Machinery of Government - relationship between the Parishes and the Executive

STATES OF JERSEY

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MACHINERY OF GOVERNMENT: RELATIONSHIP BETWEEN THE PARISHES AND THE EXECUTIVE

Lodged au Greffe on 9th March 2004 by the Policy and Resources Committee

STATES GREFFE

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to r e fer to their Act dated 28th September 2001 in which they agreed that the Policy and Resources

Committee, after consultation with the Comité des Connétable s, should bring forward for approval by the States proposals on the future relationship between the Parishes and the other areas of public administration and, in particular, concerning the provision of services, resource allocation and financing, a review of the Parish institutions, and the position of the Parish of St. Helier; and to agree that, in line with the guiding principle that the cost to the Parishes and the States should be neutral at the date of transfer, which is aimed for May 2006 –

(a ) (i ) t h e cost of native' welfare (including a 10% provision for the cost of administration) and

residential care currently met by the Island's ratepayers should be met from the general revenues of the States;

(i i ) t h e c ost of providing the following services, currently met by the States through the cash

limit of the Environment and Public Services Committee, should be funded by the Island's ratepayers in exchange for native' welfare –

  ( A ) m a i n ro a d routine maintenance, which concerns all highway resurfacing works,

including the replacement of manhole covers as required, maintenance and resurfacing of footways, reactive maintenance repairs (potholes, etc.), laying of anti-skid surfacing at key locations, repairs to surface water systems including gullies on highways and inspection and supervision costs, and all work on cleaning (including gulley emptying), signs and markings, lighting, traffic signals and pedestrian crossings;

(B  ) p a rk s a n d g a rdens;

(C  ) p u b li c c o n v e niences;

(D  ) l it te r b i n e m  ptying;

(E  ) d i s p l a y a n d f loodlighting;

( F ) o t h e r s e r v ice transfers that may be required to achieve the principle of cost

neutrality at the date of transfer, to be agreed following discussions between the Policy and Resources Committee, the Environment and Public Services Committee, and the Comité des Connétable s, and subject to the approval of the States.

(i ii ) c a p i tal investment in the infrastructure of the Island's main road network, which concerns

all restorative maintenance, strengthening and reconstruction to the highway sub- structure, defective trench reinstatements (undertaken by the service companies in the past) and new surface water drainage systems, as well as the construction of new roads, should be met from the general revenues of the States;

( b ) (i ) a n Island-wide Commercial Rate, to be levied by the States on the recommendation of the

Conseil des Connétable s, should be introduced, in accordance with paragraphs 30-43 and 50-54 of the Committee's report; and

(ii) a Domestic Island-wide Services Rate, to be levied by the States on the recommendation of the Conseil des Connétable s, should be introduced, in accordance with paragraphs 30-31

and 44-54 of the Committee's report ;

(c ) a C onseil des Connétable s, comprising the 12 Parish Connétable s, should be established as a body

corporate with responsibility for, amongst other things, managing the Island-wide Services Fund into which the Commercial Rate and the Domestic Island-wide Services Rate will be paid;

( d ) t h e  current  responsibilities of the Economic Development  Committee under the  Policing  of

Beaches (Jersey) Regulations 1959, as amended, and the Places of Refreshment (Jersey) Law 1967, as amended, should be transferred to the Parishes together with the associated income;

(e ) th e Finance and Economics Committee should be charged to undertake a review of the States land

and property portfolio in order to bring recommendations to the States regarding the States' liability to rates;

( f) t h e Policy and Resources Committee should be charged to prepare the necessary legislative

changes to enable paragraphs (a)–(e) to be implemented, subject to States approval, in time for the Parishes' 2006/7 accounting year.

POLICY AND RESOURCES COMMITTEE

REPORT

Introduction

1. O n 28th September2001 the States approved (subject to someamendments)P.122/2001 Machinery of Government:ProposedReforms'which stated that –

" T h e  Policy & Resources Committee, after consultation with the Comité des Connétable s, will bring forward for approval by the States proposals on the future relationship between the Parishes and the other areas of public administration and, in particular –

(i ) t h e provision of services;

(i i) re s ource allocation and financing;

(i ii ) a review of the Parish institutions; and (i v )  t h e position of the Parish of St.  Helier."

