Committee of Inquiry: Historical Child Abuse – additional funding.

STATES OF JERSEY

COMMITTEE OF INQUIRY: HISTORICAL CHILD ABUSE – ADDITIONAL FUNDING

Lodged au Greffe on 24th February 2015 by the Chief Minister

STATES GREFFE

2015   Price code: D  P.20

PROPOSITION

THE STATES are asked to decide whether they are of opinion

1. to agree that up to a further £14,000,000 should be made available in order to provide additional funding in relation to the Committee of Inquiry into Historical Child Abuse (now known as the Independent Jersey Care Inquiry') and to request the Minister for Treasury and Resources, if there are insufficient funds from existing sources that could  be  re-allocated  by  the  Minister  for  this  purpose,  to  bring forward for approval a proposition asking the States to agree to amend the policy for the use of the Strategic Reserve Fund and to make available up to £14,000,000 from the Strategic Reserve Fund to fund the inquiry;
2. to request the Council of Ministers, if necessary, to bring forward for approval a proposition to amend the Medium Term Financial Plan 2013–2015  accordingly,  in order  to provide  additional  funding  in relation to the Independent Jersey Care Inquiry;
3. to refer to their Act dated 6th March 2013 in which they approved the establishment of the Committee of Inquiry and approved its terms of reference,  and  whilst  these  terms  of  reference  should  remain unaltered,  to agree  that  a  separate  procedural  terms  of  reference should be appended in order that –

1. the scope of the Inquiry as set out in the Terms of Reference is understood as covering the period 9th May 1945 to 3rd April 2014;
2. the  Inquiry  operates  within  the  agreed  revised  budget  of £13.7 million;
3. the Inquiry and the States publish jointly on their websites details of their expenditure on a monthly basis;
4. the  Chair  presents  the  report  of  the  Inquiry  to the  States Assembly not later than 31st December 2016; and
5. the  Inquiry  makes  full  use  of  all  available  published  and unpublished reports which it deems relevant to the Terms of Reference.

CHIEF MINISTER

REPORT

1. Background

On 6th December 2010, the former Chief Minister, Senator T.A. Le Sueur , made the following apology –

"On behalf of the Island's government, I acknowledge that the care system that operated historically in the Island of Jersey failed some children in the States' residential care in a serious way. Such abuse has been confirmed by the criminal cases that have been before Jersey's courts. To all those who suffered abuse, whether confirmed by criminal conviction or not, the Island's government offers its unreserved apology."

In making that apology, the States of Jersey acknowledged failings in the Island's historical residential care system identified during the States of Jersey Police investigation, Operation Rectangle'. Operation Rectangle identified a total of 533 alleged offences reported and recorded between September 2007 and December 2010. Of these, 315 were reported as being committed at Haut de la Garenne children's home. Eight people were prosecuted for 145 offences, and 7 convictions were secured. Police identified 151 named offenders and 192 victims. As a consequence, on 9th March 2012, the Council of Ministers agreed the details of a Historic Abuse Redress Scheme for those who were in the States of Jersey's full-time residential care between 9th May 1945 and 31st December 1994. Detailed discussions with claimants' lawyers concluded that individuals concerned would prefer to settle matters, if possible, outside of public and adversarial court proceedings. Under the Scheme, which began in April 2012, claimants provided the relevant details and the Scheme lawyers assessed each claim.

Since 2008 there have been a number of independent reports published which relate to Children's Services. These have included –

• Williamson Report: An Inquiry into Child Protection in Jersey – June 2008[1]
• The Howard League for Penal Reform – Jersey Review: November 2008[2]
• Williamson Report: Implementation Plan – January 2009[3]
• Health, Social Security and Housing Scrutiny Sub-Panel Review: Co-ordination of Services for Vulnerable Children – July 2009[4]
• Report by the European Committee for the Prevention of Torture or Inhuman or Degrading Treatment or Punishment – July 2010[5]
• Youth Justice in Jersey: Options for Change – August 2010[6]
• Children and Young People: A Strategic Framework for Jersey 2011 (Consultation Document) – December 2010[7]

• Children and Young People: A Strategic Framework for Jersey – November 20118
• Care Inspectorate – States of Jersey Inspection of services for looked-after children – January 20129
• Health, Social Security and Housing Scrutiny Panel Review: Respite Care for Children and Young Adults – April 201210
• Action for Children – Review of Services for Children and Young People with Complex and Additional Needs – September 201211
• Care Inspectorate – Report of a follow-up inspection of services for looked- after children in the States of Jersey – September 201312
• Health,  Social  Security  and  Housing  Scrutiny  Panel  Review:  Child  and Adolescent Mental Health Services (CAMHS) – June 201413
• Services for Children – Service Improvement Plan 2011 – 201314
• Verita Report – Report to Council of Ministers15.

