Annual Business Plan 2009 (P.113-2008) - fourth amendment P.113-2008 Amd.(4)

STATES OF JERSEY

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ANNUAL BUSINESS PLAN 2009 (P.113/2008): FOURTH AMENDMENT

Lodged au Greffe on 2nd September 2008 by the Council of Ministers

STATES GREFFE

2008   Price code: D  P.113 Amd.(4)

ANNUAL BUSINESS PLAN 2009 (P.113/2008): FOURTH AMENDMENT 1  PAGE 3, PARAGRAPH (b) –

After the words "withdrawn from the consolidated fund in 2009", insert the words –

1. "except  that  the  net  revenue  expenditure  of  the  Chief  Minister's Department  shall  be  increased  by  £570,000  to  ensure  the  range  of functions within the Chief Minister's Department required for a modern and responsible government are strengthened and re organised;"
2. ",  except  that  the  net  revenue  expenditure  of  the  Chief  Minister's Department shall be increased by £200,000 to enable a new post for a Tax Strategist to be created within the Chief Minister's Department to work closely with the Director of International Finance and International Relations officers;"
3. ", except that the net revenue expenditure of the Education, Sport and Culture  Department  shall  be  increased  by  £552,000  to  extend opportunities  for  children  who  attain  the  age  of  4 years  between  1st September and 31st August in the year before commencing statutory education;"
4. ",  except  that  the  net  revenue  expenditure  of  the  Home  Affairs Department  shall  be  increased  by  £250,000  to  provide  the  necessary funding for the implementation of the Discrimination (Jersey) Law 200-;"
5. ",  except  that  the  net  revenue  expenditure  of  the  Planning  and Environment Department shall be increased by £1.0 million to fund the first phase of an extensive package of environmental initiatives, with the approval  of  this  expenditure,  in  accordance  with  the  provisions  of Article 14(9) of the Public Finances (Jersey) Law 2005, dependent upon the subsequent approval by the States of the introduction of a Vehicle Emissions  Duty  which  will  generate  sufficient  income  to  fund  this expenditure;"
6. ",  except  that  the  net  revenue  expenditure  of  the  Social  Security Department shall be increased by £4.5 million to provide the necessary funding for the anticipated increase in the cost of supplementation;"
7. ",  except  that  the  net  revenue  expenditure  of  the  Social  Security Department shall be increased by £529,000 for the purposes of providing work  and  vocational  day  care  service  opportunities  for  people  with learning disabilities and people on the autistic spectrum;"
8. ",  except  that  the  net  revenue  expenditure  of  the  Social  Security Department shall be increased by £2,320,000 to extend transitional relief to October 2009 for those in receipt of protected benefit payments under the income support scheme and to increase the Winter Fuel Allowance in accordance with recent increases in the cost of fuel;"
9. ", except that the net revenue expenditure of the Transport and Technical Services Department shall be increased by £1.0 million to fund the first phase of a package of recycling and sustainable transport initiatives, with

the approval of this expenditure, in accordance with the provisions of Article 14(9) of the Public Finances (Jersey) Law 2005, dependent upon the subsequent approval by the States of the introduction of a Vehicle Emissions  Duty  which  will  generate  sufficient  income  to  fund  this expenditure;"

10. ", except that the net revenue expenditure of the Treasury and Resources Department shall be increased by £300,000 to meet the additional costs associated with administering GST zero-rating;"
11. ",  except  that  the  net  revenue  expenditure  of  the  Law  Officers' Department for 2009 shall be increased by £520,000 to ensure there are sufficient resources to restructure the Department in order to meet the pressures on the Department and achieve service levels which are to be agreed with the Council of Ministers;".

2  PAGE 3, PARAGRAPH (f)

After the words "Summary Table C, page 96", insert the words –

1. ",  except  that  the  net  revenue  expenditure  of  the  Chief  Minister's Department shall be increased in 2010 by £584,000, in 2011 by £599,000, in 2012 by £614,000 and in 2013 by £629,000 to ensure the range of functions within the Chief Minister's Department required for a modern and responsible government are strengthened and re organised;"
2. ",  except  that  the  net  revenue  expenditure  of  the  Chief  Minister's Department shall be increased in 2010 by £205,000, in 2011 by £210,000, in 2012 by £215,000 and in 2013 by £220,000 to enable a new post for a Tax Strategist to be created within the Chief Minister's Department to work closely with the Director of International Finance and International Relations officers;"
3. ", except that the net revenue expenditure of the Education, Sport and Culture Department shall be increased in 2010 by £1,498,000, in 2011 by £1,657,000, in 2012 by £1,639,000 and in 2013 by £1,679,000 to extend opportunities  for  children  who  attain  the  age  of  4 years  between  1st September and 31st August in the year before commencing statutory education, to access free education, 20 hours per week during term time;"
4. ",  except  that  the  net  revenue  expenditure  of  the  Home  Affairs Department shall be increased in 2010 by £256,000, in 2011 by £263,000 in 2012 by £269,000 and in 2013 by £276,000 to provide the necessary funding for the implementation of the Discrimination (Jersey) Law 200-;"
5. ",  except  that  the  net  revenue  expenditure  of  the  Planning  and Environment Department shall be increased in 2010 by £2.0 million, in 2011  by  £2.5 million,  in  2012  by  £2.65 million  and  in  2013  by £2.65 million  to  fund  further  phases  of  the  extensive  package  of environmental initiatives providing that a new Vehicle Emissions Duty is approved by the States in 2008 to fund this expenditure;"
6. ",  except  that  the  net  revenue  expenditure  of  the  Social  Security Department shall be increased in 2010 by £842,000, in 2011 by £863,000, in  2012  by  £884,000  and  in  2013  by  £906,000  for  the  purposes  of  providing work and vocational day care service opportunities for people with learning disabilities and people on the autistic spectrum ;"

7. ",  except  that  the  net  revenue  expenditure  of  the  Social  Security Department  shall  be  increased  in  2010  by  £2,056,000,  in  2011  by £1,111,000, in 2012 by £716,000 and in 2013 by £351,000 to extend the phasing out of transitional relief, starting from October 2009, for those in receipt  of  protected  benefit  payments  under  income  support  and  to increase the Winter Fuel Allowance in accordance with recent increases in the cost of fuel;"
8. ", except that the net revenue expenditure of the Transport and Technical Services  Department shall be increased in 2010 by £1.752 million in 2011  by  £2.5 million,  in  2012  by  £2.5 million  and  in  2013  by £2.5 million  to  fund  further  phases  of  the  package  of  Recycling  and Sustainable Transport initiatives providing that a new Vehicle Emissions Duty is approved by the States in 2008 to fund this expenditure;"
9. ", except that the net revenue expenditure of the Treasury and Resources Department shall be increased in 2010 by £308,000, in 2011 by £315,000, in 2012 by £323,000 and in 2013 by £331,000 to meet the additional costs associated with administering GST zero-rating;"
10. ",  except  that  the  net  revenue  expenditure  of  the  Law  Officers' Department shall be increased in 2010 by £533,000, in 2011 by £546,000, in 2012 by £560,000, in 2013 by £574,000 to ensure there are sufficient resources to restructure the Department in order to meet the pressures on the Department and achieve service levels which are to be agreed with the Council of Ministers;".

COUNCIL OF MINISTERS

REPORT

Overview

The  Council  of  Ministers  has  delivered  a  Business  Plan  in  accordance  with  the instruction of the States to keep within the Cash Limits for 2009 as agreed last year. However, the world has changed and Jersey people are under increasing financial pressure since the Plan was lodged and it is not possible within these very tight spending limits to deliver a number of social and environmental initiatives which ministers believe should be funded and which are affordable.

In order to keep within Cash Limits, the Council enforced a strict prioritisation process on  any  additional  funding  required  for  service  pressures/initiatives.  Through  this process and the application of further efficiency savings, the Council has already managed to include funding for a number key service pressures (see Table 3.2 of the 2009 Annual Business Plan) e.g. Prison improvements, additional financial support for the less well-off, social inclusion at Mont à l'Abbé School, and additional staffing for Customs and Immigration.

However, this also meant that there were a number of service pressures/initiatives that the Council felt should be implemented but could not be funded within the restrictions of the Cash Limit. These projects are listed in Table 3.3 within the 2009 Annual Business Plan, and the Council of Ministers detailed these at their recent presentations of the Annual Business Plan to States Members and the media.

The Council felt that the States as a whole should have the opportunity to debate and decide whether any or all of these pressures should be funded and the implications of doing so. The Council has therefore lodged Amendments to the Business Plan in order for the States to have a full and honest debate on whether or not additional funding should be made available for these items.

The Council of Ministers announced last week that it recognises the unprecedented increases in food and fuel costs are hitting all Islanders and is therefore proposing changes to the States Business Plan in order to reduce their impact. Ministers are acutely  aware  of  the  need  to  help  support  the  less  well-off  and  are  proposing  a package of measures to alleviate the effect for those on lower incomes. This package, if approved, will inevitably result in additional funding requirements in a number of areas.

The package includes –

• zero-rating GST on food.

• increasing winter fuel payments by 20%.

• freezing fuel duty in the budget.

• maintaining the current rates of income support, including the allowance for GST on food, and the scheme for people who do not receive income support but are below the tax threshold. This means that the full benefit of GST reductions on food will be passed on to people on lower incomes who have already received support to cover their costs.

