Treasury and Exchequer
Ministerial Decision Report
Allocation of Covid Reserve funding to economy in 2021 to enable essential air connectivity to and from the Island due to the impact of COVID-19
- Purpose of Report
To enable the Minister to approve the allocation of up to £241,500 in 2021 from the Covid Reserve to the Economy head of expenditure to enable essential air connectivity to and from the Island due to the impact of COVID-19.
- Background
On 7 April 2020, the Minister approved MD-TR-2020-0037, which allocated Reserve Funding to OCE (Office of the Chief Executive) to cover emergency funding to enable essential air connectivity to and from the Island.
The original business case sought, and was awarded, funding of £330,000 (which included a contingency element of £50,000) for the initial 3-month period. Within the terms of the contract, it permitted for a rolling one-month extension up to the maximum of 12-months. The contract was subsequently extended (by MD-TR-2020-0074) for a further month (to the end of July).
In response to the recent significant increases in the number of cases of Covid-19 in Europe, which have led both the UK and Jersey Governments to implement stricter public health restrictions and the subsequent impact on the number of people willing or able to travel between the UK and Jersey (and vice-versa), there was a need to re-instate the life-line flights both for essential personnel / public use and or medical only flights (if so required). The restart was approved by the Minister in MD-TR-2020-0147.
The seriousness of the Covid-19 second wave has continued to worsen both in the UK and Jersey. The new variant of Covid-19 in the UK, which the UK Health Secretary has called ‘out of control’, has resulted in the UK implementing significantly stricter public health restrictions across much of South East England and a significant list of countries closing their borders with the UK.
The stricter UK regional tiered restrictions are expected to be kept in place for some time. Should the variant spread further across the UK and prove, as believed, to be significantly more transmissible than previous strains, such public health restrictions are likely to be tightened further.
Jersey is anticipated to amend its travel policies and quarantine requirements on UK arrivals into Jersey. The combination of these factors increase the commercial risks on scheduled airline operators and the likelihood that they may seek to temporarily suspend flights until such time as they become commercially viable to recommence.
It is imperative that Government maintains the option, at short notice, to implement minimum connectivity flights.
Covid-19 funding of up to £241,500 is required in 2021 to enable, should it be required, the continuation of the Government’s Blue Islands essential connectivity flights in 2021. This consists of up to £201,500 for ongoing essential route connectivity, and a contingency of £40,000 for additional student repatriation flights between Jersey and the UK (as required).
- Recommendation
The Minister is recommended to approve the allocation of up to £241,500 in 2021 from the Covid Reserve to the Economy head of expenditure to enable essential air connectivity to and from the Island due to the impact of COVID-19.
- 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 Contingency Allocation Policy (published as R.23/2020) sets the requirement for all allocations from contingency to be considered by the Investment Appraisal Board, Principal Accountable Officer and States Treasurer prior to submission to the Minister for approval, however it also states that ‘Where a request is made for £100,000 or less, or where the Minister is satisfied that there is an urgent need to provide funding in the public interest, an allocation may be made by the Minister on the recommendation of the Treasurer.’ A draft business case has been received and reviewed by the Investment Appraisal Team.
Further to this review, the Treasurer recommends this allocation to the Minister for approval.
Funding of up to £330,000 was allocated to the Office of the Chief Executive (OCE) head of expenditure in 2020 through MD-TR-2020-0037 to allow Government of Jersey to contract with Blue Islands to provide air services for the movement of essential workers and non-emergency medical patients on a non-commercial basis.
The funding was originally provided for the initial minimum contract period of three months (as envisaged by the initial business case) but was subsequently extended (by MD-TR-2020-0074) for a further month (to the end of July). This extension responded to the circumstances whereby commercial flights to and from the Island did not recommence until mid-July.
Recent significant increases in the number of cases of Covid-19 in Europe, have led both the UK and Jersey Governments to implement stricter public health restrictions. England is operating under a lockdown situation until (at least) 2nd December 2020. Inevitably these increased restrictions have negatively impacted the number of people willing or able to travel between the UK and Jersey (and vice-versa).
It is noted that on the 21st November 2020 the Competent Authorities Ministers endorsed the proposals to restart these additional flights to ensure minimum acceptable levels of air connectivity. The restart was approved by the Minister in MD-TR-2020-0147.
The Director of Partnerships, through OCE, agrees such routes as may be required and appropriate to service the Island’s immediate air connectivity needs with Blue Island, subject to such modelled costs being within approved, allocated funding.
In the Government Plan 2021-2024 the States Assembly approved a Covid Reserve of £40 million which is available to fund additional, unavoidable and unbudgeted costs due to the impact of COVID-19.
- Resource Implications
The Economy head of expenditure to increase by up to £241,500 in 2021 and the Covid Reserve to decrease by the same amount. This decision does not change the total amount of expenditure approved by the States in the Government Plan 2021-2024.
Report author: Group Director, Strategic Finance | Document date: 14th January 2021 |
Quality Assurance / Review: Head of Financial Governance | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2021-0006 - Reserve funding for Blue Islands Contract 2021 |
MD sponsor: Treasurer of the States |