Budget Transfer: 2014 Pay Award

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A decision made 13 January 2014:

Decision Reference: MD-TR-2014-0002
Decision Summary Title:	Contingency Funding to Departments for the 2014 4% Consolidated Pay Award		Date of Decision Summary:	6th December 2014
Decision Summary Author:	Head of Financial Planning		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 Departments for the 2014 4% Consolidated Pay Award		Date of Written Report:	6th December 2013
Written Report Author:	Head of Financial Planning		Written Report : Public or Exempt?	Public
Subject: Transfer of contingency funding from the Central Contingency (Pay Provision) to departments for costs associated with the 4% consolidated pay award for 2014 and approval for a recurring transfer in 2015.
Decision(s): The Minister for Treasury and Resources approved a 2014 request for contingency funding totalling £13,331,200 from the Central Contingency (Pay Provision) to various departments for costs associated with the 2014 4% consolidated pay award as per the schedule in the attached report. The approval includes the sum of £555,000 for the 4% consolidated pay award for 2014 in respect of the Treasury and Resources Department head of expenditure. The Minister further approved the future funding of £13,331,200 to be transferred to departments in 2015 for the recurring effect of the pay award.
Reason(s) for Decision: Article 17(2) of the Public Finances (Jersey) Law 2005 states that the Minister for Treasury and Resources is authorized to approve the transfer from contingency expenditure to heads of expenditure or the insurance fund of amounts not exceeding, in total, the amount available for contingency expenditure in a financial year. The States Employment Board has recommended a 4% consolidated pay award for 2014 for which contingency funding is held in the States of Jersey Central Contingency (Pay Provision). In order to make the payments associated with this award it is necessary to have the budget transferred to the various departments’ revenue heads of expenditure.
Resource Implications: Departments’ revenue heads of expenditure will increase by £13,331,200 in 2014 and 2015 as per the schedule in the attached report and the Central Contingency (Pay Provision) will decrease by an identical amount. This decision does not change the total amount of expenditure approved by the States. In order to fund this, a non-recurring budget transfer of £1,855,600 is required in 2014 from Central Contingency (AME) to Central Contingency (Pay Provision). This sum will be replenished with earmarked funding to be carried forward from the Central Contingency (One-off) provision in 2013. The recurring impact of these budget transfers will be reflected in the Departments’ base budgets in the next MTFP 2016-2019.
Action required: Head of Decision Support to notify the Financial Performance Reporting Manager and the Head of Financial Planning that this decision has been approved.
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Budget Transfer: 2014 Pay Award

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Treasury and Resources

Ministerial Decision Report

Contingency Funding to Departments for the 2014 4% Consolidated Pay Award

Purpose of Report

To enable the Minister for Treasury and Resources to approve a 2014 request for contingency funding totalling £13,331,200 from the Central Contingency (Pay Provision) to various departments for costs associated with the 2014 4% consolidated pay award as per the schedule at Appendix 1.

Background

The 4% award is the final year of a three year award which, whilst not reached for all pay groups, has had broad acceptance and has contributed to significant Comprehensive Spending Review (CSR) savings which flow through into future years.

The first two parts of the three year pay offer were made in 2012 and 2013 following an announcement by the Chief Minister in the States in December 2012. This represented:

2012, 1% non-consolidated award paid as a one off lump sum, with effect 1st January 2012; and
2013, 1% consolidated pay award plus 1% non-consolidated award paid as a one off lump sum, with effect 1st January 2013.
2014, 4% consolidated pay award in return for a modernisation agreement.

The offer for 2014 was for a 4% consolidated pay award in return for a modernisation agreement and a guarantee of no compulsory redundancies until the end of 2014.

On average this meant, over the 3 years that the consolidated pay award averaged 1.67% per year.

In July 2013, the States Employment Board (SEB) advised all employees and pay groups the criteria it expected to be met in order to assure the 4% award.

