Treasury and Resources
Ministerial Decision Report
Reversal of fiscal stimulus funding for extension of transitional relief
1. Purpose of Report
To set out the detailed reasons for the reversal of a fiscal stimulus funding decision made on 27th August 2010, through which the Minster awarded £1,440,000 to the department for Social Security (MD-TR-2009-0132).
2. Background
The fiscal stimulus bid to extend transitional relief for 12 months beyond the first planned reduction, scheduled to come into effect in October 2009, was successful, with the Minister awarding £1,440,000 to Social Security on 27th August 2010. The evaluation supported the bid’s compliance with the key criteria for fiscal stimulus being timely, targeted and temporary and benefiting local individuals, and included a review of the forecast cost of extending the benefit at the 100% level to ensure that the department’s existing available budget did not allow for transition to continue without assistance from the fiscal stimulus fund.
3. Current position
As at Q2 2010 the Social Security department had not drawn on this available budget due to a declining total monthly cost of transition between October 2009 and July 2010 in spite of the extension of 100% support in accordance with Income Support (Transitional Provisions) (Jersey) Order 2008 (Revised Edition – 1 January 2010), which prompted a revision of the financial forecasts.
Revised financial forecasts, submitted to the fiscal stimulus programme in August, show an expected total spend on transitional relief that is significantly lower than previous forecasts which appropriately reflected the maximum potential exposure to pay out transition benefit (and on which the original funding decision was based). As a result, the Chief Officer of Social Security has confirmed that the department has sufficient existing budget, without contribution from the fiscal stimulus allocation, to fund transitional relief in 2010 and beyond, to its cessation in 2015.
It is noted that the Minister’s commitment of funding in MD-TR-2009-0132 has resulted in a successful fiscal stimulus initiative despite the fact that the department now has no need to draw on the fiscal stimulus funds. The commitment in August 2009 provided the funding assurances needed by Social Security at the time to commit to extension of the maximum level of transitional support. This has delivered financial benefit to lower income groups at a time when it a withdrawal of support would have had a significant impact on individuals as well as likely reductions in spend.
The £1,440,000 previously allocated and accounted for as committed to the project can now be released and retained by the Treasury within the fiscal stimulus allocation. These funds may be later utilised for another scheme, or will be returned to the Stabilisation Fund on completion of the fiscal stimulus programme overall.
4. Recommendation
It is recommended that the Minister approve the reversal of the funding allocation of £1,440,000 approved in MD-TR-2009-0132 and instruct the retention of the funds in the fiscal stimulus allocation to be later awarded, if appropriate, to other schemes or returned to the Stabilisation Fund (together with any other unspent fiscal stimulus monies) on final completion of the programme.
5. Reason for Decision
The department for Social Security has sufficient existing budget, without contribution from the fiscal stimulus allocation, to fund transitional relief in 2010 and beyond to its cessation in 2015.
As a result it is necessary to formally reverse the allocation and ensure that the funds remain in the fiscal stimulus allocation for award to another scheme or return to the Stabilisation Fund following completion of the fiscal stimulus programme overall.
6. Resource Implications
No financial resource implications other than those explained above.
No manpower resource implications.