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L'înformâtion et les sèrvices publyis pouor I'Île dé Jèrri

States Departmental Budgets: Realignment to reflect savings from CSR programme

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

Ministers are elected by the States Assembly and have legal responsibilities and powers as “corporation sole” under the States of Jersey Law 2005 by virtue of their office and in their areas of responsibility, including entering into agreements, and under any legislation conferring on them powers.

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A decision made on 18 December 2012:

Decision Reference:  MD-TR-2012-0115

Decision Summary Title:

Realignment of all States departmental budgets to reflect insurance and other procurement savings as part of the CSR programme

Date of Decision Summary:

6 December 2012

Decision Summary Author:

Treasurer of the States

Decision Summary:

Public or Exempt?

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

N/A

Written Report

Title:

Realignment of all States departmental budgets to reflect insurance and other procurement savings as part of the CSR programme

Date of Written Report:

6 December 2012

Written Report Author:

Director of Accounting Services

Written Report :

Public or Exempt?

Public

Subject: The realignment of all States departmental budgets to fund savings identified for CSR purposes.

Decision(s): The Minister approved the realignment of all internal States department budgets for 2012 as part of the CSR programme having identified significant savings within the Insurance arrangements and other procurement initiatives and for these savings to be returned to the Provision for Restructuring Costs.

Reason(s) for Decision:  As part of the States-wide CSR initiative in 2012, it was identified, that significant savings were achievable from a re-tender and review of the States insurance arrangements. Departmental Insurance budgets need to be realigned to reflect these savings which have been derived from the following two factors :

  • An excellent Insurance claims history, between 2007 and 2011, with the States Insurers
  • Improved controls and monitoring of risk management within all States departments

In addition other procurement initiatives have delivered savings in 2012 which require the realignment of budgets.

Article 2(6) of the Public Finances (Transitional Arrangements) (Jersey) Order 2011 states that all or any part of the amount appropriated by a head of expenditure may, with the approval of the Minister for Treasury and Resources, be used for the purpose of another head of expenditure.

Resource Implications:

To transfer net savings of £813,650 from States-wide departmental budgets to the Provision for Restructuring Costs with increases and decreases as follows:

 

  • The following revenue Heads of Expenditure to increase
  1. Chief Minister……………….……………………………………………….………….  £1,440
  2. Treasury and Resources …………………………………………………………....  £35,170
  3. Bailiff’s Chambers…….……………………………………………………………….      £690
  4. Law Officers’ Department……..………………………....……………………….. …   £3,090
  5. Judicial Greffe………………………………………………………………………. …  £1,100
  6. Official Analyst………………………………………………………………………….     £190
  7. Office of the Lieutenant Governor…………….………………………………………     £110
  8. Data Protection Commission……………………....………………………………….     £190
  9. Probation Department….………………………………………………………………     £210
  10. States Assembly and its services……………………………………………….….     £1,780

            Total                                                                                                                            £43,970

     

  • The following revenue Heads of Expenditure to decrease
  1. Economic Development ……………...……………………………………….……... £13,220
  2. Education, Sport and Culture…..……………………………………………...…… £259,540
  3. Department of the Environment………..…………………………………….……    £37,100
  4. Health and Social Services………………………………………………………..…. £86,120
  5. Home Affairs……………………………………...……………………………..….…. £59,840
  6. Housing…………………………………………..……………………………….….. £274,960
  7. Social Security………………………………………………………………………… £24,330
  8. Transport and Technical Services…………………………………………………  £102,390
  9. Viscount’s Department…..……………………………………………………………      £120             

Total                                                                                                                               £857,620

 

Action required: Business Manager to notify the Director of Accounting Services that this decision has been approved and for the £813,650 identified above of internal States departmental budgets to be transferred to the Provision for Restructuring Costs as set out above.

