Treasury and Exchequer
Ministerial Decision Report
Extension of Blue Islands contract for provision of essential interim air connectivity
- Purpose of Report
To enable the Minister to consider the recommendation to approve the extension of the Blue Islands contract for provision of essential Air Connectivity to and from the Island.
- Background
On 7 April, the Minister approved MD-TR-2020-0037, which allocated Reserve Funding to OCE (Office of the Chief Executive) to cover emergency funding to enable essential air connectivity to and from the Island.
The original business case sought, and was awarded, funding of £330,000 (which included a contingency element of £50,000) for the initial 3-month period. Within the terms of the contract, it permits for a rolling one-month extension up to the maximum of 12-months.
In line with Exit Strategy Level 2 which only permits essential travel, the contract now requires an extension, potentially to the end of July. To date, the passenger numbers booking essential flights through the scheme are significantly higher than originally anticipated and therefore it is expected that the first 3 -months of the contract will cost in the region of £120,000 and no further funding for the month’s extension is required.
- Recommendation
The Minister is recommended to approve the extension of the Blue Islands contract for provision of essential Air Connectivity to and from the Island.
- Reason for Decision
Article 15(3) of the Public Finances (Jersey) Law 2019 states that the approval by the States of a government plan authorises the Minister to direct how an approved appropriation for a reserve head of expenditure in the plan may be spent (including on another head of expenditure) in the first financial year covered by the plan.
The current Contingency Allocation Policy (published as R.23/2020) sets the requirement for all allocations from contingency to be considered by the Investment Appraisal Board, Principal Accountable Officer and States Treasurer prior to submission to the Minister for approval, however it also states that ‘Where a request is made for £100,000 or less, or where the Minister is satisfied that there is an urgent need to provide funding in the public interest, an allocation may be made by the Minister on the recommendation of the Treasurer.’
The original business case and terms of the contract permitted for rolling one-month extensions up to the maximum 12-month term of the contract. Since inception the passenger loadings have been significantly higher than anticipated and therefore there is no impact on the original funding allocation. At 6th June costs to the end of June were estimated at £120,000 for the duration of the 3-month contract, and based on these calculations there will be sufficient funding to be able to extend the contract for up to a further month, even in the event that the existing rotations operated with lower passenger numbers.
Further to this update, the Treasurer recommends this extension to the Minister for approval within the original funding allocation.
- Resource Implications
The extension of the Scheme is forecast to be met within the initial allocation of £330,000 made in MD-TR-2020-0037 so there are no additional resource implications arising from this decision.
Report author: Specialist – Business Cases | Document date: 16 June 2020 |
Quality Assurance / Review: Group Director, Strategic Finance | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2020-0074 - Extension of Blue Islands Contract for provision of essential interim Air Connectivity |
MD sponsor: Treasurer of the States |