The recommendations and actions contained in these reports were reported to the Children's Policy Group16 on a quarterly basis and are contained in the Health and

Social Services Department's Service Improvement Plan. Since the approval of this Plan by the Children's Policy Group at the end of 2011, significant progress has been made in implementing many of the recommendations.

2. Financial costs to date Operation Rectangle

In September 2007, Operation Rectangle began as an investigation into historical child sex abuse accusations. It was made public in November 2007. In response to a written question from the former Deputy of St. Martin on 1st March 2011, the Minister for Treasury and Resources reported the expenditure to date by the various departments in relation to  the  Historic  Child  Abuse  Investigation. The  Minister  reported  that  on 8th September 2008,  the  States  approved  P.91/2008,  as  amended,  to  permit  the withdrawal under Article 11(8) of the Public Finances (Jersey) Law 2005 of up to an additional £7.5 million from the Consolidated Fund as a contingency sum to meet anticipated expenditure by various departments. The Minister's answer also included funding reimbursed from the £4.25 million approved by the States in P.83/2009. In

9 Care Inspectorate – States of Jersey Inspection of Services for looked-after children –

January 2012

9 Care Inspectorate – States of Jersey Inspection of Services for looked-after children –

January 2012

9 Care Inspectorate – States of Jersey Inspection of Services for looked-after children –

January 2012

10 Scrutiny Respite Care 2012

11 Action for Children – Review of Services for Children and Young People with Complex and

Additional Needs – September 2012

12 Care Inspectorate – Report of a follow-up inspection of services for looked-after children in

the States of Jersey – September 2013

13 Scrutiny Panel Review: CAMHS – June 2014

14Service Improvement Plan

15Verita Report

16Jersey's Children's Policy Group is made up of the Ministers for Health and Social Services,

Education, Sport and Culture, Home Affairs; and includes the Assistant Minister for Health and Social Services with special responsibility for children, and the Assistant Chief Minister with special responsibility for social policy

total, departments  had  spent  £11.3 million  to  date.  This  included  £7.5 million  for Home Affairs, £2.4 million for the Law Officers, £810,070 for Health and Social Services, £210,000 for Economic Development, £135,000 for Education, Sport and Culture,  £122,193  for  Property  Holdings,  and  £83,087  for  the  Chief  Minister's Department. £346,416 of the approved funding for this purpose was returned to the Consolidated Fund by public Ministerial Decision of the Minister for Treasury and Resources on 24th January 2011.

The Historic Abuse Redress Scheme

The Redress Scheme commenced in April 2012 and closed to applications at the end of September 2012. It has received 132 claims, and by January 2015 had settled 116 claims. The cost of the scheme to date is £4.6 million. Of this, £1.9 million has been paid in compensation and therapy costs to claimants.

The Inquiry

The States Assembly, at its meeting on 6th March 2013, adopted unanimously, as amended, the proposition in P.118/2012 – Committee of Inquiry into Historical Child Abuse (the Inquiry) (see Appendices 1 and 2). This approved the establishment of the Inquiry and its Terms of Reference (see Appendix 3).

The  States  Assembly  had  previously  asked  the  Council  of  Ministers  in  2011  to propose terms of reference for a possible Committee of Inquiry. Ministers in turn asked  Verita,  an  independent  UK  consultancy  firm  with  recent  experience  of investigations in Jersey, to report on how such an Inquiry might be framed. The subsequent Terms of Reference agreed by the Assembly are appended to this Report (see Appendix 3). In adopting P.118/2012, the Assembly recognised that the Inquiry would be complex and need administrative support as outlined in the Verita Report. The  estimated  known  and  quantifiable  costs  of  the  Inquiry  were  put  at  some £2.04 million and were considered in detail in section 2.12–2.15 and Appendix 3 of the Verita report.

