Public Finances (Amendment No 4) (Jersey) Law 201-: Ministerial Approval

Information about the publication of Ministerial Decisions

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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

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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While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.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 17 January 2013:

Decision Reference: MD-TR-2013-0005
Decision Summary Title:	Public Finances (Amendment No.4) (Jersey) Law 201-		Date of Decision Summary:	14 January 2013
Decision Summary Author:	Treasurer of the States		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Public Finances (Amendment No.4) (Jersey) Law 201-		Date of Written Report:	14 January 2013
Written Report Author:	Treasury and Resources Regulatory Advisor		Written Report : Public or Exempt?	Public
Subject: Ministerial approval of the Draft Public Finances (Amendment No.4) (Jersey) Law prior to issue by the Treasurer of the States to interested parties.
Decision(s): The Minister decided to issue for comment the Draft Public Finances (Amendment No.4) (Jersey) Law 201- which covers changes to the following areas of the Public Finances (Jersey) Law 2005: Formal establishment of the States Insurance fund; Variations to Heads of Expenditure; Role and Remit of the Treasurer; Strengthening the Accounting Officer role; Formal establishment of the Fiscal Policy Panel; and Amendments to enable Parts 3 and 4 of the Law to be amended by Regulation.
Reason(s) for Decision: To enable the Draft Public Finances (Amendment No.4) (Jersey) Law 201- to be issued for comment.
Resource Implications: There are no financial or manpower implications associated with this decision.
Action required: The Treasurer to forward the Draft Public Finances (Amendment No.4) (Jersey) Law 201- to all relevant interested parties for comment.
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Public Finances (Amendment No 4) (Jersey) Law 201-: Ministerial Approval

14th December, 2012

Draft legislative amendments to the Public Finances (Jersey) Law 2005

1. Purpose of Report

1.1 The purpose of the attached report is for the Minister for Treasury and Resources to consider and agree draft amending legislation (Appendix B) which covers changes to the following areas of the Public Finances (Jersey) Law 2005:

Formal establishment of the States Insurance fund;
Variations to Heads of Expenditure;
Role and Remit of the Treasurer;
Strengthening the Accounting Officer role;
Formal establishment of the Fiscal Policy Panel; and
Amendments to enable Parts 3 and 4 of the Law to be amended by Regulation

and to agree that the draft legislation can be issued to the Council of Ministers, the Public Accounts Committee, Corporate Services Scrutiny Panel and the Fiscal Policy Panel.

2. Summary of Proposals

2.1 The Law amendments propose the formalisation of the current States arrangements for the brokering and administration of Insurance under the umbrella of a new Insurance Fund.

2.2 It is envisaged that the proposed changes will continue the improvement in financial management within the States and bring about changes to the position of the Treasurer of the States and extend the Accounting Officer concept to all areas of States income and expenditure.

2.3 The amendments also propose the formal establishment and role for the Fiscal Policy Panel, which was agreed by the States in the approval of P133/2006, in the Finance Law. The amendment requires the Fiscal Policy Panel to produce an Annual Report on the state of the economy in Jersey and States Finances, in order to allow States Members adequate time to consider this document it is recommended that the lodging period for the Budget be extended to 8 weeks. This is a matter which is dealt with in States Standing Orders and therefore requires discussion with the Privileges and Procedures Committee.

2.4 The final part of the amendment proposes that Parts 3 and 4 of the Law, dealing with the administration of the Medium Term Financial Plan and Budget, can in future be amended via Regulation.

2.5 A more detailed summary of the proposed amendments is attached as Appendix A.

3. Recommendations

3.1 The Minister is asked:

to approve the proposed amendments to the Public Finances (Jersey) Law 2005; and
to request that the Treasurer of the States forward a copy of the proposed changes to the following for their consideration:
- Council of Ministers;
- Public Accounts Committee;
- Corporate Services Scrutiny Panel; and
- Fiscal Policy Panel.

to agree that the view of the Privileges and Procedures Committee be sought on extending the lodging period for the Annual Budget document.

