Budget Transfer: Central Contingencies to Health and Social Services (2016 Voluntary Release Scheme Costs)

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A decision made 12 July 2016:

Decision reference: MD-HSS-2016-0046
Decision Summary Title:	Transfer of funding from Central Contingencies to HSS to recognise the costs associated with the Voluntary Release Scheme in 2016		Date of Decision Summary:	6th July 2016
Decision Summary Author:	Assistant Director of Finance		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Transfer of funding from Central Contingencies to HSS to recognise the costs associated with the Voluntary Release Scheme in 2016.		Date of Written Report:	6th July 2016
Written Report Author:	Assistant Director of Finance		Written Report : Public or Exempt?	Public
Subject: Transfer of funding between Central Contingencies and HSS to recognise the 2016 costs associated with the Voluntary Release Scheme.
Decision(s): The Minister approved a non-recurring budget transfer in 2016 of £147,750.99 to the HSS revenue head of expenditure from Central Contingency – Redundancy Provision for VR Applications approved and signed up to 30th June 2016.
Reason(s) for Decision: Article 17(2) of the Public Finances (Jersey) Law 2005 states that the Minister for Treasury and Resources is authorised to approve the transfer from contingency expenditure or the insurance fund of amounts not exceeding, in total, the amount available for contingency expenditure in a financial year. This Decision funds the next tranche of VR Applications to 30th June 2016.
Resource Implications: HSS revenue head of expenditure to increase by a total of £147,750.99 in 2016 and Central Contingency – Redundancy Provision to decrease by the same amount. This decision does not change the total amount of expenditure approved by the States for the period of the current MTFP 2016 to 2019.
Action required: The Assistant Director of Finance to notify the Head of Decision Support (Treasury) that the Decision has been approved.
Signature:		Position: Minister for Health and Social Services
Date Signed:		Date of Decision:

Budget Transfer: Central Contingencies to Health and Social Services (2016 Voluntary Release Scheme Costs)

Health & Social Services Department

Ministerial Decision Report

Transfer of funding from Central Contingencies to HSS to recognise the costs associated with the Voluntary Release Scheme in 2016.

Purpose of Report

To enable the Minister to approve the transfer of £147,750.99 from Central Contingencies – Redundancy to the HSS departmental budget in 2016. This is to recognise the savings and costs associated with the Voluntary Release Scheme so far and identify the full year effect of these savings as included in the MTFP Addition for 2017 – 2019.

Background

The Voluntary Release (VR) Scheme provides a mechanism for employees who wish to volunteer to leave the organisation through redundancy or early retirement to receive a redundancy payment or immediate pension. The scheme was made available to all employees in 2015. As at the 31st May 2016 a total of 502 applications for VR had been received (329 in 2015 and 173 to date in 2016) and a total of 155 had been approved across the States of Jersey as a whole. The scheme remains open for the foreseeable future in order to support organisational change initiatives.

The Council of Ministers approved the allocation of £2,000,000 from Central Contingencies to create a Redundancy Provision in 2015 to fund the first tranche of the scheme. The States Assembly approved a further £20,000,000 to be added to the Redundancy Provision across 2015 and 2016 to be funded by transfers from the Strategic Reserve Fund with £4,000,000 to be transferred in 2015 and £16,000,000 in 2016. Following the completion of the 2015 VR scheme the remaining money was drawn down for funding of new applications in 2016. In total this left over £17 million available for VR funding from January 2016.

International Financial Reporting Standards (IFRS) interpreted for the States of Jersey in the Jersey Financial Reporting Manual (JFReM) require termination benefits to be recognised as an expense at the point at which the entity can no longer withdraw the offer of those benefits. Accordingly, the full cost of all VRs must be recognised at the point a binding contract has been signed with the employee.

To date a total allocation of £1.78million has been approved for 2016, of which £145,750.99 relates to 3 approved and signed HSS applications. The recurrent saving for HSS is £129,086.77 per annum.

Recommendation

The Minister is recommended to approve a non-recurring budget transfer of £147,750.99 in 2016 from Central Contingency – Redundancy Provision to the HSS revenue head of expenditure.

Reason for Decision

Article 17(2) of the Public Finances (Jersey) Law 2005 states that the Minister for Treasury and Resources is authorised to approve the transfer from contingency expenditure to heads of expenditure of amounts not exceeding, in total, the amount available for contingency expenditure in a financial year.

This Decision funds the second tranche of VR Applications to 30th June 2016.

Resource Implications

HSS departmental revenue head of expenditure to increase by a total of £147,750.99 in 2016 and Central Contingency – Redundancy Provision to decrease by the same amount. This decision does not change the total amount of expenditure approved by the States for the period of the current MTFP 2016 to 2019.

Report author : Assistant Director of Finance	Document date: 6th July 2016.
Quality Assurance / Review : Director of Finance	File name and path; C:\Documents and Settings\tayloramy\Local Settings\Temporary Internet Files\Content.Outlook\BYMUHCXI\WR - VR Savings in 2016.docx
MD sponsor : Director of Finance