States of Jersey Financial Report and Accounts 2011 - ANNEX

ANNEX TO

FINANCIAL REPORT AND ACCOUNTS 2011

States of Jersey

ANNEX TO

FINANCIAL REPORT AND ACCOUNTS 2011

Treasury and Resources Department

P.F.C. Ozouf Senator Minister

E. Noel Deputy Assistant Minister

L. Rowley, MBA, CPFA Treasurer of the States

Contents

Introduction to the Annex 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 3 Revenue Approvals 3 Capital Approvals 7

The Consolidated Fund

Aggregated Primary Statements 11

Chief Minister s (including Grant to the Overseas Aid Commission) 15 Economic Development 24 Education, Sport and Culture 30 Department of the Environment 37 Health and Social Services 43 Home Affairs 50 Housing 57 Social Security 65 Transport and Technical Services 71 Treasury and Resources 77

Non-Ministerial States Funded Bodies 86 The States Assembly and its Services 93 General Revenue Income 99 Other Consolidated Fund Items 105 Trading Operations

Jersey Airport 109 Jersey Harbours 116 Jersey Car Parking 123 Jersey Fleet Management 127

Reserves

Strategic Reserve 133 Stabilisation Fund 137

Separately Constituted Funds

Dwelling Houses Loans Fund 143 Assisted House Purchase Scheme 146 99 Year Leaseholders Fund 148 Agricultural Loans Fund 150

Jersey Currency Notes 152 Jersey Coinage 156

Tourism Development Fund 160 Channel Islands Lottery (Jersey) Fund 162 Housing Development Fund 165

Criminal Offences Confiscations Fund 167 Drug Trafficking Confiscations Fund 169 Civil Asset Recovery Fund 171

Glossary of Terms 175 Appendix A Grants made of less than £100,000 183

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 Annex is divided as follows:

¥ Changes from the Original 2011 Business Plan;

¥ The Consolidated Fund, including Ministerial and Non-Ministerial Department pages, General Revenue Income and other items;

¥ Trading Operations;

¥ Reserves;

¥ Separately Constituted Funds;

¥ Glossary of Terms;

¥ Grants made by the States of Jersey in 2011.

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 2011 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 Assembly Information Centre at the following address:

Morier House St. Helier Jersey

JE1 1DD

The Treasury and Resources Department thanks all departments for their co-operation 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 Business Plan approved by the States, and changes from 2010.

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).

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 2010 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 Statement, 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

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, and 2011 is the first full year that the CIF has been in operation.The CIF is an administrative arrangement, not a separate fund. 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 based on the units held rather than the underlying investments.

With the adoption of the revised financial instrument standards (as set out in Section 6 of the Accounts), both realised and unrealised gains and losses on CIF units are now recognised in the OCS of the participants. As comparative amounts have not been restated, gains and losses should be compared to the combination of both realised (in the OCS) and unrealised gains and losses (in the STRGL) for 2010.

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.

Revenue Approvals

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:

Notes:

1. Carry Forwards from 2010

Carry Forwards from 2010 into 2011 were approved by two Ministerial Decisions:

MD-TR-2011-0040: Year End Carry Forwards: 2010 - Fiscal Stimulus and P.64/2010 Article 11(8) Approved the carry forward of £2,811,703 of underspends against Fiscal Stimulus approvals, and £232,100 approval under Article 11(8) by P64/2010, but not spent by the end of 2010.

MD-TR-2011-0042: 2010 Year End Carry Forwards

Approved the carry forward of £13,129,867 of underspends from 2010 to 2011.

2. Additional Funding Approved in Year

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 subsequently 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 2011 are set out below.

3. Transfers between Revenue and Capital and Departmental Transfers

From 2010, every effort has been made to prepare Business Plans to accurately estimate the split of Capital and Revenue budgets according to GAAP. However, where variations to these estimates occur in year, adjustments may still be required. Capital approvals in previous years were not necessarily fully GAAP compliant, and where these included approvals for revenue expenditure in 2011, budget adjustments have been required to bring the budget into line with accounting definitions.

These are approved by Departmental Ministerial Decision and a Treasurer s Delegated Decision, and reported to the States as part of the Budget Management Report .

Capital Approvals

The table below shows how total Capital Approvals within the Consolidated Fund have changed during 2011.

£ 000

Previous Approvals 106,460 2011 Approval 22,149 Revenue to Capital Transfers 1,193 Other Transfers 5,907 Disposal Receipts Applied 4,584

2011 Capital Expenditure (63,763) Payment of BGW Grant to Jersey Airport (4,750) Amounts Returned to Consolidated Fund (8) Other Adjustments (221)

Unspent Capital Approvals Carried Forwards 71,551

The Consolidated Fund

The Consolidated Fund was created by the Public Finances (Jersey) Law 2005 (PFL). The majority of income and expenditure of the States flows through this fund, including taxes and other revenues approved in the budget statement and Ministerial and Non-Ministerial departments net revenue and capital expenditure as approved in the Business Plan.

Aggregated Operating Cost Statement

2011 2010 Actual Actual

£ 000 £ 000

Taxation revenue 477,056 443,685 Duties, Fees, Fines and Penalties 92,431 87,610 Sales of Goods and Services 106,413 104,877 Investment Income 17,523 15,173 Other Revenue 28,114 21,783

Total Revenue 721,537 673,128

Social Benefit Payments 166,287  165,649 Staff Expenditure 330,250  328,066 Other Operating Expenditure 187,580  183,362 Grants and Subsidies Payments 38,432  24,053 Depreciation 34,067  37,210 Impairments of Fixed Assets 8,245  130,152 Finance Costs 1,253  1,412 Pension Finance Costs 3,668  3,553 Foreign Exchange (Gain)/Loss 288  306 Movement in Pension Liability 5,640 39,900 Asset Disposal (Gain)/Loss (1,674) (81)

Total Expenditure 774,036  913,582 Net Revenue Expenditure 52,499  240,452

Aggregated Statement of Total Recognised Gains and Losses

2011 2010 Actual Actual

£ 000 £ 000

Net Revenue Expenditure 52,499  240,452 Revaluation of Fixed Assets  (138,757) (169,041) Unrealised (Gain)/Loss on Investments - (101) Unrealised (Gain)/Loss on Strategic Investments (72,400) 3,500 Unrealised (Gain)/Loss on Other Available for sale Investments  458 - Actuarial (Gain)/Loss on Defined Benefit Schemes 92 (1,445)

Total Recognised (Gain)/Loss (158,108) 73,366

Aggregated Balance Sheet

2011 2010 Actual Actual

£ 000 £ 000

Tangible Fixed Assets 2,633,491  2,476,597

Financial Assets

Loans & Advances 3,209  4,627 Strategic Investments 346,400  274,000 Other Available-for-Sale investments 14,335  14,457 Investments held at Fair Value through OCS 226,481  208,262 Derivative Financial Instruments 201  -

Total Fixed Assets 3,224,117  2,977,943

Current Assets

Loans & Advances 1,474  987 Derivative Financial Instruments 98  - Stock and Work in Progress 5,314  4,305 Debtors 102,942 98,966 Cash at Bank and in Hand 3,674  42,430

Total Current Assets 113,502 146,688

Current Liabilities

Creditors (117,758) (114,511) Balance due to other States Funds (50,641) (48,065) Provisions for liabilities and charges (100) (4,448)

Total Current Liabilities (168,499) (167,024) Net Current Liabilities (54,997) (20,336) Total Assets Less Current Liabilities 3,169,120  2,957,607

Long Term Liabilities

Finance Lease Obligations (7,528) (8,271) PECRS Pre-1987 Past Service Liability (229,998) (246,317) Provision for JTSF Past Service Liability (135,100) (114,000) Defined Benefit Pension Schemes Net Liability (11,493) (11,152) Provisions for liabilities and charges (6,308) (4,387)

Total Long Term Liabilities (390,427) (384,127) Net Assets 2,778,693  2,573,480

Reserves

Accumulated Revenue Reserves 2,163,620 2,165,538 Revaluation Reserve 338,914 202,661 Donated Asset Reserve 39,053 39,084 Capital Grant Reserve 227 261 Investment Reserve 236,879 165,936

Total Reserves 2,778,693 2,573,480

Consolidated Fund Balance

Consolidated Fund Balance

The Consolidated Fund balance is calculated in a way to represent funds available to be spent in future years, and therefore includes:

¥ Financial Assets (Advances and Other Investments).