2. I n J anuary 2002 thePolicyandResourcesCommittee, with theagreement of theComité des Connétable s, set up a Steering Group to undertake a review of the relationship between the Parishes and the Executive. This Steering Group included Memberand Officer representatives of both the States and the Parishesand was chaired by Deputy David Crespel. Liz Burst, the Chief Internal Auditor from the States Treasury,was seconded to the Steering Groupas its Executive Officer from January2002 to September 2003.
3. T h e Steering Group has produced 2 comprehensive reports summarising the results of its investigations. The Group'sPhase 1 report,Backgroundand Issues Identified', published inMay 2002, set the scene with regard to the relationship between the Parishes and the States and, in particular, outlined the various services which are provided by the 12 ParishesinJerseyandfundedby the Island's ratepayers.The Group'sPhase 2 report, entitledRecommendations for Change' was publishedinApril 2003.
4. F o llowing the publication of the Phase 2 report, the Steering Group undertook a comprehensive consultation exercisewhich ran for 9 weeks.TheGroup held 12 public meetings (one ateach Parish Hall ) as well as a further 19othermeetings with StatesMembers, Parish officials, StatesCommittees and other interested parties.In addition to these consultation meetings, the SteeringGroupalsoreceivedaround 50 pieces of correspondence from States Membersandmembersof the public providingfeedbackon the Group'srecommendations.
5. G e nerally, the feedback received during the consultation period was very supportive of the Group's recommendedway forward. Several useful suggestions weremade to further strengthen andimprove the Group'srecommended changes to the rating systemandthewayinwhich services will be delivered in the future. Inevitably, some individuals expressedconcernaboutsomeof the recommendationswhichhad been madeand the SteeringGrouphas carefully considered thesewhen putting forward its recommended way forwardto the Policy and ResourcesCommittee.
6. T h e remainder of this report details thebackgroundtoeach part of the Proposition to which the Policy and ResourcesCommittee is now seeking the approval ofthe States. Thisreport does not,however,provide all the detailed discussion andanalysiscontained in the SteeringGroup'sPhase 2 report. (Additional copies of the Phase 2 reportcanbeobtained from the Policy and Resources Department.)
7. A t Annex A is a full implementation plan covering all the recommendationsmadebytheSteeringGroup.

1. The cost ofnative' welfare (including a 10% provision for the cost of administration) and residential care currently metby the Island's ratepayers should bemet from the generalrevenueof the States.

8. T h e reis currently a split funding mechanismfor welfare and residential carecosts.The States fundsthe cost  of non-native'[1] welfare  and residential  care and the  Parishes fund the  equivalent costs for natives'1.

Figure 1: Estimated non-native' welfare and residential care costs to be met by the States in 2003 £

Non  native' welfare  payments  incurred  by  the

Employment and Social Security Committee[2] 2,997,000

Non native' residential care payments incurred by the

Health and Social Services Committee[3] 807,917 3,804,917

9. T  h e Parishes' accounting year differs from the States and runs from 1stMay to 30th April, with the exception of St.  Martinwhich currently has an accounting year ended 31st May[4]. Figure 2 shows the value of native' welfare and residential care payments incurredby the Parishesoverthelast 3  years.

Figure 2: Native' welfare and residential care costs incurred by the Parishes over the last 3 years

Increase of 9% Increase of

19%

10. F ig ure  2 showsthesubstantial increase innative' welfare and residential care costs which the Parishes have experienced over thelast 3  years. Total costs increased by 19% between 2001-2 and 2002-3; the main increasewasin residential carecostswhich increased by 33% in2002-3.The figures in the above table donot include the administration costs incurredbythe Parishes in processing native' welfare payments[5].In2003-4 the Parishes estimate that the total native' welfare and residential carecosts they will incur will be in the region of £6.8  million (excluding the costof administering welfare). This would equate to anincrease of over £0.7  million from 2002-3 or12%.
11. If the cost of native' welfare and residential care continues to increase at the levels experiencedsince 2000-1, the costs will have doubled in 6  years. This is demonstratedinFigure 3.Figure 3 alsoshows tha by 2006-7(whichis the year in which the changes to the rating system are intendedtobeimplemented) the total native' welfare and residential care costs are likely to bearound £9.5  million.

Figure 3: How native' welfare and residential care costs could escalate over the next five years

14.0 12.0 10.0 8.0 6.0 4.0 2.0

£ million

0.0

2002/3 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9

These projections include a 10% allowance for administration costs incurred by the Parishes in processing welfare claims and payments.

12. D u ring theconsultationperiod, some individuals expressed surpriseand, in somecases, disbelief atthe Steering Group'scommentintheirPhase 2 report, andduring the presentations whichwere provided at the consultation meetings, that the cost of welfare and residential caremetby the Island's ratepayers could possiblydouble in 5  years. The revised projections in Figure 3 assume that costs will increase by the averageexperienced over the last 3  years, which is rather less than originally estimated, but still very significant. TheCommitteeconsiders that this is a prudentestimate and that the actual increases could be even greater if, for example, more individuals require assistance with the cost ofresidentialcareor the Island was to experience an increase in unemployment.
13. T h e burdenof welfare andresidentialcareonsomeParishes is greater than others. Figure 4 shows that St.  Helier's ratepayers met 55.8% of the total native' welfare and residential care costs in 2002-3. Ratepayers in St.  Helier, St.  Saviourand St.  Clement met 79.4% of the total costs.

Figure 4: Proportion of native' welfare and residential care costs incurred by the Parishes in 2002-3

0.9%

0.6% 0.2% 1.6%

2.2%

4.7%

2.8% St Helier 3.4% St Saviour St Clement

4.2% St Brelade

St Lawrence St Peter

8.7% Grouville

55.8% St Martin

St Ouen

St John

St Mary 14.9% Trinity

Total cost = £6.1 million

14. T h is inequitable distribution ofcostsis also shown in Figure 5,whichshows the rates per quarter which each Parish needed to raise in2003 in order to finance theirestimated native' welfare and residential care costs in 2003-4. These vary from 1.2pper quarter in St.  Helier, St.  Saviour and St. Clementto just 0.2p i Trinity . 55%oftheSt. Saviour rate per quarter was raised to fund welfare and residential care, whereas the equivalent percentage in St. Ouen was 19 % and in Trinity just 11%.

