States of Jersey Financial Report and Accounts 2010- ANNEX

States of Jersey Treasury and Resources Department

ANNEX TO

FINANCIAL REPORT AND ACCOUNTS 2010

Treasury and Resources Department

P.F.C. Ozouf Senator Minister

J. Refault Conn table Assistant Minister

E. Noel Deputy Assistant Minister

L. Rowley, MBA, CPFA Treasurer of the States

Contents

Introduction 1

Explanation of the contents of Department/Fund Pages 1

Note on the performance of investments held in the Common Investment Fund 2 Final Approved Budgets 4

Additional Budget Approvals 6

The Consolidated Fund

Chief Minister s (including Grant to the Overseas Aid Commission) 11 Economic Development 21 Education, Sport and Culture 27 Home Affairs 34 Health and Social Services 41 Housing 50 Planning and Environment 56 Social Security 62 Transport and Technical Services 69 Treasury and Resources 75

Non-Ministerial Departments 84 The States Assembly and its Services 91 General Revenue Income 97

Trading Operations

Jersey Airport 101 Jersey Harbours 108 Jersey Car Parks 115 Jersey Fleet Management 120

Reserves

Strategic Reserve 127 Stabilisation Fund 131

Separately Constituted Funds

Dwelling House Loan Fund 137 Assisted House Purchase Scheme 140 99 Year Leaseholders Fund 143 Agricultural Loans Fund 146

Jersey Currency Notes 149 Jersey Coinage 153

Tourism Development Fund 157 Channel Islands Lottery (Jersey) Fund 159 Housing Development Fund 162

Criminal Offences Confiscation Fund 165 Drug Trafficking Confiscation Fund 168 Civil Asset Recovery Fund 171

Glossary of Terms 177 Appendix Grants made of less than £100,000 185

1 Introduction to the Annex

The principal accounts document is the Financial Report and Accounts, which includes high level financial summaries and the Minister s and Treasurer s reports. The aim of the Financial Report and Accounts has been to produce a concise annual report which will appeal to the majority of users of the accounts.

This supplementary accounts document sets out more details about figures in the accounts, which should be read in conjunction with the Financial Report and Accounts.

The remainder of the Annex is divided as follows:

¥ Changes from the Original 2010 Business Plan;

¥ Ministerial and Non-Ministerial Departments and General Revenue Incomes

¥ Trading Operations;

¥ Reserves;

¥ Separately Constituted Funds;

¥ Glossary of Terms;

¥ Grants made by the States of Jersey in 2010.

The Treasury and Resources Department hopes that readers will find the information in this annex of benefit and would encourage any queries in relation to the annex to be addressed to the relevant Department.

A copy of the 2010 Financial Report and Accounts can be found on the States of Jersey website (www.gov.je); alternatively a hard copy can be obtained from the States Book shop at the following address:

Morier House St. Helier Jersey

JE1 1DD

The Treasury and Resources Department thanks all departments for their cooperation in providing the information to allow this annex to be produced.

1. Explanation of the contents of Department/Fund Pages

The detailed information also includes narrative information on the key financial results in a format that is comparable between Departments/Funds. However, some variation is necessary due to the differing nature of the entities. The table below shows which sections apply to each type of entity.

Separately Trading Constituted

Department Operation Reserve Fund Key ResultsService Analysis /

Staff FTE

OCS, STRGL and BSTrading Fund Balance

Key Results

This section examines the highlights for the Entity s performance. For Departments and Trading Operations this will normally consider performance against the Budget approved by the States, and changes from 2009.

Separately Constituted Funds and Reserves may focus instead on the financial position at the end of the year and will also consider the performance of investments held in the Common Investment Fund (CIF).

Participants in the CIF only recognise income or gains in their Operating Cost Statement (OCS) when units in the CIF are sold, and so when considering the performance of these funds it is important to consider the performance of its investments in the CIF as well as the results in the OCS. Further information about how information is presented is given in the next section.

Service Analysis

This section looks at where the expenditure in a department/trading operation was spent (and income received), and what the key variances from budget and changes from 2009 were. To make sure that numbers are comparable to those approved in the business plan, items that were not included in the approvals process are shown separately.

Staff Full Time Equivalent Employees

This considers how many Full Time Equivalent (FTE) employees the department/trading operation had at the end of the year. It also compares this to the position at the previous year end.

Operating Cost Services, Statement of Total Recognised Gains and Losses and Balance Sheet

These statements are similar to those included for the whole States of Jersey in the main accounts for individual entities, but are shown gross of internal charges to allow a proper comparison against budget. Again, items that were not included in the approvals process are shown separately.

