Co-Funded Payroll Scheme (CFPS) Phase 3+: Amendment

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A decision made on 4 December 2020

Decision Reference: MD-TR-2020-0153
Decision Summary Title:	Amendment to the CFPS - Phase 3+		Date of Decision Summary:	4th December 2020
Decision Summary Author:	Head of Investment Appraisal		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	n/a
Written Report Title:	Amendment to the CFPS - Phase 3+		Date of Written Report:	4th December 2020
Written Report Author:	Head of Investment Appraisal		Written Report: Public or Exempt?	Public
Subject: Approval of an amendment to the Co-Funded Payroll Scheme (CFPS) Phase 3+.
Decision(s): The Minister approved an amendment to the CFPS Phase 3+ to take effect from 1st December 2020 until 31st December 2020. The amendment will also apply from 1st January 2021 to 31st January 2021 subject to the approval of the lodged Government Plan 2021-2024 by the States Assembly.
Reason(s) 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 Policy for Allocations from the Reserve agreed by the Minister for Treasury and Resources on Friday 17th July 2020 sets the requirement for all allocations from the General Reserve (Covid-19) to be referred for review to either the Council of Ministers or the relevant Competent Authorities Ministers and to seek comments from the Principal Accountable Officer (PAO) prior to submission to the Minister for approval. The Minister for Treasury and Resources approved MD-TR-2020-0049, to establish the Co-Funded Payroll Scheme Phase 2 (with £46 million allocated to Customer and Local Services by this decision, a maximum cost of £138 million and further drawdowns to be approved by the Treasurer), and MD-TR-2020-0063 and MD-TR-2020-0100 to extend the scheme until 31st August and 31st December 2020 respectively. The Minister subsequently limited the cost to a drawdown of £125 million in 2020. This variation was approved by the Council of Ministers on the 4th December 2020. The PAO was consulted on the 3rd December 2020. Following approval of the amendment by the Council of Ministers, the Minister is satisfied that there is an urgent need to provide funding in the public interest and that threats posed to the economy warrant the higher than normally acceptable risks inherent in any extension of the CFPS, including the inevitable dilution of the Scheme’s efficiency. A business case has been appraised by the Investment Appraisal Team and recommended to the Treasurer. On the basis of the above, and on the basis of the continuing economic advice that the benefits of the Scheme should outweigh any additional risk of deadweight loss, the Treasurer recommends that the Minister agrees the amendment to the CFPS Phase 3+. Costs intended to be incurred between January and March 2021 is dependent on the approval of Government Plan 2021-2024.
Resource Implications: The additional costs arising from this decision are forecast to be £4.1m in 2020 and can be met from the £125m available for the CFPS in 2020. The maximum available funding of £138 million allocated by MD-TR-2020-0049 was reduced by £13 million to a revised maximum funding of £125 million in 2020 by MD-TR-2020-0100. An additional £4.1m is also required in 2021. Funding in 2021 will be made available from the £11.3 million budget for the Co-Funded Payroll Scheme within the Covid-19 Response Head of Expenditure in the first instance, and beyond that any additional funding needed above that amount may require an allocation for Covid-19 Reserve within the General Reserve. All funding in 2021 is subject to the approval of the lodged Government Plan 2021-24 by the States Assembly.
Action required: Head of Financial Governance to ensure this decision is published on www.gov.je and notify the Head of Finance Business Partnering for Customer and Local Services.
Signature:		Position: Deputy S J Pinel, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Co-Funded Payroll Scheme (CFPS) Phase 3+: Amendment

Treasury and Exchequer

Ministerial Decision Report

Amendment to the co-funded payroll scheme phase 3+

Purpose of Report

An amendment to the Co-Funded Payroll Scheme (CFPS) Phase 3+ to take effect for claims made in respect of December and January 2021.

Background

Funding provisions were made in the Government Plan 2020-2023 in the General Reserve for funding needs that cannot be met from existing heads of expenditure in 2020. The Minister has increased the amount available in the General Reserve by transferring £65.3 million from the Treasury and Exchequer head of expenditure (MD-TR-2020-0035), approving an additional £99.99 million of expenditure (MD-TR-2020-0047) and making transfers of £28 million and £50 million from the Stabilisation Fund (MD-TR-2020-0055 and MD-TR-2020-0112).

The Minister for Treasury and Resources approved MD-TR-2020-0049, to establish the Co-Funded Payroll Scheme Phase 2, MD-TR-2020-0063 and MD-TR-2020-0100 to extend the scheme until 31st August and 31st December 2020 respectively.

