Budget Transfer: Central Contingency to Transport and Technical Services (Guernsey waste income shortfall)

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A decision made on 7 December 2015:

Decision Reference: MD-T-2015-0098
Decision Summary Title :	Allocation of funds from Central Contingency to the Transport and Technical Services Department re Guernsey waste income shortfall		Date of Decision Summary:	03 December 2015
Decision Summary Author:	Finance Manager		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:
Written Report Title :	Allocation of funds from Central Contingency to the Transport and Technical Department re Guernsey waste income shortfall		Date of Written Report:	03 December 2015
Written Report Author:	Finance Manager		Written Report : Public or Exempt?	Public
Subject: One-off budget transfer of £1,500,000 in 2015 from Central Contingency to the Transport and Technical Services Department (TTS) in relation to shortfalls against budget relating to Guernsey waste income.
Decision(s): The Minister accepted the transfer of £1,500,000 budget from Central Contingency to TTS Revenue head of expenditure.
Reason(s) for Decision: Due to the on-going consideration by Guernsey regarding its waste processing options, TTS will be unable to achieve the net income budget of £1,500,000 from the processing of Guernsey waste in 2015, which was included in the MTFP 2013-15. In order to meet its 2015 cash limit TTS requires an additional £1,500,000 budget to be transferred from Central Contingency to the TTS Revenue head of expenditure. In accordance with Financial Direction 3.6 paragraphs 5.1 and 5.3, and the Public Finances (Jersey) Law 2005 Articles 18(1)(c) and 18(2)(c), the approvals of both the Minister for Treasury and Resources, and the Minister for Transport & Technical Services are required for these variations to heads of expenditure. Treasury & Resources Department have authorised this transfer in MD-TR-2015-0128.
Resource Implications: The TTS revenue head of expenditure will increase by £1,500,000 in 2015 and the Central Contingency will decrease by an identical amount.
Action required: The Finance Director to process these budget transfers.
Signature:		Position: Minister for Transport and Technical Services
Date Signed:		Date of Decision (If different from Date Signed):

Budget Transfer: Central Contingency to Transport and Technical Services (Guernsey waste income shortfall)

TRANSPORT AND TECHNICAL SERVICES DEPARTMENT

ALLOCATION OF FUNDS FROM CENTRAL CONTINGENCY TO THE

TRANSPORT AND TECHNICAL DEPARTMENT RE GUERNSEY WASTE

INCOME SHORTFALL

Purpose of Report

To enable the Minister to request a one-off budget transfer of £1,500,000 from Central Contingency in relation to non-receipt of Guernsey waste income.

Background

In the 2013-15 MTFP, the Transport and Technical Services department’s cash limit was reduced by £1.5 million, to recognise the net anticipated effect of income from importing and treating Guernsey Waste. Guernsey is still considering the best way to deal with their municipal and bulky wastes and published its Waste Management Strategy on 29 January 2014.

As part of the fact finding exercise for this document, the States of Guernsey Public Services department stated that the earliest that they could consider export of waste was 1 January 2016. Despite on-going discussions, export of waste is unlikely to commence until 2017 at the earliest and will require the prior approval of both Jersey and Guernsey States Assemblies, the Waste Regulators and the UK.

The States of Jersey are currently involved in the tender process for treatment of Guernsey Waste and provided that Jersey attains “preferred bidder” status will request the States to approve the importation and treatment of waste. Whilst such an operation will as a minimum be required to cover marginal costs of processing, it is unlikely that a significant “profit” element will be attainable from such a contract.

Contingency funding request

As a result of the on-going consideration by Guernsey in relation to the disposal of their municipal and bulky wastes, the budgeted net income included in 2015 is unachievable. As a result of other income pressures within the department, it is not possible to cover this shortfall in 2015 with other savings.

It was identified in 2014 that it would be extremely unlikely that the net income of £1.5 million would be attainable in 2015 and accordingly the sum was allocated within the Central Contingency fund to be requested for release by the TTS department if required.

The requested funding of £1,500,000 will be used by the Department to help address this shortfall as highlighted above.

Recommendation

That the Minister accepts the budget transfer of £1,500,000 from Central Contingency to the Transport and Technical Services Department revenue head of expenditure.

Reason for Decision

Article 18 of the Public Finances (Jersey) Law 2005 (the Law) and Finance Direction No.3.6 ‘Variations to Heads of Expenditure’ (the FD) set out the procedures for transfers between heads of expenditure. Paragraph 5.1 of the FD and Article 18(2)(c) of the Law require departments wanting to transfer funds between heads of expenditure to obtain the approval of the Minister responsible for their administration. Article 18(1)(c) of the Law requires the approval of the Minister for Treasury and Resources for any budget transfers between heads of expenditure. Paragraph 5.2 of the FD delegates non-contentious transfers between heads of expenditure up to £1,000,000 to the Treasurer of the States. Paragraph 5.3 of the FD states that, in all other instances, the approval of the Minister for Treasury and Resources must be obtained.

Resource Implications

The Transport and Technical Services Department’s revenue head of expenditure will increase by £1,500,000 in 2015 and the Central Contingency will decrease by an identical amount.

Action Required

The Finance Director to process these budget transfers.

Written by:	Finance Manager
Approved by:	Director of Finance