Trading Fund Balance

Under the Public Finances (Jersey) Law 2005, Trading Operations must maintain a Trading Fund that does not form part of the Consolidated Fund. The Fund balance for each operation is calculated on the same basis as the Consolidated Fund (see the Treasurer s Report Section 2.7.1 for details), and shown in this section.

2. Note on the performance of Investments held in the Common Investment Fund

As mentioned in the main accounts, during 2010 a Common Investment Fund was created to allow funds (both inside and outside of the States accounting boundary) to pool funds for investment purposes.

The CIF is an administrative arrangement, not a separate fund, and provides a simple, cost effective way of pooling funds for investment purposes. The aim of the CIF is to provide greater investment opportunities and economies of scale, and to minimise fees and costs.

In operation, participant funds buy units in various CIF pools. Each pool will then buy individual investments in line with agreed strategies. This means that individual participants do not own investments, but rather units in the relevant CIF pool. As a result, participants recognise income or gains in their Operating Cost Statement when units are sold.

This has the result that the participant will recognise less income/gains through the OCS, with movements in the value of their investments in the CIF being recognised as unrealised gains through the STRGL. The total gain/(loss) from investments in the CIF will be equal to unrealised gains on CIF investments, plus any gains realised on sale of units.

However, the amount of income, expenditure, realised and unrealised gains incurred in the CIF attributable to each participant is tracked, and the results included in the participants pages in the Annex. These amounts are equivalent to those that would have been included in the financial statements of the participant if they held the investments directly, and it is important to consider these results in conjunction with those in the OCS.

Whilst the following departmental pages compare actual results against budget at a detailed level, the States approve only the total departmental budget.

The final approved budget for each department may vary from that approved in the business plan for several reasons, including additional budget allocations approved by the States during the year, transfers between revenue and capital heads of expenditure and other transfers between departments (which are approved by formal Ministerial Decisions).

A summary is set out in the table overleaf:

Additional Budget Approvals

The Public Finances Law allows the States Assembly to approve budgets in addition to those approved in the Annual Business Plan, under specific circumstances. These are:

¥ Article 11(8) allows the States to amend an expenditure approval on a proposition lodged by the Minister for Treasury and Resources on the grounds that there is an urgent need for expenditure and no expenditure approval is available.

¥ Article 16 allows the Minister for Treasury and Resources to approve an expenditure approval where a state of emergency has been declared or where the Minister is satisfied that there otherwise exists an immediate threat to the safety of all or any of the inhabitants of Jersey. In this case the Minister must lodge a proposition seeking expenditure approval.

In addition, amounts previously approved may be reallocated by the Treasury Minister under Article 15(1).

The approvals under which monies have been drawn down in 2010 are set out below.

States approvals in previous years under Article 11(8) and Article 16(3) of the Public Finances (Jersey) Law 2005

Amount  Amount Drawn

Proposition Purpose Approved  Down in 2010  Department

(£) (£)

P67/2008 Flu Pandemic

Preparations 1,230,000 458,000 Health and Social Services P55/2009 Economic Stimulus1 44,000,000 1,610,000 Chief Minister s

2,692,209 Economic Development 1,567,218 Education, Sport and Culture

66,700 Health and Social Services 4,893,430 Housing

17,200 Social Security

3,106,149 Treasury and Resources

P83/2009 Historic Child Abuse Enquiry 2 4,250,000 678,600 Home Affairs

368,117 Law Officers

P174/2009 H1N1 Influenza Pandemic 3 5,547,000 170,000 Health and Social Services

[1]States approvals in 2010 under Article 11(8) of the Public Finances (Jersey) Law 2005

Amount  Amount Drawn

Proposition Purpose Approved  Down in 2010  Department

(£) (£)

P64/2010 Voluntary redundancy [2] 6,000,000 923,516 Chief Minister s

43,610 Economic Development 712,844 Education, Sport and Culture

1,706,692 Health and Social Services 388,099 Home Affairs

360,048 Housing

501,881 Planning and Environment 970,736 Transport and Technical

Services

137,783 Treasury and Resources 254,791 Non-Ministerial Depts

P64/2010 Court and Case Costs [3] 8,500,000 2,396,760 Law Officers 2,017,000 Home Affairs

3,468,382 Judicial Greffe 8,400 Viscounts

300,000 Bailiff s Chambers

P64/2010 Procurement 500,000 500,000 Chief Minister s Other approvals in 2010 under Article 15(1) of the Public Finances (Jersey) Law 2005

Amount  Amount Drawn

Proposition Purpose Approved  Down in 2010  Department

(£) (£)

