Budget Transfers: Revenue and Capital Heads of Expenditure for various projects

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A decision made on 30 November 2015:

Decision Reference: MD-T-2015-0094

Decision Summary Title

Budget transfers for the replacement of DVS vehicle test centre equipment, provision of additional bus shelters and Beaumont road safety scheme.

Date of Decision Summary:

25 November 2015

Decision Summary Author:

Finance Manager

Decision Summary:

Public or Exempt?

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

N/A

Written Report

Title :

Budget transfers for the replacement of DVS Vehicle Test Centre Equipment, provision of additional bus shelters and Beaumont road safety scheme.

Date of Written Report:

25 November 2015

Written Report Author:

Finance Manager

Written Report :

Public or Exempt?

Public

Subject: Increase of budgets and subsequent transfer between Revenue and Capital Heads of Expenditure totalling £240,000, being £165,000 for the replacement of DVS vehicle test centre equipment, £45,000 for provision of additional bus shelters and £30,000 for road safety schemes.

Decision(s): The Minister approved the following:

A) An increase of £240,000 to the Transport and Technical Services (TTS) income budget and an identical increase to the TTS expenditure budget.

B) An internal budget transfer of £75,000 from the TTS revenue head of expenditure to the capital head of expenditure for Road Safety Improvements (Q00MF15037), and an internal budget transfer of £165,000 from the revenue head of expenditure to the capital head of expenditure for Replacement Assets (Q00MC10012).

Reason(s) for Decision: Under Generally Accepted Accounting Principles (GAAP) expenditure that meets the definition of capital expenditure must be capitalised. This budget transfer is the movement in budget between capital and revenue required to align the budgeting treatment of expenditure with the accounting treatment, in order to comply with GAAP.

Under Section 5.12 of Financial Direction 3.6 Variations to Head of Expenditure, additional surplus income of not more than 10% or £100,000 of the estimated income notified to the States for that particular service area and of a non-contentious nature, may be used automatically. Where the additional surplus income is greater than these limits, and the use is of a non-contentious nature, approval has been delegated to the Treasurer of the States. In all other instances, the approval of the Minister for Treasury and Resources must be obtained.

Section 5.1 of Financial Direction 3.6 Variation to Heads of Expenditure states that Departments wanting to transfer funds between heads of expenditure must obtain the approval of their minister or of their accounting officer where a scheme of delegation exists prior to obtaining approval from the Treasury Minister or Treasurer.

Article 18(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 transferred from a revenue head of expenditure to a capital head of expenditure, or vice versa, in order to comply with accounting standards issued for the purposes of Article 32(2). Delegation 1.2 delegates authority for non-contentious transfers between revenue and capital heads of expenditure (and vice versa) with no financial limit where the transfer is solely to ensure that financial transactions are accurately reflected in the States’ Accounts in accordance with accounting standards issued under Article 32(2) of the Law.

Resource Implications: The TTS revenue head of expenditure will show an additional income budget of £240,000 and an additional expenditure budget of £240,000, a net nil change. This expenditure budget will subsequently be transferred to the TTS capital heads of expenditure for Replacement Assets (Q00MC10012) and Road Safety Improvements (Q00MF15037), being £165,000 and £75,000 respectively, reducing the TTS Revenue Head of Expenditure by £240,000.

Action required: The Minister for Transport and Technical Services to request the Treasurer of the States to approve the use of additional income, the creation of the income and expenditure budgets, and the budget transfer from revenue to capital as referred to in the accompanying report.

Signature:

Position:

Minister for Transport & Technical Services

Date Signed:

Date of Decision (If different from Date Signed):

Budget Transfers: Revenue and Capital Heads of Expenditure for various projects

TRANSPORT AND TECHNICAL SERVICES DEPARTMENT

INCREASE OF BUDGET AND SUBSEQUENT TRANSFERS BETWEEN REVENUE AND CAPITAL HEADS OF EXPENDITURE FOR THE REPLACEMENT OF VEHICLE TEST CENTRE EQUIPMENT, PROVISION OF ADDITIONAL BUS SHELTERS AND BEAUMONT ROAD SAFETY SCHEME

Purpose of Report

To enable the Minister to approve the following:

A) An increase of £240,000 to the Transport and Technical Services (TTS) income budget and an increase of an identical amount to the TTS expenditure budget.

B) An internal budget transfer of £165,000 from the TTS revenue head of expenditure to the Replacement Assets head of expenditure (Q00MC10012) and £75,000 from the TTS revenue head of expenditure to the Road Safety Improvements head of expenditure (Q00MF15037).

Background

The Driver & Vehicle Standards department (“DVS”) provides an extensive and comprehensive range of services to all members of the Public, Educational Bodies, the Motor Industry, Enforcement Agencies, the Judiciary and States Departments.

The primary purpose of the department is to ensure that safety and technical provisions, and associated documentation for drivers and vehicles in Jersey, are improved to, and maintained at, internationally recognised standards.

