Treasury and Exchequer
Ministerial Decision Report
2021 End of year Flexibility
- Purpose of Report
This report sets out how the Minister is applying her powers under the Public Finances (Jersey) Law 2019 to amounts unspent at the end of 2021, including the movements recommended and the reasons for those requests.
Amendment 25 to the Government Plan 2022-2025 directed:
“that the Minister for Treasury and Resources be requested to prioritise the application of any unspent funds at the end of 2021 and 2022, be these in respect of spending related to Covid-19, departmental revenue expenditure or capital expenditure, to be returned to the Consolidated Fund and that these funds, along with receipts relating to the move of all taxpayers to current year basis, be used to minimise the borrowing requirements for Covid-19 and the Fiscal Stimulus Fund and support the repayment of debt.”
This has been a key consideration when determining the transfers proposed.
- Background
While all financial amounts remain subject to the completion and sign-off of the Annual Report and Accounts, the anticipated underspend for departmental and project heads of expenditure for 2021 is £115.7 million and the total amount unspent in the Reserve is estimated to be £84.2 million. This results in an estimated overall unspent amount of £199.9 million.
A breakdown of the underspend position is provided in Table 1.
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Table 1: Summary of Government of Jersey underspend 2021 |
Departmental and Project underspend | | |
Projects underspend | £78,543,491 | |
Departmental underspend | £37,142,021 | |
Sub-Total - Departmental and Project underspend | | £115,685,511 |
| | |
Reserves unspent | | |
General Reserve | £75,463,287 | |
Reserve for Centrally Held Items | £6,768,564 | |
Central Planning Reserve | £450,000 | |
Reserve for Central Risk & Inflation | £1,500,000 | |
Sub-Total - Reserves Unspent | | £84,181,852 |
| | |
Total Government of Jersey underspend | | £199,867,363 |
| | |
Amendment 25 to the Government Plan 2022-2025 directed:
that the Minister for Treasury and Resources be requested to prioritise the application of any unspent funds at the end of 2021 and 2022, be these in respect of spending related to Covid-19, departmental revenue expenditure or capital expenditure, to be returned to the Consolidated Fund and that these funds, along with receipts relating to the move of all taxpayers to current year basis, be used to minimise the borrowing requirements for Covid-19 and the Fiscal Stimulus Fund and support the repayment of debt.”
This has been a key consideration when determining the transfers proposed.
Transfers of departmental underspends to the Reserve in 2022
As set out in Table 1 above, departmental underspends are estimated at £37.1 million. To continue existing annual financial management processes and enable delivery of ongoing projects and other essential activity a proportion of this funding will transferred to the Reserve in 2022 as follows:
- £4.5 million will be transferred to the Reserve in 2022 and subsequently allocated to various heads of expenditure in 2022 as detailed in Appendix 1 to enable on-going activity in 2022
- £1.2 million will be transferred to smoothing reserves in 2022 – smoothing reserves are part of established practice for addressing year-to-year variations in respect of Court and Case Costs and maintenance of the public markets. Underspends on Court and Case Costs within the Non-Ministerial Departments and the Office of the Chief Executive are transferred to the Court and Case Costs Smoothing Reserve. Similarly, surpluses in respect of the public markets are transferred to the Markets Smoothing Reserve.
The remaining £31.4 million underspend will be released to the Consolidated Fund to reduce borrowing requirements. Table 2 provides a summary of the outcomes for departmental underspends.
Transfer of project underspends to the Reserve in 2022
At the end of 2021 there were unspent allocations on project heads of expenditure totalling an estimated £78.5 million. Under the Public Finances (Jersey) Law 2019, these amounts no longer automatically roll over into the following year.
To ensure that unspent amounts are prioritised to minimise borrowing, a detailed review of projects has been undertaken by departments to establish where amounts are needed in 2022 to secure project delivery (see Appendix 2), and where amounts are needed in future years (see Appendix 3) or not at all (see Appendix 4).
Following a review of the departmental analysis by Treasury and Exchequer, in consultation with the Executive Leadership Team, £67.5 million of unspent project allocations will be transferred to support delivery in 2022, and will be either:
- Allocated in 2022 to the original project - where the allocation of budget is necessary to enable the continuation of projects, amounts will be allocated from the Reserves in 2022.
- Held centrally until required during 2022 - where a transfer to 2022 has been requested for projects but there remains some uncertainty around cash flow timings, for example where they have budget allocations in the Government Plan 2022-2025, amounts have been provided in a newly formed “Capital Smoothing Reserve”, rather than transferring amounts to the project heads of expenditure. This provides certainty of funding in 2022 to enable delivery, whilst avoiding over-allocating budgets.
The allocations will be held centrally and following quarterly reviews of all projects, these budgets can either be allocated to the projects or, if no longer required to meet funding needs in 2022, released to the consolidated fund to further reduce the borrowing requirement.
