States Accounts 2012 are published

18 June 2013

The Financial Report and Accounts 2012 shows that the States have performed well against targets for the year, as well as against international industry benchmarks.

Income

States Income for 2012 was £628 million, compared with £587 million in 2011. This was £15.4 million more than anticipated, and consisted of revenues from taxation such as personal income tax and GST (£510.0 million), Impôts, Stamp Duty and the Island Rate (£86.8 million) and other income (£30.9 million).

In terms of Income from Personal Tax, the bottom 40% of earners contributed less than 2% of all income in 2012 and the top 2% of earners contributed more than 40%.

Expenditure

Departments’ net revenue expenditure for 2012 was £601 million.

Departments ended the year with an underspend of £28 million against budgets. These funds have been carried forward into 2013 to help departments make changes in service delivery that achieve long-term savings, and to meet the cost of initiatives aimed at creating jobs and boosting growth.

Management of the balance sheet

Jersey’s investment performance in 2012 was better than that of international, industry standard benchmarks. Equity returns were 15% against a benchmark of 11% and overall our returns were 9.1% against a benchmark of 8.7%.

Following an independent valuation of fixed assets, carried out by the Valuation Office Agency, there was also a significant increase in fixed assets of approximately £275 million. There were also high returns for the Common Investment Fund of £133 million, of which £57 million was generated for the Strategic Reserve, bringing it up to £651 million by the end of 2012.

The Treasury has also operated as an active shareholder with regards to Jersey Post, Jersey Telecoms, Jersey Water, Jersey Electricity and SOJDC. Together, the four utilities contributed £18 million in dividends to the States in 2012, reducing the need

for that funding to be raised by taxes.

Financial position

The Treasury and Resources Minister, Senator Philip Ozouf said “These accounts show that we have a robust financial position against a backdrop of significant global turbulence. They also provide us with reassurance that our income forecasting is robust and reliable.

“At a time when many countries in the world have debts of more than 100% of their GVA, Jersey’s balance sheet represents value net assets exceeding 100% of GVA, together with plans for balanced budgets. We are ahead of most other jurisdictions in many ways, including in economic fundamentals.”

Summary of Performance

the original budget for 2012 was set to end the year with a net operating deficit of £3.5 million, but ended with a net operating surplus of £27.1 million
States Net General Revenue Income was £15.4 million better than originally budgeted, at £627.7 million
net Income Tax was £14.5 million (3.5%) higher than the 2012 budget, primarily due to an increased tax yield relating to individuals
other General Revenue Income was £4.3 million (16.3%) higher than budgeted, primarily as a result of an additional Jersey Post dividend of £4.2 million, agreed after the Budget Statement
Stamp Duty was £2.8 million less than budgeted, due mostly to a slower than expected economic recovery, leading to fewer, lower value, transactions
other lines of General Revenue saw smaller shortfalls in income totalling £0.6 million
departmental Near Cash Net Revenue Expenditure (the amount spent on day-to-day activities) was £15.2 million less than the Business Plan, and £27.6 million less than the approved amount after carry forwards and other allocations, at £600.6 million
Social Security was £6.9 million less than approval due to lower than expected Social Benefit payments
Education was £3.6 million under budget as a result of the delegated financial management scheme, which allows underspent schools’ budgets to be carried forward
£6.3 million relates to funding for projects that extend over more than one year within the Chief Minster’s and Treasury and Resources departments
other departments had smaller underspends
departments will be carrying forward nearly £23 million of these approvals into 2013 for projects and other spending pressures
the balance will help fund Capital Projects in future years (as identified in the MTFP)
£28.4 million of Central Contingency was not needed in 2012, and this will be carried forward into 2013
after adjusting for Trading Operations, Special Funds and other accounting adjustments there was an accounting surplus of £70.0 million for the year – however, much of this relates to non-cash movements and amounts held in Special Funds and so is not available for everyday expenditure
Trading Operations incurred more expenditure than expected, but this is due to non-cash decreases in asset values as a result of the 2012 Valuation (£22 million), offset by other smaller variances
depreciation and charges relating to the use of Property, Plant and Equipment by the States for Ministerial and Non- Ministerial departments were broadly in line with budget
Special Funds saw Net Income of nearly £60.0 million. The CIF generated significant income for the States of Jersey during 2012, earning net income of £132.5 million in total, representing a return on capital of around 9.8%. Whilst much of this gain was attributable to rallies in the markets in which the CIF invested, the CIF’s investment managers also exceeded their combined benchmarks by 2% (equivalent to £14.8 million)
other Funds saw smaller amounts of income
the most significant Accounting Adjustment was associated with Pension liabilities (£41.6 million), due mostly to a revised estimate for the amount required to settle the JTSF pre-2007 debt, based on information in the latest Actuarial Valuation
the States also spent £36.8 million on Capital projects in the year, including improvements to Social Housing and the Prison
the States Balance Sheet remains strong
property, plant and equipment was revalued in the year, and now totals £3.2 billion
strategic investments in utility companies decreased by £37.6 million
pensions liabilities relating to past service liabilities have reduced by £39 million - mostly due to a reduction of £37 million in the provision for the JTSF pre-2007 liability