Finance Law Delegation Report for the six-month period to 30th June 2020

STATES OF JERSEY

FINANCE LAW DELEGATION REPORT FOR THE SIX-MONTH PERIOD TO 30TH JUNE 2020

Presented to the States on 28th August 2020 by the Minister for Treasury and Resources

STATES GREFFE

2020  R.88

REPORT

1. The administration of the public finances of Jersey

In accordance with the Public Finances (Jersey) Law 2019 ("the Law") certain matters are required to be reported to the States Assembly twice yearly by the Minister for Treasury and Resources ("the Minister").

This report summarises all decisions made during the six-month period to 30th June 2020. Where decisions have not previously been published, this is due to one of two reasons -

• The decisions were exempted under the Freedom of Information (Jersey) Law 2011; or

• The decisions were taken by the Treasurer of the States under delegated authority from the Minister.

2. Reporting on decisions

The areas of administration which are required to be reported on are as follows:

1. each function undertaken, within the applicable 6-month period under any of Articles 18 to 21, 24 and 26 to 28; and
2. each direction given, within the applicable 6-month period by the Minister under Article 15(3) with respect to the amounts appropriated for a reserve head of expenditure.

Article 18 relates to transfers between heads of expenditure.

Article 19 relates to transfers to the following year's reserve.

Article 20 relates to transfers of major project amounts to the following year. Article 21 relates to the power to allocate excess income.

Article 24 relates to emergency expenditure.

Article 26 relates to financing (borrowing).

Article 27 relates to loans.

Article 28 relates to guarantees and indemnities.

There were no approvals made in the six-month period to 30th June 2020 relating to Article 20. Other approvals are detailed below.

1. Transfers between heads of expenditure under Article 18.

2. Transfers to the following year's reserve under Article 19.

3. Approvals of the allocation of excess income under Article 21

4. Approvals of emergency expenditure under Article 24

P.28/2020 Draft Public Finances (Amendment of Law) (Jersey) Regulations 202-, approved by the States Assembly on 24th March 2020, agreed a number of

temporary modifications to the Public Finances (Jersey) Law 2019. The added modifications affect the way in which the Stabilisation Fund may be used, by allowing the Minister –

• to transfer an amount from the Stabilisation Fund to any other fund and direct that amount to be expended directly from that fund;

• to direct that an amount be expended directly from the Stabilisation Fund;

• to direct that an amount be transferred to the Stabilisation Fund from any other fund;

• to arrange for overdraft and other financing for the Stabilisation Fund;

• to arrange that repayments of loans made from the Stabilisation Fund are credited to that Fund.

There are other added modifications, which –

• allow the Minister to transfer up to and including £400 million from the Strategic Reserve Fund to the Stabilisation Fund;

• remove the requirement in Article 18 that if the Minister proposes to give a direction to re-allocate a head of expenditure, the Minister gives the States at least 4 weeks' notice;

• increase from £10 million to £100 million the amount which may be appropriated from the Consolidated Fund by the Minister without amending the government plan;

• increase the limit on financing that the Minister may arrange in a financial year from £3 million to £500 million and the limit on total outstanding financing from £20 million to £500 million;

• allow the Minister to make loans from the Stabilisation Fund (instead of only from the Consolidated Fund), and increase the limit on loans that the Minister may make in a financial year from £3 million to £100 million and the limit on total outstanding loans from £20 million to £100 million;

• increase the limit on guarantees and indemnities that the Minister may provide in a financial year from £3 million to £100 million and the

limit on the total outstanding guarantees from £20 million to £100 million.

The amendment to P.28/2020, brought by the Corporate Services Scrutiny Panel and adopted by the Assembly, clarified that:

• the amended powers expire on 30th September 2020; and

• where the Minister has obtained financing, lent money or provided guarantees or indemnities under Articles 26 to 28 while Article 24(8) applied, the financing, lending or provision of guarantees or indemnities remain valid and are not included in any monetary limits set out in Articles 26 to 28 as those Articles apply after the expiry of the modifications.

The Minister brought these amended powers into effect through MD-TR-2020-0029 by deciding that she considered there exists an immediate threat to the health or safety of any of the inhabitants of Jersey and to the stability of the economy in Jersey.

On  24th  April  2020  the  Minister  signed  MD-TR-2020-0047  which  approved additional expenditure from the Consolidated Fund of £99,990,000, to be added to the General Reserve head of expenditure for the purposes of reallocation to meet additional Covid-19 costs. Expenditure approved from this amount is detailed in section 2.8 of this report.

5. Approvals  of  financing  (borrowing)  under  Article  26  (as  amended  by P.28/2020)

On 7th May 2020 the Minister signed MD-TR-2020-0051 to agree a Revolving Credit Facility of £500 million. £5 million of that Facility was drawn down as a result of that decision. There had been no further drawdowns as at 30th June 2020.

6. Approvals of loans under Article 27 (as amended by P.28/2020)

1. Housing Development Fund

During the six-month period to 30th June 2020, no new loans were approved by the Minister for Treasury and Resources:

The  net  value  of  loans  outstanding  from  the  Housing  Development  Fund increased from £215,599,223 at 31st December 2019 to £226,205,030 at 30th

June 2020.

Loans from the HDF were split between the following loan holders:

Andium  £219,508,030 Le Vaux Housing Trust  £1,250,000 Parish of St Martin  £5,447,000 Total loans  £226,205,030

2. Other loans

On 30th June 2020 the Minister approved MD-TR-2020-0081 which agreed a secured loan facility of £10 million to Blue Islands Limited. None of this facility had been drawn down at 30th June 2020.

7. Approvals of guarantees under Article 28 (as amended by P.28/2020)

1. Jersey student loan scheme

During the six-month period to 30th June 2020, no new loans were guaranteed by the States under the Jersey Student Loan Scheme.

P53/2007 Student Loans for higher education – guarantees were debated by the States Assembly on the 6th June 2007 and a maximum outstanding limit of £10 million for an unlimited time period was approved.

2. Disruption Loan Guarantee Scheme

On 14th May 2020 the Minister approved MD-TR-2020-0054 which established a Disruption Loan Guarantee Scheme. As at 30th June 2020, 124 applications had been received by banks, of which 50 were progressed and issued into Loans.

These loans represent a total approved and guaranteed facility of £2.9 million as at 30th June 2020. At that date no defaults have been recognised by the issuing

banks.

8. Allocations from the Reserve under Article 15(3)

Abbreviations

CLS  Customer and Local Services

COO  Chief Operating Office

CYPES  Children, Young People, Education and Skills GHE  Growth, Housing and Environment

HCS  Health and Community Services

IJCI  Independent Jersey Care Inquiry

OCE  Office of the Chief Executive

SPPP  Strategic Policy, Performance and Planning T&E  Treasury and Exchequer

9. Other approvals under P.28/2020

As detailed above, on 24th March 2020 the States Assembly approved P.28/2020, which granted additional powers to the Minister for Treasury and Resources until 30th September in relation to the Covid-19 pandemic. On 15th May 2020 the Minister signed MD-TR-2020-0055 which transferred £28 million from the Stabilisation Fund to the Consolidated Fund and directed that it be added to the General Reserve head of expenditure to address direct and consequential impacts of Covid-19.

Resource Implications:

There are no financial or manpower implications as a direct result of this decision.