Andrew Williamson, a UK social work consultant and author of the independent review of children's services in Jersey in 2008, considered these to be a fair reflection of the costs involved. However, it was borne in mind that this estimate did not include the legal fees, which could be significant. These may be incurred under legal advice for the Panel, legal costs of interviewees and the legal costs for a review of the decisions on whether to prosecute. Verita had advised that the legal costs of similar Committees of Inquiry may account for some 70% of the total overall costs. The magnitude of legal costs depend on the size of the Inquiry and the number of witnesses and their requirement for legal representation, all of which made it difficult to quantify precisely the full costs at the outset. However, the best estimate of the total costs of a Committee of Inquiry, including legal costs, was considered likely to be in the region of some £6 million.

Costs would need to be met from year-end carry-forwards and the Contingency for Emerging Items. There were no permanent staffing implications for the States as a result of the Proposition, although a number of temporary staff were needed. The cost estimate did not include officer time in departments which have dealings with the Committee – for example, for liaising with the Inquiry team, recovering documents, working with the States' lawyers around disclosure and supporting those who are witnesses. This meant that temporary staff were needed, either to assist in discharging

the States' obligations towards the Inquiry or to backfill staff who were assisting. It was identified that this, in turn, could have further cost implications.

Financial position

The  decision  taken  by  the  States  Assembly  to  adopt  P.118/2012  was  on  the understanding that the total cost allocated from the Central Contingency would not significantly exceed £6 million and that the Inquiry would complete its work within 12 months. This position was set out in the Minister for Treasury and Resources' comments  on  the  Proposition  presented  to  the  States  on  4th  March  2012 (P.118/2012 Com.(2) re-issue) and confirmed in the directions by the same, presented to the States on 20th November 2013 (R.145/2013). Copies of these comments and directions are appended (see Appendix 4).

In the early stages of the Inquiry, the Panel considered that the approved budget would be adequate for the Inquiry. The Greffier of the States wrote to the Panel on 4th April 2014, prior to the Inquiry's launch, stressing that the States Assembly had set a maximum amount that the Inquiry would cost the public purse and that it was essential that the amount was not exceeded. The Panel undertook to make regular monthly reports to the Accounting Officer on expenditure.

Following a series of subsequent discussions and exchanges of letters, a meeting was held between the Inquiry and the then Treasurer of the States on 17th June 2014 regarding the adequacy of the budget. The Council of Ministers, at its meeting of 30th July 2014,  received  a  report  from  the  then  Treasurer,  proposing  additional funding over and above the original £6 million. The total amounts proposed were £6.3 million for the Inquiry and £2.65 million for States Departments' internal costs (total  £9 million).  The  Council  of  Ministers  agreed  with  the  Treasurer's recommendation  and  instructed  the  Treasurer  to  inform  the  Inquiry  accordingly. Ministerial Decisions have recently been signed to give effect to transfers of additional funding to States Departments17 18 19 20.

Costs to date

Total costs from the Inquiry launch to the end of December 2014 are as follows – Inquiry (inc. Panel, Counsel and Solicitors' fees – see Appendix 5)  £5.2 million States Departments (inc. SOJP, LOD, CMD, HSSD, ESC and legal fees)  £1.8 million

17 MD-TR-2015-0004, 26th January 2015 http://www.gov.je/Government/PlanningPerformance/Pages/MinisterialDecisions.aspx?docid= 3e0d24b02ef3eea65341f9487d4e22b7_MDs2013

18 MD-HA-2015-0012, 27th January 2015 http://www.gov.je/Government/PlanningPerformance/Pages/MinisterialDecisions.aspx?docid= 7f4056870f5ff4e74ef58bb7d0b553da_MDs2013

19 MD-ESC-2015-0002, 27th January 2015 http://www.gov.je/Government/PlanningPerformance/Pages/MinisterialDecisions.aspx?docid= 46b8a9f2d3ba150014a4fefef5a45a7e_MDs2013

20 MD-C-2015-0010, 10th February 2015 http://www.gov.je/Government/PlanningPerformance/Pages/MinisterialDecisions.aspx?docid= fbd091f601e313e41f34f579ee41fc32_MDs2013  

Interim Funding for the Inquiry

In a letter to the Treasurer of the States dated 9th January 2015, the Greffier of the States, as Accounting Officer for the Inquiry's finances, made it clear that it would be unlawful for him to approve orders or pay invoices once the allocated budget had been spent.  The  Interim  Treasurer  was  instructed  by  the  Council  of  Ministers  at their meeting of 28th January 2015 to write to relevant Accounting Officers in order to authorise interim expenditure of up to £2 million until 30th April 2015. This interim expenditure would be met from contingencies if no alternative additional funding source was identified, and would be prioritised over all other existing calls upon contingency funds. Unless additional interim funding had been agreed, it would have been necessary for the Inquiry to stop all work by the end of April until a decision on future funding could be taken by the States Assembly.

