Budget 2004 - amendment

STATES OF JERSEY

r

BUDGET 2004: AMENDMENT

Lodged au Greffe on 18th November 2003 by the Deputy of St. John

STATES GREFFE

BUDGET 2004: AMENDMENT ____________

PAGE 47 –

1. To reduce the estimate of revenue expenditure of the Employment and Social Security Committee from £80,401,400 to £79,401,400 by subtracting –

£ 1 m illion from the amount set aside for the Disability Transport Allowance.

PAGE 68

2. To increase the estimate of capital expenditure of the Environment and Public Services Committee from £7,265,000 to £8,265,000 by adding –

£ 1 m illion to the amount set aside for Foul Sewer Reconstruction and Extensions.

DEPUTY OF ST. JOHN

REPORT

Members will recall that no new monies were voted for foul sewer extension in the 2003 budget as members were told that existing votes had to be used up, but assurances were given that money would be forthcoming to assist with future mains drain extension if there was a shortfall.

In the 2004 budget book, yet again, no money is proposed for mains drains extension but several lines exist on page 22 which read as follows –

" T w o user pays' proposals were put forward and accepted by the Presidents for implementation in 2004. The Sewerage Charge, following the States debate on the principle of such charges, has been deferred until 2005 but the introduction of a mechanism to cover the cost of the current subsidy on scrap metal disposal is incorporated in the budget."

As the user pays policy has been debated by the States, members will recall that P.63/2003 of Senator Syvret was adopted on 24th June 2003, arising from which the States agreed that any new charge had to be brought to the Assembly. I do not see how funding can reasonably be raised for 2004 by this means, as the Environment and Public Services Committee has not brought its proposals to the Assembly as were proposed. In the 2003 budget book, page  28, it reads –

"I n a ddition, the department is taking a pro-active position in identifying the types of charges that it makes

in order that the user-pays' principle can be followed wherever possible. This may lead to new charges for waste disposal being introduced as well as the implementation of a sewerage charge, which is being considered. It is anticipated that these charges will take effect late in 2003 or early in 2004."

To fund my proposals, I propose to use money from the Employment and Social Security Committee from the vote set aside for the Disability Transport Allowance. Members will know that over recent years serious concerns have been raised by members that these funds are not in all part being used for the purpose originally envisaged: this is acknowledged by the Employment and Social Security Committee in the year budget book, page 46 –

" D is ability Transport Allowance to be held at current levels, pending proposals to narrow future entitlement and direct resources more effectively",

and members will note I have only asked for less than one-sixth, thereby allowing sufficient funds to the Employment and Social Security Committee to continue with its allowance to these people out in the community with real transport needs, but will concentrate the Committee's mind to deal with some of those people who are in full-time care who claim this allowance but in fact do not use disabled transport.

There are no additional manpower implications for the States arising from this proposition.

APPENDIX

EXTRACT FROM:

ANTI-INFLATION STRATEGY (P.125/2000)

(Lodged au Greffe on 4th July 2000 by the Finance and Economics Committee)

(vi) A  ction on States charges

21. F o r many years the Finance and Economics Committee has sought,with limited success, to contain increases in States charges to 2.5per cent perannum. With the adoption ofan explicit 2.5per cent inflation target, together with the need to damp down inflationary expectations and focus more on efficiency savings, this objective nowbecomes an imperative. TheFinance and EconomicsCommittee has therefore accepted the view of the Task Force that the 2.5 per cent limitmustnowbemet as a matter of  course,  and a  Code  of Direction  will  accordingly  be issued  presently.  This is covered  by proposition  (d).
22. It is recognised that there maybe legitimate andcompelling instances whereanincreaseabove 2.5 per cent is desirable. Thesemaybe,forexample,for user pays' reasons (i.e. if one particular groupreceiving a valuable service from the States is charged belowcost, then that groupissimplybeing subsidised by taxpayers generally) or in pursuitof health or environmental objectives, wherethepurposeof raising a charge may be to signal the relative undesirability of a given activity. So the CodeofDirection will allow for increases above 2.5 per cent in exceptionally compelling circumstances, but any such cases will require the Finance and Economics Committee'spriorapproval.TheCommittee is anxious to emphasise that this will be an exceptionalprocedure and will notbean escape route' for departments to increase charges (whichmaywellbe monopolistic) in excess of inflation when perhaps more attention should be given toreducingcosts thus overriding the need to increase charges inthe first place.

