Budget transfer from Central Contingencies to Community and Constitutional Affairs: Jersey freight management system (CAESAR):Upgrade

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A decision made on 14 September 2018

Decision reference: MD-TR-2018-0120
Decision Summary Title:	Contingency funding to the Department for Community and Constitutional Affairs for the upgrade of Jersey’s freight management system (CAESAR) in preparation for D1ND Brexit		Date of Decision Summary:	10th September 2018
Decision Summary Author:	Head of Decision Support		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Contingency funding to the Department for Community and Constitutional Affairs for the upgrade of Jersey’s freight management system (CAESAR) in preparation for D1ND Brexit		Date of Written Report:	10th September 2018
Written Report Author:	Head of Decision Support		Written Report : Public or Exempt?	Public
Subject: The transfer of up to £82,664 in 2018 and up to £163,519 in 2019 from Central Contingencies to the Community and Constitutional Affairs (CCA) minor capital head of expenditure to fund the costs associated with the upgrade of Jersey’s freight management system (CAESAR).
Decision(s): The Minister approved the transfer up to £82,664 in 2018 and of up to £163,519 in 2019 from Central Contingencies to the CCA minor capital head of expenditure to fund the costs associated with the upgrade of Jersey’s freight management system (CAESAR) in preparation for D1ND (“Day One No Deal”) Brexit.
Reason(s) for Decision: Article 17(2) of the Public Finances (Jersey) Law 2005 states that the Minister for Treasury and Resources is authorised to approve the transfer from contingency expenditure or the insurance fund of amounts not exceeding, in total, the amount available for contingency expenditure in a financial year. The current Contingency Allocation Policy (published as R.112/2018) sets the requirement for all allocations from contingency over £50,000 to be considered by the Investment Appraisal Board, Principal Accountable Officer and States Treasurer prior to submission to the Minister for approval. The Board recommended this request for approval at its meeting of 12th September 2018. The request has also been recommended for approval by the Principal Accountable Officer and States Treasurer. The expenditure is necessary for Brexit whether there is a negotiated Implementation Period to rely on, or whether there is no Implementation Period. The Jersey Government is ensuring that the CAESAR upgrade is ready by 29 March 2019. The investment is needed even if a deal is reached and D1ND is avoided.
Resource Implications: The CCA minor capital head of expenditure to increase by up to £82,664 in 2018 and £163,519 in 2019 and Central Contingencies to decrease by identical amounts. This decision does not change the total amount of expenditure approved by the States in the Medium Term Financial Plan 2016 to 2019. The £246,183 in total is proposed to be drawn down in 2018 and 2019 but the amount for each year may be varied without exceeding the total amount for the two years.
Action required: The Head of Decision Support to advise the Finance Director, Community and Constitutional Affairs, that this decision has been approved.
Signature:		Position: Deputy Susie Pinel Minister for Treasury and Resources
Date Signed:		Date of Decision:

Budget transfer from Central Contingencies to Community and Constitutional Affairs: Jersey freight management systems (CAESAR): Upgrade

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Treasury and Resources

Ministerial Decision Report

Contingency Funding to the Department FOR Community and Constitutional Affairs for THE UPGRADE OF JERSEY’S FREIGHT MANAGEMENT SYSTEM (CAESAR) IN PREPARATION FOR D1ND BREXIT

Purpose of Report

To enable the Minister for Treasury and Resources to approve the transfer of up to £82,664 in 2018 and up to £163,519 in 2019 from Central Contingencies to the Community and Constitutional Affairs (CCA) minor capital head of expenditure to fund the costs associated with the upgrade of Jersey’s freight management system (CAESAR) in preparation for D1ND (“Day One No Deal”) Brexit.

Background

CAESAR currently processes in excess of 5,000 inbound consignments per day. It is a crucial system that collects circa £62m per annum for the States of Jersey and is heavily relied upon by Government, business and private individuals alike. As a further illustration of freight volumes, the total value of imports into Jersey in 2016 totaled £492m. This can be apportioned as follows: £424.1 (86%) from the UK, £44.1m (9%) from Europe, £21.1m (4%) from the rest of the world and £2.7m (<1%) from Guernsey.

When the UK leaves the EU, Jersey and Guernsey will no longer benefit from Protocol 3, meaning we will not be able to access the EU common external tariff and enjoy free movement of goods. Jersey (and Guernsey) officers are currently in discussions with the UK government to agree new customs arrangements required as a result of Brexit, and the success of these negotiations is heavily dependent on the Channel Islands’ ability to demonstrate adequate freight management systems.

It is therefore necessary to upgrade the Jersey Customs and Immigration Service and Guernsey Border Agency freight management systems (CAESAR and GEMS) in preparation for a hard Brexit, otherwise known as day one no deal (D1ND), on the 29th March 2019. The investment is necessary whether or not D1ND is the outcome.

A full business has been prepared and considered by the Investment Appraisal Board (copy attached).

Recommendation

The Minister is recommended to approve the transfer of up to £82,664 in 2018 and up to £163,519 in 2019 from Central Contingencies to the CCA minor capital head of expenditure to fund the costs associated with the upgrade of Jersey’s freight management system (CAESAR) in preparation for D1ND Brexit.

Reason for Decision

Article 17(2) of the Public Finances (Jersey) Law 2005 states that the Minister for Treasury and Resources is authorised to approve the transfer from contingency expenditure or the insurance fund of amounts not exceeding, in total, the amount available for contingency expenditure in a financial year.

The current Contingency Allocation Policy (published as R.112/2018) sets the requirement for all allocations from contingency over £50,000 to be considered by the Investment Appraisal Board, Principal Accountable Officer and States Treasurer prior to submission to the Minister for approval. The Board recommended this request for approval at its meeting of 12th September 2018. The request has also been recommended for approval by the Principal Accountable Officer and States Treasurer.

The expenditure is necessary for Brexit whether there is a negotiated Implementation Period to rely on, or whether there is no Implementation Period. The Jersey Government is ensuring that the CAESAR upgrade is ready by 29 March 2019. The investment is needed even if a deal is reached and D1ND is avoided.

Resource Implications

The CCA minor capital head of expenditure to increase by up to £82,664 in 2018 and £163,519 in 2019 and Central Contingencies to decrease by identical amounts. This decision does not change the total amount of expenditure approved by the States in the Medium Term Financial Plan 2016 to 2019.

The £246,183 in total is proposed to be drawn down in 2018 and 2019 but the amount for each year may be varied without exceeding the total amount for the two years

Report author : Finance Director, Community and Constitutional Affairs /Head of Decision Support

Document date: 10th September 2018

Quality Assurance / Review :

Director of Financial Planning and Performance

File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2018-0120 - Contingency funding for CAESAR upgrade £246k

MD sponsor : Director of Financial Planning and Performance