Figure 5: Welfare rates per quarter

PARISH 2003 RATE 2003 WELFARE % OF RATE PER PER RATE PER QUARTER

QUARTER QUARTER SPENT ON WELFARE

St.  Helier 2.65 1.2 45

St.  Saviour 2.2 1.2 55

St.  Clement 2.3 1.2 52

St.  Brelade 1.6 0.4 25

St.  Lawrence 1.65 0.6 36

St.  Peter 1.8 0.6 33

Grouville 1.9 0.9 47

St.  Martin 1.9 0.7 37

St.  Ouen 2.1 0.4 19

St.  John 1.6 0.4 25

St.  Mary 1.9 0.5 26

Trinity 1.85 0.2 11

Average = 0.7p

It s h o uld be noted that the welfare rates per quarter shown in Figure  5 are based on the estimated cost of

welfare and residential care for 2003-4.

15. T h e rising cost of welfare andresidentialcare is not just a risk to St. Helier, St. SaviourandSt. Clemen Indeed,  a  small increase in  the  number of individuals  claiming  welfare  or assistance  towards their residential care costs, can have a very significant effect on a smallParish. For example, it is estimated that just 5 newresidentialcarecasescouldadd0.6ptotherate per quarter in St.  Mary. This would necessitate a 32%increasetotherate per quarter inSt. Mary, taking itto2.5p.
16. T h e Committee supports theSteeringGroup'srecommendation that the cost of all welfare and residential care shouldbemet from the general revenuesofthe States. This recommendationgainedoverwhelming support during the consultation period. The main arguments in supportof the transfer of cost can be summarisedas follows –

(i ) T  h e original principle underlying welfare was that the rich of a Parish paid for those suffering

financial hardship. This is no longer the case since everyone pays rates, including the less well- off. The States' access to a much wider taxation base is a much fairer way in which to raise income to fund support to those on low or nil incomes.

(i i) T h e current distinction between natives' and non-natives' is archaic (dating back to the late 18th

Century), discriminatory and, in the 21st Century, no longer appropriate. Funding all welfare and residential care from one source would enable this terminology to cease.

(i ii ) A s shown in Figure 3, if the cost ofnative' welfare and residential care continues to increase at

the levels experienced over the last 3  years, the costs will have doubled by 2008/9. If these costs continue to be met by the Island's ratepayers, a two-fold increase would equate to an additional £6  million having to be raised from rates. This would necessitate a very large increase in rates paid by Islanders.

(i v ) T h e Parishes have no control over residential care payments. The Parishes are not responsible for

the policy of care for the elderly or the placement of individuals in care homes. Put simply, if a resident of a Parish is admitted to a care home and they are a native', then the Parish must meet the cost of the fees paid to the home (net of any pension the elderly person receives). It is extremely difficult for the Parishes to budget accurately for these costs.

Administration of welfare payments

17. W h ilst the States isbeingaskedto agree that the cost of welfare shouldbe transferred from the Parishes to the States, the Committeeagrees with the Steering Group'srecommendation that the administration of welfare payments shouldremain with the Parishes.TheParishes already administer welfare paymentsto non-natives', with the valueofthesepaymentsbeing reimbursed to the Parishes from the Employment and SocialSecurityCommittee. This reimbursementscheme would beextendedtocover payments to natives' as well.Thereimbursement would include a 10% administrative recharge with regard to welfare payments.
18. T h e Steering Group recommended that the relationship between the Parishesas service providers and the States as funder should be supported by a Service Level Agreement. The Steering Group also recommended that welfare payments administered bythe Parishes should continue to be subjectto regular audits by the Internal Audit Departmentof the States Treasury.
19. T h e Employment and SocialSecurity Committee will be bringing forward proposalsfor a new low incomesupportsystem in Jersey. Duringthedevelopmentof this system, consideration will need to be given tothe future role of the Parishes with regard tothe administration of low income support.
20. A t its meeting on 10th July 2003, the Policy and Resources Committee received a delegation comprising the Connétable sofSt. HelierandSt. Clement and 9 St. Helier Deputies. At that meeting thePolicyan Resources Committee made a commitment to develop an interim solution to the significant welfare burden which may be suffered by some Parishes in their 2004-5 accounting year pending the

implementation of the new rating system in 2006.

21. T h e solution putforwardby the Policy andResourcesCommitteeis that theStatesshould meet the additional cost of native' welfare and residential careincurredbytheParishes in 2004-5 compared to the equivalent  costs met by ratepayers  in  2003-4. It  is estimated that this will equate  to  an  additional £2.1  million beingmet from the General Reserve. The Finance and Economics Committee has agreed to this proposal, subject tothe States approvingtheproposalsasset out in this report and proposition for the transfer ofnative welfare and residential care costs to the States, and to the subsequent production of a satisfactory implementation/businessplan.