Following a meeting 7th November 2013, the SEB is now recommending the payment of the 4% award for ALL pay groups, not already agreed, to be paid in January 2014 based on the following rationale:

Significant engagement from all pay groups in the Workforce Modernisation programme.
Progress made against all criteria for the 4% award.
4% award is the last segment of a three year award which, whilst not reached for all pay groups, has had de facto acceptance and has led to significant CSR savings which flow through future years.
Significant behavioural change from the large Trade Union (TU) pay groups as evidenced by Prospect, Unite, NASUWT and RCN/RCM/JNA.
Local workforce engagement in Health and Social Services Department and Social Security in Lean Programmes.
It will be a visible example of trust by the employer in its workforce which will support the Public Sector Reform programme and reinforce the workforce engagement model of employee relations which has been followed.

Furthermore, the SEB has informed Council of Ministers (CoM) that SEB has agreed:

The pay award of 4% will only be paid if the following conditions are met by the end of December 2013:-

That the recommendations from the Manual Workers Joint Council (MWJC) about its future are put in place by 31st December 2013.
SEB confirmed their consent to officials working with the teaching Unions to determine a draft terms of reference (TOR) for a joint working party on Teaching Terms and Conditions. The SEB will have final signoff once the TOR has been drafted. The draft terms of reference must be produced by 31st December 2013.
Implement new contracts of employment from 1st January 2014 for:

All new starters and existing staff who are promoted, transfer or in some other way have a job/role change including those that move to a new pay structure.
All other existing staff as they move onto new pay structures.

To set out a clear timetable, agreed before 31st December 2013 with SEB, for the criteria attached to the implementation of the 4% award.

Also to sign an agreement with the Trade Unions, where possible, to conclude the 2012-2014 Award.

The Chief Executive to write to all staff, in plain English, explaining the conditions set out by the SEB.
A clear communication plan be set out for communication with the public.

The funding proposed for the 4% consolidated pay award for 2014 and 2015 includes adjustments for the arrangements agreed by the SEB with Nurses and Firefighters outside of the standard 1% consolidated offer in 2013.

Certain groups are not provided for in this pay award. Prison Officers have existing arrangements in place and Doctors and Consultants are tied to settlements in line with UK arrangements.

3. Recommendation

The Minister for Treasury and Resources is recommended to approve a 2014 request for contingency funding totalling £13,331,200 from the Central Contingency (Pay Provision) to various departments for costs associated with the 2014 4% consolidated pay award as per the schedule in the attached report.

The approval includes the sum of £555,000 for the 4% consolidated pay award for 2014 in respect of the Treasury and Resources Department head of expenditure.

The Minister further approved the future funding of £13,331,200 to be transferred to departments in 2015 for the recurring effect of the pay award.

4. Reason for Decision

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

The SEB have recommended a 4% consolidated pay award for 2014 for which contingency funding is held in the States of Jersey Central Contingency (Pay Provision). In order to make the payments associated with this award it is necessary to have the budget transferred to the various departments’ revenue heads of expenditure.

5. Resource Implications

Departments’ revenue heads of expenditure will increase by £13,331,200 in 2014 and 2015 as per the schedule in the attached report and the Central Contingency (Pay Provision) will decrease by an identical amount. This decision does not change the total amount of expenditure approved by the States.

In order to fund this, a non-recurring budget transfer of £1,855,600 is required in 2014 from Central Contingency (AME) to Central Contingency (Pay Provision). This sum will be replenished with earmarked funding to be carried forward from the Central Contingency (One-off) provision in 2013.

The recurring impact of these budget transfers will be reflected in the Departments’ base budgets in the next MTFP 2016-2019.

Report author : Assistant Accountant, Financial Planning	Document date : 6th January 2014
Quality Assurance / Review : Head of Financial Planning	File name and path : L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2013-0122 - 2014 Pay Award\WR - Contingency Funding for 2014 4% Consolidated.docx
MD sponsor :Treasurer of the States

Appendix 1 – Proposed allocation to Departments