less a proportion of the Property efficiency savings identified for 2007.

In order to safeguard the future it is recommended that an SLA be drafted and agreed between the departments during 2007.

6. Recommendations

It is recommended that the Minister :

approves the following transfers to States Property Holdings :

(i) The transfer of 9.54 FTE staffing with effect from 1 October 2006;

(ii) the revenue budget transfer of £3,769,395 for 2006 and £3,761,333 for 2007, together with total expenditure incurred this year by the Estates Management Services section and all open orders;

(iii) the capital projects transfer shown at Appendix A in the budget sum of £35,063,641 (£35,273,641 less the projected savings on d’Auvergne of £150,000 and Langford of £60,000), together with all accumulated expenditure and orders on the projects listed;

and revokes the previous decision of 4 December 2006 relating to this subject as the agreed figures have now been amended.

It is also requested that the Minister notes the proposal to draft an SLA during 2007.