3. Forecasts of Future Expenditure

In October 2014, the Inquiry revised its own forecast of total cost to £7.8 million. At a further meeting with the Treasury in November 2014, the Inquiry again revised its forecast total costs to £8.8 million. The increase in cost was explained as being driven by the predicted extension to the duration of the Inquiry (then proposed to conclude in November 2015), and the Inquiry team's anticipated increased legal costs to manage the very significant document redaction and review process. In December 2014, the Inquiry then informed the States Liaison Officer that their latest forecast was that the Inquiry should conclude in July 2016 and estimated that the Inquiry's own costs would be circa £11.3 million. A further forecast, dated 9th February 2015, now puts the Inquiry's own costs, including contingency and set-up costs, at £13.7 million, with the Inquiry due to conclude by October 2016. This updated forecast is attached (see Appendix 6).

The Minister for Treasury and Resources wrote to the Panel Chair to request that the Inquiry  provide  a  written  report  in  order  to  obtain  a  better  understanding  of  the expenditure to date and the basis for the future forecast expenditure, and so to enable an informed decision (see Appendix 7). The Inquiry Chair's response is attached (see Appendix 8).

In relation to departments, it is estimated that, based on current predictions and the Inquiry solicitors' requirements for redaction and provision of significant numbers of historic documents, the extended duration of the Inquiry may possibly increase the costs for departments in responding to the Inquiry from £2.64 million to £6.5 million.

The  total  costs  for  the  Inquiry  are,  therefore,  likely  to  be  circa  £20.2 million. Indications are that approximately £3.3 million of this sum (of which approximately £1.3 million is within States Departments) will fall beyond the end of 2015 and would therefore need to be addressed by an expenditure approval in the Medium  Term Financial Plan 2016–2019.

4. Source of Additional Funding

All avenues of funding are being considered by officers, including –

• Consolidated Fund – significant measures have been required to maintain a positive unallocated balance. There remains a risk that some of the proposed measures will not be achieved, which could result in insufficient funds at the end of 2015, which would give rise to further measures being required.
• Central Contingencies – there is currently a balance of £800,000 forecast at the end of 2015 after all existing commitments have been funded. Further funding pressures exceeding the forecast remaining balance by £1.5 million have already been identified. Existing commitments and estimates are under review.
• Criminal Offences Confiscation Fund – the remaining balance is being used to fund the  Police  Relocation  Project  (subsequent transfer  of  £6.4 million  to Consolidated  Fund  and  £3 million  to  Contingencies  for  the  Inquiry). £2 million will be left in the Fund to cover the risk of exceptional Court and Case costs.
• Other Funds – available funds have already been identified to transfer into the Consolidated Fund as part of the Budget 2015 Measures.
• Unspent capital allocations – a total of £8.8 million has been identified in the Budget 2015 Proposed Measures' to be returned to the Consolidated Fund from projects which do not require the funding in the current year. This will be reallocated for the same projects over future years to realign approvals with the latest proposed timescales for the projects.

Strategic Reserve Fund

Use of the Strategic Reserve Fund requires a proposition brought by the Minister for Treasury and Resources under Article 4 of the Public Finances (Jersey) Law 2005. Such a proposition would need to seek approval to vary the policy on the use of the Strategic Reserve Fund, which was set in September 2014 as part of Budget 2015 (P.129/2014,  as  adopted  as  amended).  The  current  policy  is  attached  (see Appendix 9).

The investment return on the Reserve in 2014 exceeded the amount required for the General Hospital project by circa £14 million in 2014 – if the States Assembly were to be asked, and were to agree, then a sum up to this amount could be allocated whilst preserving the capital value of the Strategic Reserve as agreed by the States. The known  additional  expenditure  required  is  currently  £11.2 million  (£20.2 million forecast, less £6 million approved by the States Assembly, less £3 million agreed by the Council of Ministers to be funded from Contingency/COCF). However, given the increases in costs to date, it may be prudent, if there is no other alternative, to request a transfer of the full potential sum of £14 million from the Strategic Reserve Fund, with  drawdown  of  any  amounts  in  excess  of  the current forecast  requirement  of £11.2 million to be agreed by the Minister for Treasury and Resources and the Greffier of the States and reported to the States Assembly. It should be noted that the current policy requires that the Capital Value of the Strategic Reserve Fund is maintained in

real terms, and so there may be implications for future financial decisions which arise from any use of the Fund which reduces the Capital Value.