APPENDIX A

1. Establishment of the States Insurance Fund (Part 2 - Articles 2 - 7 refer)

1..1 Part of this amendment deals with the formal establishment of the States Insurance Fund - the fund specifically is set up to facilitate the brokering and administration of insurance arrangements across the States - as a special fund. It is proposed that the principal Law is amended to recognise the Fund whilst the more detailed administrative arrangements are included in a Schedule which is to be attached to the Law.

1.2 The States of Jersey currently manages the cost of insurance by operating a level of self-insurance which will continue under the new Insurance Fund arrangements. Under the terms of the existing arrangements a Reserve of approximately £7.5 million has been built up to provide a buffer against possible future insurance claims. The amendment details the process required to transfer this existing buffer from the consolidated fund to the Insurance Fund.

1.3 All States funded bodies will participate in the Insurance Fund. However, the Minister for Treasury and Resources may also enter into agreements with other persons and bodies who are connected with the States to participate. Any such participation with external bodies will be subject to agreed terms and conditions.

1.4 The amendment also enables money to be directly allocated to the Insurance Fund from the consolidated fund and conversely if a surplus should accrue in the Fund money may be withdrawn from the Fund as part of the Medium Term Financial Planning process or Budget.

2. Variations to heads of expenditure (Part 3 - Articles 8 - 11 refer)

2.1 The Law amendment proposes the formal recognition of the Central Planning head of expenditure. This amendment further proposes that the Minister for Treasury and Resources will be able to allocate funds from this head of expenditure to scope and assess future capital projects approved “in principle” by the States.

2.2 In Amendment No. 3 to the Public Finances (Jersey) Law changes were made which resulted in a general tightening of the provisions that allowed variations to heads of expenditure. Experience has shown that it is necessary for more flexibility within the rules - it is therefore proposed that the Law is amended to allow the Minister for Treasury and Resources to approve the transfer of funds between heads of expenditure for any reason.

2.3 All such transfers will need to be approved by the Minister or other person responsible for the States funded body both relinquishing and receiving the funds.

2.4 Also within Amendment No. 3 the States agreed changes which introduced the medium term financial planning process and incorporated the concept of an annual contingency, something which had not been part of the original Law. As the amended Law included the provision for contingency funding the previous provision which enabled the Minister for Treasury and Resources to take forward additional funding requests to the States if the expenditure was absolutely necessary was removed (these were previously referred to as 11(8) funding requests).

2.5 Although, Transitional Arrangements initially enabled this additional funding route to be retained for 2012 only, the Treasury and Resources Minister has recently extended this provision for a further 6 months until end of June 2013 – principally to assist with issues surrounding use of funds for the Innovation Fund.

2.6 Experience now shows that it is prudent to permanently re-introduce this facility in the principal Law itself and, therefore, the amendment incorporates provision for the Council of Ministers to take a proposition to the States if they are able to justify that additional expenditure needs to be funded and that the expenditure cannot reasonably be funded out of existing heads of expenditure or contingency and therefore the expenditure limits agreed in the Medium Term Financial Plan need to be increased. The final decision as to whether the request should be approved lies with the Assembly itself.

3. Role and Remit of the Treasurer (Part 4 Articles 12 - 13 refer)

3.1 In reports previously issued by the Comptroller and Auditor General recommendations were made that the role of the Treasurer of the States should be strengthened.

3.2 Article 28 of the principal Law establishes the office of Treasurer of the States and details the roles and responsibilities attributed to that post.

3.3 Currently the Treasurer is responsible to the Minister for Treasury and Resources for the supervision and administration of the Law and of the public finances of Jersey and for ensuring the proper stewardship and administration of the public finances of Jersey.

3.4 Amendments extend the functions of the Treasurer to include responsibility for ensuring that financial systems are provided for the administration of public finances of Jersey and for monitoring compliance with the financial management standards set by the Treasurer.

