Budget transfer for Liquid Waste Strategy

Information about the publication of Ministerial Decisions

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

Ministers are elected by the States Assembly and have legal responsibilities and powers as “corporation sole” under the States of Jersey Law 2005 by virtue of their office and in their areas of responsibility, including entering into agreements, and under any legislation conferring on them powers.

An accurate record of “Ministerial Decisions” is vital to effective governance, including:

demonstrating that good governance, and clear lines of accountability and authority, are in place around decisions-making – including the reasons and basis on which a decision is made, and the action required to implement a decision
providing a record of decisions and actions that will be available for examination by States Members, and Panels and Committees of the States Assembly; the public, organisations, and the media; and as a historical record and point of reference for the conduct of public affairs

Ministers are individually accountable to the States Assembly, including for the actions of the departments and agencies which discharge their responsibilities.

The Freedom of Information Law (Jersey) Law 2011 is used as a guide when determining what information is be published. While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.

A decision made 17 November 2017:

Decision Reference: MD-TR-2017-0119
Decision Summary Title:	Transfer of budgets between the Department for Infrastructure Capital and Liquid Waste Strategy heads of expenditure		Date of Decision Summary:	13th November 2017
Decision Summary Author:	Head of Decision Support		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:
Written Report Title:	Transfer of budgets between the Department for Infrastructure Capital and Liquid Waste Strategy heads of expenditure		Date of Written Report:	13th November 2017
Written Report Author:	Head of Decision Support		Written Report : Public or Exempt?	Public
Subject: The transfer of £4,500,000 budget in 2017 from the Infrastructure capital head of expenditure (Q00RL10011) to the Liquid Waste Strategy capital head of expenditure (Q00BT14022).
Decision(s): The Minister approved the transfer of £4,500,000 in 2017 from the DfI capital head of expenditure for Infrastructure (Q00RL10011) to the DfI capital head of expenditure for Liquid Waste Strategy (Q00BT14022).
Reason(s) for Decision: Article (18)(c) 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 one head of expenditure to another head of expenditure for any purpose. The construction of a new Sewage Treatment Works (STW) at Bellozanne is required to replace the existing plant which was built in the 1950s. Anticipated costs were reduced from £75m to £68.9m by the deletion or reduction of certain elements of the Accommodation and Enabling Works and STW Development Phase, and their associated contingencies. The Minister for Infrastructure has written to the Treasury and Resources Minister to advise that the total costs of the project are now expected to be £73 million if the primary settlement tanks need to be covered or £68.9 million if not. In order to make up the difference between the current level of funding and the revised estimated cost, the Medium Term Financial Plan 2016-2019 proposed that the Department for Infrastructure Rolling Infrastructure Vote be used to provide future funding requirements beyond that already allocated to the Liquid Waste Strategy. The Minister for Infrastructure intends to transfer £7 million in 2018 and £4 million in 2019 from the Rolling Infrastructure Vote to fund some of the shortfall. A decision (MD-T-2017-0071) was signed by the Minister for Infrastructure on 4th September 2017.
Resource Implications: The Infrastructure capital head of expenditure (Q00RL10011) 2016 allocation will decrease by £4,500,000 and the Liquid Waste Strategy capital head of expenditure (Q00BT14022) will increase by £4,500,000.
Action required: The Head of Decision Support to notify the Finance Manager, Department for Infrastructure that the decision has been approved.
Signature:		Position: Senator A J H Maclean, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Budget transfer for Liquid Waste Strategy

- 1 -

Treasury and Resources

Ministerial Decision Report

Transfer of budgets between the Department for Infrastructure capital and Liquid Waste Strategy heads of expenditure

Purpose of Report

To consider the request from the Department for Infrastructure for the transfer of £4,500,000 budget in 2017 from the Infrastructure Capital head of expenditure (Q00RL10011) to the Liquid Waste Strategy head of expenditure (Q00BT14022).

2. Background

On 3rd June 2014, the States approved the 20 year Waste Water Strategy (P.39/2014) for the Island and the funding proposals set out therein.

A key element of the Waste Water Strategy was the construction of a new Sewage Treatment Works (STW) at Bellozanne at an estimated cost of £75m to replace the existing plant which was built in the 1950s.

Subsequent to the States decision (P.39/2014) in June 2014, a strategic re-assessment of funding available for Capital projects in the Island was carried out and it determined that no further funding would be made available for the new STW project from the Capital programme beyond that already allocated in 2013, 2014 and 2015.

This decision was incorporated into the Medium Term Financial Plan (MTFP) 2016–2019 (P.72/2015) which states that any further funding required for the STW project will be sourced from the Department for Infrastructure Rolling Infrastructure Vote.