¥ Net Current Assets or Liabilities (adjusted for elements of Pension, Finance Lease and other obligations which will be included in future expenditure approvals).

¥ Provisions for liabilities and charges.

The Consolidated Fund excludes:

¥ Assets which can not be easily converted into cash (Fixed Assets and Strategic Investments).

¥ Other Long Term Liabilities which will be settled from future expenditure approvals.

Available Consolidated Fund Balance

The balance calculated does not take into account withdrawals from the Consolidated Fund that have already been approved (and so are not available to spend). The balance must be adjusted for these to give the balance available.

Capital projects are approved on an allocation basis and so unspent amounts are removed. Similarly, amounts approved for specific purposes (e.g. through requests under Article 11(8) of the Public Finances (Jersey) Law 2005), but that have not yet been allocated to departments, and property receipts that will be used to purchase assets under Article 15(3) of the Law must be adjusted for. The States also approves expenditure each year to provide a suitable insurance provision. Finally, an adjustment must be made for amounts that will be included in a future revenue head of expenditure through the carry forward process.

2011 2010 Actual Actual

£ 000 £ 000

Available Financial Assets 229,891 212,888

Net Current Liabilities (54,998) (20,336) Provisions (6,308) (4,387) Add Back: Gov Grants Payable <1yr - 4,750 Add Back: Current Finance Lease Liabilities 742 667 Add back: Current Pension Liabilities 3,894 3,774

Consolidated Fund Balance 173,221 197,356

Unspent Capital (71,551) (106,460) Voted amounts to be allocated (7,513) (26,834) Provision for Decommissioning 1 2,080 2,080 Insurance Provision (7,615) (9,317) Departmental Carry forwards (27,822) (16,200) Carry forward of Contingency (13,624) -

Available Consolidated Fund Balance 47,176 40,625

1 The budget for the new EFW plant included an amount relating to decommissioning, for which a provision is created under accounting standards. To avoid double counting an adjustment is made to the total unspent capital amount in 2010. This amount has been adjusted in the approval in 2011. In 2011 an additional provision for the decommissioning of the new plant at the end of its life has been created in line with accounting standards. Approval for this expenditure will not be sought until closer to the end of the EfW plant s useful life, and so the amount of this provision has been added back to the available consolidated fund balance.

Reconciliation of movement in Available Consolidated Fund Balance

£ 000

Opening Balance 40,625

Net General Revenue Income 586,919 Net Revenue Expenditure of Departments (598,608) Add Back: Carry Forwards 2010 16,200 Add Back: Additional Allocations  9,281 Remove: Capital to Revenue Transfers (1,193)

Approvals Carried Forward:

Departmental Carry forwards (27,822) Carry forward of Contingency (13,624)

Capital Approval in the Year (22,149) Jersey Property Holdings Receipts Applied 1,148

Transfer from Stabilisation Fund 46,000

Returns to the Consolidated Fund 9,141

Other Movements 1,258

Fund Movement (6,551)

Closing Balance 47,176

Highlights:

Underspend of £1,074,933 (4.1%) against Final Approved Budget Net Revenue Expenditure of £26,101,319 a decrease of 0.9% on 2010

Key Results

Key Variances from Budget

£ 000

Human Resources 289 PECRS 195 Statistics - Census 186 Other Variances 405

Net Underspend 1,075

Key Variances from 2010

£ 000

2010 NRE  26,341 International Affairs (776) Corporate Procurement (771) Human Resources 570 Other Variances 737

2011 NRE 26,101

Performance against Final Approved Budget

The results for the Department s performance against Final Approved Budget were:

Human Resources were under budget by £289,305. This was mainly due to over- achievement of income; training programmes spanning two financial years and delays in CSR related projects, as explained in the Service Analysis section below.

The £194,755 under spend in relation to the PECRS Pre-1987 Debt was planned and will be used to build a reserve for future payments on the debt.

Due to the timing of the Census and the planning of the Household Expenditure Survey, the Statistics Unit under spent by £185,861. The Census and the Household Expenditure Survey are conducted periodically and budgets are planned to be carried across years to meet this expenditure on a cyclical basis.

Other  variances  included  staff vacancies  of £169,967. Also, the  Economics Department has reduced expenditure on consultancy by undertaking more of its analytical work internally, saving £101,494.

Performance compared to 2010

International Affairs expenditure reduced by £776,485 compared to 2010 comprising the conclusion of Fiscal Stimulus projects (£581,483) and the transfers of International Finance function to the Economic Development Department (EDD) and Tax Policy Unit to Treasury and Resources (£100,082). The Developing Countries Conference also took place in 2010, which cost £79,178.

During 2011, the Procurement function was transferred to Treasury and Resources, resulting in a decrease in expenditure of £771,450 compared to 2010.

Expenditure within Human Resources increased by £570,276. This is due to the start of CSR related projects such as the Terms and Conditions review, and an increase in support for the reform of Health and Social Services.

Other variances compared to 2010 include the costs of the 2011 Census and the transfer from EDD of Regulation of Undertakings. Also, vacancies in the Policy Unit were held to create an under spend with the intention of funding cost pressures in International Affairs in 2012.

Reconciliation of 2011 Business Plan to Final Approved Budget

£ 000

Business Plan 2011  5,094 Carry Forwards 960 Additional Funding 565 Transfer from Capital 395 Transfer of Resources from T&R

- Business Plan 2011 17,387

- Carry forwards 738

- Additional and Reallocated Funding 1,542

- Transfer from Capital 154

Other Departmental Transfers  (428)

Final Approved Budget 26,407

Changes from Budget Voted in the Business Plan

In 2011 adjustments to the original budget voted in the Business Plan totalling £21.31 million were made.

The most notable budget movement was the transfer of the Resources Directorate from Treasury and Resources, totalling £19.82 million including carry forwards of £737,583, additional and reallocated funding in the year of £1,541,965 and a transfer from capital of £154,000. These amounts are included in the analysis below.

The Department carried forward from 2010 a total of £1.70 million to continue initiatives such as staff learning and developments needs (£209,672); funding of the 2011 Census  (£168,627)  and  Fiscal  Stimulus  projects  (£657,112). The  Fiscal  Stimulus Programme in the Department 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.

During the year, the Department received additional budget of £2.1 million. This was transfers from the CSR Restructuring Provision to fund the central CSR project team (£410,000), and to augment the Human Resources Department to conduct the Terms and Conditions Review, Organisational Development and support the reform of Health and Social Services (£893,000). VR payments were also part of this additional funding (£347,000).

Transfers to the value of £548,778 were made between capital and revenue. The majority of these related to IS projects, which were originally funded from the capital budget but were defined as revenue expenditure under UK GAAP.

Departmental transfers out totalled net £428,073 in the year. The most notable transfers were the transfers of Tax Policy Unit to Treasury and Resources (£525,705) and International  Finance  to  EDD  (£140,700), offset  by  the  transfer  of Regulation  of Undertakings from EDD (£160,200).

Other developments

From 1 January 2012, the accountability for the PECRS Pre-1987 Debt and PECRS Pre-1967 pension scheme was transferred to Treasury and Resources. This equated to a total budget transfer out of £4,328,700.

Service Analysis

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

Net Revenue Expenditure by Service Analysis

Other

24% ISD 40%

PECRS 14%

HR 22%

Underspend Breakdown

Human Resources

Policy Unit

PECRSS Pre-1987 Debt

Other Services

-400 -300 -200 -100 0

£ 000

Information Services

£2,012 (0%) Under budget  £142,759 (1.4%) more than 2010 This area provides business support and corporate infrastructure requirements across all departments. Expenditure was in line with budget.

The increased spend compared to 2010, was due to additional work to bring the PC estate up to date, additional data storage, and also upgrades to the network.

Human Resources

£289,305 (5%) Under budget  £570,276 (11.6%) more than 2010 The  Human  Resources  function  provides  HR  advice  and  support  to  all  States departments as well as setting central HR policies.

The  Department  incurred  an  under  spend  of £289,305. £63,111  (before  the apportionment of overheads) related to Learning and Development initiatives, such as the Modern Manager Programme which spans multiple years. Also, there was an over- achievement of income due to rechargeable services provided during the year.

Planned work on the Terms and Conditions and Actuarial Reviews was delayed, resulting in an under spend of £73,316. These reviews were funded from the CSR Restructuring Provision and will continue into 2012.

The Department has spent £570,276 more than in 2010 due to CSR work streams such as those mentioned above.