• deferring from January 2009 until October 2009 any reductions in income support for people who receive transitional relief.

• accelerating  the  programme  of  insulation  for  States  Housing  to  help States tenants reduce their fuel costs.

• and,  for  all  other  households,  introducing  a  programme  of  home insulation grants and energy efficiency advice to help the public reduce their fuel bills.

The States have had a consistent aim of providing free nursery education for all three and four year-olds. There are now 17 high quality nursery classes at primary schools providing 510 full-time equivalent places. However, the policy of building nursery classes  on  to  primary  schools,  though  well-intentioned,  has  led  to  inequity. Approximately half of all three and four year-olds access free nursery education, whilst the remaining half are denied this opportunity.

Ministers are proposing an amendment to the Annual Business Plan which is primarily about removing this inequity. It is about extending early education so that all children have the opportunity to access affordable, high quality early education 20 hours per week, 38 weeks per year.

The arguments for extending nursery education are powerful. Regardless of parental circumstances or whether or not childcare is required, all children should have access to a high quality nursery education opportunity regardless of setting. There is equity because parents can access the offer, whether in the public or private sector, and they may be assured that their child is receiving similar educational benefits, and from the private and voluntary providers' perspective, they are operating in a fair environment.

On  10th  July  2008,  the  States  considered  P.102/2008  of   Deputy  Ian   Gorst .  This Proposition, approved by States Members by 42 votes to nil, asked the States to receive the Strategy for Inclusive Vocational Day services and Employment for people with a learning disability and people on the autistic spectrum as drafted by the Joint Secretariat Executive Board for People with Special Needs.

The Council of Ministers is proposing an amendment which would, if approved, give effect to the above States decision and to add to the Social Security cash limit the funds identified with the above strategy.

The  Council  is  also  proposing  to  help  fund  Jersey's  environment,  recycling  and sustainable transport strategies. It is proposed that £2 million is invested as follows –

• £1 million will be added to the £0.5 million donation from the Jersey Electricity Company and put towards home insulation grants and energy efficiency measures.

• £0.5 million will go towards supplying additional commuter bus services, holding  bus  fares  at  current  levels,  expansion  of  the  "Safe  Route  to Schools" scheme and developing an eastern cycle route.

• £0.5 million will go towards increased recycling which will include the supply  of  kerbside  containers  and  improved  collecting  of  hazardous waste.

In order to fund the above environmental and transport strategies the Council of Ministers  propose  the  introduction  of  a  Vehicle  Emission  Duty  (VED)  on  the registration  of  new  vehicles,  targeted  at  vehicles  with  high  CO2  emissions.  The estimated £2 million revenue raised will be ring-fenced and allocated to the measures outlined above.

The Council is also proposing to allocate additional resources to the Chief Minister's and Law Officers' Departments which, as has been confirmed by the Comptroller and Auditor General, have been significantly under-resourced for some time. This under- resourcing is seriously jeopardising Jersey's ability to represent itself internationally and to protect the economy in an environment of ever-increasing taxation complexity and competition. It is also effecting the administration of justice and the drive towards greater efficiency in government. Further details are outlined later in the report.

Finally the Council of Ministers is proposing an amendment to provide the necessary funding for the anticipated costs of supplementation. More details are provided later in this report but it should be emphasized that supplementation measures are primarily aimed to help those on lower incomes.

The Council of Ministers notes that even with these additional spending items to the Business Plan, States financial forecasts will remain within broadly balanced budgets up to 2013, with no borrowing or use of reserves.

Ministers are firmly of the view that this package of amendments to the 2009 Business  Plan  will  help  to  give  protection  to  the  less  well-off  in  the  current economic  climate,  supports  the  States'  desire  to  enhance  its  social  and environmental policies and ensures at the same time that the government of Jersey is capable of meeting the challenges that lie ahead.

(1)  Chief Minister's Department

The Draft Annual Business Plan shows in Table 3.3 those priority service pressures which  could  not  be  included  in  cash  limits.  The  total  amount  that  could  not  be included for Chief Minister's Department was £650,000. This amendment proposes that the very highest priorities within that be funded and that £570,000 be added to the Department's cash limit.

In 2004 the States approved a change programme which was intended to deliver major efficiency savings and to improve the performance of the public sector. The view was taken  that  the  Chief  Minister's  Department  and  the  Treasury  and  Resources Department should lead the way in proving that such efficiencies and savings were delivered. One of the targets of the programme was to bring together a range of corporate resource functions and reduce the cost of central functions by some 20%. Those savings targets have been delivered and all subsequent business plans have seen consequent real terms reductions in the cash limits of these departments.

The change and savings programme was paralleled by the introduction of Ministerial Government, which has required improvements in corporate management, forward planning  and  a  greater  emphasis  on  co-ordination  across  departments.  The  Chief Minister's  Department  has  also  picked  up  additional  management  responsibilities (including the operating resources, but no additional senior management resources) for the Population Office, Director of Civil Aviation and Emergency Planning. These changes also include developing a new migration policy and introducing high quality professional emergency planning across the States. Thus, at the same time as there has been a significant reduction in the Department's resources there has been an increase in the demands placed upon the Department.

It is entirely appropriate that staff should be expected to respond positively to change and the Department has continued to provide executive support to the Chief Minister,  the Council of Ministers and departments across the States. However, the resources are not sufficient to continue to provide a quality Government service, respond to international competition, implement continuing improvements and respond to major incidents like Haut de la Garenne and the aftermath of the Broadlands fire.

This does not detract from the excellent progress that has been made over recent years. The States are now acting more decisively and strategically, decisions are based on sound information and are then implemented within budget and largely on time. The Council  of  Ministers'  Strategic  Plan  committed  the  executive  to  a  far-reaching programme of change and development, whilst reducing the resources consumed in administration  and  management.  A  major  programme  of  change  to  improve  the efficiency and effectiveness of the civil service, aimed to reduce running costs by £15 million per annum and deliver some £5 million per annum capital receipt is in hand,  with  savings  having  been  made.  The  allied  organisation  development programme is being rolled out and will over the next few years improve performance to the level that should be expected.

However,  it  would  be  wrong  to  suggest  that  this  work  has  been  fully  effective everywhere and, as can be expected within such a far-reaching change programme, a re-evaluation of basic functions and approaches is now required.

This Business Plan will determine the resources for the second term of Ministerial Government. It is therefore appropriate to decide whether the States is willing to provide  sufficient  resources  to  underpin  the  next  phase  of  the  development  of  a modern responsible Government.

The  notion  that  there  is  further  work  to  be  done  within  the  Chief  Minister's Department was supported by the Controller and Auditor General's report of May 2008  Emerging  Issues:  States'  spending  review'.  Amongst  other  things,  this highlighted the need to strengthen the Corporate Management' function of the States of Jersey.

1. Corporate management:

There is some evidence that it has not proved possible to pursue corporate initiatives  with  the  consistency  that  was  required  to  ensure  successful implementation. Consideration should be given to ensuring that the corporate management of the States has the capacity to pursue the transformation of the States successfully. This will involve considering inter alia:

1. whether the Chief Minister's Department is appropriately structured to permit the discharge of all the responsibilities allocated to it;
2. whether the Chief Minister's Department is appropriately resourced to permit consistent discharge of all of the responsibilities delegated to it; and
3. within these studies, whether appropriate resource has been dedicated to the achievement of the transformation of the States which the Spending Review suggests offers the most fruitful prospect of significant reductions in expenditure.

The  test  of  whether  the  structure  and  resources  of  the  Chief  Minister's Department are appropriate should be whether it is sufficiently resilient to be able to apply consistent pressure to the achievement of the internal objectives of the States at the same time as dealing with external pressures.

In summary, while the transition to ministerial government, and the organisational changes that accompanied and have followed it, have resulted in a more effective central policy-making and support capability, further changes are necessary to ensure that the full potential is realised.

Structural changes are underway which will address some of the issues identified by the Comptroller and Auditor General, but it is evident that there are 3 areas of work which will require additional resources if they are to meet the challenges that have been  identified.  These  are  International  Relations;  Emergency  Planning,  and  co- ordination of Social Policy. These are described in the following paragraphs. The total additional  costs  of  addressing  the  above  items  will  be  £570,000  which  includes 6 additional members of staff within the Chief Minister's Department.

This amendment therefore seeks to increase the overall cash limit by £570,000 to address the above issues.

International Relations

Jersey's continued economic success depends to a large extent on its standing in the international community. It is our economic success that provides good jobs for local people, the standard of living that we enjoy and the ability to fund high quality public services. Thus investment in promoting a strong, responsible International Identity, good relations with our major neighbours and trade partners and high regard amongst International Organisations is extremely important to maintaining our way of life.

The Chief Minister is responsible for International Relations. This section of the Department  is  headed  by  the  International  Finance  Director  and  includes  one International  Policy  Officer  with  the  retired  Chief  Adviser  acting  as  a  part-time adviser. They deal with all of the negotiations on International Finance treaties, all other international matters, relations with the UK, UN sanctions, etc. It is proposed to appoint a Senior Policy Adviser and Assistant who will not only improve the ability to respond to matters as they arise, but will be active in creating better relationships and understanding with the UK, other Countries and International Institutions such as the EU.

