Budget transfer from Central Contingencies to Department of Environment: Voluntary Release Scheme

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A decision made 16 December 2016:

Decision reference: MD-PE-2016-0162
Decision Summary Title:	Transfer of funding between Central Contingencies and the Department of Environment to recognise the savings and costs associated with the Voluntary Release Scheme in 2016.		Date of Decision Summary:	2nd December 2016
Decision Summary Author:	Finance Manager		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 between Central Contingencies and the Department of Environment to recognise the savings and costs associated with the Voluntary Release Scheme in 2016.		Date of Written Report:	2nd December 2016
Written Report Author:	Finance Manager		Written Report : Public or Exempt?	Public
Subject: Transfer of funding between Central Contingencies and the Department of Environment (DOE) to recognise the 2016 costs associated with the Voluntary Release Scheme.
Decision(s): The Minister approved a non-recurring budget transfer of £42,034.73 from Central Contingency – Redundancy Provision for VR Applications approved and signed from 1st July to 31st December 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.
Resource Implications: DOE revenue head of expenditure to increase by a total of £42,034.73 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 Finance Director to notify the Head of Decision Support that the Decision has been approved.
Signature:		Position: Deputy S Luce Minister of Environment
		Date:

Budget transfer from Central Contingencies to Department of Environment: Voluntary Release Scheme

Department of Environment

Ministerial Decision Report

Transfer of funding between Central Contingencies and the Department of Environment to recognise the savings and costs associated with the Voluntary Release Scheme in 2016.

Purpose of Report

To enable the Minister to approve the non-recurring budget transfer of £42,034.73 from Central Contingencies – Redundancy to the DOE revenue head of expenditure. 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

A voluntary release (VR) programme was run in 2015 closing at the end of July and re-opened in January 2016. As at the 19th November 2016 a total of 536 applications for VR had been received (329 in 2015 and 207 to date in 2016) and a total of 181 have been approved. The scheme remains open for the foreseeable future in order to support organisational change initiatives. In addition, a total of 46 employees have been made compulsory redundant to date in 2016.

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 £17.3 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.

CR and VR’s agreed to be centrally funded by the redundancy decision panel for the period July to November 2016 amounts to a commitment of an additional £1.86 million. This now leaves a balance of approximately £13.7 million remaining to fund redundancy for the remainder of the MTFP period to December 2019.

VR payments totalling £42,034.73 have been approved for the period 1st July to 31st December 2016.

Recommendation

The Minister is recommended to approve a non-recurring budget transfer of £42,034.73 from Central Contingency – Redundancy Provision to DOE’s 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.

Resource Implications

DOE’s revenue head of expenditure to increase by a total of £42,034.73 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 : Finance Manager	Document date: 2nd December 2016.
Quality Assurance / Review : Finance Director	File name and path: I:\FINANCE\Ministerial Decisions\DOE\2016\2016-26 MD VR Savings and funding\DOE - WR - VR Savings and funding in 2016.docx
MD sponsor : Finance Director