Policy Unit

£285,166 (9.2%) Under budget  £193,383 (7.3%) more than 2010 The Policy Unit is made up of the Chief Executive s Office, Emergency Planning, Communications Unit, Population Office and Economics.

The under spend against budget was primarily due to staff vacancies of £169,967. Also, the  Economics  Department  has  reduced  expenditure  on  consultancy  by undertaking more of its analytical work internally, saving £101,494.

The increase in spend compared to 2010 is primarily due to the transfer of Regulation of Undertakings from EDD (£160,200).

2011 2011 2011 2010 Business Final Approved Actual Actual

Plan Budget

£ 000 £ 000 £ 000 £ 000

1,413 2,028 180 180 320 480 425 425 2,338 3,113

731 900 1,154 1,229 861 940 10 10

- 1,338

- 4,239

- 3,067

- 1,213

- 284

- 10,141

- 3,013

- 1,048

- 522

- 570

- 605

- 5,758

- 3,836

- -

- 480

5,094 26,407 537 519 5,631 26,926

Policy Unit

Chief Executive s Office Communications Unit Population Office Economics

Statistics Statistics

International Affairs International Affairs

Law Drafting Department Law Drafting

Legislation Advisory Panel Legislation Advisory Panel

Information Services

Corporate Projects

Infrastructure

Business Support Groups Enterprise Support Group (Systems) Customer Service Centre

Human Resources

HR Business Partnering

HR Business Support

HR Learning and Development Employee Relations

Pensions (Other)

PECRS Pre-1987 debt PECRS Pre-1987 debt

Corporate Procurement Corporate Procurement

Corporate Resources Corporate Resources

Net Revenue Expenditure: BP Basis Depreciation

Net Revenue Expenditure: GAAP Basis

1,859 1,731 168 199 483 331 318 374 2,828 2,635

714 455 1,236 2,012 841 855 9 5

1,094 1,186 4,310 4,070 3,273 3,143 1,221 1,296 241 301 10,139 9,996

3,170 2,723 835 745 518 482 458 453 488 496 5,469 4,899

3,641 3,527

- 830

455 572 25,332 25,786 769 555 26,101 26,341

The 2011 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 included in the Business Plan as Non Cash Items .

The former Resources Directorate, made up of Information Services, Human Resources, PECRS Pre-1987 Debt and Corporate Resources, was transferred in from Treasury and Resources during the year.

Following the transfer of the International Finance Function to Economic Development and Economics to the Policy Unit, External Affairs, Economics and International Finance has been renamed as International Affairs.

Staff FTE

At the year end the Department employed the equivalent of 192 full time employees. This is a decrease of 17 (8.1%) from 2010, and is due to the transfer of the Procurement and Tax Policy functions to Treasury and Resources, and voluntary redundancies across the Department.

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

Major Income Streams:

£ 000

HR/IS support to Departments 907 Housing consent/Reg fees  186 Aerodrome licence fee 130 Other  452

Total 1,675

Expenditure Analysis

Other

Pension 4%

Finance

Costs Staff 14% 55%

Supplies and Services 27%

Income

£413,639 (32.8%) Surplus on budget  £105,586 (6.7%) more than 2010 The  largest  income  stream  relates  to  recharges  to  other  departments  from  the Information Services Department (ISD) (£690,351) and Human Resources (£216,963). The ISD recharges are accountable for the recovery of costs from other departments in relation to application support and software licences.

The Population Office also receives income in respect of Registration and Inspection fees (£75,967) and Housing Consent fees (£110,478).

The Directorate of Civil Aviation is administered through the Department and a fee of £130,000 was charged to the Jersey Airport in 2011 to cover these costs.

Other sources of income in 2011 include cost sharing with the States of Guernsey in relation to the marketing and promotion of the finance industry Fiscal Stimulus project (£77,940); Economic consultancy recharges to Economic Development (£60,000) and recharges to other departments for Communications and CSR related work (£94,713).

Income has increased since 2010 primarily due to the over-achievement of income in HR.

Staff Expenditure

£35,951 (0.2%) Over budget  £1,312,974 (8.1%) less than 2010 The minor variance on staff costs is mainly due to internal re-classification of budgets in Statistics to reflect spending patterns more accurately in relation to the Census. These intra-departmental budget movements are not shown in the Service Analysis. This is offset by staff vacancies throughout the year, as mentioned in previous sections.

The decrease in expenditure on 2010 was primarily due to the transfer of Procurement to Treasury and Resources and vacancies within the Chief Executive s Office.

Supplies and Services

£485,522 (6.2%) Under budget  £615,498 (9.2%) more than 2010 The main under spends against budget relate to the planned spending across years for the 2011 Census (£382,201) and also reduced consultancy costs in the Economics Department as more analytical work was conducted in-house (£101,494).

The increase in expenditure on 2010 is mainly due to the purchase of hardware within ISD totalling £751,725 as part of a planned PC refreshment programme.

Other Recognised Gains and Losses

The Department had no Other Recognised Gains and Losses in 2011.

Balance Sheet

The value of creditors has decreased by £636,744, due to more proactive handling of debts by the finance function.

Operating Cost Statement

2011 2011 2011 2010 Business Final Approved Actual Actual

Plan Budget

£ 000 £ 000 £ 000 £ 000

219  223 278  889

- 123

- 26

497  1,261

3,874  14,829 1,393  7,811 172  534 140  643

- 3

12  12

- 3,836

5,591  27,668 5,094  26,407 537 519 5,631  26,926

Duties, Fees, Fines and Penalties Sales of Services

Commission

Other Revenue

Total Revenue

Staff Expenditure

Supplies and Services Administrative Expenses Premises and Maintenance Other Operating Expenditure Grants and Subsidies Payments Pension Finance Costs

Total Expenditure

Net Revenue Expenditure: BP Basis Depreciation

Net Revenue Expenditure: GAAP Basis

188  172 1,270  1,272 124  123

93  2

1,675  1,569

14,866  16,178 7,325  6,710 516  469 600  424 17  5

42  42 3,641  3,527

27,007  27,355 25,332  25,786 769  555 26,101  26,341

No other gains or losses were recognised in the year.

Balance Sheet

2011 2010 Actual Actual

£ 000 £ 000

Tangible Fixed Assets 1,911 2,315 Total Fixed Assets 1,911 2,315

Current Assets

Debtors 341 422 Total Current Assets 341 422

Current Liabilities

Creditors (1,438) (2,075) Provisions for liabilities and charges - (779)

Total Current Liabilities (1,438) (2,854) Net Current Assets / (Liabilities) (1,097) (2,432) Total Assets Less Current Liabilities 814 (117) Net Assets / (Liabilities) 814 (117)

Reserves

Accumulated Revenue Reserves 814 (117) Total Reserves 814 (117)

Highlights:

Underspend of £4,200 (0.05%) against Final Approved Budget

Net Revenue Expenditure of £8,458,500, an increase of 4.1% on 2010

Key Results

Net Revenue Expenditure by Service Analysis

Work

Projects Administration Disaster 2% 1%

Fund

15%

Local Charities 1%

Grant Aid 81%

Reconciliation of 2011 Business Plan to Final Approved Budget

£ 000

Business Plan 2011  8,458 Carry Forwards 5

Final Approved Budget 8,463

Breakdown of Aid Given

Most of the expenditure in 2011 was by way of direct grants to 64 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 £10m and had to reject many worthy projects due to its budget limits. The Commission also received additional funding enquiries from over 50 other agencies.

Requests for emergency funding of disasters throughout the year remained constant. The Commission allocated slightly less than its budget to this area allocating the remaining funding to grant relief projects. As for previous years the majority of funding allocated was in respect of natural disasters with £270,000 allocated to IDP (Internally Displaced People) response.

Community Work Projects were organised for Nepal, Mongolia and Ghana involving 33 volunteers at a net cost inclusive of materials and equipment of £206,421.

A total of 12 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 £91,720 representing just over 1.0% of the total grant.

2011 2011 2011 2010 Business Final Approved Actual Actual

Plan Budget

£ 000 £ 000 £ 000 £ 000

6,876 6,881 Grant Aid 6,866 6,511 100 100 Local Charities 69 58 1,250 1,250 Disaster Fund 1,226 1,262 150 150 Work Projects 206 208

8,376 8,381 Total Aid Given 8,367 8,039

Operating Cost Statement

2011 2011 2011 2010 Business Final Approved Actual Actual

Plan Budget

£ 000 £ 000 £ 000 £ 000

68 68 4 4

10 10 8,376 8,381

8,458 8,463 8,458 8,463

Staff Expenditure 74 71 Supplies and Services 11 9 Administrative Expenses 7 8 Grants and Subsidies Payments 8,367 8,039

Total Expenditure 8,459 8,127 Net Revenue Expenditure: BP Basis 8,459 8,127

No other gains or losses were recognised during the year.

