Commercial Services Accelerated Transformation: Reserve Funding

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A decision made on 1 April 2021

Decision Reference: MD-TR-2021-0033
Decision Summary Title:	Reserve Funding for Commercial Services Accelerated Transformation		Date of Decision Summary:	30th March 2021
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:	Reserve Funding for Commercial Services Accelerated Transformation		Date of Written Report:	30th March 2021
Written Report Author:	Head of Investment Appraisal		Written Report: Public or Exempt?	Public
Subject: Allocation of Reserve Funding for Commercial Services Accelerated Transformation
Decision(s): The Minister decided to approve an allocation of up to £1,500,000 to the Chief Operating Office Head of Expenditure for Commercial Services Accelerated Transformation.
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 on Friday 17th July 2020 sets the requirement for all allocations from the General Reserve (Covid-19) once approved by the States Treasurer to be referred for review to either the Council of Ministers or the relevant Competent Authorities Ministers and to seek comments from the Principal Accountable Officer (PAO) prior to submission to the Minister for approval. The Investment Appraisal Team has recommended this request for approval and, following this review, the Treasurer, having consulted the PAO, recommends that the Minister allocates funding from the General Reserve. P.67/1999 charges the Minister for Treasury and Resources to regulate the number of persons that may be employed by the States.
Resource Implications: The COO Head of Expenditure to increase by £1,500,000 and the General Reserve to decrease by an equivalent amount. COO’s established headcount will increase by 6 FTE until the end of 2021.
Action required: Head of Financial Governance to ensure this decision is published on www.gov.je and notify the Head of Finance Business Partnering for COO.
Signature:		Position: Deputy S J Pinel, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Commercial Services Accelerated Transformation: Reserve Funding

Treasury and Exchequer

Ministerial Decision Report

Reserve Funding for Commercial Services Accelerated Transformation

Purpose of Report

Allocation of Reserve funding to the Chief Operating Office (COO) for Commercial Services Accelerated Transformation.

Background

The Government Plan 2021-24 provided additional investment in Commercial Services to enable a re-design and transformation of the Commercial Services function over the four-year life of the Government Plan. However, since the original business case for the Government Plan 2021-24 was written, it has now become clear that there will be higher than anticipated demand for Commercial Services support.

These additional pressures are primarily related to:

Brexit – the result of the Brexit negotiations has placed pressure on the Commercial Services function by requiring further work to review risks around supply chain resilience now that the final arrangements are confirmed.

Government Plan 2021-24 initiatives – over the final quarter of 2020 the Commercial Services Team gained a greater understanding of the internal demand that will be placed on it due to programmes and projects that are funded within the Government Plan. This will result in a higher level of demand from departments than was previously anticipated.

Covid-19 – the Commercial Services team has been required to provide urgent and essential expertise in support of a wider range of Covid-19-related initiatives since the onset of the pandemic. During 2021, it is expected that there will continue to be a substantial demand for extraordinary support both in respect of the continued response and to enable projects designed to help the Island and government services recover from the initial crisis phase. The Covid-19 Vaccination Programme is a good example of kinds of initiatives that might require commercial expertise this year.

The programme has multiple streams requiring commercial input that include:

Procurement
Contract management
Inbound logistics

Warehousing and inventory control
Awareness marketing
Scheduling
Outbound logistics
Administration Channels

End of life costs

Even with the additional capacity provided in the Government Plan 2021-24, it would not be possible to provide essential commercial support for the Vaccination Programme, and a wider range of Covid-19/recovery projects that are likely to require commercial input.

Additional capacity

To ensure that Commercial Services has sufficient resource in 2021 to meet the demand that has increased substantially since the Government Plan was agreed, capacity in Commercial Services will be temporarily increased by 6 FTE until 31 December. This additional resource will include two commercial specialists and four procurement specialists.

Social Value Marketplace

The economic consequences of Covid-19 and, potentially of Brexit, will have a lasting effect on the economy with structural impacts that are expected to persist over the life of the Government Plan 2021-24. Given the need to introduce a Winter Strategy Circuit Breaker in December 2020, the size of the immediate economic contraction will be greater than was anticipated by the Fiscal Policy Panel at the time the Government Plan was lodged. As a consequence, it is now increasingly necessary for Government to explore ways of leveraging the money it spends to optimise its effect on the Island. The Social Value strategy will focus on delivering enhanced value for money. In particular, the framework's economic and social elements can be a catalyst for the Island’s economic and social recovery through the provision of training, employment opportunities, and a focus on local supply chains.

Further to the P56 proposition, and through the work already undertaken to commence the development and delivery of a Social Value Pilot, there is an opportunity to materially fast track the Social Value initiative through the development of a Social Value Marketplace for Jersey; this would support the proposition beyond its original ambition, and provide opportunities for Jersey's small and minority suppliers alongside the 3rd sector.

To explore the viability of a Social Value Market place, a one-year feasibility study will be conducted to assess the potential benefits to the Island that a Social Value Marketplace could bring.

Commercial Academy

One of the key drivers for our Commercial Services Redesign is to increase the internal commercial capability across the organisation. Investment in the Government Plan sought to address the need for greater commercial capability by conducting a feasibility study to establish the viability of a Commercial and Procurement Academy for the Island in Q3/4 2022.

As the Island moves progress through its economic recovery, is increasingly important for the Government to invest in the skills development of Islanders and take steps to develop a sustainable solution to shortages in commercial expertise. Additional funding will therefore be made available to expediate the feasibility study for a Commercial Academy to help upskill the local workforce and build the commercial resilience within government.

Implications for future years

All funding relates exclusively to 2021, from 2022 onwards Commercial Services will be able to deliver its redesign programme from within the resources allocated to it in Government Plan 2021-24.

Recommendation

The Treasurer recommends that the Minister approves an allocation of £1,500,000 to the COO Head of Expenditure to enable investment in the Commercial Services Accelerated Transformation.

Reason 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 on Friday 17th July 2020 sets the requirement for all allocations from the General Reserve once approved by the States Treasurer to be referred for information to the Council of Ministers and for to be comments will be sought from the Principal Accountable Officer (PAO) prior to submission to the Minister for approval.

The Investment Appraisal Team has recommended this request for approval and, following this review, the Treasurer, having consulted the PAO, recommends that the Minister allocates funding from the General Reserve.

P.67/1999 charges the Minister for Treasury and Resources to regulate the number of persons that may be employed by the States.

Resource Implications

The COO Head of Expenditure to increase by £1,500,000 and the General Reserve to decrease by an equivalent amount.

COO’s established headcount will increase by 6 FTE until the end of 2021.

Report author: Head of Investment Appraisal	Document date: 30th March 2021
Quality Assurance / Review : Head of Financial Governance	File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2021-0033 - Reserve funding for Commercial Services Accelerated Transformation
MD sponsor : Treasurer of the States