Transfer from General Reserve to Cusomer and Local Services: Visitor Accommodation Support Scheme

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A decision made 16 November 2020:

Decision reference: MD-TR-2020-0144
Decision Summary Title:	Allocation of Reserve Funding to CLS for the delivery of a Visitor Accommodation Subsidy Scheme in 2020		Date of Decision Summary:	13th November 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:	Allocation of Reserve Funding to CLS for the delivery of a Visitor Accommodation Subsidy Scheme in 2020		Date of Written Report:	12th November 2020
Written Report Author:	Head of Investment Appraisal		Written Report: Public or Exempt?	Public
Subject: The allocation of up to £4,217,410 in 2020 from the General Reserve to Customer and Local Services (CLS) for the delivery of a Visitor Accommodation Support Scheme (Registered Tourist Accommodation Providers) to provide support for fixed costs, such support being required as a result of the impact of COVID-19.
Decision(s): The Minister approved a non-recurring allocation from the General Reserve in 2020 of up to £4,217,410 to CLS for the delivery of a Visitor Accommodation Support Scheme as a result of the impact of COVID-19.
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 (published as R.80/2020) sets the requirement that all proposed allocations from the General Reserve (Covid-19), once recommended for approval by the States Treasurer (taking into account comments from the Principal Accountable Office), are referred for review to either the Council of Ministers or the relevant Competent Authorities Ministers prior to submission to the Minister for approval. The Investment Appraisal Team has recommended this request for approval and further to these reviews the Treasurer, having consulted with the Principal Accountable Officer and noting that the Council of Ministers at their meeting of the 16th October considered and approved the principles of the Scheme, recommends this allocation to the Minister.
Resource Implications: The CLS head of expenditure to increase by up to £4,217,410 in 2020 and the General Reserve to decrease by the same amount. This decision does not change the total amount of expenditure approved by the States in the Government Plan 2020-2023. It is noted that the proposed scheme is intended to run to 30 April 2021. The funding required in 2021 is subject to approval of the Government Plan 2021-24.
Action required: The Head of Financial Governance to advise the Specialist – Business Cases and the Head of Finance Business Partnering of CLS that this decision is approved.
Signature:		Position: Deputy S J Pinel Minister for Treasury and Resources
Date Signed:		Date of Decision:

Transfer from General Reserve to Cusomer and Local Services: Visitor Accommodation Support Scheme - Covid-19

Treasury and Exchequer

Ministerial Decision Report

ALLOCATION of Reserve Funding to CLS for DELIVERY OF A VISITOR ACCOMMODATION SUPPORT SCHEME in 2020

Purpose of Report

To enable the Minister to approve the allocation of up to £4,217,410 in 2020 from the General Reserve to Customer and Local Services (CLS) for the delivery of a Visitor Accommodation Support Scheme (Registered Tourist Accommodation Providers) to provide support for fixed costs, such support being required as a result of the impact of COVID-19.

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).

Public health restrictions implemented in response to COVID-19 including the local lockdown, self-isolation and border restrictions, lockdowns in the Island’s key visitor markets, together with a dramatic fall in confidence in both leisure and business travel have resulted in an unprecedented drop in visitor numbers.

Many accommodation providers have incurred significant financial losses over the period in which their business model requires them to produce profit in order for them to sustain the business over the winter period.

Whilst the Co-Funded Payroll Scheme has provided invaluable assistance to the sector, without further support it is likely that many accommodation providers will cease to trade and significant visitor infrastructure assets, such as hotels may be sold or repurposed as residential accommodation.

The visitor accommodation sector is a key element and enabler of Jersey’s wider local economy and Island infrastructure. The sector directly and indirectly supports the wider hospitality sector, high street retail and wholesalers, visitor attractions (including heritage, arts and culture), on-island local transport and off-island connectivity in terms of international air and sea links.

If a critical mass of visitor accommodation cannot be retained beyond this challenging period, then it is likely that long term damage will be caused not only to this visitor accommodation sector but also to those co-related sectors. Due to the high cost of entry to the sector (and scarcity of sites, should repurposing of existing hotels take place) there will be limited scope for any rapid backfilling of capacity.

By providing targeted support to those Registered Tourist Accommodation Providers most impacted by Covid-19, the scheme intends to meet the following objectives:

• Ensure that Jersey maintains a core critical mass of quality and diverse bed-stock in Registered Tourist Accommodation providers to support the tourist economy to reopen in April 2021

• Limit the failure of Registered Tourist Accommodation Providers as a result of the impact of Covid-19 restrictions which would require significant, and potentially prohibitive, capital investment for the premises to be reopened by a new operator

Subject to various conditions, including a 12-month 50% turnover detriment test (applying the same definition of turnover as used for the Co-Funded Payroll Scheme), the scheme, which is intended to run for 7 months to cover the period October 2020 to April 2021, will provide a contribution to operators’ fixed costs on a per room basis. The Scheme is available to Registered Tourist Accommodation Providers irrespective of whether they are open or closed and irrespective as to whether the rooms are occupied or not.

The estimated cost of the proposed scheme over 2020 and 2021 is £9,837,775:

	2020	2021	Total
Subsidy	£4,200,000	£5,600,000	£9,800,000
Establishment, operating and audit costs	£17,410	£20,365	£37,775
TOTAL	£4,217,410	£5,620,365	£9,837,775

Recommendation

The Minister is recommended to approve the allocation of up to £4,217,410 from the General Reserve to the CLS head of expenditure in 2020 for the delivery of the proposed Visitor Accommodation Support Scheme (Registered Tourist Accommodation Providers) to provide support for fixed costs required as a result of the impact of COVID-19.

Reasons 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 (published as R.80/2020) sets the requirement that all proposed allocations from the General Reserve (Covid-19), once recommended for approval by the States Treasurer (taking into account comments from the Principal Accountable Office), are referred for review to either the Council of Ministers or the relevant Competent Authorities Ministers prior to submission to the Minister for approval.

The Investment Appraisal Team has recommended this request for approval and further to these reviews the Treasurer, having consulted with the Principal Accountable Officer and noting that the Council of Ministers at their meeting of the 16th October considered the principals of the Scheme, recommends this allocation to the Minister.

5. Resource Implications

The CLS head of expenditure to increase by up to £4,217,410 in 2020 and the General Reserve to decrease by the same amount. This decision does not change the total amount of expenditure approved by the States in the Government Plan 2020-2023.

Report author: Head of Investment Appraisal	Document date : 12th November 2020
Quality Assurance / Review: Group Director, Strategic Finance	File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2020-0144 Reserve Funding to CLS for Visitor Accommodation Support Scheme
MD sponsor: Group Director, Strategic Finance