Balance Sheet

2011 2010 Actual Actual

£ 000 £ 000

Current Liabilities

Creditors (102) (276) Total Current Liabilities (102) (276) Net Current Liabilities (102) (276) Total Assets Less Current Liabilities (102) (276) Net Liabilities (102) (276)

Reserves

Accumulated Revenue Reserves (102) (276) Total Reserves (102) (276)

Highlights:

Underspend of £1,049,227 (5.4%) against Final Approved Budget

Net Revenue Expenditure of £18,266,373, an increase of 2.5% on 2010

Key Results

Key Variances from Budget

£ 000

Policy and Regulation 801 Enterprise and Business

Development 258 Other Variances (10)

Net Underspend 1,049

Key Variances from 2010

£ 000

2010 NRE  17,814 Policy and Regulation  163 Rural Support  (182) Skills  (96) Durrell and Harbours Stimulus 647 Other Variances (80)

2011 NRE 18,266

Reconciliation of 2011 Business Plan to Final Approved Budget

£ 000

Business Plan 2011  16,079 Carry Forwards 1,504 Additional Funding  450 Fiscal Stimulus  1,288 Other Transfers  (19)

Final Approved Budget 19,302

Performance against Final Approved Budget

Overall the Department had an underspend against budget of £1,049,227 (5.4%). Unexpected income received from Ofcom and the Digital Switchover (£714,984) and a delay in Finance Industry initiatives (£77,477) contributed to the underspend in the Policy and Regulation area.

The reported underspend in Enterprise and Business Development was mainly due to slippage of diversification projects (£111,292) together with staff transfers between service areas and vacancies (£151,474).

Performance compared to 2010

Including Fiscal Stimulus funding, the increase in Net Revenue Expenditure (NRE) from 2010 to 2011 (GAAP Basis) was £452,516.

Policy and Regulation had a net increase of £163,123 mainly due to an increase in Finance  Sector  Fiscal  Stimulus  funding  (£529,478)  as  per  the  Service  Analysis discussed later. There was also a reduction of Intellectual Property costs due to delays (£167,938) and a reduction of £100,000 in the grant paid to the Jersey Competition Regulatory Authority (JCRA).

The reduction in Rural Support is mainly due to the cessation of free school milk in 2011  (£170,092)  and  the  reduction  in  Skills  was  primarily  due  to  reduced  grant payments in 2011 (£84,822).

There  was  an  increase  of Fiscal  Stimulus  funding  for  Durrell  (£748,132)  and  a decrease in Fiscal Stimulus funding for Harbours (£100,770).

Changes from Budget Voted in the Business Plan

In  2011  adjustments  to  the  original  budget  voted  in  the  Business  Plan  totalling £3,222,951  were  made. This  amount  represents  additional  budget  allocation  of £450,000  from  the  Central  Reserve  for  the  purpose  of a  grant  to  the  Tourism Development Fund (TDF) with £2,069,955 Fiscal Stimulus funding (including £791,517 carried forward from 2010) and £712,200 of other carry forwards approved.

During 2011 the International Finance budget of £140,700 was transferred from the Chief Minister s Department (CMD) and the Regulation of Undertakings budget of £160,200 was transferred to CMD.

Service Analysis

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

Net Revenue Expenditure by Service Analysis

Other Service

Areas

17%

Enterprise Tourism

& Business 39%

Development

11%

Rural

Support Finance 12% Sector 21%

Underspend Breakdown

P

Dev

-800 -600 -400 -200 0

£ 000

Underspend Overspend

Policy Development

£742,805 (184.1%) Under budget  £309,593 less than 2010 The underspend and the reduction on 2010 are mainly due to additional income of £714,984 received from Ofcom in respect of Wireless Telegraphy Licence fees and the BBC for refund of Digital Switchover fees which were not in the Business Plan.

Delays in development of Intellectual Property legislation contributed to a reduction of costs compared with 2010 (£167,938) and there was a reduction of staff costs due to the delay in recruitment (£89,664).

Enterprise and Business Development

£258,404 (11.7%) Under budget  £32,065 (1.6%) less than 2010 The reported underspend in Enterprise and Business Development was mainly due to the slippage of diversification projects in Intellectual Property and Renewable Energy (£111,292)  together  with  staff transfer  between  service  areas  and  vacancies (£151,474).

Finance Sector

£77,477 (2.0%) Under budget  £760,894 (25.2%) more than 2010 The underspend is mainly due to the delay of the delivery of the Single European Payments Area Fiscal Stimulus project (£90,000) which will continue in 2012.

The transfer of International Finance from CMD contributed to the increased spend on 2010 (£138,556). There was also an increase in the grant to Jersey Finance Ltd (£502,500) and funding for the Depositor Compensation Scheme (£84,124).

Tourism (Marketing and TDF)

£19,022 (0.3%) Over budget   £44,924 (0.6%) less than 2010 The TDF received additional funding in 2011 (£650,000): additional budget allocation of £450,000 was received from the Central Reserve and £200,000 was from existing approvals.

The decrease in spend for the Tourism, Marketing and Promotion section (£694,924) was primarily due to extra funding received in 2010 from Fiscal Stimulus (£500,000) and the Jersey Hospitality Association (£50,000). There was also a saving in the Visitor service area due to CSR related voluntary redundancy (£101,478).

2011 2011 2011 2010 Business Final Approved Actual Actual

Plan Budget

£ 000 £ 000 £ 000 £ 000

1,924 2,199 Enterprise and Business Development

Tourism

6,036 6,523 Tourism, Marketing and Promotion1

- 650 Tourism Development Fund

Policy and Regulation

300 300 Competition Law

557 531 Consumer Affairs/Trading Standards 3,014 3,861 Finance Sector

119 119 Gambling Legislation and Control 452 269 Regulation of Undertakings

361 432 Rural Sector - Policy and Regulatory 648 404 Policy Development

Rural Support

968 965 Single Area Payment

778 777 Dairy Service Support2

144 65 General Support - Rural Economy 349 422 Rural Initiative - Rural Economy

Skills

429 663 Training and Workforce Development Skills

- - Harbours Stimulus Grant

1,122 Durrell Stimulus Grant

16,079 19,302 Net Revenue Expenditure: BP Basis3

14 14 Depreciation

16,093 19,316 Net Revenue Expenditure: GAAP Basis

1,941 1,973

6,542 7,237 650 -

300 413 534 549 3,784 3,023 119 201 265 421 452 375 (339) (30)

965 1,000 764 916 59 162 439 331

656 753

- 101

1,122 374

18,253 17,799 13 15 18,266 17,814

1. Tourism Marketing, Events, Research and Visitor Services have been combined.
2. DairyServicesSupport and Quality Milk Payments have been combined.
3. The 2011 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 included in the Business Plan as Non Cash Items .

Staff FTE

At the year end the department employed the equivalent of 59 full time employees. This is a decrease of 22 (27.2%) from 2010 and is due to the Fiscal Stimulus contracts ending in 2011 (10), the net transfer of staff to the Chief Minister s Department (6) and the transfer of 3 staff to the Gambling Commission. There was also a voluntary redundancy in 2010 and there are 3 vacancies at the end of 2011.

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

Major Income Streams:

£ 000

Ofcom/ Digital Switchover 715 Marketing and Advertising 467 Licence Fees  359 Other 562

Total 2,103

Expenditure Analysis

Other 3%

Staff 20%

Grants 43%

Supplies and Services 34%

Income

£82,637 (3.8%) Shortfall on budget  £434,983 (17.1%) less than 2010 The shortfall on budget is mainly due to lower Tourism advertising Income (£37,147) and a reduction in the rental received in the Business Incubator (£38,483).

The reduction of Income is mainly due to the transfer of licence fees to the Gambling Commission (£234,756) and a reduction of Tourism advertising and sponsorship Income (£158,427).

Staff Expenditure

£259,516 (6.1%) Under budget  £516,001 (11.4%) less than 2010 The underspend was mainly due to vacancies in the Policy Development and Jersey Enterprise sections during the year (£281,436).