(a)(ii) The cost of providing the following services, currently met by the States through the cash limit of

the Environment and Public Services Committee should be funded by the Island's ratepayers in exchange for native' welfare –

(A  ) m  ain road routine maintenance, which concerns all highway resurfacing works, including

the replacement of manhole covers as required, maintenance and resurfacing of footways, reactive maintenance repairs (pot holes etc), laying of anti-skid surfacing at key locations, repairs  to  surface  water  systems  including  gullies  on  highways  and  inspection  and supervision  costs  ,  and  all  work  on  cleaning  (including  gulley  emptying),  signs  and markings, lighting, traffic signals and pedestrian crossings;

(B  )  p a rks and gardens;

(C  )  p u blic conveniences;

(D  )  l it ter bin emptying;

(E  )  d i splay and flood lighting;

(F  )  o t her service transfers that may be required to achieve the principle of cost neutrality at the

time  of  transfer,  to  be  agreed  following  discussions  between  the  Policy  and  Resources Committee,  the  Environment  and  Public  Services  Committee,  and  the  Comité  des Connétable s, and subject to approval by the States.

22. In the lightof forecasted financial deficits in future yearsand the general pressureon States expenditure, a proposal to merelytransfer native' welfare and residentialcarecosts from the ratepayer couldnotbe supported. As stated in paragraph  11, this would require the States to fund an estimated additional £9.5  million in 2006-7. Not only is the Statesbeingasked to take onthe cost ofwelfare and residential care from the Parishes2006-7 accounting year,butalso the significantfinancialrisk that these costs will continue toincrease dramatically in the future (see Figure3).
23. T h e  Steering Group recommended that  the  following  service  costs  should  be transferred  from  the Environment and Public Services Committee to the ratepayers in exchange for native' welfare and residential care costs –

Main road routine maintenance Parks and Gardens

Public conveniences Litter bin emptying Display and flood lighting

24. T h e Committeeagrees with the Steering Group that thesecosts are a much fairer chargeto the ratepayers than welfare and residential care. Ratepayers benefit from anduse the services proposed for transfer; this is notthecase for the majorityof ratepayers with regard to welfare and residential care.Theabovecosts will also bemucheasier to control and budget for than welfare andresidentialcaresince they shouldnot experience dramatic, uncontrollable increases.

25. A t the time the Steering Group produced its report, this proposed cost transfer would have provided the States with a pound for pound cost exchangeat 2002 prices. However,aswe have already demonstrated, welfare and residential care costs are increasing at levels well above inflation. Native' welfare and residential care costs are estimated to be £9.5  million in the Parishes' 2006-7 accounting year. It is intended that the cost exchange between the States and theParishes will take place from 1stMay2006to coincide with the start oftheParishes' 2006-7 accounting year.The estimated effect on States budgets in 2006 and 2007is shown in Figure 6 –

F ig u  r e 6: Estimated effect on 2006 and 2007 States budgets

2006 (May – 2007

December) (full  year)

Employment and Social Security

Committee (re native' welfare payments) +£3,200,000 +£5,400,000 Health and Social Services Committee

(re native' residential care costs) +£3,100,000 +£5,200,000

Environment and Public Services

(re main roads, parks and gardens, public

toilets, litter bins and lighting) -£5,500,000 -£8,600,000 and other services to effect cost neutral

transfer -£800,000 -£1,200,000 Overall effect on States budget +£0 +£800,000

26. F ro m 2008onwards the States would have to meet any additional welfare andresidentialcarecosts.An indication ofhowthesecostscouldincrease is shown in Figure 3.Of course, the projectionsinFigure 3 only relate to native' welfare and residential care.TheStates will alsoberequiredtomeet any increases in costs associated with non-native' welfare (which they are already currently funding).
27. T h e Steering Group recommended that the transferof main road costs to the ratepayers provides an opportunity to address the current under funding of the routine maintenance costs ofmainroads. It is estimated that a further £1.5  million (at 2003 prices) needstobespenton routine maintenance tothe Island's main roadseachyear.Thereisalso a requirement to refurbish 2  additional public conveniences per annum at a cost of £90,000 (at 2003 prices). The Steering Group proposed that this additional expenditure shouldbefundedby the ratepayers and the Committee supports this. The SteeringGroup recommended that this additional expenditure should be phased in over a 3-year period.
28. I n summary, the costswhich would betransferred to the Island's ratepayers in exchangefor native' welfare costsbeingmet from States revenues are shownin Figure  7.