EXTRACT FROM:

FISCAL REVIEW WORKING GROUP: SECOND REPORT (R.C.37/99) (Presented to the States on 28th September 1999 by the Finance and Economics Committee)

Sewage disposal charge

58. T h e Group was asked for a view on the possible introduction by the Public Services Committee of a sewage disposal charge. The Group considered the proposal in the context of the general criteria set out in paragraph 5 of this report and concluded that –

• w  h il e it could be argued that what was proposed was in accordance with the user pays principle,

the Group is of the view that this principle applies more appropriately to those situations where, through a charge for a service, users can be discouraged from placing additional demands on the service provider. Thereby the Island's limited resources would be used more effectively. A sewage charge would not satisfy this condition and would be concerned more with collecting revenue than seeking to influence the demand for the service;

• i f t h e purpose behind the charge is to raise revenue there are simpler ways of doing this. By comparison with other forms of taxation there would be a relatively high administration cost incurred in collecting a sewage charge;

• t h e g roup is not in favour of the funds raised from the sewage charge being "ring fenced" and set

aside to meet the ongoing total costs of the sewage programme. It is felt that this would have the disadvantage that expenditure on sewer extensions would be removed from the States' capital programme prioritisation exercise and high cost/low benefit schemes could well be implemented simply because the money was available rather than that they were justified;

• a p p l ying a sewage charge on the basis of the rateable values of the properties served, as is proposed by the Public Services Committee, will present problems because of the variation in rateable values between individual parishes;

• t h e i mposition of a service charge would be inflationary - although it is recognised that this would the case with any form of indirect taxation;

• t h e re would be hardship for those on relatively low incomes, and some arrangement would need to be found for relieving that hardship, recognising that this would add further to the administration

costs.

CODE OF DIRECTION No. 24 INCREASES IN STATES FEES AND CHARGES

Introduction

1. T h is Code of Direction is issued under Article 27 of the Public Finances (Administration) (Jersey)Law 1967 asamended (hereafter referred toas The Law).
2. T h e purposeof this Codeistwofold –

• f i rs t ly, it intends to set the parameters within which States Committees review their fees and charges; and

• s e c o ndly, it aims to meet the requirements of the States Anti-Inflation Strategy (P.125/2000).

3. T h e Anti-Inflation Strategy states that increasesin States fees and charges should be limited to2.5% per annum with compelling cases to be subject to the prior approval of the Finance and Economics Committee.
4. T h e aim of the States Anti-Inflation Strategy, asagreedby the StatesinSeptember, 2000, is to bear down on inflation in the Island. It wasrecognised from the outsetthat, because of the wide ranging involvement of the States in theIsland'seconomy, action on States fees and charges would need tobe an important element of the Strategy.
5. C o mmittees should whenreviewingfeesandcharges,firstthoroughlysatisfy themselves that any increase is absolutely necessary and that thereis absolutely noscopefor either holding orreducingfeesand charges through efficiency and productivity gains.Thereshouldbe no presumption ofautomatic increases "in line with inflation" without this process having been demonstrablyundertaken first.
6. T h e Anti-InflationStrategyrecognisesboth the need to address inflation and to promote the principle of "UserPays". The report attached totheAnti-InflationStrategy states –

" It   is  recognised that there may be legitimate and compelling instances where an increase above 2.5 per cent is desirable. These may be, for example, for "user pays" reasons (i.e. if one particular group receiving a valuable service from the States is charged below cost, then that group is simply being subsidised by taxpayers generally) or in pursuit of health or environmental objectives, where the purpose of raising a charge may be to signal the relative undesirability of a given activity."

T h e F inance and Economics Committee is well aware that these two issues may conflict. The Committee

is determined that States funds are allocated to high priority "core" areas, which may mean that if lower priority or non-core services are to continue the full cost of service provision will have to be met by the user.

7. T h e procedures detailed in this CodeapplytoALLStatesCommittees – Trading as well asNon-Trading Committeesfor the timebeing.(However,it is intended that the JerseyCompetitionandRegulatory Authority (JCRA) will take over responsibility for monitoring the charges leviedby the Incorporated Bodies). The Codealso relates tofees and charges which are governed by States Orders and Regulations.
8. A l l fees and charges whether directly reflected in the Island's Retail Price s Index (RPI) or not, are covered by this Code.
9. A n y proposal for the increase orintroductionof a newchargewhichis effectively a duty or tax (for cross subsidy orotherpurposes)mustbesubmittedto the Finance andEconomics Committee for consideration. (Proposals of this nature undoubtedly need legislation and will therefore require comment from the Finance and EconomicsCommittee).

2 P r o cedures to be followed

2 .1 A n nual Fee/Charge Increases of 2.5% or less

(i ) I n t he first instance Committees should be able to demonstrate that –

• t h e y have actively reviewed all costs relating to a service; and

• e v e r y effort is being made to control or reduce costs and improve productivity

b e fo r e a n in c rease to a fee or charge is levied.