There was a reduction of staff expenditure from 2010 which is due to the transfer of staff to  the  Gambling  Commission  (£288,283)  and  a  reduction  of contract  staff employed for the Fiscal Stimulus projects (£113,348). There were also vacancies during the year.

Grants

£290,250 (3.4%) Over budget  £1,228,420 (16.3%) more than 2010 The overspend is mainly due to an additional grant to Jersey Finance Ltd (£102,500), and  increase  in  grants  for  the  Rural  Initiative  Scheme  (£94,162)  and  Air  Route Development (£72,173).

The increase on 2010 is mainly due to additional grants made to Durrell (£748,132) as part  of the  Fiscal  Stimulus  and  an  increase  in  the  grant  to  Jersey  Finance  Ltd (£502,500). There was also an increase in Jersey Enterprise grants (£106,427) offset by a reduction in the grant to the JCRA.

Other Operating Expenses

£619,565 (100%) Under budget  £264,978 (100%) less than 2010 This budget is the Department s strategic budget and was transferred to various service areas in the EDD due to reprioritisation during the year including:

¥ £200,000 for extra funding to the TDF,

¥ £243,375 for the provision made for the likely realisation of guarantees provided to two companies as part of the Small Firms Loan Guarantee Scheme (SFLGS),

¥ £70,000 extra funding to Tourism for the Christmas TV campaign, and

¥ £80,000 to Tourism for Air Route Development.

The reduction on 2010 is due to a provision made for a doubtful debt in Tourism (£264,978).

Balance Sheet

The long term liability provision (£243,375) relates to a provision for the SFLGS.

The reduction in creditors (£4,452,195) is mainly due to the final payment of the

Operating Cost Statement

2011 2011 2011 2010 Business Final Approved Actual Actual

Plan Budget

£ 000 £ 000 £ 000 £ 000

391 387 170  170 694  694 3  3 65  65 152  867

1,475  2,186

4,107  4,287 5,846  7,377 234  231 546  520 407  619 6,414  8,454

- -

17,554  21,488 16,079  19,302 14  14 16,093  19,316

Duties, Fees, Fines and Penalties Sales of Goods

Sales of Services

Commission

Hire and Rentals

Other Revenue

Total Revenue

Staff Expenditure

Supplies and Services Administrative Expenses Premises and Maintenance Other Operating Expenditure Grants and Subsidies Payments Finance Costs

Total Expenditure

Net Revenue Expenditure: BP Basis Depreciation

Net Revenue Expenditure: GAAP Basis

359  604 129  97 628  809

5  3 23  14

959  1,011

2,103  2,538

4,027  4,543 6,904  7,258 293  307 387  446

- 265

8,744  7,516 1  2

20,356  20,337 18,253  17,799 13  15 18,266  17,814

No other gains or losses were recognised during the year.

Balance Sheet

2011 2010 Actual Actual

£ 000 £ 000

Tangible Fixed Assets 10  23 Total Fixed Assets 10  23

Current Assets

Stock and work in progress 113  102 Debtors 155  93 Cash at bank and in hand 4  3

Total Current Assets 272  198

Current Liabilities

Creditors (2,107) (6,559) Total Current Liabilities (2,107) (6,559) Net Current Assets / (Liabilities) (1,835) (6,361) Total Assets Less Current Liabilities (1,825) (6,338)

Long Term Liabilities

Provisions for liabilities and charges (243) - Total Long Term Liabilities (243) - Net Liabilities (2,068) (6,338) Accumulated Reserves (2,068)  (6,338) Total Reserves (2,068)  (6,338)

Highlights:

Underspend of £3,353,661 (3.1%) against Final Approved Budget

Net Revenue Expenditure of £103,561,235, an increase of 1.5% on 2010

Key Results

Key Variances from Budget

£ 000

Schools

Non Fee Paying 723 Fee Paying Provided 802

Higher Education 978 Special Education 442 Other Variances 408

Net Underspend 3,353

Key Variances from 2010

£ 000

2010 NRE  102,079 Pay Increases 640 Additional income (531) Premises costs 330 Grants and Subsidies

(including Fiscal Stimulus) 1,169 Other Variances (126)

2011 NRE 103,561

Performance against Final Approved Budget

The  underspend, amounting  to  3.1%  of Final  Approved  Budget, reflects  the arrangement for Delegated Financial Management that allows schools to carry forward funds within defined financial parameters to accommodate the difference between the academic and financial years. As annual school funding is determined largely by the number of pupils at the census date in the previous September, variations in the numbers leaving and joining each new academic year can have a significant effect on the budget. Allowing schools to carry forward surpluses and deficits enables them to manage these changes over a longer period.

Budgeting for Higher Education is dependent on many variables including university applications, course  choices, parental  income, fee  levels  and  income  thresholds (which were last updated in 2001). Given the current uncertainty over UK fees the Department has been prudent in establishing a contingency as a buffer against future fluctuations. This service area has traditionally been treated as ring-fenced and the Department will recommend that the underspend this year be carried forward for this purpose in 2012.

Special  Education  encompasses  special  schools, the  Department s  central  and devolved provisions for pupils with special educational needs in mainstream schools and specialist educational placements off-Island. Expenditure in this area can change significantly from year to year depending on the needs of the students and the provision being made.

Miscellaneous underspends mainly relate to funds set aside to meet the uncertain cost of teachers  maternity  leave  and  sickness  absence  and  savings  that  have  been accrued in order to meet the future funding pressures that the Department is facing, including the impact of the changes to teachers terms and conditions and temporary reductions in the funding allocated to the ICT strategy in the 2012 Annual Business Plan.

Performance compared to 2010

The increase in spend from 2010 to 2011 was 1.5%. The variance is due to a number of factors: the impact of pay awards and non-staff inflation; the impact of CSR savings not subject to P72/2011; funding allocated from Fiscal Stimulus and Restructuring funds to provide grants to two Non Provided Schools for premises related expenditure; school and other fee increases resulted in an increase in income of just over £0.5 million; additional  funding  provided  to  the  Jersey  Heritage  Trust  to  facilitate improvements to amenities and displays at the various sites maintained by the Trust.

Reconciliation of 2011 Business Plan to Final Approved Budget

£ 000

Business Plan 2011  100,157 Carry Forwards 2,628 Additional Funding from

Central Reserves 500 CSR Invest to Save 616 Fiscal Stimulus  2,717 CSR Early Savings  (104) Other Transfers (2) Transfer from Capital 739 Transfer to Capital (GAAP) (464)

Final Approved Budget 106,787

Changes from Budget Voted in the Business Plan

In  2011  adjustments  to  the  original  budget  voted  in  the  Business  Plan  totalling £6.63 million were made. £2.6 million was carried forward from 2010 and an additional sum of £0.5 million was transferred to the Department in accordance with the revised teachers terms and conditions agreed as part of the 2010/11 pay negotiations. Fiscal Stimulus funding totalling £2.7 million was transferred to support the Advance to Work and Advance Plus schemes, Careers Team strengthening, additional student numbers at Highlands College and a new Special Needs unit at Beaulieu School. Transfers from capital to revenue totalling £739,300 were made to comply with GAAP accounting rules on the treatment of expenditure on the Department s ICT and Healthy Eating in Schools strategies.

Transfers from revenue to capital (£39,725) and Jersey Property Holdings (£424,100) were also made to comply with GAAP rules on capital expenditure for projects at Highlands College, Victoria College and St Clement s School. Further funding was provided for CSR support and a grant to enable St George s school to purchase its buildings and deliver a CSR saving from 2012. Savings identified for 2012 in the 2011 Annual Business Plan were delivered earlier than expected and were relinquished.

Other developments

Funding for Higher Education grants to students is an area of the budget that is extremely difficult to predict due to a number of factors including the number of students applying for university places, parental incomes, course choice, university fee charges and course duration. UK Government changes to university funding and fees have added further uncertainty to the already volatile nature of this area of the budget and a working group has been established to formulate proposals for future grant and loan schemes.

Fiscal Stimulus funding is currently provided to the Department to maintain a number of projects such as Advance to Work, Advance Plus, an enhanced careers advice and guidance service and to fund additional student numbers at Highlands College. A funding request has been made for the 2012/13 academic year and requests will be submitted for a long term solution to ensure the future viability of these successful schemes.

The Department continues to work on establishing CSR savings in the light of P72/2011, however there are significant challenges in meeting the full savings of £11.1 million by 2013.