Figure 7: Costs to be met by the ratepayers in exchange for native' welfare and residential care being transferred to the States

MAIN ROAD ROUTINE MAINTENANCE £ Current costs incurred by Public Services:

Cleaning (including gulley emptying) 1,408,169 Maintenance (as defined in paragraph 30)

Roads 965,345

Footpaths 613,018

1,578,363 Signs and markings 411,532 Lighting 261,790

Traffic signals and pedestrian crossings Total current costs

Required additional expenditure Routine annual maintenance (resurfacing) Lighting

Road structures and edges

Signs and markings

Traffic signals

Inspections and monitoring

Total main road routine maintenance costs PARKS AND GARDENS

PUBLIC CONVENIENCES

Current costs incurred by Public Services Additional required refurbishment costs

LITTER BIN EMPTYING

DISPLAY AND FLOOD LIGHTING

TOTAL COSTS TO BE MET BY THE RATEPAYERS

228,162 3,888,016

717,600 282,487 217,298 108,649

108,649

108,649 1,543,331

5,431,347 2,523,600

649,953  90,000

739,953 332,315 221,756 9,248,971

All costs are shown at 2003 prices

Note: all of the above costs are subject to review under the Fundamental Spending Review process

(a)(iii)  Capital investment in the infrastructure of the Island's main road network, which concerns all

restorative maintenance, strengthening and reconstruction to the highway sub-structure, defective trench reinstatements (undertaken by the service companies in the past) and new surface water drainage systems, as well as the construction of new roads, should be met from the general revenues of the States.

29. D u ring the consultation period the main concern expressed with regard to the proposed cost transferto the ratepayers waswith regard to main roads.Concerns were expressedbymembersofthe public regarding the requirement for significant capital investment in the roads.Therewas a fear that thesecostswould have to bemetbyratepayers. The Committeeconsiders that it isvital that the responsibilityforfunding the capital investment(predominantly repairs to the sub-structureof the roads) rests firmly with the States and that the ratepayers will beresponsiblefor routine maintenance costsonly.Thecomponentsof routine maintenance costs are shown in Figure 7. In order that there shouldbe a clearunderstandingof the nature of the respective responsibilities for capital investment and routine maintenance, these responsibilities are defined belowas follows –

C a p i ta l F  u n ding for Highways Maintenance (the States):

T o u n d e rt a k e all restorative maintenance, strengthening and reconstruction to the highway sub-

structure, defective trench reinstatements (undertaken by the service companies in the past) and new surface water drainage system.

R e v e n u e F  u nding for Highways Maintenance (the Conseil des Connétable s):

T o u n d e r ta k e all highway resurfacing works, including the replacement of manhole covers as required, maintenance and resurfacing of footways, reactive maintenance repairs (potholes, etc.),

laying of anti-skid surfacing at key locations, repairs to surface water systems including gullies

on highways and inspection and supervision costs, and all work on cleaning (including gulley emptying), signs

and markings, lighting, traffic signals and pedestrian crossings.

2. An Island-wide CommercialRate,tobeleviedbytheStates on therecommendationof the Conseil des Connétable s,shouldbe introduced, inaccordancewithparagraphs30-43and 50-54 ofthe Committee'sreport

30. T h e SteeringGroup proposed that twonew Island-wide rates should be introduced, namelyanIsland- wide Commercial Rate and a Domestic Island-wide ServicesRate.These rates would beusedto fund the services listed in (a) (ii)(A-F)ofthe proposition. They would also enable additional required routine maintenance for main roads and publicconveniences, currently provided forat a cost of £1.6 million per annumat2003 prices, tobemetby the Island's ratepayers (as notedinparagraph 27).
31. From the ratepayer's perspective, the system for the paymentof rates will remain essentially thesame. Heor she will continue to receive anannualratesassessment from the parish, andpayment will bemade directly to the parish authorities, as before. A proportionof the rates received will then be allocated by the Parish to the central Island-wide ServicesFund.
32. In relation to the Island-wide CommercialRate, it is proposed that 70%of this rate would be paid into an Island-wide ServicesFund,administeredby a new body tobeknown as the Conseildes Connétable s,and used to fund the services transferred from the States. Theremaining 30% would be retained bythe Parishes to part-fundtheir parochial costs. (Note: The Conseil des Connétable s would be based on the existing Comité des Connétable s, and would be formally established in legislation as a legal entity in its own right. Further information about the proposed role of the Conseil is given in paragraphs 55-61 of this report).
33. M anycountries require businesses to contribute more towards the cost of local services than domestic householders. In 2003 commercial ratepayers in Jersey paid an average of2p per quarter. In England the current Non-Domestic Rate levied on commercial ratepayers is 43p per pound of rateable value (equivalent to Jersey's quarter'). Rates inEngland fund a much widerrange of services than in Jersey (for example: Education, Social Servicesand the Fire Service). Nevertheless, the conceptof a higherrate for commercial ratepayers iswellestablished in England.Guernsey'sTaxon Rateable Valuesischarged at a higherrate for business premises than domestic.
34. T h e SteeringGroup proposed that the aim shouldbetophase in an Island-wide Commercial Rate of 3p over a three tofour-year period. Effectively this wouldmean that commercial ratepayers paid on average 50% more per quarter than their domestic counterparts. Whilst an Island-wide CommercialRateof 3p was a realistic aimbasedon the Parishes' 2002 quarters, it is unlikely to bein2005 when the changesto the rating system would be introduced.
35. T h e Parish Rate (Jersey)Law2003came into effecton 1st January 2004. Under this Law therepairand decoration allowances currently awarded to owners and occupiers of houses and other buildings (including commercialpremises)cease.Under the old1946Law the followingallowances were applied to the assessmentofquarters –

2 0 % re d u c t io n in respect of the costs of internal decoration; and 3 0 % re d u c t io n in respect of the costs of other repairs.