5. A procedural Terms of Reference for the Inquiry in order to control costs

The Panel has reiterated, in discussions with the Interim Treasurer and the Greffier of the States, that it is keeping strictly to its extensive Terms of Reference and has resisted any attempts from external sources to go beyond them. The Inquiry Chair has stated that any variation to the Terms of Reference for the Inquiry would be a decision for the States Assembly.

In order to clarify a range of matters which have a direct bearing upon the costs of the Inquiry, it is proposed that a set of Procedural Terms of Reference are appended to the existing 15 terms of reference for the Inquiry, which would remain unaltered.

The Terms of Reference cover the period from 1945 to the current day, meaning that relevant new information is constantly being created, which also causes issues with current  live  civil  and  criminal  proceedings.  It  is,  therefore,  proposed  that  the Procedural Terms of Reference clarify that the scope of the Inquiry as set out in the main Terms of Reference will be understood as covering the period 9th May 1945 to 3rd April 2014 to coincide with the launch date of the Inquiry. This would enable the Panel to consider the present day services without requiring new information to be considered during the course of the Inquiry itself.

A significant number of independent reviews and investigations have been conducted into  the  police  investigation,  decisions  to  prosecute  as  well  as  current  children's services. The original terms of reference included under 12 "The Inquiry should make full  use  of  all  work  conducted  since  2007."  It  is  proposed,  therefore,  that  the Procedural Terms of Reference ask the Inquiry to make full use of all the various published and unpublished reviews, court cases, investigations, etc. ("the reports"), which have so far concluded so that the Inquiry are not required to re-investigate issues that have already been independently and robustly reviewed.

The length of the Inquiry has a significant impact upon costs and, therefore, the Inquiry should operate within the revised budget limit and present their findings to the Assembly on a specified date. The original proposition (P.118/2012) asked the States Assembly –

(g)  to  agree  that  the  Committee  of  Inquiry  should  be  requested  to complete its work within 12 months of commencing the Inquiry.

In order to provide some assurance to the Assembly, it is proposed that the Procedural Terms of Reference should include that the Inquiry operates within its agreed revised budget limit of £13.7 million and, as part of its commitment to full transparency of the work of the Inquiry, publish in parallel to departments, details of expenditure on its website on a monthly basis. The Inquiry would seek to ensure that its final report is presented to the Assembly by no later than 31st December 2016 (Note: the current financial forecast anticipates that the report should be presented by October 2016).

6. Implications

1. If further funding and procedural Terms of Reference are agreed to help address cost issues

The  Minister  for  Treasury  and  Resources  may,  under  Standing  Order  150,  give directions as to the expenses that a committee of inquiry may incur as well as how such expenses are to be funded. Such directions were presented to the States Assembly on 20th November 2013 (see R.145/2013) and referred back to earlier comments lodged by the Minister for Treasury and Resources (P.118/2012 Com.(2) re-issue). These directions would need to be updated if additional funds were provided in order to specify the new limit and to indicate the source of funding. An indication will also be given as to the period during which this funding will be made available (e.g. up to December 2016).

Whilst  some  of  the  Inquiry  costs  are  relatively  fixed  and  predictable,  such  as accommodation, some costs, such as those relating to witness hearings, depend upon decisions taken by the independent Inquiry in order to fulfil its Terms of Reference. Given the breadth of those Terms of Reference, the period of time that they cover and the emergence of new evidence, fresh lines of necessary investigation are almost inevitable as the Inquiry continues its work. There can, therefore, be no guarantee that the funding required might not increase again in the future.

The  drawdown  of  any  amounts  in  excess  of  the  current  forecast  requirement  of £11.2 million, but within the limits set by the Assembly, would be agreed by the Minister for Treasury and Resources and the Greffier of the States and reported to the States Assembly. Should the overall forecast of funding required exceed the limits set by the Assembly, then any decision to provide further additional funding would need to return to the Assembly.

With regard to the Procedural Terms of Reference, the Chief Minister would consult with the Chair of the Panel on the publication of an updated Terms of Reference document to include the appended Procedural Terms of Reference as decided upon by the Assembly in order to assist in addressing cost issues.

2. Impact upon Inquiry if further funding is not agreed

Should the Assembly decide not to provide additional funding for the Inquiry, then the Greffier of the States, as Accounting Officer, will be unable to authorise any further expenditure by the Inquiry beyond the existing limit, and the Inquiry may be required to cease work by the end of April 2015.