Signature:

 

 

 

 

Position: Senator  P F C Ozouf, Minister for Treasury and Resources

 

                 

 

Date Signed:

 

Date of Decision:

States Departmental Budgets: Realignment to reflect savings from CSR programme

 - 1 -

Treasury and Resources

Ministerial Decision Report

 

 

 

 

Realignment of all states DEPARTMENTAL BUDGETS TO

REFLECT INSURANCE AND OTHER PROCUREMENT SAVINGS as part of the csr programme 2012

 

 

  1. Purpose of Report

To enable the Minister to approve the realignment of all internal States department budgets for 2012 as part of the CSR programme having identified significant savings within the Insurance arrangements and other procurement initiatives and for these savings to be returned to the Provision for Restructuring Costs.

 

 

  1. Background – Insurance budgetary Savings to CSR

As part of the States Insurance re-tendering process undertaken in 2011, a review of all States of Jersey (SoJ) insurance claims history over the past five years (2007 – 2011), with the States Insurers Insurance Corporation of the Channel Islands (ICCI), highlighted the following annual data / trends:

 

Payments & Recoveries (of claims) made by ICCI

SoJ - NET PAYMENTS BY INSURANCE CLASS

% of Annual Excess Limits used

YEAR

Liability £

MedMal £

Directors & Officials £

Motor

£

Property £

TOTAL

£

General Classes

MedMal & Officials

2007

164,273

24,054

0

95,597

206,639

490,563

62.20%

4.81%

2008

108,868

27,000

0

161,879

374,412

672,159

86.02%

5.40%

2009

113,138

32,000

36,224

67,024

76,296

324,682

34.19%

13.64%

2010

72,018

185,000

80,094

110,144

203,156

650,412

51.38%

53.02%

2011

249,678

149,000

45,000

140,926

197,599

782,209

78.43%

38.80%

Total

707,975

417,054

161,318

575,570

1,058,102

2,920,019

 

 

Mean Average

141,595

83,411

32,264

115,114

211,620

584,004

62.44%

23.13%

 

SoJ - Self Insurance Exposure Utilisation Report   (2007 - 2011)

Year

 

2007

Class

Excess Limits

Claims Awarded

Est. Claims Accrued

Total Exposure

% Exposure

Aggregate

750,000

377,352

0

377,352

50%

Med Mal Aggregate

500,000

14,054

10,000

24,054

5%

2008

Aggregate

750,000

650,483

70,065

720,548

96%

Med Mal Aggregate

500,000

14,643

20,380

35,023

7%

2009

Aggregate

750,000

175,763

47,000

222,763

30%

Med Mal Aggregate

500,000

36,224

4,000

40,224

8%

2010

Aggregate

750,000

298,512

85,100

383,612

51%

Med Mal Aggregate

500,000

36,072

276,770

312,842

63%

2011

Aggregate

750,000

316,696

433,304

750,000

100%

Med Mal Aggregate

500,000

33,898

452,950

486,848

97%

Mean Average

Aggregate

750,000

363,761

127,094

490,855

65.45%

Med Mal Aggregate

500,000

26,978

154,820

179,798

35.96%

 

SoJ - Self Insurance Exposure Utilisation Report  (ytd August 2012)

Year

 

2012

Class

Excess Limits

Claims Awarded

Est. Claims Accrued

Total Exposure

% Exposure

Aggregate

1,400,000

44,859

697,340

742,199

53%

Official Indemnity Agg.

250,000

0

50,000

50,000

20%

 

The above data tables reflect two main historic factors, namely that:

 

  1. The average annual net payments, to ICCI, from the central Insurance Fund were well below annual aggregate deductible levels set by the Insurers – indicating that the SoJ claims history (no. of incidences / quantums) is low.
  2. The average annual self Insurance exposure of the SoJ to claims, within the central Insurance Fund, is also low – indicating that the levels of claims arising against the central Insurance Fund are well managed.

 

The Treasury based its’ decision to release insurance savings to CSR in 2012 based on this detailed  analysis, coupled with a more proactive approach to improving risk management policies and procedures throughout the States.

 

This proactive approach is evidenced by the increased involvement of the Insurance Risk Forum and Insurance Group (IRFIG), which is chaired by the Head of Treasury and Investment Management, whose scope includes the following directives:

  • To advance States-wide risk management awareness strategies designed to best manage SoJ claims culture.
  • To promote by results the SoJ’s proactive position on such matters to our Insurers.