T h e s e allowances were applied to the owner or occupier according to who had responsibility for the

internal and external repairs and maintenance of the building.

36. T h e removalof these allowances increases the quarters at whichownersandoccupiersofhousesand other buildings are assessed. Foreachproperty the quarters increase by a third. The result of this,under the current rating system,is that in 2004 the rates per quarter levied by the Parishes to fund theirparochial costs will reduce(astherewillbemore quarters over which to spread those costs).

37. G i ven the increase in the numberof quarters which are occurring in 2004, and the consequential decrease in the ratesper quarter charged bythe Parishes, the Committee does not consider that it isfairtoagree what the Commercial Rate shouldbenow.The principle that the Commercial Rate shouldbe set at a level 50% higher than that paid bydomestic ratepayers seems a fair starting point. If the predictions inFigure 3 were tobetrue, then the averagerate per quarter payable byall ratepayers in 2004 would be1.6p.An increase of 50% would produce a targetCommercialRate of 2.4p.At this stage the Committee isseeking States approval to the principle ofan Island-wide CommercialRate.
38. D u ring the consultation period the Steering Group received muchfeedbackon the proposal to introduce a Commercial Rate. TheChamberofCommercecommented in writing as follows –

" W e b r o a d ly approve the proposal. Chamber recognises that businesses in St. Helier have benefited from a low rate in the last year in particular due to the budgetary issues that have affected the Parish over the last few years. The introduction of a Commercial Rate will return their rates to a similar level of those in the past and its phased introduction will allow businesses to make sufficient allowance in their budgets. However, Chamber also notes that, for its members in other Parishes, there will be a significant percentage increase in rates paid."

39. T h e concern about the effect of a Commercial Rate on businesses located in the ruralParisheswas raised by a numberof individuals during the consultation period. The Steering Group didrecommendin its report that consideration shouldbegivento establishing a systemof relief from the CommercialRate. The SteeringGroup suggested that such a schemeof relief should beextendedto agriculture, tourism, small businesses and charities. ThePolicy and ResourcesCommitteewill work with the Comitédes Connétable s to develop a scheme of relief for the more financially vulnerable areas of the Island's businesscommunity.In undertaking this task the Committeewill liaise with the ChamberofCommerce and other interested parties.
40. It i s alsoimportant to remember that theCommercial Rate will bephased in over a three year period soas to avoidany large increases in oneyear.
41. T h e Committee does not consider that the introduction of a CommercialRate will be inflationary. Rates are a small proportion of a business' overall costs in Jersey, andwedo not believe that a phased increase of 50% will have a significant effect on the Island's cost of living.
42. T h e recommendedmethod for setting theCommercial Rate is set out in paragraph 50.
43. A s mentioned in paragraph  39,the detail ofwhich ratepayers shouldpaytheCommercial Rate will need to be workedonby the PolicyandResourcesCommitteeandtheComité des Connétable s.TheSteering Group envisaged that a commercial foncier and occupierratewouldbe applied to offices, shops,lodging houses and otherbusinesses. Private landlords of domestic properties which are let outcouldalsobe liable to pay the CommercialRateontheir foncier quarters, but the tenants of such property would be charged the domesticrate as occupier.

(b)(ii) A Domestic Island-wide Services Rate, to be levied by the States on the recommendation of the

Conseil des Connétable s, should be introduced, in accordance with paragraphs 30-31 and 44-54 of the Committee's report ;

44. T h e Steering Group alsorecommended that there should be an Island-wide element to the rate paid by domestic ratepayers: the Domestic Island-wide ServicesRate. This rate would beusedto fund the balance of the cost of the services proposed to be transferred from the Statesonce the 70% contribution from the Island-wide Commercial Rate had been taken into account.
45. P a ragraph  37 explains why it isnotpossible to agreenowwhat the Island-wide CommercialRateshould be. This is dueto the increase in quarterswhichwill arise in2004 due totheremovalofallowances.For the samereasonitisnotpossibletoestimate with certainty atwhatlevel the Domestic Island-wide

Services Rate will need to be set at the time it is introduced (the target being the Parishes 2006-7 accounting

year).

46. H o wever,it is possibletoshow what the scenario would have beenif the new system had been in place for the Rate Year 2003 and theParishes2003-4AccountingYear.Figure 8 shows the total rates whichwe estimate would have been payable bydomestic ratepayers in 2003if the 2 new Island-wide rates[6] had been in place –

F ig u r e 8: Estimated 2003 rates per quarter payable by domestic ratepayers under the new system

2003 rate per quarter

St.  Helier 2.65

St.  Saviour 2.2

St.  Clement 2.3

St.  Brelade 1.6

St.  Lawrence 1.65

St.  Peter 1.8 Grouville 1.9

St.  Martin 1.9

St.  Ouen 2.1

St.  John 1.6

St.  Mary 1.9 Trinity 1.85

Av = 2.0

Domestic Parish Island- Rate wide

Services

Rate

0.7 1.6

0.7 1.0

0.7 1.0

0.7 1.2

0.7 1.0

0.7 1.2

0.7 1.1

0.7 1.3

0.7 1.8

0.7 1.4

0.7 1.4

0.7 1.8

Total Increase/ rate per (decrease) quarter

2.3 (0.35)