The total cost of bolstering the International Relations division is estimated to be £200,000, which would include 2 additional Officers with travel and other costs; and provision  to  retain  an  off-Island  media  adviser  and  fund  one  or  2  promotional activities a year.

There  is  also  an  amendment  in  relation  to  the  Law  Officers'  Department  which proposes to employ a legal adviser to work on International matters. That person would work in close liaison with the Chief Minister's Department's International Relations division.

Emergency Planning

As part of the introduction of Ministerial Government, the Emergencies Council was reconstituted. The Chief Minister, as President, is now responsible for ensuring that the  Island  is  properly  prepared  to  deal  with  major  emergencies.  One  Emergency Planning Officer with a part-time secretary was transferred. Since then there has been a marked increase in the co-ordination and professionalism of this function. All States Departments are now playing a full part in preparing plans and exercising them. However, there is a considerable amount of work to be completed before the Island could be assured that all of the necessary plans and preparations are in place. In the

event  of  a  major  emergency  the  Emergency  Planning  Officer  is  responsible  for supporting the Emergencies Council. However, if such an emergency were to occur whilst he is away from the Island, he does not have a deputy who could step into the role. It is proposed to employ an Emergency Planning Assistant and create a small contingency provision to fund exercises, small equipment purchases and other related costs. The additional cost for which there is currently no budget would be £70,000.

Social policy

The States Strategic Plan instructed the Council of Ministers to draw up a Social Policy  Framework,  which  would  become  an  overarching  structure  to  ensure  that Social Policies are properly co-ordinated and taken forward. It was published in May 2007,  with  the  goal  of  "Independent  households  enjoying  life  in  a  thriving community" and has been taken forward by Ministers and their departments. All major  new  policies,  including  Income  Support,  housing  policies,  the  developing Health  New  Directions  policy  and  others,  are  following  the  framework.  The framework  proposed  that  there  should  be  an  overarching  structure  to  ensure compliance,  which  would  include  assessment  of  all  new  policies  against  the framework, an annual report on the nature of social need and progress towards the goals and development of an integrated system to help people receive the right help from the right agency as and when they need it. At present there are no resources available to co-ordinate the process. If it is to become an active corporate policy which is taken forward with the involvement and support of, amongst others, the voluntary community, there needs to be a point of co-ordination and leadership. An overall provision of £100,000 would allow the appointment of a co-ordinating officer with the resources to take the framework forward.

Support for the Chief Minister

The Privileges and Procedures Committee presented a report on 9th November 2007 to the States on the Machinery of Government Review. In it they comment that the facilities used by the Chief Minister are not of the standard that might be expected of Jersey's  political  leader.  They  specifically  recommended  that  the  Chief  Minister should have a dedicated full-time private secretary. Given the other pressures which the department is facing, it has not proved possible to create such a post. Addition of £50,000 to the Department's cash limit would allow such a post to be created.

Improving resource management and performance across States Departments

Significant change and improvement has been made in the overall management of resources and the cost of such functions has been significantly reduced. However, the Comptroller and Auditor General has commented that "Consideration should be given to ensuring that the corporate management of the States has the capacity to pursue the transformation of the States successfully".

At  present,  central  resource  functions  are  split  between  the  Chief  Minister's Department and the Treasury and Resources Department. These functions comprise Human Resources, Treasury Shared services (including procurement), Information Services and Property. Whilst these functions do work together and have brought together disparate functions across the States, none of them has the capacity to take the full lead on transformation and change across the public sector. It is proposed that all of these functions should be brought together into a common function, with a shared remit to improve administration and performance across the public sector. This will allow them to make further improvements within their overall management of the  States' resource functions, but will also give them the combined scale to lead on transformation of performance more generally.

In the first instance it will be necessary to recruit a Senior Officer to take on the overall management and lead on change. With on-costs and support costs that would need an addition to cash limits of some £150,000. However, it is confidently expected that this investment will  more than  pay for itself in future years  as  savings and improvements are made across the public sector.

Conclusion

The Draft Business Plan complies with the previous States decision on cash limits. It allocates the overall cash limit to departments, with a clear focus on front-line services and this properly reflects the Council of Ministers' priorities. However, there are other significant pressures which it has not been possible to include within the overall cash limit. This amendment proposes to increase the Chief Minister's Department's cash limit by £570,000 in order to meet governmental pressures and to ensure that the Island's wider interests are safeguarded. There will have to be other structural changes within  the  central  departmental  structures  to  create  an  even  greater  focus  on transformation and proper support to the Chief Minister. Taken together these changes will  create  a  modern,  professional  infrastructure  to  support  the  next  phase  of development of the Island's Government.

2. Chief Minister's Department Background

For over 60 years Jersey has had an extremely simple, flat rate scheme incorporating a single rate of 20% for corporates and individuals. In order to protect Jersey's finance industry a new 0/10 tax (depending on a company's activities) regime for corporates has been introduced which commenced operation from 3rd June for new companies and will extend to existing companies from January 2009 except for International Business companies (IBCs) which are allowed to retain their status until 2011. A Goods and Services Tax (GST) has also been introduced to replace a significant part of the tax revenues lost. Even based on this extremely limited summary of recent and impending changes, it is clear that Jersey has moved from a simple tax regime to a complicated one.

At  the  same  time  the  independent  study  by  the  London  Business  School  (LBS) identified the importance of tax certainty and our continuing negotiation of tax treaties as key drivers for the success of the finance industry.

There is now a clear need to consider the challenges posed by this greater complexity, consider  the  alternatives  for  ensuring  that  Jersey  retains  its  competitiveness  and commence planning for our long-term future in conjunction with possible spending desires.

Proposal

It  is  proposed  that  a  new  post  for  a  Tax  Strategist  is  created  within  the  Chief Minister's Department to work closely with the Director of International Finance and International Relations officers.

Role and Terms of Reference Aim

To advise Ministers on local and international tax policy to achieve the  Island's economic objectives –

• The scope of taxation covered will include –

– Corporate and individual income tax

– Goods and Services Tax (or VAT)

– Environmental taxes

– Impôts

– Social Security

– Stamp Duty

– Other taxes as appropriate

• Locally there will be a requirement for –

– considering tax raising/tax policy options in terms of their intrinsic merits and how they fit with the overall tax strategy for the Island

– providing  tax  input  to  other  areas  of  policy  development, e.g. economic analyses

– managing bought-in specialist tax expertise

– communicating tax policy to local stakeholders

• Internationally, there will be a requirement for –

– Review of UK and other taxation consultation and initiatives in order to identify potential opportunities or threats

– Consideration of the impact of local policy in the global arena of OECD,  Ecofin/EU  Code  of  Conduct  Group,  IMF  and  other recognised bodies

– Technical  input  to  the  Tax  Information  Exchange  Agreements (TIEAs)

– Technical input to the (re-)negotiation of Double Tax Agreements (DTAs)

– Technical input to the (re-)negotiation of the EU Savings Directive

– Benchmarking of the Jersey fiscal policy against other offshore centres and maintaining a competitive position

– Review  of  evolving  EU  tax  law  especially  tax  cases  that distinguish  adversely  between  EU  and  non-EU operations/jurisdictions

Benefits

• An  holistic  approach  to  tax  strategy  will  produce  an  Island  able  to respond to external and internal pressures in an agile and innovative manner maximising the continued delivery of fiscal receipts

• A forward-looking approach will anticipate potential future hurdles and challenges  allowing  Jersey  to  position  itself  accordingly  and  ensure continued tax competitiveness

• Adopting some of the workload currently assumed by the Comptroller of Income Tax and his team will allow increased focus on the administration of  the  tax  system  and  collection  of  tax  as  this  workload  becomes increasingly complex

Costs

• Annual salary package and related costs are estimated at £200,000

Summary

A successful fiscal regime is a key driver of economic success. Jersey is moving from an  extremely  simple  tax  regime  that  operated  broadly  in  isolation  from  the international community to an increasingly complex regime, regularly subjected to international scrutiny. These changes are likely to generate a growing level of macro and micro debate which will regularly interact with the political environment. Jersey now needs the additional resource and expertise that a full time tax strategist will provide.

3. Education, Sport and Culture Introduction

The commitment to provide free nursery education for all three and four year-olds has been made by the States. There are now 17 high quality nursery classes at provided primary schools providing 510 full-time equivalent places. The policy of building nursery classes on to primary schools, though well-intentioned, has led to inequity. Approximately half of all three and four year-olds access free nursery education, whilst the remaining half are denied this opportunity.

This amendment is primarily about removing that inequity. It is about extending early education so that all children have the opportunity to access affordable, high quality early education 20 hours per week, 38 weeks per year.

The arguments for extending nursery education are powerful. Regardless of parental circumstances or whether or not childcare is required, all children should have access to a high quality nursery education opportunity regardless of setting. There is equity because parents can access the offer, whether in the public or private sector, and they may be assured that their child is receiving similar educational benefits, and from the private and voluntary providers' perspective, they are operating in a fair environment.

The benefits to the States are that the commitment to deliver nursery education for all three and four year-olds could be achieved more quickly by accessing provision that already exists in the non-provided sector without incurring additional capital costs or affecting the sustainability of the private sector. Also there will be greater influence over the cost and quality of nursery education.