Further discussion would need to take place with the Inquiry Chair and Panel as to how to bring the Inquiry to an orderly conclusion. This, in itself, is likely to require further additional funding of circa £1.2 million to manage arrangements until such time as the Inquiry could be wound down and a "report to date" completed in order to capture the evidence presented thus far and any initial conclusions. In doing so, the Inquiry  could  present  the  evidence  from  Phase 1(a)  (background  evidence  and evidence from former residents of children's homes and foster care). As expressed during  former  Senator  F. du H. Le Gresley's  opening  remarks  to  P.19/2011;  this would: "allow those who had experienced abuse in the past to be heard, to know society supports them in speaking out and that their experiences are recognised." It

would not, however, afford those who have had allegations made against them the opportunity to tell their side of the story or any consideration of the authority response to the historic investigation or decisions in relation to prosecution. In this regard, it would not enable the Inquiry to fulfil any of the terms of reference as adopted by the Assembly as appended to this report. Further consideration would need to be given as to how the evidence gathered to date could be used to assist the UK Goddard Inquiry into Child Sexual Abuse.

There is currently no identified source of funding for the estimated £1.2 million that would be necessary in order for the Inquiry to produce a "report to date" should the Inquiry Panel agree to undertake such a report. If the Assembly does not support this proposition's request for additional funding, then such costs would need to displace other important earmarked calls upon contingency.

7. Conclusion

The Committee of Inquiry is a function of the Assembly. The Council of Ministers has a duty in relation to the Medium Term Financial Plan to bring before the Assembly any such requests for significant additional funding for the Committee of Inquiry in the context of competing demands for public funding. The Chief Minister is, therefore, seeking a decision from States Members in order that the Council can understand the will of the Assembly in relation to funding for the Inquiry.

8. Financial and manpower implications

The financial implications of this proposition are self-explanatory. Up to an additional £14 million would need to be made available to enable the Inquiry to conclude its work, and these funds would either be found by –

• re-allocating  funding  from  existing  Departmental  revenue  and  capital expenditure  budgets,  refusing  carry-forward  requests,  reallocating contingencies, or similar measures; or
• asking the States to amend the policy for the use of the Strategic Reserve Fund (often known as the Rainy Day Fund') so that funds can be used from that Fund for this purpose.

Part (b) of the proposition could only address that portion of the forecast additional expenditure  (£7.9 million)  that  falls  before  the  end  of  2015.  The  remaining £3.3 million  would  need  to  be  reflected  in  the  Medium  Term  Financial  Plan 2016–2019.

There are no new manpower implications arising.

PROPOSITION

HISTORICAL CHILD ABUSE: REQUEST TO COUNCIL OF MINISTERS (P.19/2011)

As adopted by the States on 2nd March 2011 as amended

THE STATES agreed to request the Chief Minister and the Council of Ministers to reconsider their decision and lodge a proposition asking the States to establish a Committee of Inquiry to investigate the following issues which remain unresolved in relation to historical abuse in the Island –

1. What measures were taken to address inappropriate behaviour from staff when it was  discovered,  and  if  those  measures  were  insufficient,  what  other measures should have been taken?
2. How did those in authority at political and officer level deal with problems that were brought to their attention?
3. Were there any mechanisms in operation to allow children to report their concerns in safety and what action was taken if and when concerns were voiced?
4. Was a consistent and impartial approach taken when deciding on which cases to prosecute; and was the process free from political influence or interference at any level?

PROPOSITION

COMMITTEE OF INQUIRY: HISTORICAL CHILD ABUSE (P.118/2012) THE STATES are asked to decide whether they are of opinion

1. to agree that a Committee of Inquiry should be established in accordance with Standing Order 146 to enquire into a definite matter of public importance, namely historical child abuse in Jersey; and that the Committee should be comprised of a senior legally qualified Chairman of significant standing from outside Jersey and 2 other members from outside the Island with suitable skills and experience;
2. to approve the Terms of Reference for the Committee of Inquiry (as set out in Appendix 1 to the Report of the Council of Ministers dated 5th November 2012);
3. to agree that the Chairman should be selected by a Panel comprising the Greffier of the States and 2 independent persons from the United Kingdom, with  the  selection  process  being  overseen  by  the  Jersey  Appointments Commission;
4. to agree that the 2 members of the Committee should be selected by a Panel comprising  the  proposed  Chairman,  the  Greffier  of  the  States  and 2 independent persons from the United Kingdom, with the selection process being overseen by the Jersey Appointments Commission;
5. to agree that the proposed Chairman should be requested to recommend any final changes to the Terms of Reference for the Committee of Inquiry referred toin paragraph (b) above for approval by the Assembly, and also to set out the proposed process for conducting the Inquiry having consulted with interested parties where necessary;
6. to request the Chief Minister to bring forward to the States the necessary proposition relating to the appointment of the Chairman and members and, if necessary, to the approval by the States of the final Terms of Reference if changes have been recommended by the proposed Chairman;
7. to agree that the Committee of Inquiry should be requested to complete its work within 12 months of commencing the Inquiry.

