Budget transfer from Central Contingency: Redundancy Provision

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A decision made 21 December 2015:

Decision reference: MD-ESC-2016-0002
Decision Summary Title:	Allocation of Central Contingencies – Redundancy Provision to the Education, Sport and Culture Department to fund the Voluntary Release Scheme in 2015.		Date of Decision Summary:	21st December 2015
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:	Allocation of Central Contingencies – Redundancy Provision to the Education, Sport and Culture Department to fund the Voluntary Release Scheme in 2015.		Date of Written Report:	21st December 2015
Written Report Author:	Finance Manager		Written Report : Public or Exempt?	Public
Subject: Central Contingency funding allocation to the Education, Sport and Culture Department to fund the Voluntary Release Scheme in 2015.
Decision(s): The Minister agreed the amount and requests that the Minister for Treasury and Resources approves a non-recurring budget transfer of £835,310 in 2015 from Central Contingency – Redundancy Provision to the Education, Sport and Culture Department revenue head of expenditure to fund the Voluntary Release Scheme.
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 to heads of expenditure of amounts not exceeding, in total, the amount available for contingency expenditure in a financial year. On 16th and 17th April 2015, the Council of Ministers agreed to the request to approve non-recurring funding in 2015 totalling £5,100,000 from the Central Contingency – Redundancy Provision to various departments for the funding of the Voluntary Release Scheme. This request is to fund the Voluntary Release Scheme in 2015 in line with the allocation of funding approved by the States Assembly in P.72/2015 Medium Term Financial Plan 2016 – 2019 (as amended).
Resource Implications: The Education, Sport and Culture Department revenue head of expenditure to increase by a total of £835,310 in 2015 and the Central Contingency – Redundancy Provision funding to decrease by an identical amount. This decision does not change the total amount of expenditure approved by the States for the period of the current MTFP 2013 to 2015.
Action required: The Minister for the Education, Sport and Culture Department to seek approval from the Minister for Treasury and Resources in accordance with Financial Direction 4.3 – Contingency Allocations to heads of expenditure, for the above described budget transfer.
Signature:		Position: Deputy Rod Bryans Minister for Education, Sport and Culture
Date Signed:		Date of Decision:

Budget transfer from Central Contingency: Redundancy Provision

The Education, Sport and Culture Department

Ministerial Decision Report

ALLOCATION OF CENTRAL CNTINGENCIES – REDUNDANCY PROVISION TO THE EDUCATION, SPORT AND CULTURE DEPARTMENT TO FUND THE VOLUNTARY RELEASE SCHEME IN 2015.

Purpose of Report

To enable the Minister to agree the amount and to request that the Minister for Treasury and Resources approves a non-recurring budget transfer of £835,310 in 2015 from Central Contingencies – Redundancy Provision to the Education, Sport and Culture Department revenue head of expenditure to fund the Voluntary Release Scheme.

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 has been made available to all employees in 2015.

It is anticipated that future use of such schemes would be more targeted throughout 2016 to 2019 focusing on areas where re-design of services are identified that will add value to the services provided by the public sector. This focused approach in partnership with Trade Unions should reduce the need for compulsory redundancy and facilitate the achievement of the £70,000,000 people saving targets for the period.

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 [1]. This provides a total of £6,000,000 available for this purpose in 2015.

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.

The VR scheme run in 2015 received 329 applications in total. Of these, 12 applications were approved from the Education, Sport and Culture Department and these employees have signed up to leave the organisation in 2015/6.

The total cost of the approved VR packages for the Education, Sport and Culture Department is £850,694. The recurring saving achieved as a result of releasing these employees will be £608,043 and 8.4 FTE.

Recommendation

The Minister is recommended to agree the amount and request that the Minister for Treasury and Resources approves a non-recurring budget transfer of £835,310 in 2015 from Central Contingency – Redundancy Provision to the Education, Sport and Culture Department revenue head of expenditure to fund the Voluntary Release Scheme.

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.

On 16th and 17th April 2015, the Council of Ministers agreed to the request to approve non-recurring funding in 2015 totalling £5,100,000 from the Central Contingency – Redundancy Provision to various departments for the funding of the Voluntary Release Scheme.

This request is to fund the Voluntary Release Scheme in 2015 in line with the allocation of funding approved by the States Assembly in P.72/2015 Medium Term Financial Plan 2016 – 2019 (as amended).

Resource Implications

The Education, Sport and Culture Department revenue head of expenditure to increase by a total of £835,310 in 2015 and the Central Contingency – Redundancy Provision funding to decrease by an identical amount. This decision does not change the total amount of expenditure approved by the States for the period of the current MTFP 2013 to 2015.

Report author :	Document date: 21st December 2015.
Quality Assurance / Review :	File name and path:
MD sponsor :	File name and path:

[1] P.72/2015 Medium Term Financial Plan 2016 – 2019 (as adopted as amended), P.75/2015 Independent Jersey Care Inquiry: amendment to Medium Term Financial Plan 2013 – 2015, P.76/2015 Strategic Reserve Fund: funding for Independent Jersey Care Inquiry and transfers from and to the Consolidated Fund.