Our Hospital Early Enabling Works: Funding

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While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.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 on 5 March 2021

Decision Reference: MD-TR-2021-0020
Decision Summary Title:	Our Hospital Funding of Early Enabling Works		Date of Decision Summary:	4th March 2021
Decision Summary Author:	Head of Finance Business Partnering supporting Hospital		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Our Hospital Funding of Early Enabling Works		Date of Written Report:	4th March 2021
Written Report Author:	Head of Finance Business Partnering supporting Hospital		Written Report : Public or Exempt?	Public
Subject: Our Hospital Funding of Early Enabling Works
Decision(s): The Minister approved the allocation of up to £11.167 million from the General Reserve to the Our Hospital head of expenditure to fund early works in advance of the financing of the main project.
Reason(s) 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 Policy for Allocations from the Reserve agreed by the Minister for Treasury and Resources sets the requirement for all allocations from the General Reserve (Covid-19) once approved by the States Treasurer to be referred for review to either the Council of Ministers or the relevant Competent Authorities Ministers and to seek comments from the Principal Accountable Officer (PAO) prior to submission to the Minister for approval. The Council of Ministers and PAO have been consulted. Whilst a business case for this specific element of the funding has not been received and evaluated the Political Oversight Group has supported this request and approved a Strategic Outline Case (SOC). The Our Hospital (OH) scheme has an approved budget in the Government Plan (GP) 2021 – 2024 of £20 million. This was designed to finance project expenditure necessary to take the project through to June 2021. The Outline Business Case (OBC) is expected to be presented to the States Assembly in Summer 2021 along with a financing proposal to provide funds for the balance of the project from July 2021. However early funding is required in advance of the funding raised through that proposition to progress the programme for enabling works on the Overdale site. This is a timing issue for the availability of funds rather than a budgetary issue, as the costs have been budgeted within the SOC. The Political Oversight Group, at their meeting of 18th February 2021, agreed to request the Minister for Treasury and Resources to make an allocation of up to £11.167 million from the General Reserve.
Resource Implications: The General Reserve will decrease by up to £11.167 million and the Our Hospital head of expenditure will increase by up to a corresponding amount. If additional funding for the project, including these Early Enabling works, is approved by the States Assembly then the amounts approved by this decision will be returned to the General Reserve in 2021, preserving the balance available for other unforeseen requirements.
Action required: Head of Financial Governance to inform the Head of Finance Business Partnering supporting Hospital that this decision has been approved.
Signature:		Position: Deputy S J Pinel Minister for Treasury and Resources
Date Signed:		Date of Decision:

Our Hospital Early Enabling Works: Funding

Treasury and Exchequer

Ministerial Decision Report

Our Hospital Funding of Early Enabling Works

Purpose of Report

To enable the Minister to approve the allocation of up to £11.167 million from the General Reserve to the Our Hospital (OH) head of expenditure to fund early works in advance of the financing of the main project.

Background

The OH scheme has an approved budget in the Government Plan (GP) 2021 – 2024 of £20 million. This was designed to finance expenditure necessary to take the project through to June 2021. The project does not have any other budget and cannot therefore incur any expenditure that exceeds this sum without further approvals.

It was originally intended that the Outline Business Case (OBC) would be presented to the States in June 2021 along with a financing proposal to provide funds for the balance of the project from July 2021, thus providing the total estimated cost of £804.5 million as identified in the Strategic Outline Case (SOC) (for information the actual drawdown of this sum would be staged as advised by the Treasurer at that time).

Matters have changed and developed as work on the project has been carried out in recent months.

Early funding in advance of funding raised through the Financing Proposition is required to progress:

professional fees in relation to the Overdale decant and the re-provision of accommodation of £1.317 million; and
acquisition of priority residential properties early in 2021 of £15.850 million.

The total cost of these two activities is £17.167 million. Contingency sums of £6 million are available within the £20 million approved in the Government Plan 2021-2024, and the OH Political Oversight Group (POG) agreed at the meeting on 18th February 2021 that £6 million funding can be used for these purposes. The remaining requirement to be approved by this decision is £11.167 million.

