Economic Stimulus Plan: Budget allocation to Economic Development Department relating to grant award to Jersey Finance Limited

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A decision made 21 June 2010 regarding: Economic Stimulus Plan: Budget allocation to Economic Development Department relating to grant award to Jersey Finance Limited.

Decision Reference: MD-TR-2010-0099
Decision Summary Title:	Fiscal Stimulus Budget Allocation –Economic Development Department		Date of Decision Summary:	15th June 2010
Decision Summary Author:	Interim Treasurer of the States		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Allocation of fiscal stimulus funding to the Economic Development Department for the project to support the finance industry		Date of Written Report:	15th June 2010
Written Report Author:	Acting Fiscal Stimulus Programme Manager		Written Report : Public or Exempt?	Public
Subject: Economic Stimulus Plan: budget allocation to the Economic Development Department in respect of a grant award to Jersey Finance Limited.
Decision(s): The Minister approved: · the allocation of £230,000 to the Economic Development Department which will be transferred to the department’s 2011 revenue budget to enable onward payment of a grant to Jersey Finance Limited. The grant payments in 2011 will be made in tranches which are considered appropriate by the Economic Development Department, and together will be a maximum of £230,000, based on the actual costs of Jersey Finance Limited operating the overseas office. This commitment to the second year of funding will enable Jersey Finance Limited to open its third overseas office before the end of 2010 with the funds already allocated by way of public ministerial decision of the Minister for Treasury and Resources (reference MD-TR-2010-0032). The third office is part of the fiscal stimulus project to support the finance industry through the economic downturn; and · the inclusion of a further (maximum) amount of £230,000 within the provisional programme (an “amber light”) to be held in reserve to fund the costs of the third office in 2012, on the understanding that the Economic Development department will work with Jersey Finance Limited, and others, to secure a longer term funding solution beyond 2011. The Minister further instructed the Finance Industry Support project group to report on spend of all stimulus monies, and project progress/performance, on a monthly basis in accordance with guidelines set by the Treasury, and return any unspent monies on completion of the project.
Reason(s) for Decision: A discretionary fiscal stimulus allocation from the Stabilisation Fund of £44m has already been approved. The finance industry support programme meets the key criteria for fiscal stimulus being timely, targeted and temporary and will benefit local business and individuals. The establishment of Jersey Finance Limited’s third overseas office in 2010 is dependent on the funds to enable the office to remain open for 2011 and 2012, so in order for the office to open in 2010, the 2011 funding consequences must be committed to, as well as funding held in reserve for 2012. The programme to support the finance industry is designed to satisfy the third objective of the fiscal stimulus initiative, by way of laying the foundations for future growth, and as is the case with many other fiscal stimulus initiatives (such as projects in respect of skills and training), the third office cannot be committed to now without continuing spend into 2011, and possibly 2012. The allocation of £230,000 to the project now for 2011 costs, together with the additional amber light amount of £230,000 for 2012 will enable the workstream to proceed alongside the other components of the project to support the finance industry through the economic downturn and help lay the foundations for future growth.
Resource Implications: No financial or resource implications other than those explained in the accompanying report.
Action required: Treasury to be informed of decision to release necessary funds to the Economic Development Department’s budget.
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Economic Stimulus Plan: Budget allocation to Economic Development Department relating to grant award to Jersey Finance Limited

Treasury and Resources

Ministerial Decision Report

Allocation of fiscal stimulus funding to the Economic Development Department for the project to support the finance industry

1. Purpose of Report

The purpose of this report is to summarise the recommendation of the FSSG to the Treasury Minister to agree green light funding in respect of the Economic Development department’s (“EDD”) support for Jersey Finance Limited’s third overseas office in 2011, as part of the overall fiscal stimulus project to support the finance industry.

2. Background

The £44m fiscal stimulus fund was approved by the States to be set aside from the Stabilisation Fund (2009/P55) to stimulate the local economy during the economic downturn following advice from the Fiscal Policy Panel (the “FPP”), an independent advisory body set up to advise the Treasury and Resources Minister on the Island’s fiscal policy, and in particular the use of the Stabilisation Fund.

All fiscal stimulus projects are designed to put additional money back into the economy, to add to demand and mean that the fall in output and extent of job losses will be less severe than would otherwise be the case.

This allocation of £230,000 in 2011 to the project to support the finance industry, which has already been allocated £2,517,000 (to the Chief Minister’s department and the Economic Development department as set out in Treasury and Resources ministerial decision references MD-TR-2010-0032 and MD-TR-2010-0088), facilitates the opening of Jersey Finance Limited’s third overseas office in 2010 by providing security of funding into the next financial year, recognising that it would not be of benefit or deliver best value for money to establish such a presence for a period of less than one year. A further provisional allocation will be held in reserve within the provisional programme for 2012, on the understanding that the Economic Development department will work with Jersey Finance Limited, and others, to secure a longer term funding solution beyond 2011. These allocations of funding facilitate direct measures to assist the financial services sector, which has, and will continue to, come under increasing pressures and threats as a result of the global economic downturn. Jersey’s finance industry contributes 53% of the Island’s wealth, measured by Gross Value Added (GVA), and its 13,000+ direct employees are the most financially productive in Jersey’s economy.

3. Fiscal Stimulus Rationale

The statistics set out above demonstrate the significance of the finance industry in Jersey. As a result it has been widely agreed during the assessment process that it is simply unacceptable to do nothing. Managing the risk of adverse impacts on Jersey as a result of increased scrutiny of offshore finance centres is of huge importance to steering the Island successfully through the downturn. It is extremely important to take necessary measures to protect existing and foster new opportunities within the Finance Industry in the light of the external threats it is facing.

The overall project of which Jersey Finance Limited’s third overseas office forms a part is uniquely targeted at meeting the third objective of this discretionary intervention (as described in P55/2009), being the creation of new opportunities for business to help support them through the downturn and mitigating job losses across the economy as a whole. The delivery of this project complements existing fiscal stimulus activity and provides an overall programme of measures that is balanced across the overall objectives as well as across the main sectors of Jersey’s economy.

The work stream is to be undertaken by the Economic Development Department (“EDD”) indirectly through the award of a grant to Jersey Finance Limited, a non-government body which has an existing funding relationship with EDD.

4. Recommendation from the Fiscal Stimulus Steering Group

The FSSG recommends a ‘green light’ to the Treasury Minister for the 2011 costs of Jersey Finance Limited’s third office, with the funding to be allocated to EDD’s 2011 revenue budget, and EDD making grant payments in tranches as appropriate based on the actual costs incurred by Jersey Finance Limited operating the overseas office.

The FSSG also recommends that the Treasury Minister include a further (maximum) amount of £230,000 within the provisional programme (an “amber light”) in reserve to fund the costs of the third office in 2012, on the understanding that the Economic Development department will work with Jersey Finance Limited, and others, to secure a longer term funding solution beyond 2011.

There is no impact on manpower.

5. Reason for Decision

A discretionary fiscal stimulus allocation from the Stabilisation Fund of £44m has already been approved. The finance industry support programme, including this particular activity, meets the key criteria for fiscal stimulus being timely, targeted and temporary and will benefit local business and individuals. The allocation of £230,000 to the project in 2011, together with an amber light sum of £230,000 for 2012, will enable the third overseas office to be opened by Jersey Finance Limited which will strengthen the promotion of Jersey in the middle-east and India.

6. Resource Implications

No financial resource implications other than those explained above.

No manpower resource implications.