3.5 The amendment also proposes a new responsibility for the Treasurer building upon the post’s current reporting relationship to the Minister for Treasury and Resources. This amendment proposes that the Treasurer advises the Council of Ministers upon the public finances of Jersey. The preparation of the Medium Term Financial Plan is the responsibility of the Council of Ministers and it is imperative that the Council gets all the necessary financial advice and input to ensure that the Plan’s recommendations achieve the proper stewardship and administration of public finances.

3.6 A further amendment to the role and remit of the Treasurer expands upon the Treasurer’s current role, detailed in Article 30 of the principal Law, to report directly to the States if public money has been dealt with unlawfully. The amendment extends the kind of impropriety that the Treasurer may report to the States from a failure to comply with the Law to a failure to comply with a financial direction. The amendment further details the circumstances under which the Treasurer may report to the States where money has been either dealt with unlawfully or in a way which contravenes the Law and whilst it has been possible to rectify the situation the consequences of the action or the money involved, in the Treasurer’s view were material.

3.7 It is proposed that an amendment is made to the basis on which the Treasurer prepares the financial accounts of the States. Currently Article 32 of the principal Law requires that the States of Jersey accounts are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and prescribed accounting standards - however, as the financial environment changes and in order to reflect best financial practice the Treasurer needs to move forward and produce Accounts in line with changing and improving accounting standards (such as new and emerging International Financial Reporting Standards). The amendment requires the Minister to lay details of the accounting standards being followed before the States. The Treasurer will continue to prepare accounts in line with appropriate and approved accounting standards.

4. Strengthening of the Accounting Officer role (Part 4 - Article 15 refers)

4.1 The Law as currently drafted establishes Chief Officers as the Accounting Officer for States funded bodies. This amendment builds on this role by empowering the Minister for Treasury and Resources to appoint an accounting officer for Special and Trust Funds and all non-departmental States Income.

4.2 The Accounting Officer will be personally accountable for the proper financial management of a fund - with further details on the extent of this responsibility defined in financial directions.

5. Formalisation of the Fiscal Policy Panel (Part 5 - Articles 17 – 18 refer)

5.1 The Fiscal Policy Panel was formally established by the States in its approval of Report and Proposition 133/2006 - Establishment of Stabilisation Fund and Policy for Strategic Reserve. The Panel already exists and operates within the parameters set in the Report.

5.2 The role and format of the Panel will continue to be to provide advice and make recommendations to the Minister for Treasury and Resources on the prevailing economic climate. The Panel comprises of at least 3 members who have the relevant knowledge and experience and are appointed by the States for a three year period, with Panel members being recommended by the Minister (although not specified in the Law the Minister will consult upon the appointment with the States Economic Adviser). The Law specifies that the Minister gain the relevant approvals for such appointments from the States Appointments Commission.

5.3 The amendment proposes that the Panel must provide reports to the Minister:-

for the completion of the Draft Medium Term Financial Plan (and any amendment thereto);
at any other time that the Minister may request;
whenever a significant change in States expenditure or new States expenditure is proposed or there is a proposal to dispose of a significant States asset.

5.4 Although there is no obligation for the Panel to publish a report for the Annual Budget there is provision for the Minister to make a request to the Panel for such a report if changes to economic conditions require.

5.5 Although the Fiscal Policy Panel reports to the Minister for Treasury and Resources the amendment places an obligation on the Council of Ministers and the Minister to have due regard to the reports published by the Panel.

5.6 The Panel are required to produce an Annual report on the economy (global and Island) and States finances (including transfers to/from the Strategic Reserve and Stabilisation Fund).

6. Amendment of Parts 3 and 4 of the Law by Regulation (Part 6 - Article 19)

6.1 The final part of the amendment enables the Minister for Treasury and Resources to make Regulations to amend Parts 3 and 4 of the Law (excluding Article 15 which deals with the power to give immediate effect to a Law that is a taxation draft). These Parts deal with the States administrative process for financial planning and budgeting and States Trading Operations.

6.2 The States would still be required to approve any Regulations but if approved these would not require approval by the UK Privy Council.

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