Capital Infrastructure Rolling Vote: Re-allocation of Funds to Various Projects

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A decision made 17 February 2012:

Decision Reference: MD-T-2012-0017
Decision Summary Title :	Reallocation of the TTS Capital Infrastructure Rolling Vote (Q00RL 10011) to one off major infrastructure projects		Date of Decision Summary:	09 February 2012
Decision Summary Author:	Capital Accountant		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Reallocation of the TTS Capital Infrastructure Rolling Vote (Q00RL 10011) to one off major infrastructure projects		Date of Written Report:	09 February 2012
Written Report Author:	Capital Accountant		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Capital transfers totalling £3,700,000 from the Infrastructure Rolling Vote (Q00RL10011) to the Phillips Street Shaft Capital Vote (£2,000,000), to the Ash Cell Capital Vote (£1,600,000) and to the Asset Replacement Capital Vote (£100,000).
Decision(s): The Minister for Transport and Technical Services approved the following: The transfer of £2,000,000 from the Infrastructure Rolling Vote to the head of expenditure for Phillips Street Shaft (Q00BP12010). The transfer of £1,600,000 from the Infrastructure Rolling Vote to the head of expenditure for Ash Waste Storage Cells (Q00DD11003). The transfer of £100,000 from the Infrastructure Rolling Vote to the head of expenditure for the Replacement Assets (Q00MC10012).
Reason(s) for Decision: To enable the completion of the Phillips Street Shaft Project, to correctly account for Ash Waste Storage Cells under the JFReM, and to increase the amount of assets TTS replace in 2012.
Resource Implications: Other than those detailed in the report there are no further financial or manpower implications.
Action required: The Finance Director to seek approval from the Minister for Treasury and Resources and then to action the budget transfers in conjunction with the Head of Financial Performance Reporting.
Signature:		Position:
Date Signed:		Date of Decision (If different from Date Signed):

Capital Infrastructure Rolling Vote: Re-allocation of Funds to Various Projects

TRANSPORT AND TECHNICAL SERVICES DEPARTMENT

REALLOCATION OF THE TTS CAPITAL INFRASTRUCTURE ROLLING

VOTE (Q00RL10011) TO ONE OFF MAJOR INFRASTRUCTURE PROJECTS

Purpose of Report

To enable the Minister to approve a reallocation of capital budgets amounting to £3,700,000 from the Transport and Technical Services Rolling Infrastructure Vote (Q00RL10011) to the Phillips Street Shaft Vote (Q00BP12010), the Ash Waste Storage Cell Capital Vote (Q00DD11003), and the Replacement Asset Capital Vote (Q00MC10012). This will enable TTS to complete the Phillips Street Shaft project, to properly account for the creation of Ash Waste Storage Cells JFReM, and to achieve greater economies of scale by replacing their current assets in a more timely fashion.

Background

Phillips Street Shaft

The Phillips Street Shaft project was originally considered as part of the original cavern project in 1998, however it was never undertaken due to other priorities within TTS. The flooding in the north of town in October 2010, particularly around the Halkett Public House highlighted the risk of flooding that this part of town is susceptible to. As a result TTS reprioritised their drainage infrastructure work to include this flood alleviation scheme.

The estimated cost of the Phillips Street Shaft Project was £5,600,000. A budget of £3,600,000 for the Phillips Street Shaft Project has been included within the draft Annual Business Plan 2012. As this project is on the drainage infrastructure network this budget was approved on the proviso that TTS fund the remainder from their original infrastructure capital allocation. To improve monitoring of the financial budgets it was decided that the budget and related business units should be moved to a separate head of expenditure.

Ash Waste Storage Cells

Previously ash cells have been treated as part of infrastructure and funded by TTS from their infrastructure capital allocation. The operational efficiencies provided by the new EFW plant has resulted in an increase in hazardous ash waste being created. The safe disposal of this waste material has now increased in priority. However, the impact of increased environmental regulations regarding the safe storage of hazardous ash waste material has substantially increased the cost of ash cells from approximately £300,000 to the region of £1,000,000. This substantial increase in costs has increased the financial risk in the project and as a result moving the budgets and related business units to a separate head of expenditure would be advisable to ensure improved financial controls are followed.

Under the JFReM accounting standards Ash Cells do not meet the accounting definition of infrastructure and as a result should not be treated as such. By moving these business units and budget to a separate head of expenditure the correct accounting treatment can be clearly followed.

Replacement Assets

The 2012 Business Plan allocated a sum of £987,000 over three years to TTS for the replacement of assets. To enable greater flexibility and to achieve greater financial economies of scale TTS wish to transfer £100,000 from their capital infrastructure rolling vote to the replacement asset head of expenditure. By doing this TTS can replace more infrastructure assets sooner, thereby reducing costs of extra maintenance and increasing the economies of scale that are achieved through greater purchasing power.

Discussion

Phillips Street Shaft

The St Helier Water Link and Cavern Project was commissioned in 1998. Phillips Street Shaft was proposed as part of that project. The demolition of the former Ann Court Housing site presented an opportunity for constructing the tunnel connection with minimal disruption.

The project is estimated to cost £5,600,000 of which £3,600,000 was awarded in the 2012 Business Plan. This leaves a deficit of £2,000,000 which TTS are required to fund from their existing capital allocation.

Ash Waste Storage Cells

The operating efficiencies created by the Energy from Waste Plant has increased the hazardous ash waste residue produced. This has resulted in a greater need to create ash waste storage cells. These ash cells were previously funded from the TTS infrastructure rolling vote. However, under the JFReM, these ash cells do not meet the accounting definition for infrastructure. As a result the funding earmarked for these ash cells from the infrastructure rolling vote should be moved to a separate head of expenditure.

Replacement Assets

The States of Jersey Business Plan for 2012 allocated TTS a sum of £987,000 over three years, of this only £253,000 is allocated for 2012. TTS plan to invest an extra £100,000 into replacing infrastructure assets such as pumping stations in 2012 from their rolling infrastructure vote to enable greater economies of scale and to reduce future maintenance costs going forward.

Recommendation

It is recommended that the Minister approves the following:

The transfer of £2,000,000 from the Infrastructure Rolling Vote to the head of expenditure for Phillips Street Shaft (Q00BP12010).
The transfer of £1,600,000 from the Infrastructure Rolling Vote to the head of expenditure for Ash Waste Storage Cells (Q00DD11003).
The transfer of £100,000 from the Infrastructure Rolling Vote to the head of expenditure for the Replacement Assets (Q00MC10012).

Reason for Decision

Under Financial Direction 3.6 and the Public Finances (Jersey) Law 2005, the approval of the Minister for Treasury and Resources is required for any variations to heads of expenditure above £1,000,000. Authority to approve non-contentious budget transfers under £1,000,000 has been delegated to the Treasurer of the States.

Resource Implications

There are no manpower implications or increases in budgets or expenditure.

Action Required

The Finance Director to seek approval from the Ministry for Treasury and Resources and then to action the budget transfers in conjunction with the Head of Financial Performance Reporting.

Written by:	Capital Accountant
Approved by:	Finance Manager