Professional Fees for decant from Overdale and re-provision of accommodation

With Overdale confirmed as the selected site, it has been identified that there is a requirement for a significant amount of early work to be carried out prior to the main works, to enable the target date for opening the hospital to be achieved. Variations to the existing Pre Construction Services Agreement (PCSA) are required to bring forward the works to the pre-construction stage.

The quote from the contractor for this work is valued at £1.425m for the costs associated with the provision of professional services only. This value has been assessed as reasonable by the cost management consultants and is planned to take place from January to July 2021.

As the works are taking place earlier than planned, a short term i.e. cash flow source of funding will need to be identified as, while the budget for this identified in the SOC is sufficient to meet this cost, it was originally assumed to be required post June 2021 and funded from the financing proposition.

The cash flow impact arises from the need to bring forward these early works and amounts to £1.317m for January to June 2021. The balance of £0.108m is required in July 2021 and is within a wider funding proposal to identify funding for the project from July 2021.

Site acquisition cash flow changes

The site acquisitions work stream has progressed much earlier than originally planned so it can meet the challenging Overdale programme timeline for early works. Acquisitions have particularly focussed on the residential properties, which were prioritised owing to the known risks associated with the Compulsory Purchase of Land (Procedure) (Jersey) Law 1961 and vulnerabilities in respect of Human Rights Law. Key properties within P.129 required for progression of the highways works have also been prioritised.

Further negotiations having taken place and regular updates provided to the Senior Officers Steering Group (SOSG) and POG. Funding is required for the early acquisition of residential properties and other priority properties valued at £15.338 million plus £0.512 million for stamp duty, totalling £15.850 million.

Table 1:

Property Categorisation	Valuation £m	Stamp Duty £m	Total £m
Houses included within P.129 (CPO Proposition for OHP)	4.158	0.125	4.283
Houses linked to land included within P.129	3.300	0.183	3.483
	7.458	0.308	7.766

Houses to be purchased using SO 168	4.630	0.109	4.739
Other land and buildings included within P.129	3.250	0.095	3.345
	7.880	0.204	8.084

Total Early Site Acquisitions	15.338	0.512	15.850

Recommendation

The Minister is recommended to approve the allocation of up to £11.167 million from the General Reserve to the Our Hospital head of expenditure to fund early works and property acquisitions in advance of the financing of the main project

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 Policy for Allocations from the Reserve agreed by the Minister for Treasury and Resources sets the requirement for all allocations from the General Reserve (Covid-19) once approved by the States Treasurer to be referred for review to either the Council of Ministers or the relevant Competent Authorities Ministers and to seek comments from the Principal Accountable Officer (PAO) prior to submission to the Minister for approval. The Council of Ministers and PAO have been consulted. Whilst a business case for this specific element of the funding has not been received and evaluated the Political Oversight Group has supported this request and approved a Strategic Outline Case (SOC).

The OH scheme has an approved budget in the Government Plan (GP) 2021 – 2024 of £20 million. This was designed to finance project expenditure necessary to take the project through to June 2021.

The OBC is expected to be presented to the States Assembly in summer 2021 along with a financing proposal to provide funds for the balance of the project from July 2021. However early funding is required in advance of the funding raised through that proposition to progress the programme for enabling works on the Overdale site. This is a timing issue for the availability of funds rather than a budgetary issue, as the costs have been budgeted within the SOC.

The Political Oversight Group, at their meeting of 18th February 2021, agreed to request the Minister for Treasury and Resources to make an allocation of up to £11.167 million from the General Reserve.

Resource Implications

The General Reserve will decrease by up to £11.167 million and the Our Hospital head of expenditure will increase by up to a corresponding amount.

If additional funding for the project, including these Early Enabling works and property acquisitions, is approved by the States Assembly then the amounts approved by this decision will be returned to the General Reserve in 2021, preserving the balance available for other unforeseen requirements.

Report author: Head of Finance Business Partnering supporting Hospital	Document date: 4th March 2021
Quality Assurance / Review : Head of Financial Governance	File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2021-0020 - Reserve funding for Our Hospital Early Enabling Works
MD sponsor : Treasurer of the States