MR-TR- Integrated Business

2010-0067 Improvement Process 1,577,000 1,007,000 Chief Minister s

570,000 Treasury and Resources MR-TR- Jersey Heritage

2010-0067 Trust support 370,000 370,000 Education, Sport and Culture Total Additional Approvals Drawn Down 32,265,165

The Consolidated Fund

Highlights:

Underspend of £1,535,501 (5.6%) against Final Approved Budget

Net Revenue Expenditure of £26,340,665, an increase of 22.0% on 2009, resulting from Fiscal Stimulus, CSR implementation and budget transfers

Performance against Final Approved Budget

The Chief Minister s Department received funding from the Fiscal Stimulus Programme for work in support of the economy - further detail about the reviews is shown in the section below summarising budget changes in 2010. The Fiscal Stimulus funded programmes spanned 2010 and 2011. They were underspent by £657k in 2010, but will be completed in 2011.

The Statistics Unit was underspent by £167k as a result of the timing of Census work see Service Analysis on page 13.

Members  approved  an  increase  to  the  Chief Minister s  budget  to  fund  several initiatives arising from the Comprehensive Spending Review (CSR) as reflected in the budget reconciliation table below. Some of the CSR work streams were completed in 2010, but others will carry forward their 2010 underspends to fund their activity in 2011. For example, the Procurement Transformation work stream underspent by £243k in 2010 and will now be completed in 2011. Most of the remaining CSR underspend relates to the budget set aside to form the CSR project team. This budget was underspent by £68k, which was required to resource work on the CSR across the Health and Social Services Department. It is anticipated that this work will also be completed in 2011.

The Information Services Department undertook a zero-based review of their budget at the beginning of the year, which resulted in a widespread realignment of the existing base. There are various small budget variances which offset each other, but the most significant variance is an underspend relating to a delay in the commencement of some project work, e.g. Applications Review.

Performance compared to 2009

During  2010  Ministerial  responsibility  for  the  Corporate  Systems  Team  and  the Procurement function were transferred from the Treasury and Resources Minister to the Chief Minister s Department and the Procurement budget was increased by £500k to pump prime the Procurement Transformation project. Actual net expenditure on these functions was £2,126k in 2010.

The  CSR  programme  was  launched  in  2010  and  incurred  actual  expenditure  of £1,177k for which where was no comparable expenditure in 2009.

The  Fiscal  Stimulus  projects  undertaken  within  External  Affairs, Economics  & International  Finance  incurred  additional  expenditure  of £893k  with  the  £657k remaining budget being required in 2011 to complete the work.

VR payments approved as part of the CSR process increased expenditure by £1,149k from the previous year.

There were also several instances where net revenue expenditure has decreased year- on-year. The main ones relate to GAAP accounting requirements (less Information Services project expenditure was incurred in 2010) and a reduction resulting from a review of the Customer Services Centre.

Reconciliation of 2010 Business Plan to Final Approved Budget

£ 000

Business Plan 2010  20,397 Transfer of functions 1,771 CSR work streams  1,507 VR/VER  1,008 Fiscal Stimulus projects  1,550 Other Transfers  1,088

Final Approved Budget  27,321

Changes from Budget Voted in the Business Plan

A Ministerial Decision was approved in 2010 to transfer the Corporate Systems and Procurement  functions  from  Treasury  and  Resources  to  the  Chief Minister s Department. These budgets totalled £1,771k.

Funding of £1,507k was approved for expenditure on CSR related projects from carry forwards and an Article 11(8) request approved by the States in July. The additional CSR  budgets  funded  the  CSR  team  to  manage  the  programme, the  four  CSR Departmental Reviews, the Organisational Development and Terms and Conditions review work streams and Procurement Transformation.

£1,008k budget was approved to fund the costs of VR and early retirement as part of the CSR savings process. In addition, some redundancies were also funded from existing budgets.

Additional projects were undertaken in-year, which were funded by the Fiscal Stimulus programme (£1,550k). This included a Business Tax review, a project to respond to the EU Directive on Alternative Investment Fund Managers (AIFM) and the marketing and promotion of the finance industry.

The other transfers consist of several items including approved carry forwards of 2009 under spends and capital to revenue transfers to comply with GAAP requirements.

Other Developments

The Department has undertaken much new activity during 2010 and this will continue into 2011. Most of the variances described here are attributable to four main issues: the CSR programme, the transfer of two service Departments from Treasury and Resources to CMD, VR s and Fiscal Stimulus projects. The largest of these is the CSR programme where the Department will not only have to identify savings of its own but will play a pivotal role in helping other Departments identify and deliver their own savings and service efficiencies.

Service Analysis

An analysis of the Department s performance by Service Area is given below.

