Budget transfer from Unspent Capital Allocations to Central Contingencies

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A decision made 5 October 2018:

Decision Reference: MD-TR-2018-0122
Decision Summary Title:	Transfer of Unspent Capital Allocations to Central Contingencies		Date of Decision Summary:	14th September 2018
Decision Summary Author:	Head of Decision Support		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Transfer of Unspent Capital Allocations to Central Contingencies		Date of Written Report:	14th September 2018
Written Report Author:	Financial Performance Reporting Manager		Written Report : Public or Exempt?	Public
Subject: A non-recurring transfer of £3,730,519.09 from various Capital Heads of Expenditure (as detailed in the attached report) to Central Contingencies.
Decision(s): The Minister decided to approve a non-recurring transfer of £3,730,519.09 from the Capital Heads of Expenditure to Central Contingencies.
Reason(s) for Decision: Article 18(1A) of the Public Finances (Jersey) Law 2005 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 transferred from the head of expenditure to contingency expenditure, within or after the end of the relevant financial year. Article 18(1B) of the Public Finances (Jersey) Law 2005 states that the Minister shall, after consulting the Chief Minister and PAO, give the States Assembly at least 2 weeks’ notice before an amount is transferred under paragraph (1)(c). Article 18(1C) of the Public Finances (Jersey) Law 2005 states that before giving notice under paragraph (1B), the Minister shall, in relation to any States funded body, consult the Minister responsible for that body. The Ministers for the departments listed have been consulted. The Chief Minister and Principal Accountable Officer (PAO) have been consulted.
Resource Implications: Capital Heads of expenditure to decrease by £3,730,519.09 in 2018 and Central Contingencies to increase by the same amount. This decision does not change the total amount of expenditure approved by the States in the Medium Term Financial Plan 2016-2019.
Action required: Head of Decision Support to advise the Financial Performance Reporting Manager once this decision has been approved. In accordance with Article 18 (1B) the Greffier of the States is requested to arrange for the attached report to be presented to the States at least 2 weeks before the transfer is concluded. After the expiry of 2 weeks following presentation to the States the transfer may be concluded.
Signature:		Position: Deputy S J Pinel, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Budget transfer from Unspent Capital Allocations to Central Contingencies

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States Treasury and Exchequer

Ministerial Decision Report

TRANSFER OF UNSPENT CAPITAL BUDGETS TO CENTRAL CONTINGENCIES

Purpose of Report

To request the approval of a non-recurring transfer of £3,730,519.09 from various Capital Heads of Expenditure listed below to Central Contingencies.

Background

The outturn cost of capital projects is inherently variable with many factors such as ground conditions, local market conditions and even weather contributing to the final cost. These factors are managed through an appropriate level of project contingency which is set at the start of the project to manage risk and contain the total project costs within the approved allocation.

As a result, there can be budget remaining unspent and no longer required for the purpose it was approved once projects are complete. There are also instances where budget is allocated for a specific capital project but as work progresses to develop the project, circumstances change in a Department’s priorities or service delivery requirements which mean the budget is no longer required for that purpose.

Existing capital allocations have been reviewed to identify any funds that are no longer required and which could be reallocated in order to manage pressures from within existing resources. Specific comments on two of the allocations are provided below:

Children’s Homes: £2 million was allocated in 2013 to develop homes for children who require residential care. £750,000 of this was allocated to an upgrade of the Oakwell respite care home. This project completed in 2014. The remaining £1.25 million was allocated for the construction of three new care homes for people with autism on the Greenfields site. This project was taken to the point of tendering for the project (with £220,000 of associated fees which will need to be written off to revenue) before it was decided to put the project on hold pending a review of service provision by the H&SS Corporate Directorate.

Refurbishment of Sandybrook: £1.2 million was allocated in 2014 to upgrade and refurbish the Sandybrook Care Home. Following more detailed feasibility works it was found that the £1.2 million would be insufficient to undertake the works required to the home. It was decided to put this project on hold and review the island’s Care Home requirements and current provision so that the funding could be best utilised. Based on this it has been decided to transfer the funding to Central Contingencies so that it can be re-prioritised.

If further proposals relating to the above schemes are brought forward they will be reconsidered for allocation of capital funding,

3. Recommendation

The Minister is recommended to approve a non-recurring transfer of £3,730,519.09 from various Capital Heads of Expenditure listed above to Central Contingencies.

4. Reason for Decision

Article 18(1A) of the Public Finances (Jersey) Law 2005 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 transferred from the head of expenditure to contingency expenditure, within or after the end of the relevant financial year.

Article 18(1B) of the Public Finances (Jersey) Law 2005 states that the Minister shall, after consulting the Chief Minister and PAO, give the States Assembly at least 2 weeks’ notice before an amount is transferred under paragraph (1)(c).

Article 18(1C) of the Public Finances (Jersey) Law 2005 states that before giving notice under paragraph (1B), the Minister shall, in relation to any States funded body, consult the Minister responsible for that body. The Minister for the departments listed have been consulted.

The Chief Minister and Principal Accountable Officer (PAO) have been consulted.

5. Resource Implications

This decision will result in the listed capital heads of expenditure decreasing by £3,730,519.09 in 2018 and Central Contingencies increasing by the same amount.

This decision does not change the total amount of expenditure approved by the States for 2017 in the Medium Term Financial Plan.

Report author : Financial Performance Reporting Manager	Document date 14th September 2018
Quality Assurance / Review : Director of Financial Planning and Performance/ Head of Decision Support	File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2018-0122 - Transfer of unspent capital to Contingency £3.73m
MD Sponsor: Director of Financial Planning and Performance