Budget transfer from Limes Upgrade Project to Central Contingencies and Consolidated Fund

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A decision made 17 November 2017:

Decision Reference: MD-TR-2017-0138
Decision Summary Title:	Transfer of Unspent Capital Allocations to Central Contingencies		Date of Decision Summary:	14th November 2017
Decision Summary Author:	Head of Financial performance		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:
Written Report Title:	Transfer of Unspent Capital Allocations to Central Contingencies		Date of Written Report:	14th November 2017
Written Report Author:	Head of Financial Performance		Written Report : Public or Exempt?	Public
Subject: A non-recurring transfer of £5,758,418 from the Capital Heads of Expenditure (as detailed in the attached report) to Central Contingencies and £1,000,000 to be returned to the Consolidated Fund from the Limes Upgrade capital project.
Decision(s): The Minister decided to approve a non-recurring transfer of £5,758,418 from the Capital Heads of Expenditure to Central Contingencies and £1,000,000 to be returned to the Consolidated Fund from the Limes Upgrade capital project. In addition the Minister delegated authority to the Treasurer to approve the transfer of any further unspent capital allocations to Central Contingencies in future.
Reason(s) for Decision: Article 18(1A) 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 the head of expenditure to contingency expenditure, within or after the end of the relevant financial year. There is one exception, being the £1.0 million for the Limes Upgrade project which was a conditional contribution from the Le Seelleur Trust in the Budget 2013. The funding was not transferred from the Le Seelleur Trust pending the progress of the project so the £1.0 million must therefore be returned to the Consolidated Fund. The remaining balance is proposed to be transferred to Central Contingencies. Under Article 28 (1) of the States of Jersey Law 2005 a Minister may delegate, wholly or partly, functions conferred upon them by any Law to either an Assistant Minister or an officer. An updated Delegation of Functions report will be published shortly to replace the existing Delegation of Functions (R.87/2016) dated August 2016 to enable the Treasurer of the States to approve the transfer of any further unspent capital allocations to Central Contingencies.
Resource Implications: This decision will result in the Capital Heads of expenditure decreasing by £6,758,418 and Central Contingencies increasing by £5,758,418 and the Consolidated Fund increasing by £1,000,000. This decision does not change the total amount of expenditure approved by the States for 2017 in the Medium Term Financial Plan.
Action required: The Head of Decision Support to advise the Head of Financial Performance once this decision has been approved. The Greffier of the States to be requested to arrange for the updated delegation report to be presented to the States at the earliest opportunity.
Signature:		Position: Senator A J H Maclean, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Budget transfer from Limes Upgrade Project to Central Contingencies and Consolidated Fund

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Treasury and Resources

Ministerial Decision Report

TRANSFER OF UNSPENT CAPITAL BUDGETS TO CENTRAL CONTINGENCIES AND A RETURN TO THE CONSOLIDATED FUND

Purpose of Report

To request the approval of a non-recurring transfer of £5,758,418 from the Capital Heads of Expenditure listed below to Central Contingencies and £1,000,000 to be returned to the Consolidated Fund from the Limes Upgrade capital project.

In addition the Minister delegated authority to the Treasurer to approve the transfer of any further unspent capital allocations to Central Contingencies in future.

Background

The outturn cost of capital projects is inherently variable with many factors such as ground conditions, local market conditions and even weather contributing to the final cost. These factors are managed through an appropriate level of project contingency which is set at the start of the project to manage risk and contain the total project costs within the approved allocation.

As a result, there can be budget remaining unspent and no longer required for the purpose it was approved once projects are complete. There are also instances where budget is allocated for a specific capital project but as work progresses to develop the project, circumstances change in a Department’s priorities or service delivery requirements which mean the budget is no longer required for that purpose.

Given the above circumstances and the significant pressure on the capital programme over the coming years, existing capital allocations have been reviewed to identify any funds that are no longer required and which could be reallocated in order to manage those pressures from within existing resources. That process, overseen by the Capital Sub Group of the Corporate Management Board, has identified the following list of unspent balances.

There is one exception, being the £1.0 million for the Limes Upgrade project which was a conditional contribution from the Le Seelleur Trust in the Budget 2013. The funding was not transferred from the Le Seelleur Trust pending the progress of the project so the £1.0 million must therefore be returned to the Consolidated Fund. The remaining balance is proposed to be transferred to Central Contingencies.

In light of the above, there will be further instances where capital budget is no longer required for the purpose it was approved but, via the proposed mechanism of transferring it to Central Contingencies, could be reprioritised to support other key priorities without increasing the total amount of expenditure approved by the States.

It is proposed that a process is introduced which reviews remaining unspent capital allocations quarterly as part of the existing capital monitoring process and identifies any amounts which are no longer required for the approved purpose. This list will be collated by the Financial Performance Team in Treasury & Resources and the relevant responsible Departments will be asked to confirm the amount available and approve any transfers. This decision seeks the Minister’s approval to delegate the approval of all future such transfers to the Treasurer.

3. Recommendation

The Minister is recommended to approve a non-recurring transfer of £5,758,418 from the capital heads of expenditure listed above to Central Contingencies and £1,000,000 to be returned to the Consolidated Fund from the Limes Upgrade capital project.

In addition the Minister delegated authority to the Treasurer to approve the transfer of any further unspent capital allocations to Central Contingencies.

4. Reason for Decision

Article 18(1A) 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 the head of expenditure to contingency expenditure, within or after the end of the relevant financial year.

Under Article 28 (1) of the States of Jersey Law 2005 a Minister may delegate, wholly or partly, functions conferred upon them by any Law to either an Assistant Minister or an officer.

An updated Delegation of Functions report will be published separately to replace the existing Delegation of Functions (R.87/2016) dated August 2016 to enable the Treasurer of the States to approve the transfer of any further unspent capital allocations to Central Contingencies.

5. Resource Implications

This decision will result in the listed capital heads of expenditure decreasing by £6,758,418 and Central Contingencies increasing by £5,758,418 and the Consolidated Fund increasing by £1,000,000.

This decision does not change the total amount of expenditure approved by the States for 2017 in the Medium Term Financial Plan.

Report author : Head of Decision Support	Document date 14th November 2017
Quality Assurance / Review : Director of Financial Planning and Performance	File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2017-0138 - Unspent Capital transfer to Contingencies
MD Sponsor: Director of Financial Planning and Performance