Treasury and Resources
Ministerial Decision Report
Allocation of fiscal stimulus funding to the Chief Minister’s Department and the Economic Development Department for initiatives to support the finance industry
- Purpose of Report
A wide ranging proposal and business case, containing 13 individual components was evaluated in November 2009 and 9 of those workstreams were given provisional (amber light) approval by the Fiscal Stimulus Steering Group (the “FSSG”). The purpose of this report is to summarise the recommendation of the FSSG to the Treasury Minister to agree green light funding in respect of a number of those workstreams following the bidding departments having satisfied the FSSG’s criteria.
- Background
The £44m fiscal stimulus fund was approved by the States to be set aside from the Stabilisation Fund (2009/P55) to stimulate the local economy during the economic downturn following advice from the Fiscal Policy Panel (the “FPP”), an independent advisory body set up to advise the Treasury and Resources Minister on the Island’s fiscal policy, and in particular the use of the Stabilization Fund.
The advice received from the FPP in March 2009 (and re-confirmed in November 2009) stated that discretionary policy actions that are truly counter cyclical and meet certain criteria are necessary. The key criteria are as follows:
- Timely;
- Targeted; and
- Temporary
In addition, “business as usual” requirements and financial directions apply to economic stimulus initiatives, particularly value for money and ensuring intrinsic value to the States and the Island.
All fiscal stimulus projects are designed to put additional money back into the economy, to add to demand and mean that the fall in output and extent of job losses will be less severe than would otherwise be the case.
The projects already allocated funding from the fiscal stimulus programme are primarily related to Jersey’s civil infrastructure sector and in direct support of individuals through skills and training initiatives and social security transitional relief. There is also a significant programme of construction and maintenance works, to be funded by both fiscal stimulus monies and business as usual budgets. The allocation of funding to the initiatives set out in this report facilitates direct measures to assist the financial services sector, which has, and will continue to, come under increasing pressures and threats as a result of the global economic downturn. Jersey’s finance industry contributes 53% of the Island’s wealth, measured by Gross Value Added (GVA), and its 13,000+ direct employees are the most productive in Jersey’s economy.
- Main Content / Subject matter
Fiscal Stimulus Rationale
The statistics set out above demonstrate the significance of the finance industry in Jersey. As a result it has been widely agreed during the assessment process that it is simply unacceptable to do nothing. Managing the risk of adverse impacts on Jersey as a result of increased scrutiny of offshore finance centres is of huge importance to steering the Island successfully through the downturn. It is extremely important to take necessary measures to protect existing and foster new opportunities within the Finance Industry in the light of the external threats it is facing.
A wide ranging proposal and business case, containing 13 individual components was evaluated in November 2009 and 9 of those work streams were given provisional (amber light) approval. These components are uniquely targeted at meeting the third objective of this discretionary intervention (as described in p55/2009), being the creation of new opportunities for business to help support them through the downturn and mitigating job losses across the economy as a whole. The implementation of these initiatives will complement the existing approved projects and provide an overall program of measures that is balanced across the overall objectives as well as across the main sectors of Jersey’s economy.
To progress these project work streams from amber to green lights, a number of conditions were set out by the FSSG and additional information was subsequently submitted by each of the project’s owners and reviewed by the FSSG. The outcome of the review was that satisfactory information had been provided, and, in particular, detailed targeted outputs would enable continued monitoring of the achievements of each of the following 8 components of the overall proposal.
Project work stream | FTE | £ |
Legislative clearance | 2.00 | 445,000 |
JFL grant - technical project resource | - | 80,000 |
JFL Assessment of potential insurance opportunities | - | 10,000 |
JFL grant – opening of third representative office | - | 200,000 |
JFL grant – inward investment into Jersey’s finance industry | - | 132,000 |
SUB-TOTAL - EDD | 2.00 | 867,000 |
Alternative Investment Financial Market (AIFM) | - | 100,000 |
International Tax | 1.00 | 750,000 |
Marketing and promotion | 1.00 | 700,000 |
SUB-TOTAL - CMD | 2.00 | 1,550,000 |
TOTAL | | 2,417,000 |
These work streams are to be undertaken by the Economic Development Department (“EDD”) (both directly and indirectly through the award of grants to Jersey Finance, a non-government body which has an existing funding relationship though EDD) and the Chief Minister’s Department (”CMD”).
- Recommendation
Recommendation from the Fiscal Stimulus Steering Group
The FSSG recommends a ‘green light’ to the Treasury Minister for the project streams summarised below, with the funding to be allocated to the 2010 revenue budget and additional temporary headcount for the duration of the schemes, throughout 2010, as follows:
Project |
Department Budget | Headcount FTE | Amount to be allocated to 2010 revenue budget |
| | | £ |
Legislative clearance | EDD | 2.00 | 445,000 |
JFL Technical project resource | EDD | - | 80,000 |
JFL Assessment of potential insurance opportunities |
EDD |
- | 10,000 |
JFL grant – opening of third representative office in Far East | EDD | - | 200,000 |
JFL grant – inward investment into Jersey’s finance industry |
EDD | - | 132,000 |
SUB-TOTAL - EDD | | 2.00 | 867,000 |
Alternative Investment Financial Market (AIFM) | CMD |
- | 100,000 |
International Tax | CMD | 1.00 | 750,000 |
Marketing and promotion | CMD | 1.00 | 700,000 |
SUB-TOTAL - CMD | | 2.00 | 1,550,000 |
TOTAL | | | 2,417,000 |
- Reason for Decision
A discretionary fiscal stimulus allocation from the Stabilisation Fund of £44m has already been approved. The finance industry support programme meets the key criteria for fiscal stimulus being timely, targeted and temporary and will benefit local business and individuals. The total allocation of £2,417,000 to the project will enable the workstreams to proceed in accordance with the critical path of the programme.
- Resource Implications
The financial and manpower resource implications are set out in the table in section 4.
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