COUNCIL OF MINISTERS

COMMITTEE OF INQUIRY: HISTORICAL CHILD ABUSE (P.118/2012) Terms of Reference, as amended

The Committee of Inquiry ("the Committee") is asked to do the following –

1. Establish the type and nature of children's homes and fostering services in Jersey in the period under review, that is the post-war period, with a particular focus on the period after 1960. Consider (in general terms) why children were placed and maintained in these services.
2. Determine the organisation (including recruitment and supervision of staff), management,  governance  and  culture  of  children's  homes  and  any  other establishments caring for children, run by the States and in other non-States run establishments providing for children, where abuse has been alleged, in the  period  under  review  and  consider  whether  these  aspects  of  these establishments were adequate.
3. Examine the political and other oversight of children's homes and fostering services and other establishments run by the States with a particular focus on oversight by the various Education Committees between 1960 and 1995, by the various Health and Social Services Committees between 1996 and 2005, and by ministerial government from 2006 to the current day.
4. Examine the political and societal environment during the period under review and its effect on the oversight of children's homes, fostering services and other establishments run by the States, on the reporting or non-reporting of abuse within or outside such organisations, on the response to those reports of abuse by all agencies and by the public, on the eventual police and any other investigations, and on the eventual outcomes.
5. Establish a chronology of significant changes in childcare practice and policy during the period under review, with reference to Jersey and the U.K. in order to identify the social and professional norms under which the services in Jersey operated throughout the period under review.
6. Take into account the independent investigations and reports conducted in response to the concerns raised in 2007, and any relevant information that has come to light during the development and progression of the Redress Scheme.
7. Consider the experiences of those witnesses who suffered abuse or believe that they suffered abuse, and hear from staff who worked in these services, together with any other relevant witnesses. It will be for the Committee to determine, by balancing the interests of justice and the public interest against the presumption of openness, whether, and to what extent, all or any of the evidence given toit should be given in private. The Committee, in accordance with  Standing  Order  147(2),  will  have  the  power  to  conduct  hearings  in private if the Chairman and members consider this to be appropriate.

8. Identify how and by what means concerns about abuse were raised and how, and to whom, they were reported. Establish whether systems existed to allow children and others to raise concerns and safeguard their wellbeing, whether these systems were adequate, and any failings they had.
9. Review the actions of the agencies of the government, the justice system and politicians during the period under review, in particular when concerns came to light about child abuse and establish what, if any, lessons are to be learned.
10. Consider how the Education and Health and Social Services Departments dealt with concerns about alleged abuse, what action they took, whether these actions were in line with the policies and procedures of the day, and whether those policies and procedures were adequate.
11. Establish  whether,  where  abuse  was  suspected,  it was  reported  to  the appropriate bodies, including the States of Jersey Police; what action was taken by persons or entities including the police, and whether this was in line with  policies  and  procedures  of  the  day  and  whether  those  policies  and procedures were adequate.
12. Determine whether the concerns in 2007 were sufficient to justify the States of Jersey Police setting in train Operation Rectangle'.
13. Establish the process by which files were submitted by the States of Jersey Police to the prosecuting authorities for consideration, and establish –

• Whether those responsible for deciding on which cases to prosecute took a professional approach;
• Whether the process was free from political or other interference at any level.

If, for these purposes, or as a result of evidence given under paragraph 7, in the opinion of the Chairman of the Committee, it would be of assistance that one or more of the prosecution files underpinning any prosecution decision may be examined in a manner to be determined by the Committee.

14. Set out what lessons can be learned for the current system of residential and foster care services in Jersey and for third-party providers of services for children and young people in the Island.
15. Report on any other issues arising during the Inquiry considered to be relevant to the  past  safety  of  children  in residential  or  foster  care  and  other establishments run by the States, and whether these issues affect the safety of children in the future.