1.7 (0.5)

1.7 (0.6)

1.9 0.3

7. 0.05
8. 0.1
9. (0.1)

0. 0.1
1. 0.4(*)
2. 0.5(*)

2.1 0.2

2.5 0.65(*) Av = 2.0

(see para 47)

* S t. Ouen increased its rate by 0.2p per quarter in 2003 to purchase a new refuse collection vehicle. This is a one-off item of expenditure which, if disregarded, reduces the increase to St.  Ouen's rate per quarter in Figure  8 to 0.2p. St.  John raised an additional levy of 0.2p per quarter in 2003 to create a fund to meet th eventual cost of the Parish Hall extension. It is hoped that sufficient money will be in the fund by 2005-6. This would reduce the increase for St. John shown in Figure  8 to 0.3p. Trinity 's 2003-4 budget includes £200,000 for the Parish Hall extension and £50,000 for an extension to the cemetery. These 2 costs equate to 0.9p per quarter. These costs will not recur in 2005-6 which would reduce Trinity 's Parish Rate in Figure  8 to 0.9p and the total rate paid by Trinity 's domestic ratepayers to 1.6p, a 0.25p decrease from the actual 2003 rate per quarter of 1.85p. It should be borne in mind that other Parishes will from time to time need to make temporary adjustments to their rates in order to cater for projects of this nature, e.g. parish hall extensions.

47. It is not surprising that St.  Helier, St. Saviour, St. Clement and Grouville would haveseen a decrease i their 2003 rates per quarter underthe alternative system.Asshown in Figure 5,these 4 Parishes currently raise 45-55%of their rates to fund welfare and residential care costs. Taking 2003 as an example year, the Domestic Island-wide Services Rate of0.7p would beless that the actual 2003 rateper quarter raised to fund welfare and residential care in those 4 Parishes (Figure 5).Taking into account the itemsof special expenditure provided for in the 2003rates by St.  Ouen, St.  John and Trinity (see note underFigure 8 estimated increases to the other Parishes wouldrange between 0.05pand 0.3p per quarter. TheCommittee does notconsidertheseto be unacceptableor excessive increases.
48. It i s important to note from Figure  8 that the average rate per quarter paid by domestic ratepayers across the Island had the newframework been inplace in 2003, would have been 2p.This equates to the actual average rate per quarter paid in 2003.The effect on domestic ratepayers of the new framework for raising rates is that expenditure has been more fairly allocated across them. All domestic ratepayers pay the same rate per quarter towards the cost of the Island-wide Services. Under the new framework, domestic

ratepayers will be able to identify why the total rate per quarter they are required to pay may be greater or less

than that in other Parishes. This is because the only variable element of the rate per quarter paid by domestic ratepayers will be the Parish Rate.

49. T h e SteeringGroupfaced a difficult task in seeking a wayinwhich costs couldbe allocated more equitably across the Island'sratepayers.Alternatives to the proposals whicharebeingrecommendedwere considered but none of these produced a fairoutcome for all Parishes. At Annex  B aresome examples of the rates per quarter which would have resulted under 3 alternative options to the proposalsput forward in this report.

Method for agreeing the 2 Island-wide Rates

50. T h e 2 Island-wide Rates will notbeagreedby Parish Assemblies. If a ParishAssembly were able to reduce therateto fund main roads (and the other service costs whichare proposed to be transferred to the ratepayers) this could seriously affect therequired maintenance programme.Mainroads rarely span just one Parish. Indeed some main roadscross 3 ormore Parishes. The approval of expenditure and the associated rateon a Parish-by-Parishbasiswould not be practical. Itisintended that the 2 rateswouldbe set onanannual cycle. The suggestedmethodforagreeing both rates is set outbelow.

Planning (September – December)

1. C  o nseilproducesanannual Business Plan for the Island-wide Services,after consultation with the PublicServicesDepartment,whichwould set out a work programme for the year ahead,includingproposalsfor expenditure andfor the Island-wide rates.

Consultation (January – March)

2. C o nseil consults with industry (via a Business Consultative Panel) on the proposed CommercialRate.
3. P a r ish meetings are held topresent the Island-wide Services Business Plan and the proposedCommercialRateandDomestic Island-wide Services Rate and to receive commentsonthese.

Setting and approval of rates (March – June)

4. T h e plan would be forwarded to the Council of Ministers for consideration as part of the annual business plan and budget for onward submission to the States.
5. T h e States of Jersey approveor reject the Island-wide rate, withoutamendment.