Background

Five reports have now been presented to the States since 2004. The independent report A Vision for the Future of Early Education and Childcare in Jersey' (R.C.35/2004) highlighted the inequity in the current arrangements and concluded that –

"whilst there is a clear strategy for Early Years Education in Jersey, there is no overall strategy for integrated early education and care [and] a perceived lack  of investment in early education and childcare services has resulted in criticism of the existing policy'.

Investing in Our Future: A vision for Early Childhood Education and Care for children in Jersey' (R.C.54/2005) set out plans to develop and extend high quality learning opportunities for children by investing in the private and voluntary sectors to complement nursery classes in provided schools.

This was followed by the Early Childhood Education and Care: Progress Report (R.100/2006) and the Annual Business Plan 2008: Amendment (P.93/2007).

At the beginning of 2008, the plan to extend free nursery education was subject to scrutiny. In reaching its conclusions the Education and Home Affairs Scrutiny Panel found that –

"There is evidence of support for the principle of offering some free entitlement to Early Years for all rising four year olds and broad support that an equal entitlement should be available to all children.

The Education and Home Affairs Scrutiny Panel further recommended that –

"The Minister for Education, Sport and Culture should organise a stakeholder consultation  event  with  an  independent  Chairman  to  resolve  the  ways  and means to deliver free, flexible entitlement of quality Early Years education for rising four year olds. This should be undertaken in time for the 2009 intake of children."

In response to this the Minister for Education, Sport and Culture commissioned the Jersey Child Care Trust to undertake this consultation on his behalf. Stakeholders were invited to consider whether –

• the States should continue to build nursery classes at provided schools;

• all three and four year-olds should be offered a half-time place at a States nursery class by offering a choice of morning or afternoon sessions;

• the States should invest in a partnership with the private and voluntary sectors to provide a free element to all;

• the cost of Early Years education should be met by the States, means testing parents or a combination of both.

Whilst written submissions to this consultation supported building further nursery classes  at  provided  schools,  the  majority  of  attendees  at  the  stakeholder  event supported the concept of a public and private sector partnership funded by the States. The report compiled by the Jersey Child Care Trust, Fair Nursery Places for all 3-4 Year Olds' is attached to this report (Appendix 1).

Why Invest in Early Education?

The case for investing in early education is already proven. Countries across the world are realising the benefits. They invest for educational, economic and social reasons.

The positive effects of high quality early education, whether at home or in a provided setting,  on  children's  educational  outcomes  are  well-known.  There  is  compelling evidence  that  early  education  contributes  to  the  physical,  emotional,  social  and intellectual development of children. It prepares them for a seamless transition to  school and has a positive impact on educational outcomes and skill development later on.

Parents of young children need support to reconcile work and family life. Working mothers greatly improve productivity, taxation and family budgets. Jersey has the highest  rate  of  working  women  in  Europe  but  the  cost  of  childcare  in  Jersey  is prohibitive, particularly where there is more than one child in the family.

Quality early education and care is also often critical to help families from outside Jersey  to  settle,  integrate  and  become  self-sufficient.  It  can  provide  them  with  a cultural  orientation  and,  for  non-English  speaking  children,  stimulate  language development and social inclusion.

Given our ageing population, if we want an Island that is economically strong, socially cohesive and culturally rich, it makes sense to invest in children and young families to secure the future. Success early on breeds success later on but the converse is also true.

Why universal provision?

The advantages of universal provision have been well documented in previous reports. Experience in the United Kingdom suggests that gaps are widening between children, with those from the most disadvantaged backgrounds lagging behind educationally and socially.

A universal system provides free and equitable access to all, regardless of income. There is a better social mix which can lead to broader learning opportunities and there is no stigma attached to children from poorer families. Additional educational support for disadvantaged children can be provided within the universal system. This approach has  a  clear  advantage  in  that  it  does  not  discriminate  against  any  sector  of  the population and it is simple to promote and administer.

A means-tested system, on other hand, might seem to be more fair and equitable but it would be short-sighted. Whilst it might bring in additional revenue to offset the cost of early education, it would increase the demand for income support and claims for Child Care Tax Relief. In the context of increased taxation, GST, the high cost of living in Jersey, the high cost of housing and the high cost of childcare, the likelihood is that many  of  those  experiencing  financial  hardship  would  not  be  eligible  for  any substantial support. This could lead to a decrease in take-up of nursery places and an increase in the use of unregistered childcare.

Why 20 hours per week, 38 weeks per year?

The figure of 20 hours per week reflects the key findings of the Effective Provision of Pre-School Education (EPPE) Project which concluded that full-time attendance for 30 hours per week term-time led to marginal educational gains for children compared to part-time attendance for 20 hours per week term-time.

School nursery classes mirror the academic year. To create equity, it is important to reflect the same offer in the private sector. Working parents would be able to pay for additional hours in the private sector to meet their requirements.

To make arrangements more equitable, if this amendment is supported, the intention would be to further investigate introducing charges for the additional 10 hours per week which are currently available in school nurseries. Any income derived from this  could be used to offset the cost of early education and any additional administrative costs.

Who would receive the funding, parents or providers?

Although some governments prefer to give funding to parents in the form of vouchers, in doing so they lose the opportunity to work constructively with early years settings on issues relating to staff development and quality.

The experience of many countries suggests that the most effective mechanism is to provide the funding directly to providers under the terms of a clear service level agreement.

However,  the  challenges  of  extending  nursery  education  in  partnership  with  the private and voluntary sectors are significant. It will be necessary to ensure that the benefits to providers are sufficiently attractive for them to wish to join the programme. The public nursery education funding allocation will need to be set at a realistic level, formula funded with an inflation index to make providers willing to join, and comply with any conditions set around the delivery of quality education.

The  Department  for  Education,  Sport  and  Culture  has  significant  experience  of working with the private sector through the partnerships that have been established with the private schools. It is anticipated that similar arrangements could be agreed with the private and voluntary providers within the context of the draft framework attached to this report (Appendix 2).

This framework establishes the concept of a Nursery Education Fund. Under the terms of the framework, nursery education providers who wished to be part of the scheme would be required to apply and meet the requirements for registration.

The States would then purchase, at an agreed rate, the full cost per hour of nursery education for each eligible child, for up to 20 hours per week, 38 weeks per year under the terms set out in the framework.

How would the States work in Partnership with Key Stakeholders?

Following the recommendations of the Education and Home Affairs Scrutiny Panel, significant work has already been undertaken on the development of a Jersey Early Years Partnership (Appendix 3).

The key principle underpinning the proposed partnership is a two-way process of communication and collaborative working. Members will be consulted about policy initiatives and, as a collective body, under an independent Chairman, stakeholders will have a fundamental role in informing overall strategy in relation to early years and childcare. The model is drawn from best practice in Early Years Development and Childcare Partnerships in England and has been modified to take account of local context.

Financial and manpower implications

The cost of funding this amendment to offer free nursery education entitlement of 20 hours  per  week  term-time  to  all  children  is  based  on  a  number  of  general assumptions.

The cost of funding this amendment to offer free nursery education entitlement of 20 hours  per  week  term-time  to  all  children  is  based  on  a  number  of  general assumptions –

• Demographic  projections  modelled  by  the  Department  for  Education, Sport and Culture using data provided by the Chief Minister's Statistical Unit are accurate to within 2%.

• The  projections  for  2010  and  2011  have  been  updated  to  reflect  the unexpected increase in birth rate in 2007, and the figures for 2012-2013 are based on the average forecast birth rates for the period 2009-2011.

• A fair and reasonable fee to pay for a nursery education place in the private and voluntary sector from September 2009 would be £4.55 per hour.

• In order to qualify for funding, the providers in the private and voluntary sector will need to comply with an agreed quality framework that will also be applicable to the States nursery sector.

• The nursery education fee would be increased in line with inflation.

Projected Costs:

The  manpower  implications  of  introducing  these  proposed  new  arrangements  are considered to be minimal, and will be met from within existing staff resources.

Summary

Providing universal free early education for all three and four year-olds is something that countries throughout the world aspire to. Most do not yet have the capacity. Jersey has it within its grasp. With minimal growth in provision, and assuming that all providers join the nursery education programme, it would be possible to meet demand.

Providing free nursery education across the whole sector would build on the strengths of current educational provision which is well supported, popular and recognised as high quality.

By supporting this amendment to the Annual Business Plan 2009, States Members will be making provision for a greater number of three and four year olds to access free early education for up to 20 hours per week, 38 weeks per year. This would  represent a significant step towards the development of a clear and equitable strategy for integrated early education and care in Jersey.

It will create equity whilst improving access, affordability and parental choice. It will pave the way for a more constructive, strategic partnership between all providers and create conditions that will facilitate continuous improvement in quality.

4. Home Affairs Department

Members  will  recall  that  the  Council  of  Ministers  has  approved  the  Draft Discrimination (Jersey) Law 200- that will, ultimately, outlaw discrimination on the grounds of race, sex, disability and age. The draft Law has been the subject of public consultation in advance of consideration by the States later this year.

The draft over-arching Law aims to prohibit discriminatory conduct. It sets out areas where discrimination will not be tolerated, for example, in employment, education, the provision  of  goods,  facilities  and  services,  and  in  the  management  of  clubs  and premises, subject to certain exceptions. It also sets out the specific mechanisms for enforcing the standards.