- Held centrally in 2022 (drawdowns from other specific funding sources) - where projects have been funded from other funds such as the Health Insurance Fund and require additional budget in future years, the associated balances will be transferred to the Reserve in 2022. Transfers in 2022 may be adjusted to ensure only funding utilised is withdrawn from the relevant source fund. Requirements for future years will be included in future government plans.
Where departments have not identified any requirement in 2022, amounts related to projects funded by the Consolidated Fund are being released to offset borrowing requirements and any future year requirements will be included in future government plans (set out in Appendix 3 and Appendix 4).
Table 3 provides a financial summary of the outcomes of this process.
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Table 3: Summary of Year End Flexibility Outcomes for Project Underspends | |
| | | |
Major Projects underspend | £24,155,293 | | |
Specific funding projects | £12,733,041 | | |
Other projects | £23,873,475 | | |
Our Hospital | £17,781,682 | | |
Total Project Underspends | | £78,543,491 | |
| | | |
Allocated to original project in 2022 | (£24,446,476) | | |
Consolidated Fund projects held centrally | (£22,450,658) | | |
Specific funding to offset drawdowns | (£20,575,682) | | |
Total Transferred to support delivery in 2022 | | (£67,472,816) | |
| | | |
Total Balance Released to Consolidated Fund | | £11,070,675 | |
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Transfer balances on the Reserve from 2021 to 2022
The unused balance on the Reserve in 2021 was £84.2 million, including £25.7 million relating to Covid-19. Following consideration of funding requirements in 2022, £32.9 million will be transferred to the Reserve in 2022 to enable the following:
- Meet on-going financial management requirements – transfers to Reserves in 2022 will ensure provision is made for existing ringfenced priorities, support the continuation of smoothing reserves, and bolster reserves for centrally held items and for risk and inflation.
- an alternative source of funding for Fiscal Stimulus projects – projects related to Oakfield Sports Centre and Jersey Opera House were originally planned to be funded through Fiscal Stimulus, but, due to delays in commencement of works, no longer meet the timely criteria for the fund as they are unable to be delivered by June 2022. These projects have been removed from the stimulus programme, and unspent reserves will be used as an alternative source of funding for these projects.
As these projects have been removed from the Fiscal Stimulus programme, the net impact on total borrowing for Covid-19 and Fiscal Stimulus is nil.
The remaining balance of £51.2 million will be released to the Consolidated Fund to minimise the borrowing requirement from the revolving credit facility. This includes the unspent balances on the Covid-19 Reserve along with allocations provided in the General Reserve as it is currently anticipated that the allocations in the Government Plan 2022-2025 will be adequate for Covid-19 related pressures in 2022. A release from the Reserve of £32.9 million had already been planned in the Government Plan 2022-2025.
Table 4 provides a financial summary of the outcomes of this process.
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Table 4: Summary of Year End Flexibility Outcomes for Reserves | |
| | | |
Reserve balances unspent | | £84,181,852 | |
| | | |
General Reserve | £18,893,451 | | |
Reserve for Centrally Held Items | £6,768,564 | | |
Central Planning Reserve | £450,000 | | |
Reserve for Central Risk & Inflation | £1,500,000 | | |
Alternative funding for fiscal stimulus projects | £5,337,000 | | |
| | (£32,949,015) | |
| | | |
Total Balance Released to Consolidated Fund | | £51,232,837 | |
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Summary of End of Year Flexibility Outcomes
Table 5 provides a financial summary of the overall outcomes of the End of Year Flexibility Process.
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| Table 5: Summary of Year End Flexibility Outcomes | |
| | | | |
| Government of Jersey underspend | | £199,867,363 | |
| | | | |
| Departmental Outcomes | | | |
| Transfers to Departments | (£4,495,739) | | |
| Transfers to Smoothing Reserves | (£1,235,928) | | |
| | | (£5,731,667) | |
| Projects Outcomes | | | |
| Transfers to original project in 2022 | (£24,446,476) | | |
| Transfers to reserves for projects held centrally | (£22,450,658) | | |
| Specific funding transfers to offset drawdowns | (£20,575,682) | | |
| | | (£67,472,816) | |
| Reserves Outcomes | | | |
| General Reserve | (£18,893,451) | | |
| Reserve for Centrally Held Items | (£6,768,564) | | |
| Central Planning Reserve | (£450,000) | | |
| Reserve for Central Risk & Inflation | (£1,500,000) | | |
| Alternative funding for fiscal stimulus projects | (£5,337,000) | | |
| | | (£32,949,015) | |
| | | | |
| Total Balance Released to Consolidated Fund | | £93,713,865 | |
| | | | |
3. Recommendation
- The Minister is recommended to approve the transfers outlined below, the result of which is that up to £93,713,865 will be released to the Consolidated Fund to reduce the borrowing requirement from the revolving credit facility (£32.8 million of which was already planned).