The consultation on the Future of Education Learning for Tomorrow s World  - closed in early December 2011 and the outcome from the consultation exercise as well as other research will form the basis of future reporting to the States in 2012 and beyond.

Service Analysis

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

Service Analysis

Other

Service Areas

32% NFP Primary

23%

Further and Vocational 9%

Higher

Education

8% NFP FP Provided  Secondary

Schools 23% 5%

Underspend Breakdown

-1500 -1000 -500 0 500

£ 000

Underspend Overspend

Non Fee Paying Primary Education

£801,691 (3.3%) Under budget  £506,557 (2.2%) more than 2010 All schools are formula funded for a financial year on the basis of pupil numbers, with a fixed element applied to meet other costs. Schools operate under the Delegated Financial Management scheme which allows some year end flexibility to manage the differences  in  the  academic  and  financial  years  and  the  uncertainty  over  pupil numbers and future funding. Additional funding was provided to Primary Schools in 2011 as a result of increased non-contact time negotiated as part of the 2010/11 pay deal for teaching staff.

Non Fee Paying Secondary Education

£144,471 (0.6%) Over budget  £90,323 (0.4%) more than 2010 The  same  funding  and  Delegated  Financial  Management  scheme  applies  to Secondary Schools and they are able to carry forward negative as well as positive amounts  to  future  years  in  order  to  manage  the  financial  pressures  that  are experienced as pupil numbers change. 3 of the 5 secondary schools were overspent at the end of 2011, and have made changes in the Autumn term 2011 to reduce expenditure as pupil numbers fall.

Fee Paying Provided Schools

£801,577 (12.9%) Under budget  £154,375 (2.9%) more than 2010 The budget allocation to Fee Paying Schools is also established on the same basis as Non Fee Paying Schools although at a lower rate to reflect the contribution made by fees to the running of the school. Underspends have occurred through prudent financial management in order to both enable capital schemes to be progressed and provide some flexibility into the future.

Further, Vocational and Tertiary Education

£75,816 (0.8%) Under budget  £189,587 (2.0%) more than 2010 Highlands College received additional funding of £948,700 (approx 10% of final expenditure) during the year from Fiscal Stimulus to enable additional students to participate in vocational courses. A small underspend relates to timing differences on materials expenditure.

Higher Education

£977,181 (10.4%) Under budget  £266,164 (3.0%) less than 2010 The Department carried forward £661,000 from 2010 to supplement the budget in this area. However, a renegotiation of fees from Autumn 2011 and slight changes in the student  profile  resulted  in  an  increased  underspend  compared  to  2010. The Department  proposes  to  carry  this  forward  again  to  mitigate  against  increased pressures in the budget following changes to the UK university fee structure and the likelihood of increased expenditure as a result of parental incomes being reduced by the recent economic situation.

2011 2011 2011 2010 Business Final Approved Actual Actual

Plan Budget

£ 000 £ 000 £ 000 £ 000

Schools and Colleges

Non Fee Paying Provided Schools

3,683 3,676 Pre-School Education 3,610 3,462 23,468 24,654 Primary Education 23,852 23,346 24,067 23,776 Secondary Education 23,921 23,830 Fee Paying Schools

5,686 6,229 Provided Schools 5,427 5,273 5,133 6,140 Non Provided Schools 6,132 5,076 8,063 8,147 Special Educational Needs and Special Schools 7,707 7,850 758 766 Instrumental Music Service 757 742

Culture and Lifelong Learning

8,827 9,733 Further, Vocational and Tertiary Education 9,657 9,468 1,717 1,710 Public Libraries 1,606 1,634 1,477 1,464 Youth Service 1,442 1,516 8,676 9,380 Higher Education (Student Finance) 8,402 8,669 689 1,859 Careers Jersey 1,853 1,492

Child Care Support

199 199 Child Care Registration 201 191 176 177 Jersey Child Care Trust 180 177 2,496 2,507 Heritage (Grant to the JHT) 2,504 2,731 1,798 1,814 Culture (including Grant to the JAT) 1,772 1,795

Sport and Leisure

1,928 1,864 Sports Centres 1,795 2,026 1,365 1,419 Playing Fields and Schools Sports 1,290 1,411

609 633 Sport Development 576 704 329 332 Grants and Advisory Council 358 353 208 208 Activity Clubs and Outdoor Education 177 208 100 100 Minor Capital Expenditure 215 -

Less : Savings to be identified following

(1,295) -  outcome of major reviews -  - 100,157 106,787 Net Revenue Expenditure: BP Basis1 103,434 101,954

176 177 Depreciation 125 120

- -  Asset Disposal Loss 2 5

100,333 106,964 Net Revenue Expenditure: GAAP Basis 103,561 102,079

1. The 2011 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 included in the Business Plan as Non Cash Items .

Staff FTE

At the year end the department employed the equivalent of 1,533 full time employees. This is an increase of 12 (0.8%) from 2010, and is due to additional staff delivering Primary and Pre School Education as a result of the increased non- contact time for teachers agreed as part of the 2010/11 pay negotiations.

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

Major Income Streams:

£ 000

Fee Paying Provided Schools  8,996 Highlands College 3,022 Sport Division  4,154 Other 1,603

Total 17,775

Expenditure Analysis

Social Benefits

Other 7% 7%

Grants and Subsidies 11%

Supplies Staff

and 67% Services

8%

Income

£706,626 (4.1%) Surplus on budget  £531,408 (3.1%) more than 2010 Additional income compared to 2010 was generated primarily through Fee Paying Provided Schools (up 3.7%) and Highlands College student, employer and adult education fee income (up 11%) partly as a result of increased students and partly as a result of fee increases and reviews.

Sport Division income was slightly down on 2010 as a result of a revised method of accounting for agency income on shows and events (now excluded).

Income budgets in the Fee Paying Provided Schools were reduced (funded from carry forwards) to reflect the effect of P72/2011 and the proposed CSR changes to funding, as shown by the change between the Business Plan figures (shown after allocating the £1,295,000 savings not identified in the 2011 Annual Business Plan) and the Final Approved Budget.

Staff Expenditure

£1,136,124 (1.4%) Under budget  £639,855 (0.8%) more than 2010 Primary Schools carried forward funds to 2011 to meet unforeseen staff absence costs and a proposed CSR saving by reducing the hours delivered in States nurseries was changed in scope. As a result, this area ended the year with a £475,000 underspend on staff budget. Other underspends included the remaining schools and colleges with a £136,500 underspend on staff due to timing of recruitments and an underspend on the budget for staff maternity leave and long-term sickness absence of £299,000.

Grants and Subsidies

£74,474 (0.6%) Under budget  £1,168,745 (9.9%) more than 2010 Additional Grants were provided to Non Provided Schools in relation to Fiscal Stimulus projects (£510,500) and Invest to Save CSR initiatives (£500,000).

Supplies and Services

£778,473 (7.5%) Under budget  £108,503 (1.1%) less than 2010 As a result of a change to the method of accounting for Shows and Events agency income and expenditure, payments to the promoters of shows are now reflected as reduced income rather than expenditure. School underspends from 2010 are generally included within this area and amounts remaining unspent at the end of 2011 may be carried forward to 2012.

Other Recognised Gains and Losses

The Department had no other recognised gains and losses in 2011.

Balance Sheet

The  Debtors  shown  in  the  Balance  Sheet  mainly  represent  increased  levels  of prepayments at the end of 2011 in relation to Non Provided Schools and other grant funded organisations

Operating Cost Statement

2011 2011 2011 2010 Business Final Approved Actual Actual

Plan Budget

£ 000 £ 000 £ 000 £ 000

21 21 339 239 15,888 15,633 19 19 832 832 326 326

17,425 17,070

8,300 8,961 81,323 82,906 8,414 10,329 756 1,182 7,118 7,262 94 94 11,561 13,107 16 16

117,582 123,857 100,157 106,787

176 176

- -

100,333 106,964

Duties, Fees, Fines and Penalties Sales of Goods

Sales of Services

Commission

Hire and Rentals

Other Revenue

Total Revenue

Social Benefit Payments

Staff Expenditure

Supplies and Services Administrative Expenses Premises and Maintenance Other Operating Expenditure Grants and Subsidies Payments Finance Costs

Total Expenditure

Net Revenue Expenditure: BP Basis

Depreciation

Asset Disposal Loss

Net Revenue Expenditure: GAAP Basis

23 24 476 457 15,949 15,518 58 22 893 861 376 362

17,775 17,244

8,022 8,201 81,769 81,129 9,550 9,659 1,212 1,029 7,538 7,208 62 86 13,032 11,863 24 23

121,209 119,198 103,434 101,954

125 120 2 5

103,561 102,079

No other gains or losses were recognised during the year.