External Affairs, Economics & International Finance

Service Analysis

£822k (25.6%) under budget  £721k (43.3%) more than 2009 Other External Affairs, Economics & International Finance was £822k under budget, due to

External 20% external factors impacting on the timings of a number of reviews supported by Fiscal Affairs, Information

Economics & Services Stimulus funding. These included reviews of Jersey s business tax policy (EU review), InternationalFinance 38% Jersey s  position  in  relation  to  the  EU  Directive  on  Alternative  Investment  Fund

9% Managers (AIFM) and new proposals for EU regulation of financial services. There were also a number of new financial market promotional opportunities that arose in

PECRS Pre- Human London and the emerging markets of India and China which were deferred into 2011. 1987 Debt

Resources

14%

19%

External Affairs, Economics & International Finance was £721k higher than 2009, due mainly to expenditure on the Stimulus projects mentioned above and expenditure on the Carswell Review (review of unelected members).

Underspend Breakdown Information Services

£138k (1.4%) under budget  £1,592k (19.6%) more than 2009 This area provides business support and corporate infrastructure requirements across all departments. The underspend in 2010 was mainly due to unfinished project works, which will be completed in 2011.

The year-on-year cost increase is mainly due to the transfer of the Systems Team from Treasury and Resources (£1,296k).

-1000  -800  -600  -400  -200  0  200 Underspend £ 000 Overspend

Human Resources

£168k (3.6%) over budget  £440k (9.9%) more than 2009 The  Human  Resources  function  provides  HR  advice  and  support  to  all  States Departments as well as setting central HR policies.

It incurred an overspend of £168k mainly due to the CSR programme work streams (Organisational Development and Terms & Conditions review), although the funding for these projects is held under Corporate Resources.

The year-on-year spend increase of £440k is predominantly due to the CSR work streams.

Net Expenditure Service Analysis

2010 2010

Business Final Approved 2010 2009

Plan Budget Actual Actual

£ £ £ £

1. The 2010 Business Plan did not include the approval of some GAAP items of expenditure such as depreciation and capital grant amortisation. To allow comparison against budget, these amounts are shown separately to expenditure subject to approvals. Budgets shown for these items were collated as part of internally generated shadow accounts.
2. Includes Emergency Planning Office.

Staff FTE

At the year end the Department employed the equivalent of 209 full time employees. This is an increase of 21 (11.2%) from 2009, and is due to the transfer of Corporate Procurement and Information Services personnel from Treasury and Resources.

Operating Cost Statement, Statement of Total Recognised Gains and Losses and Balance Sheet

Expenditure Analysis

Other 15%

Administration Expenses

2%

Supplies

and

Services Staff 25% 58%

Reconciliation of 2009 NRE to that previously reported in the 2009 Accounts

£ 000

2009 NRE as Reported 21,496 New Asset Treatment

Expenditure Depreciation 83 Expenditure Asset Disposal Loss  9

Restated 2009 NRE 21,588

Income

£203k (14.9%) Surplus on Budget £246k (18.6%) more than 2009 The largest income stream relates to recharges to other Departments from Information Services (£405k), Corporate Procurement (£347k) and Human Resources (£205k). The Procurement recharges are accountable for most of the achievement over budget and are largely the recovery of Procurement Transformation project costs incurred on behalf of other Departments.

The year-on-year increase is similarly related to the Procurement recharges in that the work undertaken and the service area itself are new to the Chief Minister s Department in 2010.

Staff Expenditure

£1,032k (6.8%) Over Budget £3,926k (32.0%) more than 2009 The  overspend  on  staff costs  is  offset  by  compensating  under  spends  against Supplies and Services.

The  year-on-year  increase  is  largely  due  to  the  transfer  of staff working  on  the Corporate  Systems  (Enterprise  Support  Group)  and  Procurement  teams  and  VR payments made in 2010.

Supplies and Services

£2,332k (25.8%) Under budget £963k (16.8%) more than 2009 The main underspends against budget relate to the CSR work streams, Fiscal Stimulus initiatives and the Census.

The increase in expenditure on 2009 is also due to the additional work undertaken in respect of the CSR and Fiscal Stimulus reviews as well as the costs associated with the transfers of the Enterprise Support Group and Corporate Procurement teams from Treasury and Resources.

Other Recognised Gains and Losses

There were no Other Recognised Gains/Losses for the Chief Minister s Department in 2010.

Balance Sheet

The value of Fixed Assets has increased by £1,628k due to the transfer of the JDE system from Treasury and Resources. The main reason for the increase in Creditors is that a number of IS projects commenced during the latter part of the year and were unpaid as at year end.