51. S te ps 2 and 3 are additional to the original proposal oftheSteeringGroup for setting the Island-wide rates.  They  have been added to the process to  address some of the concerns expressed during  the consultation periodregardingthelackof consultation andaccountabilitywith regard to the Island-wide Rates. The suggestion of a Business ConsultativePanel (step  2)wasputforwardby the Chamberof Commerce.
52. In order to introduce the changes fortheParishes' 2006-7 accounting year, the first Island-wide Rates will need tobeset during theperiodMarch-June2006.
53. T h e ParishRate will continue to be agreed by theParishAssembly.As stated in paragraph  48, the Parish Rate will bethe only variable elementin the total rate per quarter payable by domestic ratepayers across the Island. The Parish Assembly will continue to retain the power to increaseordecrease this rate. The role ofcommercial ratepayers at the Parish Assembly whichsets the Parish Rate will need tobereviewed. Commercial ratepayers should retain the rightto attend the Parish Assembly and ask the Connétable questions on the Parish Estimates for the year (since 30% of the rates paid bycommercial ratepayers will be  retained  by the Parish  to  contribute  towards  parochial  expenditure). However, the  commercial ratepayers shouldnotbeallowed to take partin the vote to set a Parish Rate since they will not pay this. The Parish Rate is only chargeable to domestic ratepayers under the newproposals. This change willneed to be effected when the Parish Rate (Jersey) Law 2003 is amended.

54. It isimportant to realise that whilst the ParishAssemblies will notbe able toagree the 2 Island-wide Rates, (although they willhavean opportunity every year to provide feedback to the Connétable on the proposed ratesprior to them being formally set), the Assembliescannot currently influence the amountof expenditure voted for welfare and residential care.AsshowninFigure 5,the average 2003 welfare rate per quarter acrossall12 parishes was 0.7p. This isthesame level the Domestic Island-wide ServicesRate would have been set,had it been in place in 2003. Therefore, it can be argued that onaverage, domestic ratepayers have asmuch influence over the Parish budgetunder the new proposals as they do now.

(c) A Conseil des Connétable s, comprising the 12 Parish Connétable s, should be established as a body corporate with responsibility for, amongst other things, managing the Island-wide Services Fund into which the Commercial Rate and the Domestic Island-wide Services Rate will be paid;

55. T h e SteeringGrouprecommended a new,enhanced role for the groupof12  Connétable s. If the States supports this recommendation, then in the future the Connétable s will play a very important role in the delivery ofpublicservicesin the Island.
56. It i s recommended that the current Comité des Connétable sisrenamed the Conseildes Connétable s.The word Conseil' better reflects the collective decision-making responsibility the Connétable s will have in the future.
57. A t Annex C is a set ofsuggestedtermsofreferenceforthenewConseildes Connétable s. The main responsibility the Conseilwill have is for the delivery andfunding of the Island-wide Services funded from rates (mainroads,parks and gardens, public conveniences, litter bins and lighting). Asexplainedin paragraph  50 this will include responsibility for setting the Island-wide Commercial Rate and Domestic Island-wide ServicesRate.
58. I n orderto effectively meet thesenewandimportant responsibilities, the Committee agrees with the recommendationofthe Steering Group that the Conseildes Connétable s shouldbe formally established in legislation  as  a  legal entity  in  its  own right.  It is  not proposed that  the Conseil  should  become a Committee of the States since its responsibilities are not,and will not, be part oftheExecutive arm of the Island's central government.TheConseil will be the custodiansofratepayers, rather than taxpayers, money and accordingly it will need tobeaccountable to the Island'sratepayers.
59. T h e issue ofthe accountability of theConseildes Connétable swas raised by several individuals during the consultationperiod.Concerns were also expressed by the Bailiff in a letter tothePresidentof the Policy andResourcesCommittee.TheCommitteehas considered comments received on this subject carefully but considersthere are sufficient checks and balances within the proposed framework for the Conseil to ensure adequateaccountabilityto the ratepayers and the States. Thesechecks and balances are –

D e m  ocratic accountability of the Conseil des Connétable s

1. T h e powersand responsibilities of the Conseil will beclearlysetout in legislation. They will have delegated authority for certain functions.
2. T h e States will be provided with someemergencypowersin legislation in theevent that they needed to issue directions to the Conseil or even removesomeoftheir responsibilities.
3. E v ery year the Connétable s will presenttheBusiness Plan for the Island- wide Services and the associated proposed Island-wide Rates to Parish meetings in order to receive comments from ratepayers. The Business Plan  will  include  targets  and  objectives  which the  Conseil will  be expected toachieve.
4. T h e Conseil des Connétable s will consult with industryon the proposed Island-wide Commercial Rate via a Business ConsultativePanel.
5. T h e 2 Island-wide Rates will be approved by the States of Jersey.

6. T h e Conseildes Connétable s will be required to produce annualaccounts for the Island-wide Services Fund. Theseaccountswillbe audited bythe Comptroller and Auditor General.TheComptrollerandAuditorGeneral will alsoundertakevalueformoneyreviewsof the Conseil's activities to provide  the  States  and ratepayers  with assurance as to  whether  the Conseil  is  exercising  its  functions with  due  regard  to economy, efficiency and effectiveness. In particular theComptrollerandAuditor General  would provide an opinion  as to  whether the  Conseil had achieved its objectives and targets set out in the Island-wide Services Business Plan.
7. T he activities of the Conseil will alsofall within theremitof the Public Accounts Committee.