Food Costs Bonus (Jersey) Order 2012

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A decision made 13 July 2012:

Decision Reference: MD-S-2012-0054
Decision Summary Title :	DS – Rate of Food Costs Bonus for 2012		Date of Decision Summary:	10 July 2012
Decision Summary Author:	Policy and Strategy Director		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	WR - Rate of Food Costs Bonus for 2012		Date of Written Report:	10 July 2012
Written Report Author:	Policy and Strategy Director		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Food Costs Bonus (Jersey) Order 2012
Decision(s): The Minister made the Food Costs Bonus (Jersey) Order 2012
Reason(s) for Decision: The Food Costs Bonus (Jersey) Regulations 2011 commenced in July 2011 and provide for an annual Food Costs Bonus to be paid in each of the years 2011, 2012 and 2013. The Regulations allow for the value of the bonus to be adjusted upwards in 2012 and the Minister has decided to increase the bonus by £25, to take account of the full-year impact of the increase of GST from 3% to 5%.
Resource Implications: There are no manpower implications. The additional cost of the bonus is estimated to be £37,500 in 2012. This sum is available within the existing cash limit.
Action required: Policy and Strategy Director to notify the Greffe and the Law Draftsman that the Order has been made and forward the signed and sealed Order to the States Greffe for notification to the States.
Signature:		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

Food Costs Bonus (Jersey) Order 2012

Food Costs Bonus - Rate for 2012

Introduction

The Food Costs Bonus Regulations were approved during 2011 and provide for a bonus for each of the years 2011, 2012 and 2013. The Regulations allow for an increase in the rate of bonus in 2012, as follows:

“5 Rate of bonus

(1) For 2011 and subsequent years the amount of the bonus is £193.36.

(2) For either or both of the years 2012 and 2013 the Minister may, by Order, specify an increased amount of bonus instead of the amount specified in paragraph (1).

(3) Any amount specified under paragraph (2) for 2013 must not be less than the amount for 2012.”

Note that there is no requirement to make any increase.

Previous Bonus Amounts

Year	Rate	Note
2008	£50	Original GST Bonus: To cover 8 months from May 2008
2009	£150	Renamed Food Costs Bonus: Extra sum added to compensate for food costs as well as GST on food (“Le Fondre” decision)
2010	£153.60	Automatic update in line with Sept 2009 food element
2011	£193.36	New Regulations: Bonus reset to include element for increase in GST from 3% to 5% for 7 months, as well as Sept 10 food element

Current spend and budget

Benefit spend on FCB during 2011 was £255,640, representing 1,322 claims. With the introduction of the Cold Weather Bonus in early 2012, individuals were encouraged to apply for the 2011 FCB if they had not already done so. The total number of FCB claims that have now been paid for 2011 amounts to approx 1,400.

The total budget (including administration costs) for 2012 is £750,500, which includes £300,000 for the Cold Weather Bonus.

Adjusting for the full year impact of the increase in rate of GST

The value of the FCB in 2011 took account of the additional cost associated with the increase in the GST rate from 3% to 5% on 1st June as it applies to the cost of food. Evidence from the Statistics Unit at that time suggested that the average cost of GST on food for a household in the second income quintile was approximately £90 per annum, at the 3% GST rate. The increase in GST in respect of 7 months of 2011, equated to an additional cost of £35. The full year impact of the increase from 3% to 5% would be an additional £60. To compensate fully for this in 2012 the value of the bonus needs to be increased by £25.

This takes the value of the bonus from £193.36 to £218.36.

Resource Implications

There are no manpower implications.

On the basis of 1,500 FCB claims in 2012 the additional cost of the benefit will be £37,500. This amount is available within the departmental cash limit.