Comprehensive Spending Review: Budget transfer to Health and Social Services for Restructuring Provision

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A decision made 6 February 2012:

Decision Reference: MD-TR-2012-0014
Decision Summary Title:	CSR – Allocation of Restructuring Provision and Budget Transfer to H&SS		Date of Decision Summary:	26 January 2012
Decision Summary Author:	Comprehensive Spending Review Programme Director		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	CSR – Allocation of Restructuring Provision and Budget Transfer to H&SS		Date of Written Report:	26 January 2012
Written Report Author:	Comprehensive Spending Review Programme Director		Written Report : Public or Exempt?	Exempt 3.2.1 (a)(x)
Subject: Approval of requests for Restructuring Provision funds in support of the Comprehensive Spending Review and transfer of budget to the Health and Social Services Department.
Decision(s): The Minister approved: (a) requests totalling a maximum of £615,000 in 2012 and a commitment of £82,000 in 2013 in support of the CSR process to be funded from the Restructuring Provision; and (b) a 2012 budget transfer of £615,000 from the Restructuring Provision to the Health and Social Services Department.
Reason(s) for Decision: The States recognised the need to invest funds to achieve savings as significant as £65 million over 3 years when it approved a Restructuring Provision of £6 million and £10 million in the 2011 and 2012 budgets respectively and earmarked £10 million in the 2013 Budget. This current request for a total of £697,000 over the next 2 years for two projects in Health and Social Services, which is supported by the Council of Ministers, will ensure CSR projects are progressed and achieved. Article 15(1)(a) 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 used for the purposes of another head of expenditure.
Resource Implications: The Treasury and Resources revenue head of expenditure to decrease by £615,000 and £82,000 in 2012 and 2013 respectively and the Health and Social Services revenue head of expenditure to increase by the same amounts. This decision does not change the total amount of expenditure approved by the States for 2012 or 2013.
Action required: Head of Decision Support to notify the Comprehensive Spending Review Programme Director and Head of Financial Performance Reporting that this decision has been approved.
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Comprehensive Spending Review: Budget transfer to Health and Social Services for Restructuring Provision

Treasury and Resources

Ministerial Decision Report

COMPREHENSIVE SPENDING REVIEW (CSR) – ALLOCATION OF RESTRUCTURING PROVISION AND BUDGET TRANSFER TO H&SS

This report is Exempt under Section 3.2.1(a)(x) of the Code of Practice on Access to Information, in order to prevent disclosure of commercially sensitive information.

Purpose of Report

To enable the Minister for Treasury and Resources to:

(a) approve requests totalling a maximum of £615,000 in 2012 and commitments of £82,000 in 2013 in support of the CSR process to be funded from the Restructuring Provision; and

(b) approve a budget transfer of £615,000 from the Restructuring Provision to the Health and Social Services Department under Article 15(1)(a) of the Public Finances (Jersey) Law 2005;

Background

A Restructuring Provision of £10 million was approved in the 2012 Business Plan to support the CSR process and facilitate the achievement of savings throughout departments, which followed an allocation of £6 million in 2011. At its meeting on 15 December 2011, the Council of Ministers endorsed the approval process whereby bids from departments would be submitted to the CSR Programme Office, challenged by that team and the CSR Programme Board and, if supported at this stage, forwarded to the Council of Ministers for approval. Under the Public Finances Law, the actual transfer of funds from the Provision can only be actioned through a Treasury and Resources Ministerial Decision. It was agreed that urgent requests could be approved directly by the T&R Minister with the Council of Ministers being informed.

Two key principles regarding the allocation of funds from the Restructuring Provision were also endorsed as follows:

(a) That the request is approved on the understanding that it could not be funded from within a department’s current budget; and

(b) should a department have an unplanned underspend on its revenue budget at the end of the financial year, the allocation from the Restructuring Provision is taken back to the Provision as a first call on that underspend, in order to fund future investment.

Current Financial Position

(a) A summary showing the financial position of the Restructuring Provision together with the impact of the current requests is as follows:

(b) Appendix A summarises the proposals already approved together with the current requests.

(c) The Business Plan acknowledged that there were further indicative requirements which, at that time, would reduce the 2012 and 2013 remaining budgets to about £1 million and £5 million respectively. Although departments have yet to submit firm proposals, it is inevitable that the provision will be required to support further savings initiatives. In addition, this takes no account of other potential uses of the provision (eg funding Procurement savings not achieved within timescales, ESC CSR target not delivered or skills and training iniatives beyond 2012 as mentioned in the 2012 Business Plan).

(d) A request will be made to carry forward the 2011 underspend of £712,000 into 2012 to increase the funds available. In addition, some departments have indicated that their 2011 budgets from the Restructuring Provision will be underspent. Departments will be making carry forward requests for these monies so the specific projects can continue.

Funding Requested

(a) The current requests, which were approved by the Council of Ministers at its meeting on 26 January 2012, are as follows:

	2012 £’000	2013 £’000	TOTAL £’000
H&SS – Support for Lean Projects (max)	202	82	284
H&SS – Energy Projects	413	-	413
TOTAL	615	82	697

(b) Full Business Cases for each of these requests have been submitted and challenged by the CSR Programme Office and supported by the CSR Programme Board. All pay back periods are within the 3 year maximum prescribed under the CSR process. Appendix B provides a short summary of each proposal as additional information.

Comments

(a) If both requests are approved, a balance of £5.1 million and £8.2 million will remain in the Restructuring Provision in 2012 and 2013 respectively, although this doesn’t take into account any underspend in 2011 and 2012 being carried forward to the following year.

(b) Chief Officers have been asked to confirm for the 2011 year end that any funds allocated from the Restructuring Provision have been spent as planned and achieved the savings as indicated. Any underspend on a specific proposal will be transferred back to the provision. This will also be the case for any 2012 and 2013 approvals.

Recommendation

The Minister is recommended to:

(a) approve requests totalling a maximum of £615,000 in 2012 and a commitment of £82,000 in 2013 in support of the CSR process to be funded from the Restructuring Provision; and

(b) approve a budget transfer of £615,000 from the Restructuring Provision to the Health and Social Services Department under Article 15(1)(a) of the Public Finances (Jersey) Law 2005;

Reasons for Decision

The States recognised the need to invest funds to achieve savings as significant as £65 million over 3 years when it approved a Restructuring Provision of £6 million and £10 million in the 2011 and 2012 budgets respectively and earmarked £10 million in the 2013 Budget. This current request for a total of £697,000 over the next 2 years for two projects in Health and Social Services, which is supported by the Council of Ministers, will ensure CSR projects are progressed and achieved.

Article 15(1)(a) 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 used for the purposes of another head of expenditure.

Resource Implications

The Treasury and Resources revenue head of expenditure to decrease by £615,000 and £82,000 in 2012 and 2013 respectively and the Health and Social Services revenue head of expenditure to increase by the same amounts.

This decision does not change the total amount of expenditure approved by the States for 2012 or 2013.

Report author : Comprehensive Spending Review Team Leader	Document date : 26/01/2012
Quality Assurance / Review : Head of Decision Support	File name and path L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2012-0014 - 4th tranche CSR allocation Restructuring Provision - CA\WR - 4th tranche CSR allocation Restructuring Provision 120125.doc
MD sponsor : Treasurer of the States