(i i) T h e prior approval of the Finance and Economics Committee to increase an existing fee or charge

WILL NOT be required where the average increase in the fee or charge does not exceed 2.5% per annum compounded.

2 .2  P r oposed Fee/Charge increases of more than 2.5% per annum

(i ) A  s in 2.1 (i) above Committees should, in the first instance be able to demonstrate that –

• t h e y have actively reviewed all costs relating to a service; and

• e v e r y effort is being made to control or reduce costs and improve productivity

b e fo r e a n in c rease to a fee or charge is levied.

( ii ) T h e prior approval of the Finance and Economics Committee WILL NOT be required where

increases are calculated by reference to statute, or by a formula which has already received the approval of the States or the Finance and Economics Committee.

( ii i)  W  here a fee or charge increase exceeds 2.5% per annum it will be the responsibility of the

requesting Committee to ensure that –

• t h e approval of the Finance and Economics Committee is gained before any increase is

levied; and

• t h e r equesting Committee provides the necessary justification for the level of increase.

(i v ) T h e Finance and Economics Committee will delegate the task detailed in (iii) to the Treasurer of

the States where –

• r e q u ests do not need to be submitted to the States for their approval; and

• r e q u ests relate to non-contentious issues;

• C o m mittees are able to demonstrate that they are increasing charges in order to fulfil the "User Pays" principle.

3. " U ser Pays" principle

3 .1 It is recognised that there are instances where one particular group receives a valuable service

from a States Committee at a charge which is below cost and they are, therefore, being subsidised by taxpayers generally. In these circumstances it is expected that Committees carefully consider whether there is a case for the user to meet either the full cost of a service or a greater proportion of the cost of service provision. (When assessing the cost of providing a service Committees should ensure that all direct costs as well as overhead costs are taken into account).

3 .2 In the circumstances in 3.1 above Committees are requested to follow the procedures detailed in

section  2.

3 .3 T h ere may be instances where a Committee decides to introduce or increase a charge in order to

indicate the undesirability of a given activity on health or environmental grounds. For the avoidance of doubt this also relates to import duties. If it is intended that the charge purely covers the cost of service provision Committees will be expected to follow the procedures in Section 2 above. However, if the level of charge exceeds the cost of service provision this is effectively a tax and its potential imposition will need to be fully discussed with the Finance and Economics Committee.

Foul Sewer Extension Schemes Remaining list, priority confirmed by Sewer Working Party (SWP)

Reference No. Scheme Title

46 Perruque, St. John

2A Area north of Becquet Vincent, Trinity 22 La Rue des Niemes, St. Peter

22A La Presse, St. Peter

34 Ville au Bas, St. Ouen

61 La Rue du Vieux Ménage, St. Saviour 32B Mont Mado Phase 2, St. John

45 Tas de Geon (west), Trinity

5/94 Boulivot de Bas, Grouville

23 St. Ouen's Church area

19 Mont Cochon, St. Helier

60 Old Beaumont Hill, St. Peter

51A Rue d'Elysée, Phase 1, St. Peter

41 Jubilee Hill, St. Peter

33 Park Estate, St. Brelade

4 Bouley Bay, Trinity

Remaining list, priority yet to be confirmed by SWP

Reference No. Scheme Title

45A Tas de Geon (east), Trinity

21 Mont Matthieu, St. Ouen

27 Les Tombettes, St. Mary

11A Rue de Guilleaume et d'Anneville, Faldouet

82 Sunset Nurseries, St. Ouen

2B La Rue des Haies, St. John

71 La Citadelle Estate, St. Lawrence

35 Mont Rossignol, St. Ouen

5A La Charrière du Bourg, Grouville

62 Rue de la Chouquetterie/Bouillon, St. Martin 88 La Rue des Cabarettes, St. Martin

47 St. Peter's Arsenal, St. Peter

49A La Maison de Maufant, St. Martin

66 La Rue du Sud, St. Ouen

24C La Verte Rue/Rue des Catieaux, Trinity

51B Rue d'Elysée, Phase II, St. Peter

76 La Route de Rozel/Côte du Nord, St. Martin 47A Area to east of St. Peter's Arsenal, St. Peter 24B La Rue Jacques/Brabant, Trinity

