Treasury and Exchequer
Ministerial Decision Report
aLLOCATION OF pRE-FEASIBILITY vOTE and general reserve funding TO the our hospital head of expenditure
- Purpose of Report
To enable the Minister to approve the non-recurring allocation of up to £5 million from the Pre-feasibility Vote (PFV) and up to £6.7 million from the General Reserve heads of expenditure to the Our Hospital head of expenditure.
- Background
The PFV has been established in the Government Plan 2020-2023 in recognition that projects may require access to funding to conduct initial exploratory work that will gather the necessary data and understanding to support the development of a robust and comprehensive business case. The PFV is a source of one-off funding intended to support pre-feasibility studies for capital projects which were identified as part of the Government Plan.
Funding was also made available in the Government Plan 2020-2023 in the General Reserve head of expenditure to be used to meet unforeseen pressures, or to provide advance funding for urgent expenditure in the public interest
In line with the Procedures for Allocations from the Reserve (published as R.23/2020), the Investment Appraisal Board (IAB) reviews funding requests. This supports the development of best practice in project development and evaluation, enabling better prioritisation and value for money across the Government.
All funding requests require a business case that has been designed using principles of HM Treasury’s Five Case Model to ensure that a consistent approach can be applied across the Government.
The IAB is not a decision-making body. It considers evidence to support a funding request and makes a recommendation for funding to the States Treasurer before the Minister for Treasury and Resources makes a funding decision and allocation. Recommendations for funding are also circulated to the Principal Accountable Officer, One Gov Political Oversight Group (OneGovPOG), and the Council of Ministers in advance of approval by the Minister for Treasury and Resources.
Based upon the evaluation of the business case and responses to further questions, the IAB recommended funding to the Our Hospital head of expenditure. The objectives of the investment are as follows:
- establish the agreed clinical requirements of the new Hospital;
- use the outcome of this to scope the size and shape of a new Hospital to inform the shortlisting of potential locations;
- conduct Island and stakeholder communication and engagement on those locations, alongside technical and financial assessments of deliverability, in order to identify a preferred site for the Government and States Assembly to consider and approve.
Funding should be held in the Reserve and the PFV until there is evidence that it is required by the Department. Evidence will be provided to the Minister for drawdowns and the Minister will approve the drawdowns in tranches of up to £1.5 million.
- Recommendation
The Minister is recommended to approve the non-recurring allocation of up to £5 million from the PFV and up to £6.7 million from the General Reserve to the Our Hospital head of expenditure.
- Reasons for Decision
Pre-feasibility vote
Article 18(1)(a) of the Public Finances (Jersey) Law 2019 states that a specified amount appropriated for one head of expenditure may, with the approval of the Minister for Treasury and Resources, be used for the purposes of another head of expenditure that is set out in the government plan.
Article 18(4) of the Public Finances (Jersey) Law 2019 states that the Minister shall give the States Assembly at least 4 weeks’ notice before an amount is transferred under paragraph (1)(a). P.28/2020 Draft Public Finances (Amendment of Law) (Jersey) Regulations 202-, approved by the States Assembly on 24th March 2020, agreed a number of temporary modifications to the Public Finances (Jersey) Law 2019 one of which stated; to remove the requirement in Article 18 that if the Minister proposes to give a direction to re-allocate a head of expenditure, the Minister gives the States at least 4 weeks’ notice.
Article 18(5) of the Public Finances (Jersey) Law 2019 states that if a direction under this Article would affect a head of expenditure that relates to the responsibilities of any Minister, that Minister must be consulted before the direction is made.
Allocation from the Reserve
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 Procedures on Allocations from the Reserve (published as R.23/2020) sets the requirement for allocations from the Reserve to be considered by the Investment Appraisal Board, Principal Accountable Officer and States Treasurer prior to submission to the Minister for approval.
For requests over £100,000, the Minister of Treasury & Resources will provide the One Government Political Oversight Group (OneGovPOG) with a schedule of all funding decisions she is minded to make before making a final decision, seeking that Group’s comments.
If the Minister is minded to approve a funding allocation, the draft Ministerial Decision will be circulated to the Council of Ministers five working days before a Ministerial Decision is signed and published.
The Investment Appraisal Board has recommended this request for approval.
The Principal Accountable Officer, OneGovPOG and the Council of Ministers have also been consulted.
5. Resource Implications
The PFV head of expenditure will decrease by up to £5 million, the General Reserve head of expenditure will decrease by up to £6.7 million and the new Our Hospital head of expenditure will increase by identical amounts.
This decision does not change the total amount of expenditure approved by the States in the Government Plan 2020-2023.
MD-TR-2019-0065 approved £845,000 to HCS for 2019 of which there is a remaining balance of £345,021. This decision supersedes the previous decision and the remaining balance will be released back into the General Reserve available balance.
Funding that has been drawn down and is unspent at the end of the financial year will return to the PFV. Where unspent balances are required for the same purpose in the following year, the Minister for Treasury and Resources may approve a Ministerial Decision to reissue the funding without a need to repeat the funding application process. Any amounts that remain unspent once the pre-feasibility work has been completed will be returned to the PFV or to the Reserve.
Funding should be held in the Reserve and the PFV until there is evidence that it is required by the Department. Evidence will be provided to the Minister for drawdowns and the Treasurer will approve these drawdowns, with the written agreement of the Minister, in tranches of up to £1.5 million.
Report author: Specialist – Business Cases | Document date : 24th June 2020 |
Quality Assurance / Review: Group Director, Strategic Finance, Head of Financial Governance | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2020-0087 |
MD sponsor: Treasurer of the States |