The exact types of discrimination covered by the Law will be subsequently introduced in stages by Regulations. These will cover separately race, sex, disability and age. It is intended that the first set of Regulations will relate to race discrimination and these should be put before the States early in 2009 when it is expected the Law will come into force.

The legislation supports the strategic aim of the States to promote a safe, just and equitable society and to reinforce basic rights and equal opportunities for all sectors of the community. This is particularly relevant given a significant section of Jersey's population has diverse national, ethnic and racial backgrounds. Once the Law and the Race Regulations are enacted, they will support Jersey's commitment to international standards, in particular the United Nations Convention on the elimination of all forms of racial discrimination.

Previous Funding

Members will recall that in the 2007 States Annual Business Plan an amount of £500,000 was allocated for the implementation of Discrimination Legislation as part of the Strategic Plan funding. It was always anticipated that the introduction of the legislation should be phased and when the funds were approved in the States Annual Business Plan 2007 – 2011 the following observation was made – it is unlikely that all of the funding will be required in the first year following the introduction of the Law and it is intended that the balance of funds will be used to supplement the Prison budget in the short term, until the funding pressures are resolved' (Annex page 60).

Following  2  reports  from  Her  Majesty's  Inspectorate  (HMI)  of  Prisons,  which identified inadequacies in provision and arrangements to support the varied group of prisoners at La Moye and recognition that the Prison has historically been under- funded, a full review of the Prison budget was undertaken in 2007. The results were presented to the Council of Ministers, which accepted the evidence that the budget for the Prison fell short of the resources required for the size and complexity of the task. The Council concluded that there should be an increase in the Prison's base budget and  following  discussions  agreed  that  the  funds  originally  allocated  for  the  implementation of Discrimination Legislation should be diverted to the Prison for 2008  and  beyond.  The  additional  funding  for  the  Prison  has  allowed  for  the recruitment of additional staff and the implementation of certain initiatives previously included in the Prison Performance Improvement Plan including Prison Education.

Consequently,  the  implementation  of  Discrimination  Legislation  will  require  new growth funding. Alternatives for the administration of the Discrimination Legislation are being evaluated and once the first phase of the Law is implemented in 2009 the budget will be reviewed.

Financial and manpower implications

The financial implications of this amendment are self-explanatory and depending on the  agreed  enforcement  mechanism  there  may  be  the  need  for  a  new  post  of Discrimination Officer.

5. Planning and Environment Department Environment Package

It is proposed to introduce an emissions-banded Vehicle Emissions Duty (VED) from 1st January 2009 in order to progress the environment, recycling and sustainable transport strategies, and address rising heating, lighting and petrol costs.

The tax will be on the registration of new vehicles (plus at a reduced rate on hire cars and on imported second hand vehicles). The tax will be introduced at a low rate which will yield an estimated £2 million in 2009.

It is intended that the tax will be increased in future years, with disproportionate increases on high polluting vehicles. The revenues from VED will be earmarked for environmental  purposes,  in  particular,  to  reduce  energy  consumption,  increase recycling, and reduce car travel.

It is proposed that in 2009, £1 million will be spent on promoting energy efficiency, £0.5 million on recycling, and £0.5 million on increasing bus travel and journeys by bicycle and by foot.

Energy Efficiency – Grant to the Jersey Energy Trust' £1 million

At a time of rapidly increasing energy prices it is critical that action is taken to help people, and in particular the most vulnerable in society, to reduce the amount of energy that they use. A central theme of the forthcoming Energy Policy will be to reduce  overall  energy  use  and  improve  energy  efficiency  as  this  will  contribute significantly to all the goals of energy policy – to provide secure, affordable and sustainable energy.'

£1 million  of  revenue  will  be  added  to  the  voluntary  donation  from  the  Jersey Electricity Company of £0.5 million, and will be used to promote energy efficiency. A Jersey Energy Trust will be created in 2009 and its role will be as an impartial energy advice  service.  The  Jersey  Energy  Trust  will  be  an  action-orientated  body  that provides advice and assistance to help Islanders to reduce their energy consumption. Initial actions will be directed towards low income and vulnerable groups – it is estimated that there are up to 1,300 households who spend more than 10% of their income on fuel bills.

Funding  will  be  directed  towards  grant  assistance  for  weatherisation  programmes including home energy audits and follow-up remediation measures such as the fitting of loft and cavity wall insulation; draught proofing and improving the efficiency of boilers.

In  subsequent  years  the  energy  efficiency  programme  will  be  expanded  into  all households  and  businesses  and  to  promote  the  uptake  of  small  scale  renewable technologies.

6. Social Security Department Supplementation

Supplementation is the payment required under Social Security (Jersey) Law 1974 whereby the States tops up the social security contributions for those whose earnings are not sufficient for them to pay the full contribution required. The money is not spent' as such but paid into the Social Security Fund to meet future benefit and in particular pension payments. This is one of the mechanisms the States have in place preparing for the future requirements of the ageing population.

If these contributions were not supplemented, then current benefit and future pension entitlement for those earning below the earnings limit (currently £40,728 per annum) would be reduced. The benefit entitlement of those earning more than this would not be affected. Supplementation therefore ensures that the benefit entitlement of the low and middle earners is protected at the same level as that of the higher earners.

The cost of supplementation is driven by a number of factors: Increase in the earnings limit:

The upper earnings limit for contributions is increased each January in line with the rise in average earnings, as per the average earnings index of the previous June. This is linked to the policy, embedded in legislation, that old age pensions and other contributory benefits are increased each year in line with the rise in average earnings.

The size of the working population:

Economic  growth  in  recent  years  has  led  to  increases  in  the  workforce  and,  as approximately 56% of all workers are paid below the earnings limit, this leads to an increased cost of supplementation. Initial figures for 2008 show that the workforce is continuing to grow.

The actual increase in earnings:

Any differential between the increase in the earnings limit and increases in actual earnings will further influence the cost of supplementation. For example if the average earnings index for June 2008 of 4.3% is indicative of wage increases below the earnings limit, then this will increase further the costs of supplementation in 2008, when the earnings limit was increased by 4.7%.

At the beginning of 2008 the Department of Social Security indicated to the Council of Ministers, based on the figures available at that time, that the cash limit allocated to the Department would require an additional £2.1 million for 2009 over and above the estimates previously provided for. This increase was in respect of the additional costs arising  from  the  increase  in  the  number  of  workers  and  the  lower  than  average  earnings  increase  experienced  by  lower  paid  workers.  This  was  included  as  a "significant funding pressure" in the 2009 Business Planning process.

In arriving at the draft Business Plan for 2009, it was agreed by the Council of Ministers that additional funds needed to meet the forecast growth in Supplementation arising from economic growth would not be provided for in the Business Plan and that only the up rating in accordance with the predictions for the average earnings index would be provided. A budget of £63.6 million for 2009 was proposed.

The receipt of the 2008 A' Quarter contribution data in June showed that the cost of supplementation was higher than forecast for that quarter. Whilst the change was small, the initial revised estimates showed that for 2008 the cost could exceed the 2008 cash limit by up to £2.1 million. Once the contributions have been collected for the 2nd quarter of 2008 (mid-September), the Department will be able to forecast the total  cost  for  2008  with  more  certainty,  to  assess  what  additional  funds  may  be required for the current year.

However, the continuing growth in the economy together with the increase in the numbers in work and the effects on the cost of supplementation has a significant impact  upon  the  forecast  for  2009  and  the  revised  estimates  indicate  that  the Department could be under funded by up to £4.5 million for that year. This represents a growth in the total estimated cost from the previous estimate made at the beginning of 2008, of up to 3.5% ahead of the 2007 total cost and 2008 first quarter cost being known.

The Department is actively pursuing a number of options to reduce the ongoing cost of supplementation and amend the system of supplementation to reduce uncertainty in cost  in  future  budgets.  All  such  options  will  require  changes  to  primary  and/or secondary legislation as well as changes to the administrative and IT systems within the Department. The Department will be able to implement some of these measures in 2009 (subject to States approval) but whilst significant these are unlikely to have an impact  on  the  cost  of  supplementation  in  that  year,  sufficient  to  save  the  full £4.5 million per annum plus the cost to supplementation of an increasing workforce for the future years which is not provided for in the estimates for 2010 – 2013.

Savings  to  supplementation  of  the  magnitude  of  £4.5 million  plus  the  costs  of economic growth are likely to require fundamental changes to the structure, as well as increases to the level, of employee and/or employer social security contributions.

The revised growth forecast comes largely from the increasing size of the workforce encountered in recent years as a result of economic growth, approximately 55 – 57% of whom have earnings such that their contributions attract supplementation.

The  initial  analysis  of  the  first  quarter's  data  has  shown  that  the  growth  in  the workforce has continued, with the number of contributors having risen by 1.4% over the  same  quarter  in  2007.  Of  these  contributors,  the  numbers  of  those  whose contributions requiring Supplementation has risen by 3% to 32,062. It is also evident that the average earnings of those whose contributions have been supplemented have not kept pace with the earnings ceiling, in line with the June 2007 average earnings figure of 4.7%. This may be as a result of a reduction in the average numbers of hours worked, lower levels of pay rise, a change in the proportions of employees working in differing sectors or a mixture of these factors.