138 5 Props Spec. School, Queen's Road

58B Le Chemin de Herupe, St. Lawrence/St. John

98 Le Rondy, St. John

127 Le Mont au Prêtre (top of Trinity Hill), Trinity 117 Route Orange, St. Brelade

126 Highview Lane, St. Helier

70 La Rue des Sapins, St. Peter

131 Southern end of La Blinerie Lane, St. Clement 115 Rue Flicquet, St. Helier

132 La Ville au Neveu, St. Ouen

144 La Rue des Nouettes, St. Clement

87 East of Manor Park, St. Helier

91 Le Coin, La Rue du Bocage, St. Brelade

113 Les Grupieaux, St. Peter

102 La Ville es Vibert , St. Mary

44B Gargate Mill area, St. Peter

64 Le Mont des Routeurs, St. Peter

103 Les Varines, St. Saviour

85 La Rue de la Blanche Pierre, St. Lawrence

92 Portelet area, St. Brelade

53 Rue Mahaut, St. Ouen

134 La Rue de l'Epine, Trinity

74 Devil's Hole, St. Mary

52A Route de Vinchelez, St. Ouen

93 La Route des Champs, St. Saviour

83A La Route des Mans, St. Brelade

96 La Fosse de Pathais, St. Ouen

101 Le Mont des Louannes, St. Peter

15C La Rue du Nord, Trinity

120 La Rigondaine, Grouville

27B La Rue du Cerf, St. Mary

84 Le Coin, top of la Haule Hill, St. Brelade

123 La Rue des Champs Rault, Trinity

104 Oaklands Lane, St. Helier

89 Le Mont de la Guerande, Gorey

73 Le Marais, St. Mary

32C La Rue de Fremont, St. John

79 La Rue des Huriaux, St. Martin

133 Les Arbres, near Warwick Farm, St. Helier

77 La Rue de Sous les Bois, Trinity

58A La Rue de la Mare Ballam, St. Lawrence/St. John

83 La Route du Franc Fief, St. Brelade

34C Croix du Marais, St. Ouen

36C Victoria Village east, Trinity

40C La Rue de la Mer, St. Ouen

139 Grantez, St. Ouen

99 La Rue Militaire, St. John

19A Le Mont Cochon, St. Helier , area to west

105 La Rue des Raises, St. Martin

72A La Rue des Potirons, St. Mary

135 La Rue des Fontaines, Trinity

64A La Rue des Hêtres, St. Peter

118 Pont Marquet, St. Brelade

44C La Rue de Panigot, St. Peter

63 Northern Exchange, St. John

109 Back of St. Lawrence Church, St. Lawrence

112 La Rue de la Fontaine, St. Peter

69 Le Chemin de l'Etocquet, St. Ouen

110 La Rue de la Hauteur, St. Helier

57 La Rue de la Fontaine, St. Martin, St. Lawrence 78 La Rue des Catieux, Trinity

121 Le Côtil Vautier, Grouville

122 La Rue du Rue, St. Martin

26 Rue des Servais, St. John

27C Rue es Abbés, St. Mary (north end)

99B Les Chenolles, St. John

95 La Botellerie, St. Ouen

140 Flicquet Bay

38 Route de la Hougue Bie/La Commune

145 La Rue a l'Eau, St. Ouen

81 La Ville es Nouaux, St. Martin

136 Marais a la Cocque, Grouville

141 Mont de la Mare Ste. Catherine

68 La Rue du Creux Baillot, St. Ouen

114 Ruelle de St. Clair, St. Lawrence

90 St. Brelade's Church area, St. Brelade

27A Mourier Valley FSE, St. John

59 La Rue Parcqthée, St. Lawrence

100 La Rue es Bufs, St. Mary

97 Le Chemin du Herupe, St. John

106 Portelet Common, St. Brelade

46A La Rue de Sorel, St. John

143 La Rue des Pelles, St. Martin

142 La Rue es Philippes, Grouville

42B La Rue es Abbes, St. Mary (south end)

129 Rue des Issues, St. John

108 Area adjacent to Desalination Plant, St. Brelade

107 La Croix au Maître, St. Martin

44D La Rue de la Vallée, St. Peter

80A La Ville Bree, St. Martin

15D La Rue de l'Allée, Trinity

72 Gigoulande, St. Peter

14B Halfway Hill Extensions, Grouville

99A La Rue des Courts Champs, St. John

76A La Ville Machon, La Rue des Côtes du Nord, St. Martin 128 La Gabourellerie, St. Ouen

116 La Vieille Charrière, St. Martin

86 North-east of Dannemarche Reservoir, St. Lawrence

75 La Rue de la Mare des Pres 2, St. John

125 La Prêterie, St. Peter

32D La Rue de la Mare des Pres 1, St. John

124 La Rue de la Fontaine, Trinity

67 Les Landes, St. Ouen

137 La Commune, Victoria Village