Social Security under-spend allocated to Long Term Care Fund (P.140/2013)

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A decision made 19 December 2013:

Decision Reference: MD-S-2013-0132
Decision Summary Title :	Departmental under-spend allocated to create payments into the LTC Fund (2013)		Date of Decision Summary:	18 December 2013
Decision Summary Author:	Policy Principal		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Departmental under-spend allocated to create payments into the LTC Fund (2013)		Date of Written Report:	18 December 2013
Written Report Author:	Policy Principal		Written Report : Public or Exempt?	Public
Subject: Departmental under-spend allocation to create payments into the LTC Fund (2013) as per the Addendum to P.140/2013 Long-Term Care (States Contribution) (Jersey) Regulations 201-
Decision(s): The Minister approved the allocation of Departmental underspend to create payments into the LTC Fund. In order to satisfy the requirements of the Public Finances (Jersey) Law 2005 the payment in 2013 will be accounted for as a grant from the Social Security Department revenue head of expenditure to the Long Term Care Fund.
Reason(s) for Decision: Until the LTC contribution rate is set at 1% in 2016, additional payments into the LTC Fund will be needed to ensure that the LTC scheme can operate. As detailed in P.140/2013 (Add) the estimated SSD budgetary value to be allocated as payment into the LTC Fund in 2013 is £11.7m.
Resource Implications: None.
Action required: The SSD Director of Finance and Governance to notify the Head of Financial Planning, Treasury and the SSD Finance Manager that this decision has been approved. Copy of signed decision to be submitted to the Treasury Department.
Signature:		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

Social Security under-spend allocated to Long Term Care Fund (P.140/2013)

Tax-Funded under-spend allocated to create payments into the LTC Fund (2013)

Purpose of the Report

As per the Addendum to P.140/2013 Long-Term Care (States Contribution) (Jersey) Regulations 201-, to enable the Minister for Social Security to approve the Departmental under-spend in 2013 to be allocated to create payments into the LTC Fund.

Background

Excerpt from Section 11 Other SSD budget underspend allocated to create payments into the LTC Fund

Until the LTC contribution rate is set at 1% in 2016, additional payments into the LTC Fund will be needed to ensure that the LTC scheme can operate.

Based on 2011 tax data, a 1% LTC contribution is estimated to yield £15.3 million in 2011 prices.

As such, taking into account changes proposed in the budget (P.122/2013) and RPI/Average Earnings, it is estimated that 1% in 2014 would yield £16.3 million and £16.9 million in 2015. With LTC contributions starting at 0.5% in 2015, this equates to a loss of income into the LTC Fund over the first 2 years of £24.7 million.

Due to the level of provision for the costs of the recession within tax-funded benefit budgets and actual costs being lower than originally anticipated, the Medium Term Financial Plan includes funding for the Social Security Department in 2013, 2014 and 2015, which is unlikely to be spent fully. These surplus budgetary amounts will be released to create payments into the LTC Fund to maintain the viability of the LTC scheme until 2016.

These amounts are only provided as an indication of the likely amounts available.

They cannot be confirmed until the end of each year, when actual expenditure has been calculated.

As agreed with the Minister for Social Security and the Minister for Treasury and Resources –

 The estimated SSD budgetary value to be allocated as a payment to the LTCF in 2013: £11.7 million

 The estimated SSD budgetary value to be allocated as a payment to the LTCF in 2014: £9.0 million

 The estimated SSD budgetary value to be allocated as a payment to the LTCF in 2015: £6.4 million.

Recommendation

The Minister for Social Security is recommended to approve a payment to the LTC Fund of an amount not less than £11.7 million from the Departmental under-spend in 2013. In order to satisfy the requirements of the Public Finances (Jersey) Law 2005 the payment in 2013 will be accounted for as a grant from the Social Security Department revenue head of expenditure to the Long Term Care Fund.

Reason for Decision

To enable the LTC Fund to operate in 2014-2015 without LTC Contributions at 1% commencing until 2016.

Resource Implications

None

L:\Strategy & Policy\Policy\Political & Ministerial (7.0)\Ministerial Business (7.1)\Ministerial Decisions (7.1.1)\2013\0132 - Departmental under-spend allocated to create payments into the LTC Fund (2013)\WR_SSD allocation to LTCF (2013).docx