DVS have approximately 3,700 vehicles passing through the vehicle test station each year. There are legal obligations to test all Public Service Vehicles (“PSV”), all controlled Taxi-Cab meters, all vehicles that are issued with vehicle exemption licences, all vehicles issued with international circulation permits, all pre-registered vehicles that require registration in Jersey, and the testing of suspected defective vehicles on behalf of the States Police.

The vehicle test equipment is vital to the day to day running of DVS. Without this equipment legal obligations to test PSV vehicles could not be fulfilled and PSV licences would not be issued. P30 exemption licences would not be issued, international circulation permits would not be issued, and vehicles could not be registered in the Island. All of these areas would have a detrimental effect on the day to day running of the Island as there are many industries that would be affected and many members of the public would be inconvenienced or potentially put at risk.

Parts of the vehicle test equipment are antiquated, ranging from 15 to 25 years old. More recently, two gear boxes that drive the rollers in the brake testing equipment failed and had to be rebuilt by local engineers as replacements were no longer available. This proved to be expensive and non-productive as the test station could not be operated whilst these repairs were being carried out. More importantly, it prevented the department from fulfilling its statutory obligations. The longer DVS postpones reinvestment in internationally approved equipment, the greater the risk is run of Jersey not being compliant with European Standards relating to motor vehicles. This would also have ongoing consequences for vehicles travelling from Jersey to trade in parts of Europe and the UK.

Though identified on the TTS replacement asset programme as needing replacement in 2015, no funding was available to be allocated from the existing Replacement Assets Head of Expenditure, with the expectation that DVS would find additional funding as necessary. It is estimated that, due to civil and electrical works necessary in addition to the equipment purchase itself, the total funding necessary could be as high as £250,000.

During 2015, the unusual licence plate sales, sold both via auction and over the DVS counter, have generated additional income, which is expected to achieve at least £240,000 in excess of budget, of which £165,000 is requested to fund the remainder of the DVS equipment replacement project, £45,000 is requested to fund the provision of additional bus shelters as part of TTS’ sustainable transport policy and £30,000 is requested to fund further road safety improvement schemes.

The States Sustainable Transport Policy aims to persuade people out of their cars in order to reduce congestion and pollution by improving the alternatives, namely public transport, walking and cycling. The bus service offers the greatest potential for reduced car use, and improved facilities such as more bus shelters are therefore a key aspect of the Policy. The use of £45,000 from the number plate sale income will enable a programme of bus shelter provision to continue throughout 2016.

A detailed assessment of the Beaumont Hill/La Route de La Haule junction has been carried out following concerns regarding safety issues expressed at a public meeting. A key outcome of the assessment was that flashing road studs should be installed to improve the visibility of the zebra crossings, in order to improve pedestrian safety. The use of £30,000 from the number plate sale income on additional road safety measures at this junction will result in an improvement of pedestrian facilities, which is central to the States Sustainable Transport Policy.

In order to create a budget to fund these three projects, it will be necessary to create an income and expenditure budget for £240,000.

Under States of Jersey accounting policies this purchase of States of Jersey assets must be treated correctly as capital expenditure.

This creates a mismatch between income within the revenue head of expenditure and expenditure within the capital heads of expenditure for Replacement Assets (Q00MC10012) and Road Safety Improvements (Q00MF15037).

In order to correct this mismatch and create a capital budget TTS are required to undertake the following:

a) Create an additional income and expenditure budget for £240,000 within their revenue head of expenditure. This is a net nil budget adjustment.

b) Transfer this expenditure budget from revenue to the capital heads of expenditure for Replacement Assets (Q00MC10012) and Road Safety Improvements (Q00MF15037), being £165,000 and £75,000 respectively, in order to match it against the proposed capital expenditure.

Recommendation

The Minister is recommended to approve:

A) An increase of £240,000 to the Transport and Technical Services (TTS) income budget and an identical increase to the TTS expenditure budget.

B) Approve an internal budget transfer of £165,000 from the TTS revenue head of expenditure to the capital head of expenditure for Replacement Assets (Q00MC10012), and £75,000 from the TTS revenue head of expenditure to the capital head of expenditure for Road Safety Improvements (Q00MF15037).

Reason for Decision

Under Section 5.2 of Financial Direction 3.6 and the Public Finances (Jersey) Law 2005, the approval of non-contentious transfers between heads of expenditure up to £1,000,000 is delegated to the Treasurer of the States

Resource Implications

The TTS revenue head of expenditure will show an additional income budget of £240,000 and an additional expenditure budget of £240,000, a net nil change. This expenditure budget will subsequently be transferred to the TTS capital heads of expenditure for Replacement Assets (Q00MC10012) and Road Safety Improvements (Q00MF15037), being £165,000 and £75,000 respectively, reducing the TTS Revenue Head of Expenditure by £240,000.

Action required

The Minister for Transport and Technical Services to request the Treasurer of the States to approve the use of additional income, the creation of the income and expenditure budgets, and the budget transfer from revenue to capital as referred to in the accompanying report.

Written by:	Finance Manager
Approved by:	Director of Finance