Balance Sheet

2011 2010 Actual Actual

£ 000 £ 000

Tangible Fixed Assets 1,729 1,690 Total Fixed Assets 1,729 1,690

Current Assets

Debtors and Prepayments 5,025 3,600 Cash at Bank and in Hand 55 50

Total Current Assets 5,080 3,650

Current Liabilities

Creditors (4,970) (4,487) Provisions for liabilities and charges -  (204)

Total Current Liabilities (4,970) (4,691) Net Current Assets / (Liabilities) 110 (1,041) Net Assets 1,839 649

Reserves

Accumulated Revenue Reserves 1070 (128) Donated Asset Reserve 769 777

Total Reserves 1,839 649

Highlights:

Underspend of £280,608 (4.1%) against Final Approved Budget

Net Revenue Expenditure of £6,738,751, a decrease of 9.4% on 2010

Key Results

Key Variances from Budget

£ 000

Net planning fee income 248 Staff savings  77 Restructuring project delays  74 Planning appeals  (187) Other income  43 Other variances  26

Net Underspend 281 Key Variances from 2010

£ 000

2010 NRE  7,440 Planning and building fees  (360) VR payments 2010  (502) VR payments 2011  224 Depreciation  (84) Other Variances 20  

2011 NRE 6,738

Reconciliation of 2011 Business Plan to Final Approved Budget

£ 000

Business Plan 2011  6,749 Carry Forwards 433 CSR Invest to Save  85 CSR Savings - VR  (224) Transfer to Capital (122)

Final Approved Budget 6,921

Performance against Final Approved Budget

Overall the Department had an underspend against budget of £280,608 (4.1%). This was made up of net additional planning fee income, including £247,730 from some large applications, offset by increased costs relating to temporary planning officers. The rest of the underspend is due to additional income of £42,639, staff savings due to  unplanned  sickness  and  other  variances  (£77,302), planning  appeal  costs  of £187,495 and delays in restructuring projects under the CSR (£74,000).

Performance compared to 2010

The decrease in Net Revenue Expenditure (NRE) from 2010 to 2011 was £701,973 (9.4%); £310,156 related to additional planning fee income, and £50,275 to additional building fee income as a result of the 2.5% fee increase. There was also a reduction in staff expenditure due to VR payments made in 2010 of £501,881, as part of the CSR which also produced staff savings in 2011. £223,947 relates to 2012 CSR savings taken early during 2011.

Changes from Budget Voted in the Business Plan

In 2011 adjustments to the original budget voted in the Business Plan included CSR savings  for  2012  taken  early  (£223,947), less  restructuring  monies  (£85,000)  for projects within Planning and the Meteorological Office. Carry forwards from 2010 included  £181,772  for  Energy  Efficiency  grants  and  £251,568  for  the  Process Improvement Programme (PIP), of which £122,750 related to asset purchase, so was transferred from revenue to capital, in accordance with UK GAAP.

Other Developments

2011 has seen continued provision of Energy Efficiency grants, the establishment of the Eco-Active brand, and adoption of the Island Plan and the North of Town Masterplan. Work has already started and will continue on planning improvements, including an online application facility to streamline the planning process, making it faster and easier for the Department s customers. The Department s role as a Waste Regulator has been developing, with the issue of 3 waste management licenses, 9 notifications for transfrontier shipments of waste and 7 registrations for hazardous waste carriers.

In addition, the Department has exceeded its 2011 target of £208,000 of savings by bringing forward VR savings of £223,947 and is committed to further savings of £577,000 over the next 2 years as part of the CSR and an additional £300,000 in fees for User Pays.

2012 will see the implementation of the Rural Economy Strategy; increased concentration on supplementary planning guidance and masterplanning with the continued expansion of Eco-Active across the States. There is a continued risk that development and building control income may be affected as a result of the downturn in the construction industry.

Service Analysis

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

Planning and Building Division

Service Analysis £297,310 (18.9%) Under budget  £599,148 (32.0%) less than 2010 Planning The majority of the underspend from budget and reduction from 2010 is due to

and Building additional planning fee income. There have also been delays in restructuring projects 19%

to 2012.

In addition, there were lower staff costs than 2010 due to VR payments made in 2010, and smaller appeal payments made in 2011, £91,875 less than 2010.

Environment

81% Development control continues to focus on implementing service improvements and

has commenced projects on online applications which will be available in 2012.

Environment Division

Underspend Breakdown £16,686 (0.3%) Over budget   £21,773 (0.4%) less than 2010

The  additional  spend  over  budget  relates  to  additional  grant  allocations  for  the Countryside Renewal Scheme during the year (£116,395) offset in part by savings on administrative functions and lower consultancy spend within the Division.

The reduction over 2010 relates to further staff savings in the Environment Division and mem nt

VRs taken in 2010. These were partly offset by an increase in grant expenditure.

-400 -300 -200 -100 0 100

£ 000

Underspend Overspend

2011 2011 2011 2010 Business Final Approved Actual Actual

Plan Budget

£ 000 £ 000 £ 000 £ 000

1,481 1,572 5,268 5,349

6,749 6,921

135 135

- -

6,884 7,056

Planning and Building Division  1,275 1,874 Environment Division  5,365 5,387

Net Revenue Expenditure: BP Basis1 6,640 7,261 Depreciation 98 182

Asset Disposal (Gain)/Loss - (3) Net Revenue Expenditure: GAAP Basis 6,738 7,440

1. The 2011 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 included in the Business Plan as Non Cash Items .

Staff FTE

At the year end the department employed the equivalent of 108.3 full time employees. This is a decrease of 2.7 (2.4%) from 2010, and is due to vacancies at year end for 2 new trainee forecasters in the Meteorological Department and other parts of posts.

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

Major Income Streams:

£ 000

Duties, Fees, Fines and Penalties  3,058 Sales of Services 742  Other 297

Total 4,097

Expenditure Analysis

Other Supplies 8%

and

Services

13%

Grants Staff 14% 65%

Income

£453,792 (12.5%) Surplus on budget   £359,712 (9.6%) more than 2010 Duties, Fees, Fines and Penalties includes additional planning application fees of £310,156 and additional building application fees of £50,275 from 2010. This was due to large fees during 2011 from larger than usual applications. Receipt of income is subject to fluctuations based on market conditions.

Staff Expenditure

£21,336 (0.3%) Over budget  £423,236 (5.7%) less than 2010 Decreased staff expenditure year on year relates to VR payments being paid out during 2010 and VR savings during 2011. This has been offset in part by additional contract staff employed to assist with planning application work, hence the excess spend on budgets.

Supplies and Services

£251,471 (15.4%) Under budget   £257,911 (15.7%) less than 2010 The reduction in spend on supplies and services relates to one off expenditure in Policy and Projects during 2010 when the revised Island Plan was presented to the States and reduced consultancy spend in several areas of the Environment Division due to reallocation of funding to grants. Additional underspend against budgets is due to a reduction in other areas of expenditure to cover appeals.

Other Operating Expenditure

£196,985 unbudgeted  £82,825 (29.6%) less than 2010 This includes planning appeal claims, ex-gratia payments and resultant legal fees. Budget is not allocated for these claims as they cannot be predicted. In 2011 there were smaller settlements in comparison to 2010.

Grants and Subsidies Payments

£102,277 (7.4%) Over budget   £452,410 (43.6%) more than in 2010 In 2011, the Countryside Renewal Scheme focused on the completion of the slurry storage  construction  program, with  18  stores  completed  to  date. Longer  term components (hedgerows, organic production) also received grant monies. Total CRS spend during 2011 was £486,387.

The Energy Efficiency Service has received 1,238 applications for assistance from low income and vulnerable islanders to date. Also, the Community Buildings Programme is working on projects with 21 local charities and not-for-profit organisations. The service paid out a total of £978,110 in grants during 2011.

Balance Sheet

The provision made in 2011 relates to a planning appeal against the department for an estimated £100,000. Creditors include income which has been deferred to match work completed  on  planning  and  building  applications. Debtors  have  decreased substantially from 2010 primarily due to additional applications as a result of building by-law changes in 2010.