Whilst the Department is undertaking further analysis of the data and revising forecast spend across other cash limited expenditure for 2008 to ensure, if possible, that the  cash limit for 2008 is not exceeded, it is very unlikely that this could be achieved in 2009, given the scale of the costs involved.

There are very few options available to the Department to address this issue within the proposed cash limit for 2009 and whilst it may be possible to make some savings, they would result in reduced quality of customer care or may even lead to more costs incurred by the Department in terms of, for example, contributions not being collected or fraud going unidentified. Other cuts would impact on the most vulnerable of society and would be clearly unacceptable.

These options would not achieve savings anywhere near £4.5 million. The Council of Ministers proposes therefore to increase the cash limit for 2009 in accordance with the current statutory obligations, but that any amounts not required as a result of changes to the forecasts or the contribution system, would not be available for other purposes.

7. Social Security Department

Employment  and  vocational  day  care  service  opportunities  for  people  with learning disabilities and people on the autistic spectrum

On  10th  July  2008,  the States  considered  P.102/2008  of   Deputy  Ian   Gorst .  That proposition,  approved  by  States  members  by  42 votes  to  nil,  asked  the  States  to receive the Strategy for Inclusive Vocational Day services and Employment for people with a learning disability and people on the autistic spectrum as drafted by the Joint Secretariat Executive Board for People with Special Needs.

The proposition went on to –

1. request the Ministers for Social Security, Education, Sport and Culture, and Health and Social Services to review and consider this Strategy and take all necessary steps to support its implementation in order to find solutions to reduce pressures on existing services in providing appropriate work and vocational day service opportunities for people with learning disabilities and people on the autistic spectrum; and
2. request the Chief Minister to incorporate funding arrangements within the 2009 Annual Business Plan to enable any solutions that are identified to be implemented.

This amendment if approved is to give effect to the above States decision and to add, to the Social Security cash limit, the funds identified with the above strategy, such that once the Departments concerned have completed their findings and proposals, then the funding will be available immediately rather than a wait for a further year for funding to be agreed.

The funding will be separately identified within the cash limit of the Social Security Department  for  the  purposes  of  providing  work  and  vocational  day  care  service opportunities for people with learning disabilities and people on the autistic spectrum and would not be made available for other purposes.

8. Social Security Department

Income Support Transitional Relief and Winter Fuel Allowance

On 22nd August the Council of Ministers announced a package of measures to address the unprecedented increases in food and fuel costs being experienced by Islanders.

The Council of Ministers, supporting the zero-rating of GST on food; is maintaining the current rates of Income Support, thereby increasing payments in real terms once food is zero-rated and increasing funding available for insulation of homes.

In addition, the Council of Ministers is proposing to extend the transitional relief for those receiving protected benefit payments, such that no reduction in benefit will be seen until October 2009. In addition to the extensions to transitional relief already announced by the Minister for Social Security, this measure will protect the income of approximately 3,500 households at an additional cost of £2.2 million (£2.17 million on breakdown) in 2009, falling to £0.2 million by 2013.

In recognition of the significant increases in the cost of fuel, the Council of Ministers are proposing that the Winter Fuel Allowance be increased by 20% with effect from the payment in January 2009 (which is based on the weather for December 2008). This increase is in addition to the 6.8% increase already approved through increases to the Income Support components during 2008.

The Winter Fuel Allowance is paid to families on Income Support with either –

• An adult over 65;

• A child under 3; or

• A child or adult with a significant disability.

Last winter it was paid to approximately 2,250 families per month and the additional cost of the proposed increase would be £150,000 in 2009.

9. Transport and Technical Services Department Recycling – £0.5 million

The funding for the replacement Energy from Waste plant has been agreed by the States on the basis that the final capacity of the plant will not exceed 105,000 tonnes of waste. In order to achieve this, recycling rates must increase from the target of 32% by 2009 set in the Solid Waste Strategy to 36% by 2018. Critical to achieving and perhaps exceeding this more challenging target is the implementation of an Island- wide kerbside collection system.

The  extra  funds  will  cover  the  start-up  costs  of  introducing  household  recycling collections to the remaining Parishes. A total of £0.35 million would be required for the supply of kerbside containers and to deliver a high profile and comprehensive launch campaign.

The remaining balance will contribute to the costs of handling and exporting the additional  materials  collected  and  allow  TTS  to  re-commence  the  recycling  of hazardous  electrical  waste  (TVs,  batteries  and  computers)  including  the  backlog stockpiled in 2008.

In  subsequent  years  the  extra  funds  will  allow  TTS  to  expand  the  recycling infrastructure in line with the revised Solid Waste Strategy.

Sustainable Travel and Transport – £0.5 million

Locally there is a high dependency on individual travel in private cars. This leads to congestion, localised poor air quality, traffic safety issues and high use of road fuels, which in turn contributed to nearly one quarter of the Island's carbon emissions in 2007.

The draft Integrated Travel and Transport Plan (ITTP) outlines a number of measures to encourage the uptake of more sustainable travel options and, if £500,000 became available from introducing VED, the following would be delivered in 2009 –

Additional  commuter  bus  services  and  real  time  information  at  key locations will be introduced and bus fares increases will be put on hold.

Proposals for an eastern cycle route (or routes) will be investigated and, where feasible, the first stages of implementation will be commenced.

Following the success of the St. Martin 's Safe Route to Schools' project, a further scheme (or schemes) will be implemented to encourage children and parents to leave the car at home.

In subsequent years additional funding will be used maintain low bus fares and expand the capacity of routes; and to deliver new facilities such as the proposed Eastern Cycle route.

10. Treasury and Resources Department Introduction

The proposed zero-rating of GST on food will introduce additional complexities to the administration and collection of GST.

GST Administration

The GST and Customs teams are currently resourced to administer GST in its present relatively simple form. The increased complexity and administrative requirements introduced  by  the  zero-rating  of  food  will  require  the  permanent  recruitment  of additional staff in both teams.

It  is  expected  that  3  additional  GST  staff  would  be  required  and  one  additional customs  officer.  These  staff  will  obviously  require  training,  accommodation  and equipment. It is estimated that the additional cost associated with administering the zero-rating of GST on food in 2009 would be approximately £300,000.

11. Law Officers' Department

The Draft Annual Business Plan shows in Table 3.3 those priority service pressures which  could  not  be  included  in  cash  limits.  The  total  amount  that  could  not  be included for the Law Officers' Department was £650,000. Included in the total of £650,000 is an additional Legal Adviser to handle the legal issues which would result from the introduction of the Freedom of Information Law. As the Law will not be considered  by  the  States  in  2008  it  could  not  come  into  force  during  2009  and  therefore the need does not arise in that year. Should the Law be agreed there will be a need for this post, but until it has been agreed it would not be appropriate to increase the cash limits to reflect it. This amendment therefore proposes that the remaining priorities be funded and that £520,000 be added to the Department's cash limit, which will also require the addition of 4 posts.

The Business Plan includes an increase in the Department's cash limit of £230,000 and this bid is in addition to that increase. The uses to which the further sum of £520,000 would be put are as follows, with each explained in more detail in the subsequent paragraphs –

• Salary levels to enable recruitment and retention of staff £80,000;

• One additional senior and one additional assistant legal adviser to deal with increasing workloads £280,000;

• An Assistant Legal Adviser for secondment to White & Case in Brussels £60,000;

• A records manager to comply with Public Records Law and workload £100,000.

Salary levels to enable recruitment and retention of staff

The market in Jersey for good lawyers is very active and the department faces severe competition  in  recruitment  of  staff.  The  Comptroller  and  Auditor  General  has confirmed that the pressure from competitive salaries is a significant problem for the department  and  its  effectiveness  is  threatened  by  this  difficulty.  The  growth  of £230,000 that has been allocated will allow some changes to  be  made, but it is expected that there will be continuing pressures and the additional £80,000 will allow those to be dealt with.

Members may recall that a review of the salaries in the Law Officers' Department was conducted  by  a  Pay  Review  Board  chaired  by  Mr.  Colin  Powell,  OBE,  in  2002 pursuant to a decision of the Human Resources Committee of the day. The purpose of that review was to review the external comparability and internal relativity of the salaries and benefits paid to the Crown Officers and States legal appointees having regard to –

• remuneration paid to comparable offices of equivalent responsibility and similar accountability in the Jersey private sector and other Jersey public sector organisations, UK public sector and any other employment sectors or community/jurisdictions deemed appropriate;

• the prevailing local labours market forces in the areas under consideration and the need for the States to recruit, develop and obtain officers of the appropriate calibre.

The findings of that review were that there was a substantial disparity with the private sector in some areas and that some of the salaries at the more experienced level should be increased by significant percentages. In fact the findings were not implemented in full. Since then, remuneration in the private sector has continued to increase at greater levels than for Public Sector lawyers, and although the gap at the lower level of the younger lawyers is not so very great, there is a substantial difference between the earning power of a more senior Public Sector lawyer and one in the Private Sector.  The Council of Ministers recognises that the Island cannot afford to pay senior Public Sector lawyers at the same rate as they would earn in the Private Sector. However, it would be foolish to think that the advantages of a Public Sector legal environment – the sense of worthwhile service for the public good, an attractive Pension Scheme and the diversity and therefore the interest of the issues to be considered – will outweigh the need to provide for one's family in a time of rising house prices and to match the standard of living attainable in the Private Sector.