Operating Cost Statement

2010 2010

Business Final Approved 2010 2009

Plan Budget Actual Actual

£ £ £ £

Statement of Total Recognised Gains and Losses

2010 2009

£ £

Net Revenue Expenditure 26,340,665  21,588,021 Total Recognised Loss  26,340,665  21,588,021

Balance Sheet

2010 2009

£ £

Highlights:

Under-spend of £4,902 (0.1%) against Final Approved Budget

Net Revenue Expenditure of £8,127,393, an increase of 5.8% on 2009

Key Results

Net Revenue Expenditure by Service Area

Administration Local Work 1% Charities

Projects 1% 3%

Disaster Fund 16%

Grant Aid 79%

Reconciliation of 2010 Business Plan to Final Approved Budget

£ 000

Business Plan 2010  8,055 Carry Forwards 77

Final Approved Budget 8,132

Most of the expenditure in 2010 was by way of direct grants to 61 agencies, both large and small, with all grants based on the individual merits of projects covering clean water, health, sanitation, education, agriculture, livestock, and  revolving  credit schemes for small businesses.

The Commission received applications which totalled in excess of £12.3m and had to reject many worthy projects due to its budget limits. The Commission also received additional funding enquiries from over 60 other agencies.

The demand for the funding of disasters and emergencies remained high throughout the year, and the Commission allocated slightly more than its budget to this area, meeting the shortfall from its grant aid allocation. The majority of funding allocated was in respect of natural disasters with approximately 10% being spent on applications arising from human conflict.

Community Work Projects were organised for Mongolia, Uganda, and Ghana, involving 33 volunteers at a net cost inclusive of materials and equipment of £207,944.

A total of 13 applications were approved for grants made to local organisations which raise funds for aid projects overseas. All met the established criteria and were awarded matching £ for £ funding based on monies raised by the organisation itself.

Administration costs remained low at £88k, representing just over 1.0% of the total grant.

Breakdown of Aid Given

2010 2010

Business Final Approved 2010 2009

Plan Budget Actual Actual

£ £ £ £

Operating Cost Statement

2010 2010

Business Final Approved 2010 2009

Plan Budget Actual Actual

£ £ £ £

Statement of Total Recognised Gains and Losses

2010 2009

£ £

Net Revenue Expenditure 8,127,393  7,678,865 Total Recognised Loss  8,127,393  7,678,865

Balance Sheet

2010 2009

£ £

Highlights:

Underspend of £1,508,852 (7.8%) against Final Approved Budget

Net Revenue Expenditure of £17,813,857, an increase of 0.4% on 2009

Key Results Performance against Final Approved Budget

Key Variances from Budget

Overall the Department had an underspend against budget of £1,509k (7.8%). The

£ 000

Tourism Marketing and Promotion (764) transfer  of La  Collette  Fuel  Farm  to  Transport  and  Technical  Services  (£150k), Policy Development  1,070 unexpected income received from Ofcom (£712k) and a reduction of subtitling fees

DurPolicrelly &StimRegulusulat i o n - F in a n c e  402396  (£82k) contributed to the reported underspend in the Policy Development area.

Other Variances  405

Net underspend  1,509 There were delays in activity on Durrell Stimulus (£402k) and Finance industry policy

and regulation (£396k); this activity will be completed in 2011.

Additional resources (£778k) were allocated to Tourism Marketing and Promotion for increased  advertising  and  marketing  spend, in  order  to  address  unexpected difficulties in the tourism industry (including volcanic ash disruption).

Key Variances from 2009 Performance compared to 2009

£ 000

2009 NRE  17,510 The increase in Net Revenue Expenditure (NRE) from 2009 to 2010 (GAAP Basis) was Finance Sector 569

Durrell Stimulus  374 £68k (0.4%). The increase is largely attributable to the Durrell and Finance Stimulus Tourism Marketing and projects (£943k), offset by reduced expenditure on Marketing and Promotion and

Promotion  (345)

Policy Development  (164) Policy Development (£509k) and reduced depreciation (£221k) due to the transfer of Other Variances (145)   La Collette Fuel Farm to Transport and Technical Services.

2010 NRE (BP Basis) 17,799 Depreciation  15

2010 NRE (GAAP Basis) 17,814

Reconciliation of 2010 Business Plan to Final Changes from Budget Voted in the Business Plan Approved Budget

Total adjustments amounting to £3.4m were made to the amount voted in the 2010

£ 000 Business Plan, with Stimulus funding approved totalling £2.7m and carry forwards

BusinessCarry For wPlanard s2010  797 totalling £797k.

15,880

Fiscal Stimulus  2,692

Additional Funding  44 The maintenance fund of £255k for La Collette Fuel Farm was brought forward from Departmental Transfers  (105)

Final Approved Budget 19,308 2009 and was transferred to Transport and Technical Services in 2010 together with a

further £100k. The rental income budget of £250k for La Collette Fuel Farm was transferred to Jersey Property Holdings (see movement on Hire and Rentals in the Operating Cost Statement).