Operating Cost Statement

2011 2011 2011 2010 Business Final Approved Actual Actual

Plan Budget

£ 000 £ 000 £ 000 £ 000

2,730 2,730 28 28 743 743 143 143

3,644 3,644

7,258 7,034 1,419 1,633 144 144 367 367

- -

1,205 1,387

10,393 10,565 6,749 6,921

135 135

- -

6,884 7,056

Duties, Fees, Fines and Penalties[1] Sales of Goods

Sales of Services

Other Revenue

Total Revenue

Staff Expenditure

Supplies and Services Administrative Expenses Premises and Maintenance Other Operating Expenditure Grants and Subsidies Payments

Total Expenditure

Net Revenue Expenditure: BP Basis

Depreciation

Asset Disposal (Gain) / Loss

Net Revenue Expenditure: GAAP Basis

3,058 2,693 25 17 742 746 272 282

4,097 3,738

7,055 7,478 1,382 1,640 121 121 493 443 197 280 1,489 1,037

10,737 10,999 6,640 7,261

98 182

- (3)

6,738 7,440

Balance Sheet

2011 2010 Actual Actual

£ 000 £ 000

Tangible Fixed Assets 1,025 894 Total Fixed Assets 1,025 894

Current Assets

Debtors 143 705 Total Current Assets 143 705

Current Liabilities

Creditors (4,392) (4,241) Provisions for liabilities and charges (100) (502)

Total Current Liabilities (4,492) (4,743) Net Current Liabilities (4,349) (4,038) Total Assets less Current Liabilities (3,324) (3,144) Net Liabilities (3,324) (3,144)

Reserves

Accumulated Revenue Reserves (3,324) (3,144) Total Reserves (3,324) (3,144)

Highlights:

Underspend of £1,318,492 (0.8%) against Final Approved Budget

Net Revenue Expenditure of £172,268,117, an increase of 1.0% on 2010

Key Results

Key Variances from Budget

£ 000

Operational services 350 Equipment purchases 157 Stock write back 521 PMO team 290

Net Underspend 1,318

Key Variances from 2010

£ 000

2010 NRE  170,507 2011 Business Plan 8,247 2010 Carry Forward 3,527 CSR Savings (2,770) Increased income (6,675) 2011 Underspend (1,319) Other variances 751

2011 NRE 172,268

Performance against Final Approved Budget

The out-turn against budget for 2011 is a £1.3 million underspend. This comprises four main elements.

The net operational underspend against service budgets is less than £0.4 million representing 0.2% of the Department s net revenue budget. In addition, a small underspend of less than £0.2 million has been recorded against equipment purchase budgets relating entirely to the timing of equipment delivery dates over year end. This spend is fully committed and the equipment is due to be received in early 2012.

The majority of the £1.3 million underspend was generated by non operational issues. As a result of the life of Tamiflu drugs being extended by the manufacturer, stocks previously written off were reinstated. This resulted in a net £0.5 million credit to the financial position.

The  Department s  CSR  target  of £2.8m  for  the  year  was  achieved. This  was successfully  managed  through  a  dedicated  Project  Management  Office  (PMO). Funding  for  this  was  provided  centrally  from  restructuring  funds. The  phased implementation of the PMO has resulted in an underspend in 2011 of £0.3 million.

Whilst the Department achieved a net underspend for the year, this was largely driven by non operational reasons. The operational underspend equating to just one fifth of one percent of the overall budget demonstrates that these services continue to face significant financial pressures.

Performance compared to 2010

Net Revenue Expenditure (NRE) has increased by £1.8 million in 2011 from 2010. The main drivers being increased funding provided in the 2011 Business Plan and a non- recurrent carry forward from 2010, offset by the delivery of CSR savings and income from the Health Insurance Fund (HIF).

The 2011 Business Plan provided funding for a number of issues, notably investment in endoscopy services, the Integrated Care Record (ICR) programme, medical staffing and the hospital wards. This funding is reflected in the increased level of spend in 2011 compared to 2010.

The carry forward funded the provision of hospital, community and social services, additional equipment in the Hospital, the establishment of the PMO and strategic planning for the delivery of health and social care in Jersey.

The Department successfully delivered its CSR target of £2.8 million for 2011; this has been removed from operational budgets.

Reconciliation of 2011 Business Plan to Final Approved Budget

£ 000

Business Plan 2011 167,639 2010 Carry Forward 3,527 Additional Funding  497 Fiscal Stimulus Funding 96 Transfer from Capital 474 Other Transfers (778)

Final Approved Budget 171,455

Changes from Budget Voted in the Business Plan

The Department s net budget has increased by £3.8 million compared to the 2011 Business Plan. The main increase was the non-recurring carry forward from 2010, described above. The remainder of the changes are described below.

Additional funding Voted by the States under P17/2009 (Williamson Funding) totalling £0.5 million relates to the refurbishment of Brig-Y-Don which was re-opened in the summer of 2011 providing accommodation for children.

Fiscal Stimulus money of £0.1 million was made available to the Department for the refurbishment of Rosewood House providing elderly dementia services.

The Department went live with the ICR project in August 2011. A budget transfer of £0.5 million from capital to revenue was required to ensure compliance with UK GAAP accounting standards.

Departmental transfers of £0.8 million are made up of a number of transfers to and from other departments. The largest of these was a transfer of legal fees budget to Treasury and Resources Contingency.

Other developments

In May 2011 the Minister published a public consultation green paper entitled  Caring for each other, Caring for ourselves considering how services should be provided through the challenging demographic changes over the next 30 years. The outcome of the public response was overwhelmingly in favour of a new model for health and social care in Jersey where people get the right care at the right time by the right staff.

The Minister, in consultation with the Council of Ministers, intends to bring reforms forward as a white paper during 2012.

Net Revenue Expenditure by Service Analysis

Public

Health Community  Services

& Social  1% Services

38%

Hospital Services 61%

Underspend Breakdown

Com

S Se

-1000 -800 -600 -400 -200 200

£ 000

Underspend Overspend

Hospital Services

£1,111 (0.0%) Over budget  £3,293,460(3.3%) more than 2010 Hospital Services net expenditure has increased by £3.3 million and was in line with budget.

The 2011 Business Plan provided for significant investment in key areas, particularly in endoscopy services, middle grade doctor contracts, medical staffing and nursing. In addition, spend on the provision of specialist and emergency care in UK hospitals and drugs also increased significantly. These increases are in part offset by increased income from radiology services, the stock write back, referred to above and the impact of 2010 voluntary redundancies.

The increased spend in Theatres and Ambulatory care in 2011 reflects the investments that were anticipated in the business planning process.

The  overall  out  turn  was  in  line  with  the  original  budget. The  out  turn  included significant  growth  in  the  volume  and  cost  of UK  specialist  treatments  which  is expected to continue into 2012; offset by the timing of equipment purchases and stock write back referred to above.

The  financial  pressures  surrounding  the  provision  of hospital  services  are  well documented in the Department s Green Paper and are reflected in the 2012 Business Plan.

Community and Social Services

£833,276 (1.3%) Under budget  £225,084 (0.3%) more than 2010 Community and Social Services net expenditure has increased by £0.2 million and was £0.8 million under the original budget.

There has been significant investment in Children s and Therapy services following the Williamson recommendations. In addition to inflationary pressures, Adult services budgets have been subject to significant pressure during 2011 as a result of a dramatic increase in high cost placements, often in the UK. The cost of specialist UK placements for clients with special needs and mental health issues has increased by 17% in 2011 alone. This will be a major financial pressure for these services in 2012.

The increase in expenditure compared to 2010 was offset, in part, by income from the HIF relating to the provision of primary care services provided by the Department.

The variance against budget reflects the phasing of investment in services for children, reflected in Children s and Therapy Services. This is offset by the increased level of spend on Adult Services, particularly relating to the increasing number of individual care packages and mental health placements.

Public Health

£486,365 (16.4%) Under budget  £2,482,276 (50.0%) less than 2010 Public Health net expenditure has decreased by £2.5 million in 2011, largely arising from primary care clinical services being funded through the HIF income for the first time in 2011. A further £0.5 million decrease in actual expenditure reflects the impact of VRs in 2010.

The variance against the original budget reflects VRs in 2010 and vacancies in established posts not planned at budget setting.

2011 2010 Business 2011 2011 Actual

Plan Final Approved Actual (Restated)1 (Restated)1 Budget

£ 000 £ 000 £ 000 £ 000

Public Health Services

2,207 1,194 Public Health Clinical Services  1,007 3,037 1,710 1,778 Public Health Strategies  1,479 1,931

3,917 2,972 2,486 4,968