In the last 10 years, the Law Officers have, like Private Sector legal firms, pursued a policy of encouraging lawyers in the Department to qualify as Jersey Advocates. Since 2000,  9 people  have  qualified  through  the  Department;  2  of  those  left  shortly afterwards  and  are  now  partners  in  local  law  firms,  one  has  left  to  pursue  an alternative career and the remaining 6 so far remain employed in the Department. There are 6 others at different points on the road to legal qualification. The Law Officers take the view that the skills available in the Department have increased considerably over this period and it was absolutely necessary that it should have done so in order to meet the challenges which are presented from a changing and growing workload. More detail about the work of the Department can be found in the Attorney General's  Reviews  which  are  published  annually  and  are  available  on  the  Law Officers' Department website at www.gov.je.

This comes at a price. One cannot expect to train lawyers to qualification and keep them  thereafter  without  increasing  their  salaries  beyond  mere  cost  of  living increments; and there is no point in spending effort and resource in training only to lose the lawyers once the qualification is obtained, or shortly thereafter.

Of  course,  the  process  cannot  continue  indefinitely.  The  shape  of  the  skill  sets available in the Department has been the subject of discussion between the Law Officers and their senior advisers. Some turnover is not only inevitable but can even be positive. It is desirable occasionally to see gaps at the top to provide for career progression and to see some newly qualified lawyers go elsewhere to enable the recruitment of trainees to replace them who themselves would then go through the process of qualification.

However the budget has not grown sufficiently in the last 8 years to match the greater skills  the  Department  has  now  within  it.  The  Council  of  Ministers  noted  that something could be done within existing cash limits but this was not enough. Of the additional  sum  sought  by  the  amendment,  £80,000  reflects  the  money  needed  to enable the States to remunerate the lawyers in the Department at an appropriate level.

Two additional senior legal advisers to deal with increasing workloads

A Senior Legal Adviser to work in the Constitutional, Human Rights and Legislation Group, where the amount of work required of the Department has grown enormously. The causes of the increase are various – in part as a result of domestic political initiatives; in part as a result of the Island assuming more responsibility for its own legislation rather than agreeing to have UK legislation applied to us either directly or by Order in Council; in part by the need for new legislation to meet international standards or Conventions by which the Island has agreed to be bound. In addition there has increasingly been work required to analyse the new Conventions which the Island has been asked to ratify. These need to be measured, not only against existing Jersey domestic legislation, but also against the resources which would be required to implement the different obligations in the Convention, and although the assessment of  resources  is  not  a  matter  for  the  Law  Officers'  Department,  the  analysis  of  the obligations and the Conventions definitely is.

A Senior Legal Adviser to join the General Section and to be available to meet demands by other Departments for advice on the wide range of problems passed to us. The reality is that more legislation almost inevitably means more day to day problems which need to be considered and addressed.

An Assistant Legal Adviser seconded to the Island's Legal Advisers in Brussels

An Assistant Legal Adviser to be seconded to the office of the Island's Legal Advisers in Brussels. This opportunity has recently presented itself, and is one which seems too good to miss. Not only will such a secondee have the opportunity of improving in the Brussels lawyers the understanding of the Island's particular circumstances and the reasons for the advice which is needed, but he or she will also be able to pick up at first hand the interface with the European Commission where the practical application of EU law and of the acquis communautaire is made. It is to be hoped that the contacts made at junior levels in the Commission will provide a long term return to the Island as such officials climb the ranks in the Commission. It is also hoped that the secondee will be able to make contacts with the UK Mission to the European Union which would also be of long-term value. This appointment would probably be for a period of 12 months to 2 years and then further appointments made on a rotational basis, the arrangement  being  intended  to  support  the  States  policy  of  seeking  a  greater international capacity.

A records manager to comply with Public Records Law and workload

A Senior Assistant Legal Adviser to act as a Records and Information Manager. The need for this post is acute. Not only is the Law Officers' Department currently unable to  meet  its  obligations  under  the  Public  Records  Law  as  a  result  of  paucity  of resources,  but  the  quantity  and  diversity  of  information  in  the  Department  needs management at a qualified level which will improve –

1. the easier retrieval of advice given previously on the same or a similar subject matter;
2. the preparation of standard forms of documents; and
3. the production of library precedents,

all of which should improve the response times of the Department to their requests for assistance and advice.

In  his  report  on  Spending  Pressures  the  Comptroller  and  Auditor  General  has confirmed  that  there  is  a  need  for  additional  resources,  but  that  they  should  be accompanied by improvements in managerial arrangements. The Attorney General and Solicitor General will be working with the Chief Executive to the Council of the Ministers  with  advice  from  the  Comptroller  and  Auditor  General  in  order  to implement any necessary improvements.

If the States is to receive the highest quality timely legal advice then it is important that the Law Officers' Department is properly resourced to fulfil these requirements. At present it is quite clear that the workload and competitive recruitment pressures are seriously impacting on the Department's ability to meet all of the demands in a timely and  consistent  manner.  This  amendment  would  provide  much-needed  additional  resources and would be accompanied by the necessary changes to ensure that the States receives the highest quality legal advice as and when required.

Summary of financial and manpower implications

These  proposals  will  increase  gross  spending  by  £11.7 million  in  2009  and  net spending,  after  £2 million  from  VED,  by  £9.7 million.  From  2010  onwards  they increase  gross  spending  by  approximately  £10 million  and  net  spending,  after £5 million a year contribution from VED, by approximately £5 million.

These proposals are consistent with the Strategic Objective of balanced budgets over the 5 year period 2009 – 2013.

The effects of the amendments to States expenditure for the period 2009-2013, and the effect on the Financial Forecast are illustrated in the following table.

Note:

* The proposals for environmental, recycling and sustainable transport initiatives would be dependent upon the approval of the introduction of a new Vehicle Emissions Duty (VED) from January 2009

These proposals would result in an increase of 16 full-time equivalent States staff above those already included in the 2009 Business Plan as illustrated in the following table –

2009 2010 2011 2012 2013 Department Proposal £m £m £m £m £m FTE International Relations, Emergency Planning, Social Policy support, Chief

Chief Minister's  Minister Support and Improving Resource Management 0.570 0.584 0.599 0.614 0.629 6.00 Chief Minister's  Tax Strategist 0.200 0.205 0.210 0.215 0.220 1.00 Education, Sport and Culture Early Years Education 0.552 1.498 1.657 1.639 1.679 0.00 Home Affairs Discrimination Law 0.250 0.256 0.263 0.269 0.276 1.00 Planning and Environment Environmental Package and Energy Efficiency 1.000 2.000 2.500 2.650 2.650 0.00 Social Security Supplementation 4.500 - - - - 0.00 Social Security Inclusive vocational day services and employment 0.529 0.842 0.863 0.884 0.906 0.00 Social Security Income Support Transitional Relief and Winter Fuel Allowance 2.320 2.056 1.111 0.716 0.351 0.00 Transport and Technical Services Sustainable Travel & Transport and Recycling Initiatives 1.000 1.752 2.500 2.500 2.500 0.00 Treasury and Resources Administration for Zero Rating of GST on food 0.300 0.308 0.315 0.323 0.331 4.00 Law Officers'  Staffing for restructuring and improved service levels 0.520 0.533 0.546 0.560 0.574 4.00

Total Implication 11.741 10.034 10.564 10.370 10.116 16.00

Page - 31

P.113/2008 Amd.(4)

APPENDIX 1

Fair Nursery Places for all 3-4 Year Olds

A Jersey Child Care Trust Consultation Exercise

Introduction

The Education and Home Affairs Scrutiny Panel's Early Years Report contained the following recommendation. The Minister for Education, Sport and Culture should organise a stakeholder consultation event with an independent Chairman to resolve the  ways  and  means  to  deliver  free,  flexible  entitlement  of  quality  Early  Years education for rising four year olds. This should be undertaken in time for the 2009 intake of nursery children'.  In response to this recommendation, the Minister for Education, Sport and Culture (ESC) commissioned the Jersey Child Care Trust to undertake a consultation exercise. Two streams of consultation took place, resulting in 51 written responses and 68 participants at the consultation event. This was funded by the Department of ESC, co-ordinated by the JCCT with support from the States of Jersey Communications Unit and the Dept for ESC. An independent research analyst, Marion Walton compiled two reports following the consultation.

A number of limitations to this consultation study should be highlighted, notably the absence of detailed cost implications for the options and disappointingly, the ethnic minority groups did not respond to the invitations.

Discussion

Respondents considered four options, their comments and our conclusions will be discussed in turn:

Option 1: Continue to Build Nursery Classes at Primary Schools

Currently there are 17 Primary Schools with a nursery attached and five without. It is not possible to provide a nursery class at two of these due to their location so this option is limited in its impact, as it would only provide an additional 90 nursery class places.

This option received the strongest support from the written responses which included comments that they were keen that the States finish what they started', whereas there was little support for this option at the consultation event. The major difference in views could be because those who responded in writing may not be aware of the limitations of this choice, whereas those who attended the event would be.