Service Analysis

An analysis of the Department s performance by Service Area is given below.

Net Revenue Expenditure by Service Area

Other Enterprise Service & Business

Areas Development 17% 11%

Finance Sector 17%

Tourism SectorRural 41%

14%

Underspend Breakdown

-1500 -1000 -500 0 500 1000

£ 000

Underspend Overspend

Tourism, Marketing and Promotion

£764k (11.8%) Over budget £345k (4.6%) less than 2009 The overspend mainly relates to an increase in joint public/private sector marketing and a decision to increase TV advertising (£503k), and a provision for a debtor of £264k. The overspend was funded by budget transfers from other service areas within EDD.

Tourism also received £500k Stimulus funding and £50k from the Jersey Hospitality Association for additional marketing in response to the volcanic ash crisis.

Spend was slightly down compared to 2009 due to a reduction in route development subsidies.

Policy Development

£1,070k (102.9%) Under budget £164k (122.1%) less than 2009 The underspend and the reduction on 2009 is due to additional income of £712k received from Ofcom in respect of Wireless Telegraphy Licence fees which were not in the Business Plan, the transfer of La Collette Fuel Farm to Transport and Technical Services (£150k) and a reduction of subtitling fees (£82k).

Finance Sector

£396k (11.6%) Under budget £569k (23.2%) more than 2009 Finance Development received £967k Stimulus funding in 2010 and the underspend mainly relates to delays on various related projects due to law drafting and awaiting the decisions of international bodies.

Skills Training and Workforce Development

£286k (27.6%) Under budget £186k (32.9%) more than 2009 The  underspend  is  due  to  a  reduction  in  payments  of skills  development  and apprenticeship grants.

The increase on 2009 is mainly due to a Stimulus funding of £316k and a reduction in grants paid (£109k).

Net Expenditure Service Analysis

2010 2010 Restated Business Final Approved 2010 2009

Plan Budget Actual Actual

£ £ £ £

1. The 2010 Business Plan did not include the approval of some GAAP items of expenditure such as depreciation and capital grant amortisation. To allow comparison against budget, these amounts are shown separately to expenditure subject to approvals. Budgets shown for these items were collated as part of internally generated shadow accounts.
2. 2009 Actuals have been restated to move Skills Development (£166k) from Enterprise and Business Development to Training and Workforce Development to reflect the treatment in the 2010 Business Plan.
3. Quality Milk Payment, School Milk and DairyServiceSupport have been combined.

Staff FTE

At the year end the Department employed the equivalent of 81 full time employees. This is an increase of 8 (11%) from 2009, and is due to the Stimulus Apprenticeship Scheme.

Operating Cost Statement, Statement of Total Recognised Gains and Losses and Balance Sheet

Expenditure Analysis

Other

5%

Staff 22%

Grants 37%

Supplies and Services 36%

Reconciliation of 2009 NRE to that previously reported in the 2009 Accounts

£ 000

2009 NRE as Reported 17,506

New Asset Treatment

Expenditure Depreciation  236 Expenditure Asset Disposal Loss  4

Restated 2009 NRE 17,746

Income

£1,368k (116.9%) Surplus on Budget  £163k (6.9%) more than 2009 The surplus on budget is mainly due to income not in the 2010 Business Plan, including:

¥ £712k received from Ofcom in respect of Wireless Telegraphy Licence fees,

¥ £250k rental income for La Collette, and

¥ £366k received by Tourism in respect of brochure advertising income.

The increase on 2009 is due to a number of variances of which the largest is an increase of £123k from gambling licence fees.

Staff Expenditure

£193k (4%) Under budget £506k (12.5%) more than 2009 The increase in staff costs on 2009 is mainly due to additional contract staff employed for the Stimulus projects and the underspend on budget is due to vacancies in Tourism and Finance Industry Development for part of the year.

Grants

£681k (8.3%) Under budget £493k (7.0%) more than 2009 The underspend mainly relates to the Durrell Stimulus project (£402k) starting later than planned and a reduction in Air Route Development payments (£248k).

The increase on 2009 is mainly due to the additional Stimulus projects (£845k), and reductions in Quality Milk Payments (£150k) and route development payments (£236k).

Supplies and Services

£255k (3.6%) Over budget £811k (10.0%) less than 2009 There was an increase of £118k to develop the Intellectual Property legislation which was not included in the Business Plan.

The decrease from 2009 is mainly due to Investor Compensation (£554k) which was a one-off cost in 2009, a reduction of airline marketing (£173k) and Tourism research (£82k).