 

It is also worth stating here that following the completion of the States Insurance portfolio tendering process, ICCI were successfully re-appointed as the SoJ primary Insurers. This re-appointment was part of a three year (2012 – 2014) Rate Stabilisation Agreement (RSA), which included a further two year (2015 – 2016) option available to SoJ, depending on performance.

 

As part of this new agreement, SoJ agreed to increase certain aspects of the States insurance policy coverage in keeping with best advice and also agreed to increase the SoJ annual self insurance exposure limits from £1.25m to £1.9m, as shown in the ‘Excess Limits’ columns above.

 

In turn for agreeing to increase the States annual risk exposure, the SoJ secured a very favourable group boundary premium in 2012, against a backdrop of an ever hardening cycle within the Insurance markets worldwide. The stability and surety created by securing this favourable new premium (2011: £1.7m – 2012: £1.6m) and RSA with ICCI further supports the Minister’s decision to release savings identified to the CSR programme in 2012.

 

 

 

 

 

  1. Computation of Departmental Insurance Budgets to be released to CSR in 2012

 

 SUMMARY CSR INSURANCE SAVINGS – 2012

Internal States Departments

Opening Insurance Recharge

Closing  Insurance Recharge

Inter-Departmental Recharge Adjustment

Insurance Budget Annual Increase/(Decrease)

Ministerial Departments

 

 

 

 

Chief Minister

6,998

11,798

 

4,800

Economic Development

12,556

4,276

 

(8,280)

Education, Sport and Culture

314,760

80,700

 

(234,060)

Department of the Environment

37,892

10,022

 

(27,870)

Health and Social Services

203,840

143,430

 

(60,410)

Home Affairs

104,933

53,613

 

(51,320)

Housing

373,136

70,126

(29,400)

(273,610)

Social Security

30,827

8,007

 

(22,820)

Transport and Technical Services

195,544

105,014

 

(90,530)

Treasury and Resources

47,393

119,743

29,400

42,950

Non Ministerial States Funded Bodies

 

 

 

 

Bailiff’s Chambers

9

699

 

690

Law Officers’ Department

89

4,659

 

4,570

Judicial Greffe

242

2,212

 

1,970

Viscount’s Department

1,196

1,636

 

440

Official Analyst

251

441

 

190

Office of the Lieutenant Governor

573

683

 

110

Data Protection Commission

21

211

 

190

Probation Department

1,327

1,537

 

210

Receiver General

10

10

 

0

States Assembly and its services

1,640

3,420

 

1,780

 

 

 

 

 

Totals

1,333,237

622,237

0

(711,000)

 

These insurance savings are reflected in the Medium term Financial Plan in 2013 as part of the procurement savings target. This saving needs to be reflected in 2012 budgets and returned to the CSR Restructuring Reserve in 2012.

 

 

  1. Procurement Savings

A number of other procurement projects were delivered, evidenced and savings of £102,650 achieved in 2012. A base budget reduction for these projects has been included in 2013 within the Medium Term Financial Plan. The cost savings from these projects in 2012 need to be reflected in budgets and the saving returned to the CSR Restructuring Reserve in 2012. The projects delivered and savings evidenced in 2012 include;-

 

  • Electric Meter Tariff Review – savings resulting from changing tariffs on meters to the most favourable following investigation of usage patterns.
  • Mobile Phones – savings resulting from re-tendering of mobile phone contract.
  • Advertising – savings resulting from re-tendering and changes to arrangements for advertising.
  • Stationery – savings resulting from tendering exercise for stationery resources.