Departmental Transfers:
Under Article 19 of the PFL:
- a transfer of £4,495,739 million from departmental heads of expenditure in 2021 to the Reserve Head of Expenditure in 2022
- a transfer of £1,107,701 and £100,000 from Non-Ministerial departments and the Office of the Chief Executive 2021 Heads of Expenditure respectively to the Reserve Head of Expenditure (Smoothing Reserve – Court & Case Costs) in 2022.
- a non-recurring transfer of £28,227 from Infrastructure, Housing and Environment 2021 Head of Expenditure to the Reserve Head of Expenditure (Smoothing Reserve – Markets surplus) in 2022.
Under Article 15 of the PFL:
- an allocation of £4,495,739 from the Reserve Head of Expenditure to various heads of expenditure in 2022 as set out in Appendix 1.
Projects Transfers:
Under Article 20 of the PFL:
- a transfer of up to £2,777,299* from the Fort Regent project Head of Expenditure in 2021 to the Head of Expenditure for that project in 2022
- a transfer of up to £193,440* from the Vehicle Testing Centre project Head of Expenditure in 2021 to the Head of Expenditure for that project in 2022
Under Article 19 of the PFL:
- a transfer of up to £21,345,646* in 2021 from various project Heads of Expenditure detailed in Appendix 2 to the Reserve in 2022[1]
- a transfer of up to £22,450,658 in 2021 from various project Heads of Expenditure detailed in Appendix 5 to the Reserve in 2022
- a transfer of up to £20,575,682 in 2021 from various project Heads of Expenditure detailed in Appendix 6 to the Reserve in 2022
Under Article 15 of the PFL:
- an allocation of £21,475,737 from the Reserve Head of Expenditure to various project Heads of Expenditure in 2022 as detailed in Appendix 2.
Reserves Transfers:
Under Article 19 of the PFL:
- a transfer of up to £32,949,015 from the Reserve Head of Expenditure in 2021 to the Reserve Head of Expenditure in 2022 (per Table 5 above).
Under Article 15 of the PFL:
To enable delivery of the Oakfield Sport Centre project:
- a transfer of up to £3,100,000 from the Reserve Head of Expenditure to the Inspiring Active Places project Head of Expenditure in 2022
To enable delivery of the Jersey Opera House project:
- a transfer of up to £2,237,000 from the Reserve Head of Expenditure to the Department for the Economy Revenue Head of Expenditure in 2022
4. Reason for Decision
In light of known and potential funding pressures for 2022 the Minister approves the transfer of net departmental underspend and unspent sums on the Reserve in 2021 to the Reserve in 2022 whilst also allowing an amount to be returned to the Consolidated Fund to minimise the borrowing requirement from the revolving credit facility. Following further reviews of heads of expenditure the Minister approves certain other transfers, as described above.
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.
Article 19 of the Public Finances (Jersey) Law 2019 states that despite an approved Government Plan, the Minister may direct that an unspent amount appropriated for a head of expenditure in one financial year be deemed to be appropriated for a reserve head of expenditure for the following financial year.
Article 20 of the Public Finances (Jersey) Law 2019 states that despite an approved Government Plan, the Minister may direct that an unspent amount appropriated for a head of expenditure for a major project in one financial year is deemed to be appropriated for a head of expenditure for that major project for the following year.
Article 59 (1a&b) of the Public Finances (Jersey) Law 2019 states that a) the capital head of expenditure is deemed to be a head of expenditure in the approved government plan for each financial year until the related capital project is finished; and b) if there are amounts appropriated under the previous Law for a capital head of expenditure that are unspent at the end of the financial year in which this Law comes into force; any amounts that remain unspent are deemed to be appropriated for that head of expenditure in the next financial year.
P.90/2021 (Amd 25) was adopted and states that the Minister for Treasury and Resources should prioritise the application of any unspent funds at the end of 2021 and 2022, be these in respect of spending related to Covid-19, departmental revenue expenditure or capital expenditure, to be returned to the Consolidated Fund and that these funds, along with receipts relating to the move of all taxpayers to current year basis, be used to minimise the borrowing requirements for Covid-19 and the Fiscal Stimulus Fund and support the repayment of debt.
5. Resource Implications
This decision will result in various transfers of unspent amounts in 2021 to the Reserve in 2022, and subsequent allocation of some of those amounts.
In 2022, following all of the above transfers, the Reserves will increase by £71,874,283
including £22,450,658 held centrally for projects. Departmental and project heads of expenditure will increase by £34,279,215.
Borrowing for Covid-19 and Fiscal Stimulus will reduce by an estimated £60.9 million compared to the forecast in the Government Plan 2022-2025.