Other Recognised Gains and Losses

The Economic Development Department had no Other Recognised Gains and Losses in 2010.

Balance Sheet

The reduction of fixed assets of £185k is due to the transfer of La Collette Fuel Farm to Transport and Technical Services on 1st January 2010.

The reduction in debtors on 2009 (£351k) is due mainly to the provision for a doubtful debt in Tourism.

The long-term liability relating to funding of the airport s below ground  works has been removed from the Balance Sheet to reflect the States decision to remove future funding. A final payment of £4.75m will be made in 2011, and is recognised as a creditor under current liabilities.

Operating Cost Statement

2010 2010

Business Final Approved 2010 2009

Plan Budget Actual Actual

£ £ £ £

Statement of Total Recognised Gains and Losses

2010 2009

£ £

Net Revenue Expenditure 17,813,857  17,746,091 Total Recognised Loss  17,813,857  17,746,091

Balance Sheet

2010 2009

£ £

Highlights:

Underspend of £2,628,086 (2.5%) against Final Approved Budget Net Revenue Expenditure of £102,078,786 an increase of 3% on 2009

Key Results

Key Variances from Budget

£ 000

Provided Schools

Non Fee-paying  628

Fee-paying  842 Special Education  199 Higher Education 710 Other Variances 249

Net Underspend 2,628 Key Variances from 2009

£ 000

2009 NRE  98,992 Staff cost inflation  1,548 Nursery Education Fund 780 Fiscal Stimulus Funding 1,075 Arts and Heritage Grants (755) Sport Maintenance (275) Voluntary Redundancies 712 Other Variances (123)

2010 NRE (BP Basis)  101,954 Depreciation  120

Other GAAP items 5 2010 NRE (GAAP Basis)  102,079

Reconciliation of 2010 Business Plan to Final Approved Budget

£ 000

Business Plan 2010  99,517 Fiscal Stimulus  1,567 Departmental Transfers 370 Transfer from Capital 1,256 Additional Funding 713 Carry Forward  1,159

Final Approved Budget 104,582

Performance against Final Approved Budget

The  underspend  amounting  to  2.5%  of Final  Approved  Budget  reflects  the arrangements for Delegated Financial Management that allow schools to carry forward funds within defined financial parameters to accommodate the difference between the academic and financial year. This same principle applies to the fee paying provided schools.

The Department has been prudent in supplementing the Higher Education base budget with £800k to safeguard against the potential impact of uncertainties relating to total expenditure. The service area has traditionally been treated as ring-fenced and the Department will recommend that this sum be carried forward as a buffer against future fluctuations. It should be noted that there is a structural deficit in the higher education budget and it is essential to set aside funds for this purpose.

Miscellaneous underspends relate to funds set aside to meet the uncertain cost of teachers maternity leave and sickness absence and savings that have been accrued as various sections of the Department have started to reorganise in order to implement the Department s Comprehensive Spending Review proposals.

Performance compared to 2009

The increase in spend from 2009 to 2010 was 3%. The variance is due to a number of factors: the impact of pay awards and non-staff inflation; the full year effect of the introduction of the Nursery Education Fund from September 2009; the allocation of Fiscal Stimulus Funding for additional numbers in Further and Vocational Education and the Advance to Work Schemes. The variance relating to the Arts and Heritage organisations reflects the additional support provided in 2009 in particular in respect of the Jersey Heritage Trust, following which the organisation has restructured to provide a more sustainable financial framework.

Other variances reflect the savings achieved throughout the service, an indication of the financial rigour applied to expenditure and preparation for the future uncertainties created by the CSR process.

Changes from Budget Voted in the Business Plan

In 2010 adjustments were made to the original budget voted in the Business Plan totalling £5.1 million. This amount represents £1.16 million carried forward from 2009, Fiscal Stimulus funding to support the Advance to Work Scheme, Careers Team strengthening and additional numbers at Highlands College and a transfer from the Treasury  to  supplement  the  Higher  Education  budget. The  transfer  represents  a repayment of funds required to support the Jersey Heritage Trust in 2009. Resources were  transferred  from  capital  to  support  the  Heritage  Trust  over  a  period  of reorganisation and also to ensure the correct GAAP treatment of expenditure on the Department s ICT Strategy. Further funding was allocated to support agreed Voluntary Redundancy payments as part of the Department s Comprehensive Spending Review proposals.