In 2013 and 2014, a total of £10.1m was allocated to the STW project. This consisted of £4m from the Infrastructure Rolling Vote, £3.1m from the main Capital programme and £3m from the Consolidated Fund.

A further investment of £25.494m was agreed in the Budget 2015 from the Currency Fund and £1m was also transferred from the Rolling Infrastructure Vote in 2015 in accordance with the MTFP. These funds are all held under capital Vote Q00BT14022 (Liquid Waste Strategy).

In addition, in 2013 and 2014 a further £1m was received in a separate Vote, Q00MF13030, which is intended for Refurbishment of the existing Clinical Waste Incinerator at Bellozanne (this money did not form part of the £75m allocation but can be utilised, as moving the Clinical Waste Incinerator now forms part of the works for the STW).

This provided a total of £37.594m across two heads of expenditure that had been allocated to the STW project up to December 2015.

Subsequent funding and procurement of the STW project was based on proposals set out and approved in the Department for Infrastructure Ministerial decision, MD-T-2015-0072 and which was based on a revised Capital cost of the scheme of £53.594m.

Proposals within the Ministerial Decision envisaged the £16m shortfall in funding being achieved by transfers from the Infrastructure capital head of expenditure to the Liquid Waste Strategy capital head of expenditure in 2016-18 of £4,500,000, £4,500,000 and £7,000,000 respectively.

Subsequently, £4.5m was transferred in 2016 and the budget for the STW project stood at £42.094m.

In accordance with the Ministerial Decision and the MTFP 2016-2019, a further £4.5m is required to be transferred in 2017.

In adopting a revised Capital cost of £53.594m in 2015, as outlined in MD-T-2015-0072, a number of risks were highlighted which would impact on the cost of the scheme if they arose. These included the fact that no allowance had been made for inflation over the course of the project and rejection of an export licence for clinical waste would increase costs further.

A number of these risks have subsequently arisen, including those above, and in addition, adoption of the final layout and preliminary design, including additional facilities to assist with mitigating nitrate discharges to St Aubin’s Bay, has also impacted on the likely outturn cost. Estimates indicated a likely outturn cost of £68.944m, including contingencies.

Unless another source of funding is identified in the meantime for the additional amount now required over and above the £53.594m, this funding will need to be allocated from the Rolling Infrastructure Vote in 2019 and 2020 as there are insufficient funds in the proposed total 2017 and 2018 Rolling Infrastructure Vote allocations to accommodate this sum.

Ministerial decision (MD-T-2017-0071) was signed by the Minister for Infrastructure on 4th September 2017. Subsequent to the Department for Infrastructure decision being signed, the Minister for Infrastructure has written to the Treasury and Resources Minister to advise that the total costs of the project are now expected to be £73 million if the primary settlement tanks need to be covered or £68.9 million if not.

3. Recommendation

The Minister is recommended to approve the request from the Department for Infrastructure for the transfer of £4,500,000 budget in 2017 from the Infrastructure Capital head of expenditure (Q00RL10011) to the Liquid Waste Strategy head of expenditure (Q00BT14022).

4. Reason for Decision

Article (18)(c) 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 one head of expenditure to another head of expenditure for any purpose.

The construction of a new Sewage Treatment Works (STW) at Bellozanne is required to replace the existing plant which was built in the 1950s. Anticipated costs were reduced from £75m to £68.9m by the deletion or reduction of certain elements of the Accommodation and Enabling Works and STW Development Phase, and their associated contingencies.

The Minister for Infrastructure has written to the Treasury and Resources Minister to advise that the total costs of the project are now expected to be £73 million if the primary settlement tanks need to be covered or £68.9 million if not.

In order to make up the difference between the current level of funding and the revised estimated cost, the Medium Term Financial Plan 2016-2019 proposed that the Department for Infrastructure Rolling Infrastructure Vote be used to provide future funding requirements beyond that already allocated to the Liquid Waste Strategy. The Minister for Infrastructure intends to transfer £7 million in 2018 and £4 million in 2019 from the Rolling Infrastructure Vote to fund some of the shortfall.

A decision (MD-T-2017-0071) was signed by the Minister for Infrastructure on 4th September 2017.

5. Resource Implications

The Infrastructure capital head of expenditure (Q00RL10011) 2016 allocation will decrease by £4,500,000 and the Liquid Waste Strategy capital head of expenditure (Q00BT14022) will increase by £4,500,000.

Report author : Head of Decision Support	Document date: 13th November 2017
Quality Assurance / Review : Head of Decision Support	File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2017-0119 - DfI Capital to Capital transfer for Liquid Waste Strategy £4.5m
MD sponsor : Director of Financial Planning and Performance