Budget transfer: Social Security to Housing: Rent and Income Support Increases from October 2013

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A decision made 24 July 2013:

Decision Reference: MD-TR-2013-0063
Decision Summary Title:	Budget transfer from Social Security to Housing as a result of the proposed Housing Rent and Income Support increases from October 2013		Date of Decision Summary:	16 July 2013
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:	Budget transfer from Social Security to Housing as a result of the proposed Housing Rent and Income Support increases from October 2013		Date of Written Report:	16 July 2013
Written Report Author:	Head of Financial Planning		Written Report : Public or Exempt?	Public
Subject: A budget transfer from the Social Security Department (SSD) revenue head of expenditure to the Housing Department (HSG) revenue head of expenditure amounting to £148,700 in 2013, £600,200 in 2014 and £622,300 in 2015 as a result of lower than forecast increases proposed for Income Support and Housing rents from October 2013.
Decision(s): The Minister approved a budget transfer from the SSD revenue head of expenditure to the HSG revenue head of expenditure amounting to £148,700 in 2013, £600,200 in 2014 and £622,300 in 2015 as a result of lower than forecast increases proposed for Income Support and Housing rents from October 2013. SSD are forecast to make savings in Income Support as a result of lower than forecast increases in benefit from October 2013. The department has agreed to contribute a large proportion of these savings to fund a shortfall in the forecast rental income to the HSG as a result of the lower increase in housing rents proposed from October 2013. Both increases are proposed at 2.15% compared with 3.61% forecast in the Medium Term Financial Plan (2013 – 2015).
Reason(s) for Decision: Article 2(6) of the Public Finances (Transitional Arrangements) (Jersey) Order 2011 states that all or any part of the amount appropriated by a head of expenditure may, with the approval of the Minister for Treasury and Resources, be used for the purposes of another head of expenditure.
Resource Implications: The SSD revenue head of expenditure will decrease by £148,700 in 2013, £600,200 in 2014 and £622,300 in 2015 with a corresponding increase in the HSG revenue head of expenditure.
Action required: The Business Manager to advise the Department Finance Directors for Housing and Social Security that this decision has been approved and advise the Financial Performance Reporting Manager that the transfer can be processed.
Signature:		Position: Senator Philip Ozouf, Treasury and Resources Minister
Date Signed:		Date of Decision:

Budget transfer: Social Security to Housing: Rent and Income Support Increases from October 2013

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Treasury and Resources

Ministerial Decision Report

BUDGET TRANSFER FROM SOCIAL SECURITY TO HOUSING AS A RESULT OF THE PROPOSED HOUSING RENT AND INCOME SUPPORT INCREASES FROM OCTOBER 2013.

Purpose of Report

To enable the Minister for Treasury and Resources (T&R) to approve a budget transfer from the Social Security Department (SSD) revenue head of expenditure to the Housing Department (HSG) revenue head of expenditure amounting to £148,700 in 2013, £600,200 in 2014 and £622,300 in 2015 as a result of lower than forecast increases proposed for Income Support and Housing rents from October 2013.

Background

The Medium Term Financial Plan (MTFP) 2013-2015 included forecast assumptions for the increases to income support and rent increases for October 2013 with the SSD and HSG’ cash limits being based on these assumptions. The forecast assumption was 3.61% being half-way between the MTFP forecast of RPI and average earnings for 2013. Similar assumptions were included for October 2014 and October 2015.

The States have recently debated and approved P33/2013 - The Reform of Social Housing. This proposition sets the future strategy for social housing in Jersey and included annual rental increases at RPI plus 0.75%. The Housing Department intends to introduce this metric, as approved, in the course of the transition to its new status. The RPI figure for March 2013 is 1.4% and the relevant average earnings increase is 1.5%. As a result the increase in rent proposed for October 2013 is 2.15%, being 1.4% inflation rate and the additional 0.75%.

In order that the increases in income support and housing rents are kept on a similar basis as assumed in the MTFP, and in line with past practice, the Minister for SSD was advised of the housing rent proposals and has agreed to propose a similar increase for income support. P66/2013 Draft Income Support (Amendment No.9)(Jersey) regulations 201- proposes increases to income support at the level of 2.15% from October 2013.

The impact on HSG is a forecast reduction in rental income of £148,700 in 2013, compared to the MTFP. The full year affect of this reduction in 2014 is £600,200 and by 2015 compounds to £622,300. If this reduction is not compensated for, HSG states that this will cause the Business Model presented to the States as R15/2013 to become unviable.

The SSD will accrue savings as a result of the reduced increase in income support. A proportion of these savings are broadly equivalent to the loss of rental income to HSG for States tenants on income support. This represents about two thirds of the loss of housing rental in each year.

SSD will also accrue savings in respect of private sector tenants on income support and the department has agreed to contribute a proportion of these savings in addition to those made on States tenants to offset the total loss of rental income to HSG.

3. Recommendation

The Minister for Treasury and Resources is recommended to approve a budget transfer from the SSD revenue head of expenditure to the HSG revenue head of expenditure for 2013 of £148,700. The Minister is also recommended to approve that £600,200 and £622,300 is transferred from the SSD revenue head of expenditure to the HSG revenue head of expenditure for 2014 and 2015 respectively, representing the recurring full year affect of the October 2013 increases in income support and housing rents.

4. Reason for Decision

Article 2(6) of the Public Finances (Transitional Arrangements) (Jersey) Order 2011 states that all or any part of the amount appropriated by a head of expenditure may, with the approval of the Minister for Treasury and Resources, be used for the purposes of another head of expenditure.

5. Resource Implications

The SSD revenue head of expenditure will decrease by £148,700 in 2013, £600,200 in 2014 and £622,300 in 2015 with a corresponding increase in the HSG revenue head of expenditure.

Report author : Head of Financial Planning	Document date : 16th July 2013
Quality Assurance / Review : Director of Financial Planning and Performance	File path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2013-0063 - Budget transfer from SS to Housing - Income support\WR - Budget Transfer for Income Support and Housing Rents October 2013.doc
MD sponsor :Treasurer of the States