CFPS Phase 3+

In light of the requirement to introduce further public health restrictions there is a need to amend the CFPS Phase 3+ in order to enable additional support to be provided to businesses that will be impacted by the additional restrictions.

The following changes that have been agreed:

a) Changes to the level of subsidy provided

b) Withdrawal of the requirement for businesses to be open and trading

c) The introduction of a requirement to abide by public health restrictions

Subsidy

The current CFPS Phase 3+ provides a subsidy equal to the actual percentage detriment suffered plus 10% up to a maximum potential subsidy of 60%.

This approach will be changed to increase the maximum subsidy to 80% and the method of calculation to the detriment percentage plus 20%.

The following tables provide some examples of how the level of support available will differ to the existing CFPS Phase 3+:

Current scheme Revised Scheme

Detriment	Subsidy
20%	30%
23%	33%
34%	44%
50%	60%
60%	60%
80%	60%

Detriment	Subsidy
20%	40%
23%	43%
34%	54%
50%	70%
60%	80%
80%	80%

This revised approach enables businesses with the greatest need such as those that will be required to cease trading during December to access the same 80% subsidy that was available when Stay at Home restrictions were in place earlier in the year.

Enhanced support is also provided for businesses that suffering moderate levels of detriment recognising that the deterioration in the economic climate has the potential to affect a wide range of sectors both directly and indirectly.

The subsidy available to all businesses is tailored to financial need through its link to the actual level of detriment that a business is suffering. This helps to ensure the CFPS remains a well targeted intervention whilst providing additional support to the businesses and workers that need it most.

Recommendation

Based upon economic advice, the business case, and after having weighed the potential economic benefits against the relative risks, the Minister is recommended to approve the variation of the CPFS to establish Phase 3+.

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 Policy for Allocations from the Reserve agreed by the Minister for Treasury and Resources on Friday 17th July 2020 sets the requirement for all allocations from the General Reserve (Covid-19) once approved by the States Treasurer to be referred for review to either the Council of Ministers or the relevant Competent Authorities Ministers and to seek comments from the Principal Accountable Officer (PAO) prior to submission to the Minister for approval.

The Minister for Treasury and Resources approved MD-TR-2020-0049, to establish the Co-Funded Payroll Scheme Phase 2 (with £46 million allocated to Customer and Local Services by this decision, a maximum cost of £138 million and further drawdowns to be approved by the Treasurer), and MD-TR-2020-0063 and MD-TR-2020-0100 to extend the scheme until 31st August and 31st December 2020 respectively. The Minister has subsequently limited the cost to a drawdown of £125 million in 2020.

This variation was approved by the Council of Ministers on the 4th December 2020. The PAO was consulted on the 3rd December 2020.

Following approval of the amendment by the Council of Ministers, the Minister is satisfied that there is an urgent need to provide funding in the public interest and that threats posed to the economy warrant the higher than normally acceptable risks inherent in any extension of the CFPS, including the inevitable dilution of the Scheme’s efficiency.

A business case has been appraised by the Investment Appraisal Team and recommended to the Treasurer. On the basis of the above, and on the basis of the continuing economic advice that the benefits of the Scheme should outweigh any additional risk of deadweight loss, the Treasurer recommends that the Minister agrees the amendment to the CFPS Phase 3+.

Costs that may be incurred in 2021 will be subject to approval of the lodged Government Plan 2021-24 by the States Assembly.

Resource Implications

The additional costs arising from this decision are forecast to be £4.1 million in 2020 and can be met from the £125 million available for the CFPS in 2020.

The maximum available funding of £138 million allocated by MD-TR-2020-0049 was reduced by £13 million to a revised maximum funding of £125 million in 2020 by MD-TR-2020-0100.

An additional £4.1m is also required in 2021. Funding in 2021 will be made available from the £11.3 million budget for the Co-Funded Payroll Scheme within the Covid-19 Response Head of Expenditure in the first instance, and beyond that any additional funding needed above that amount may require an allocation for Covid-19 Reserve within the General Reserve. All funding in 2021 is subject to the approval of the lodged Government Plan 2021-24 by the States Assembly.

Report author: Specialist – Business Cases	Document date: 4th December 2020
Quality Assurance / Review : Head of Financial Governance	File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2020-0153 - Amendment to the CFPS Phase 3+\WR - Variation to CFPS Phase 3.docx
MD sponsor : Treasurer of the States