 

SUMMARY CSR OTHER PROCUREMENT SAVINGS – 2012

Internal States Departments

Electric Meter Tariff Review

Mobile Phones

Advertising

Stationery

Other Procurement savings Budget Increase / (Decrease)

Ministerial Departments

 

 

 

 

 

Chief Minister

0

(590)

(2,210)

(560)

(3,360)

Economic Development

(100)

(990)

(2,940)

(910)

(4,940)

Education, Sport and Culture

(14,460)

(4,710)

(6,230)

(80)

(25,480)

Department of the Environment

0

(2,990)

(5,410)

(830)

(9,230)

Health and Social Services

(7,250)

(13,770)

(2,010)

(2,680)

(25,710)

Home Affairs

(3,820)

(470)

(580)

(3,650)

(8,520)

Housing

0

(460)

(460)

(430)

(1,350)

Social Security

(190)

0

(1,320)

0

(1,510)

Transport and Technical Services

0

(10,560)

(490)

(810)

(11,860)

Treasury and Resources

(3,710)

(1,500)

(1,220)

(1,350)

(7,780)

Non Ministerial States Funded Bodies

 

 

 

 

 

Law Officers’ Department

0

(600)

(350)

(530)

(1,480)

Judicial Greffe

0

(360)

(190)

(320)

(870)

Viscount’s Department

0

(240)

(110)

(210)

(560)

 

 

 

 

 

 

Totals

(29,530)

(37,240)

(23,520)

(12,360)

(102,650)

 

 

  1. Overall Savings

The overall savings from the insurance re-tender and review together with other procurement projects in 2012 have delivered savings of £813,650 which need to be removed from Departmental budgets.

SUMMARY OF TRANSFERS (TO) / FROM PROVISION FOR RESTRUCTURING COSTS

Internal States Departments

Insurance Budget Increase / (Decrease)

Other Procurement savings Budget Increase / (Decrease)

Budget Transfers (to) / from Provision for Restructuring Costs

Ministerial Departments

 

 

 

Chief Minister

4,740

(3,360)

1,440

Economic Development

(8,280)

(4,940)

(13,220)

Education, Sport and Culture

(234,060)

(25,480)

(259,540)

Department of the Environment

(27,870)

(9,230)

(37,100)

Health and Social Services

(60,410)

(25,710)

(86,120)

Home Affairs

(51,320)

(8,520)

(59,840)

Housing

(273,610)

(1,350)

(274,960)

Social Security

(22,820)

(1,510)

(24,330)

Transport and Technical Services

(90,530)

(11,860)

(102,390)

Treasury and Resources

42,950

(7,780)

35,170

Non Ministerial States Funded Bodies

 

 

 

Bailiff’s Chambers

690

0

690

Law Officers’ Department

4,570

(1,480)

3,090

Judicial Greffe

1,970

(870)

1,100

Viscount’s Department

440

(560)

(120)

Official Analyst

190

0

190

Office of the Lieutenant Governor

110

0

110

Data Protection Commission

190

0

190

Probation Department

210

0

210

States Assembly and its services

1,780

0

1,780

 

 

 

 

Totals

(711,000)

(102,650)

(813,650)

 

 

  1. Recommendation

The Minister is recommended to approve the transfer of £813,650 of departmental budgets for year 2012 as savings contributing to the Comprehensive Spending Review Programme

 

 

  1. Reason for Decision

As part of the States-wide CSR initiative in 2012, it was identified, that significant savings were achievable from a re-tender and review of the States insurance arrangements. Departmental insurance budgets need to be realigned to reflect these savings which have been derived from the following two factors:

 

  • An excellent insurance claims history, between 2007 and 2011, with the States Insurers.
  • Improved controls and monitoring of risk management within all States departments.

 

In addition other procurement initiatives have delivered savings in 2012 which require the realignment of budgets.

 

Article 2(6) of the Public Finances (Transitional Arrangements) (Jersey) Order 2011 states that all or any part of the amount appropriated by a head of expenditure may, with the approval of the Minister for Treasury and Resources, be used for the purposes of another head of expenditure.

 

 

  1. Resource Implications

Internal States departmental budgets to be reduced by £813,650 as set out above.

 Report author : Assistant Accountant Treasury and Investment Management

Document date : 09/10/2012

Quality Assurance / Review : Director of Accounting Services

File name and path: L:\Treasury\Sections\Treasury Operations\Treasury Management Folder\Insurance\2012\CSR Programme\CSR Ministerial Decisions & Reports\Final Draft Versions

MD sponsor : Minister for Treasury and Resources

 

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