Report author: Specialist – Business Cases | Document date: 1 February 2022 |
Quality Assurance/Review: Head of Financial Governance | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2022-00xx – End of Year Flexibility |
MD sponsor: Acting Group Director, Strategic Finance |
Appendix 1 – Amounts to be transferred to departments in 2022
Balances set out in the table below will be transferred from the Heads of Expenditure set out in the table in 2021 to the Reserve in 2022 under Article 19 and subsequently allocated to the same project Heads of Expenditure in 2022 under Article 15.
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Delayed in 2021 - Identified Financial Requirements - Transfer to Departments in 2022 | |
| | | | |
Head of Expenditure | Financial Requirement | | | |
Debt Management | Our Hospital P.80/2021 | | £1,900,000 | |
Health and Community Services | Jersey Care Model | | £1,500,000 | |
Office of the Chief Executive | Pilot Schemes | | £611,995 | |
Jersey Overseas Aid | Approved Flexibility | | £257,730 | |
Infrastructure, Housing & Environment | Water Management | | £95,000 | |
Treasury and Exchequer | Review of Parishes | | £50,000 | |
Strategic Policy, Planning & Performance | Census 2021 | | £81,014 | |
| Total Allocations to Departments | | £4,495,739 | |
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Appendix 2 – Transfers to the original projects in 2022
Balances set out in the table below will be transferred from the Heads of Expenditure set out in the table in 2021 to the Reserve in 2022 under Article 19 and Article 20 subsequently allocated to the same project Heads of Expenditure in 2022 under Article 15 and Article 20.
Appendix 3 – Project underspends required for 2023-25
| | | |
| Summary of project underspends required for 2023-25 | | |
| | | |
| Sewage Treatment Works | £4,502,985 | |
| Fort Regent | £1,500,000 | |
| Discrimination Law | £1,000,000 | |
| School & Educational Development | £617,681 | |
| North of St Helier Youth Club | £335,000 | |
| Le Squez Youth Centre | £230,000 | |
| Total released to the Consolidated Fund* | £8,185,666 | |
| | | |
*Although these underspends are required in future years these will be included in the Government Plan 2023-2026, therefore this current allocation can be released to the Consolidated Fund.
Appendix 4 – Project underspends no longer required
| | | |
| Summary of project underspends to be released to the Consolidated Fund | | |
| | | |
| Piquet House - Family Court | £1,065,300 | |
| Rouge Bouillon Site review outcome | £471,174 | |
| Grainville Phase 5 | £440,707 | |
| St Mary School | £200,000 | |
| Replacement RIS/PACS IT Assets | £169,864 | |
| Discrimination Law | £157,101 | |
| Non Mins - Minor Capital | £126,380 | |
| La Collette Waste Site Dev | £60,494 | |
| Les Quennevais Rep School | £57,555 | |
| Refit & Replacement of Fisheries Vessel | £47,932 | |
| Regulation Digital Assets | £30,552 | |
| Replacement Assets & Minor Capital | £26,343 | |
| Our Hospital | £14,375 | |
| Le Squez Youth Centre | £6,713 | |
| DVS Systems | £6,156 | |
| Minor Capital | £2,834 | |
| North of St Helier Youth Club | £1,385 | |
| Equipment replacement 2021 | £119 | |
| Road Safety Improvements | £23 | |
| Total released to the Consolidated Fund | £2,885,009 | |
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Appendix 5 – Project Balances Held Centrally
Balances set out in the table below will be transferred from the Heads of Expenditure set out in the table in 2021 to the Reserve in 2022 under Article 19.
| |
Head of Expenditure | £ |
Sewage Treatment Works (MP) | 6,373,123 |
Cyber (MP) | 3,161,546 |
Integrated Tech Solution (MP) | 2,532,717 |
MS Foundation (MP) | 2,226,404 |
School & Educational Developments | 2,031,192 |
Replacement Assets (Various) | 1,867,805 |
Health Services Improvements | 1,583,668 |
Learning Difficulties (MP) | 825,819 |
Infrastructure | 630,452 |
Discrimination Law, safeguarding | 613,653 |
Court Digitisation | 283,010 |
Service Digitisation | 259,309 |
Office Modernisation (MP) | 61,960 |
Total | 22,450,658 |
Appendix 6 – Projects with specific funding transferred to the Reserve in 2022
Balances set out in the table below will be transferred from the Heads of Expenditure set out in the table in 2021 to the Reserve in 2022 under Article 19.
| |
Head of Expenditure | |
Our Hospital | £17,781,682 |
Dewberry House SARC 2021 | £1,800,000 |
In-patient/support services re | £989,000 |
States of Jersey Police Firearms | £5,000 |
Total | £20,575,682 |
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