Other developments

Following the extensive independent financial and business review carried out in 2010, the Jersey Heritage Trust has gone through a period of reorganisation to ensure that the business is sustainable. A new Service Level Agreement has been developed with a framework of financial reporting both to the Board of Trustees and to the Department; regular consultation will enhance further the relationship with the Department. Additional funding of £350k has been allocated as part of the 2011 Business Planning process to provide a realistic base budget and to contribute to the annual requirement identified in the review to support the ongoing refurbishment of facilities. The Department is working closely with the Economic Development Department and with the Trust to explore other income streams to meet the full refurbishment requirement, thus removing the need for additional central funding. This new relationship with the Trust, defined in the SLA, will be used as the basis for reviewing the arrangements with the other third party grant-funded agencies.

Funding for Student grants is difficult to forecast as assumptions are based on a number of variables; the number of students seeking admission to University, the income of parents and the cost of courses chosen. In addition a tuition fee settlement has yet to be decided with the representative body of UK Universities. The UK Government has announced radical changes to University funding for 2012 and the real effect of this on Jersey is unlikely to be known until October 2011. In view of this an increased intake is anticipated as students who might have deferred admission enrol to avoid unknown fee increases that might apply from the next academic year.

Further funding of £1.6 million was allocated to the Department from the Economic Stimulus Stabilisation Fund and has been used to fund a number of initiatives associated with the economic downturn: the Advance to Work Scheme, established as a full-time work experience and off-the-job training option for young jobseekers (£603k) and a similar Scheme, Advance Plus providing a more concentrated programme of vocational training and work experience for an older age range (£63k); strengthening of the Careers team to meet increased demands on the service and provide specific Trust and Compliance training (£140k); and to meet the cost of additional student numbers at Highlands College (£585k). An unspent allocation £273k has been returned to the Fund.

The Department is committed to achieve the full extent of savings required as part of the Comprehensive Spending Review. Following an extensive period of analysis, savings proposals have been submitted which amount to 10% of the Department s Gross Revenue Expenditure: £2.3 million in 2011, £3.1 million in 2012 and £5.7 million in 2013. A framework of communication and risk management has been established to ensure that the savings can be delivered in a structured and comprehensive manner.

Service Analysis

An analysis of the Department s performance by Service Area is given below.

Net Revenue Expenditure by Service Area

Other Service Areas 40%

Fee Paying Provided 5%

NFP Higher Secondary

Education 23% 9% NFP

Primary

23%

Underspend Breakdown

N Pri

E Fee P Provi

-1000 -500 0 500

£ 000

Underspend Overspend

Non Fee-Paying Provided Schools Secondary Education

£235k (1%) Over budget £405k (1.7%) more than 2009 All schools are formula funded for a financial year on the basis of pupil numbers, with a fixed element applied to meet other costs. There is a level of uncertainty in relation to actual pupil numbers until the commencement of the academic year. Schools are often unable to respond to fluctuations in the short term. It is only through longer term changes to catchment areas or a radical reorganisation of resources that a school can respond to significant changes in pupil numbers. Three of the Island s five non fee- paying secondary schools are overspent at the end of 2010, by 5.3%, 3% and 0.2% of gross revenue expenditure - a recovery plan has been agreed and will be monitored to ensure that corrective action is taken.

Non Fee-Paying Provided Schools Primary Education

£863k (3.6%) Under budget £458k (2%) more than 2009 The current arrangements for Delegated Financial Management enable schools and colleges to carry forward both surpluses and deficits within defined limits between financial years in order to plan for the academic year. Five of the Island s twenty two primary schools are overspent albeit by minimal amounts of approximately 1% at the end of 2010. The schools ensure that they have sufficient flexibility in their budgets so that they are able to meet uncertainties that might arise throughout the year. Schools need to make provision for funding short term teacher sickness and for Development Plans that span two financial years.

Higher Education

£709k (7.6%) Under budget £147k (1.7%) more than 2009 The Department has been prudent in supplementing the Higher Education budget by £800,000 in 2010. This was possible due to a reimbursement of funds from the Treasury which had been used to support the Jersey Heritage Trust in 2009. It was anticipated that the impact of the recession would place additional pressure on the budget which would not be known until the final quarter of the year when it would be too late to take corrective action. Circa £120,000 of this funding was required over and above the base budget.

Fee-Paying Provided Schools

£842k (13.8%) Under budget £138k (2.5%) less than 2009 The budget allocation to the fee-paying schools is established on the same basis as that applied to the non fee-paying schools although at a reduced percentage to reflect the  contribution  made  by  fees  to  the  running  of the  school. The  schools  have traditionally transferred funds to Property Holdings in order to carry out various capital projects. The transfer did not take place in 2010 as it is likely that the funds will be required to provide some flexibility over the period of implementing the Department s CSR proposals.

Net Expenditure Service Analysis

2010 2010

Business Final Approved 2010 2009

Plan Budget Actual Actual

£ £ £ £