The commitment that the States have made to build nursery classes attached to States Primary Schools has clearly been a good investment to-date and this perhaps led to the strong support from the written responses. There are indeed a number of advantages to providing nursery education at primary schools, notably the ease of transition for the children and their parents. Respondents raised the matter that this transition would be far more successful, if applications for nursery class places were linked to applications for places within that school.

The JCCT is aware that there has been a strong correlation between the opening of new States nursery facilities and the closure of private pre-school facilities over the last few years. In addition, there is concern for the future provision for 0-3 year-olds who require a higher, costlier ratio of adults to children, and therefore rely upon the 3-4 year-old to keep the finances balanced.

This  option  alone  cannot  meet  demand.  In  addition,  it  would  provide  a  lack  of continuity of care for those working families who require more than 30 hours per week, term-time only. To choose this option would not provide an equitable or long- term solution and would not achieve the objective of a fair system for 3-4 year olds.

Option 2: Provide 15 Hours For All in States Nurseries

The current situation provides half the Island's 3-4 year-olds with 25 hours of free care and half with no free care at all. This option proposes every 3-4 year-old would receive 15 hours of free care per week, term-time only and in a States nursery.

This option would not be a workable solution for Jersey where we have one of the highest rates of working women in the world at 79%. To choose this option would create  a  fragmented  care  situation  for  many  families.  One  written  response  also highlighted the likelihood that most parents would want the morning places. It would also pose an almost impossible challenge to the private sector.

In  addition,  15 hours  for  all  may  appear  equal,  however,  when  considering  the individual needs of children, Dr. John Bennett is quoted as saying, "equal is not enough". By this he means that some children with particular needs will require more than their peers to achieve their best outcomes.

This option is not a workable solution for all families.

Option 3: Develop a States and Private partnership to provide some free hours for all

This option would enable every family the choice to take up to 25 hours' free access to a States nursery or 20 hours' free access to a private provision. A parent could then pay for 5 hours' lunch cover at a States nursery for a full-time place, or for further hours required in a private nursery, i.e. up to 30 hours more, per week, for a full-time place.

There was no concern expressed from respondents, for the difference of 20 hours in private or 25/30 hours in States settings previously proposed by the Minister for ESC. The settings offer different services and this option would provide true choice for families based upon their needs.

A great deal of joint working would need to take place, in order that the system best meets the needs of children, their families and the providers who offer the service. Although  there  was  a  mixed  response  from  the  written  submissions  to  the  consultation, there was an almost unanimous vote for this option at the consultation event. This could be because the participants were presented with much more information to help them form their decision.

The consultation responses share a theme surrounding the need for good quality provision. A fundamental success of determining what good quality is when providing free access to public and private provision will be if this is addressed by the formation of a working group. This working group should include members of both private and public sectors and their conclusions should be a determining factor in any provision's ability to offer States funded hours.

The consultation event demonstrated that some very positive bridges already exist between the public and States provision but also enabled new links to be built. This can only be beneficial for providing nursery care in the best interests of the Island's children.

Option 4: The cost should be met by the States, the parents or a combination of both

This option gave the different total costs for each proposed option, but more detailed cost information was requested by respondents for the options.

When considering the financial aspects of the consultation exercise, there was frustration that the broader context of childcare was not taken into account within this consultation. In both written and participants' comments the option to care for their own children was raised.

Means-testing, as a principle, could hinder some families accessing any nursery provision before the child enters reception. John Bennett speaks of the most successful uptake of places within early childhood centres where access is universal.[1] 

The option of the parents paying for the currently free entitlement also would be a backward move against all the current research, good work and investment that has already taken place.

The JCCT propose that for a relatively small additional sum of money[2] from the States, every child could receive at least 20 free hours. However, work is required to determine a fair hourly rate that a private provider should receive in respect of the free entitlement. This work could be undertaken by a public/private working group, set up to investigate how best to use public funds within a partnership arrangement.

Future work on this matter should keep in mind that the States nurseries provide a maximum of 25 hours' free access per week and not the 30 hours previously always quoted. It is parents who pay for the remaining 5 hours per week to pay for lunchtime cover.

Conclusion

The written consultation gave a strong preference to carry on building nursery classes but this would not meet need. However, the consultation event favoured the private/public partnership approach. However it is possible that if those who have provided a written submission were at the consultation event, their response would have been different.

Following this consultation and taking into account the views expressed, the favoured option is considered to be the private/public partnership. This option best meets the needs of all 3-4 year-olds in Jersey.

One outcome of the EPPE Project research concludes that "the quality of pre-school centres is directly related to better intellectual/cognitive and social/behavioural development in children" and that a poor pre-school experience is equivalent to no pre-school experience[3]. Fair nursery places for all 3-4 year-olds not only means access for all, but should also be linked to good quality. So all 3-4 year-olds should have some free access to a good quality early years provision. This will call for a working group with representatives from each stakeholders group agreeing upon what a good learning environment is in Jersey.

Fair nursery places for all 3-4 year-olds should also mean a fair deal when agreeing the hourly rate from the States for the private providers who offer the essential good learning environments. Establishing a fair rate should involve some open discussion with all stakeholders.

This consultation exercise has shown that those stakeholders concerned with the issue of nursery places for 3-4 year-olds are willing to engage and work together to create a fairer system. The Early Years and Childcare Partnership would offer an appropriate forum  for  these  recommendations  to  be  implemented  by  the  Department  for Education, Sport and Culture in time to meet the timescale set by the Scrutiny panel.

Jersey Child Care Trust August 2008

NURSERY EDUCATION FUND – DRAFT GUIDANCE

Introduction

In accordance with the vision for Early Years Education and Care set out in Investing in Our Future', the Minister for Education, Sport and Culture intends to extend free foundation  stage  education  for  three  and  four  year-olds  by  creating  a  strong partnership between the public, private and voluntary sectors.

This strategy has been structured to provide greater choice to parents, create equity, maintain  affordability  and  create  the  conditions  for  continuous  improvement  in quality.

The aim is to provide greater access for three and four year-olds to a free nursery place for 20 hours per week, for 38 weeks per year. A range of providers who will be part of a  quality  assured  network  may  deliver  the  free  provision.  The  Department  for Education,  Sport  and  Culture  working  with  the  Jersey  Early  Years  Childcare Partnership will strive to ensure that there is a suitably diverse range of providers offering high quality provision to deliver parental choice.

Eligibility

Funding will be available on the basis that the child attains the age of four years between 1st September and 31st August in the year before commencing statutory education.

Key Principles

Subject to availability of places, this means that any parent wishing to access 20 hours free provision in a week should be able to do so without paying any fee. In delivering this providers will be expected to have regard for the following principles:

• The needs of the child are paramount;

• Free provision should be of the highest quality;

• Where possible parents should be able to access free nursery education that is integrated with additional childcare.

Nursery Education Fund

Funding for the free element of nursery education should not be considered as a subsidy. In other words parents should not be asked to pay the difference between the funding provided by the States and the fees that the provider would wish to charge.

Providers may not charge top-up' fees nor charge parents in advance and return the free part of their fees.

Where funding provided by the States exceeds the hourly fees that a provider would normally charge for the free early education component, as long as the parents are receiving a completely free place, providers may retain any excess to that hourly

funding providing that it is used to support the education of all eligible children at the setting.

It is likely that many parents will wish to purchase additional hours at their own expense. Depending on their circumstances, these parents may qualify for support with these costs through Child Care Tax Relief or Income Support. Whilst the fee charged for additional provision is between the provider and the parents, parents must not be forced to take up additional provision or activities as a condition of accessing the free element.

Some providers may be unable to open for 38 weeks. If sufficient parents make an informed decision to choose a provider that is open for less than 38 weeks, those providers may be funded for the number of weeks provision that they deliver. Where parents take such a decision and where other available providers could offer a 38 week place, there is no obligation on the States to fund additional provision at an alternative provider.

Ensuring that parents have the opportunity to request the same basic offer regardless of where they access provision, is designed to create a level playing field across all providers whether, public, private or voluntary.

Applying for Nursery Education Funding

All providers seeking eligibility to claim nursery education funding will be required to complete an initial application process.

Providers who qualify for the scheme will be required to submit an annual monitoring report which will involve feedback from parents. This will be assessed by Early Years Advisor and Administrator, Day Care Registration.

All eligible providers will be subject to periodic quality and standards evaluation. Registers and financial records pertaining to the funding arrangement will also be subject to inspection.

An eligible provider of a registered Centre wishing to access funding to support the free  element  of  nursery  education  must  submit  details  of  eligible  children  on  a headcount data entry form' to the Administrator of Day Care Registration (DCR) at the beginning of each term. This information must include name, address and number of hours attending. If a child attends more than one registered Centre, pro rata funding will apply.

Payment will be made directly to the provider by States Treasury against headcount information, within 3 weeks of the final date for the submission of data. Separate accounts must be kept of this arrangement.

If  an  eligible  child  enters  the  Centre  after  the  final  date  for  the  submission  of headcount data, the provider must send this information to the Administrator, Day Care Registration. Payment for this child will be made in the following term.

If a child included in the headcount return leaves the setting or, if the hours of attendance  first  stated  on  the  return  are  reduced,  the  provider  must  inform  the Administrator,  Day  Care  Registration  as  soon  as  possible  after  the  change  of

circumstances. Any financial adjustments arising out of a change of circumstances will take effect in the following term.