COMMITTEE OF INQUIRY: HISTORICAL CHILD ABUSE (P.118/2012) – COMMENTS

Presented to the States on 4th March 2013 by the Minister for Treasury and Resources P.118/2012 Com.(2) (re-issue)

COMMENTS

The Minister for Treasury and Resources has particular responsibilities under Standing Order 150 "Committee of inquiry: remuneration and expenses". These are set out below,  along  with  his  comments  on  the  financial  and  manpower  implications contained in P.118/2012.

1. Responsibilities  under  Standing  Order  150  "Committee  of  inquiry: remuneration and expenses

Standing Order 150 states –

Committee of inquiry: remuneration and expenses

The Minister for Treasury and Resources may give directions as to –

1. the remuneration (if any) of a member of a committee of inquiry;
2. the expenses that a committee of inquiry may incur; and
3. how such remuneration and expenses are to be funded.

The following comments are intended to inform States members of the steps that will be taken under this Standing Order. Should the States approve the Proposition, the Minister  for  Treasury  and  Resources  will  at  the  appropriate  time  issue  formal directions.

2. Financial and manpower implications Estimated Cost

An  initial  estimated  cost  of  £6 million  was  identified  by  the  Chief  Minister's Department. This was produced with some assistance from Verita, who have previous experience of similar Inquiries. Further validation work has since been undertaken by the States Greffe and States Treasury.

The detailed estimates are attached at the Appendix.

In  summary,  the  estimates  include  provision  for  the  following  areas  of  potential expenditure –

• Pre-Inquiry costs relating to recruitment of Chairman and Panel

• Remuneration  for  Panel  members  (plus  travel,  accommodation  and subsistence)
• Management and administrative support to Panel and Inquiry
• Legal and specialist support to the Panel and Inquiry
• Accommodation (including fit out, furniture, equipment and rental)
• ICT  systems  (including  Document  Management  and  storage,  Recording, Transcription) with associated IT support
• Transcription costs
• Document  research (including  Document  Officer  and  support  from  Jersey Archive)
• Legal support costs to witnesses, individuals named and relevant organisations
• Communications
• Contingency.

By their very nature estimates have to be based on assumptions, and this is the case here. The main assumption is that the actual Inquiry itself will be for one year. Other key  assumptions  relate  to  the  number  of  witnesses,  named  individuals  and organisations to be interviewed. Allied to this is the level of legal support (and costs) that will be required to support those individuals and organisations.

These estimates will be reviewed when the Chairman and Panel are appointed and their  approach  to  the  conduct  of  the  Inquiry  confirmed.  The  £6 million  estimate includes a contingency provision of £1 million recognising that there will inevitably be changes/developments as the process develops.

However it is considered essential that there is a clear indication given at the outset on both the likely timescale for the Inquiry and the Budget available.

Risks clearly exist for increased costs, should the timescale of the Inquiry be extended for whatever reason. This needs to be recognised and managed appropriately.

The  financial  and  manpower  implications  also  identify  that  the  £6 million  cost estimate does not include officer time in departments which have dealings with the Committee  of  Inquiry  and  which  may  lead  to  "backfill"  costs.  At  this  stage  the expectation is that Departments affected will be required to meet such costs from within their existing budgets.

Funding the £6 million

Should the States approve P.118/2012, it is recommended that up to £6 million be allocated from the Central Contingency that Members approved in the Medium Term Financial Plan. Such an allocation would be required to follow the approved and published procedures for the Central Contingencies (R.10/2012).

Management of the £6 million Budget

The £6 million would be allocated to the States Greffe as part of the States Assembly head of expenditure. The Accounting Officer would be the Greffier of the States and financial management support would be provided through the existing States Treasury arrangements.

Management of the Budget would be required to comply with all aspects of the Public Finances (Jersey) Law 2005 and all relevant Financial Directions.

If approved, the Inquiry would operate over 2 financial years – 2013 and 2014.

It  is  expected  that  expenditure  will  be  contained  within  the  £6 million  allocated. Ongoing  forecasting  will need to  be  undertaken  as  part  of  the regular  budgetary controls procedures.

The Minister for Treasury and Resources intends, after having received formal advice in the usual way from the Treasurer of the States, to issue directions under Standing Order 150 to the Committee of Inquiry. The Directions will cover budgetary limits, financial procedures and reporting.

Re-issue Note

These  comments  are  re-issued  because  the  second  page  of  the  Appendix  was inadvertently omitted from the original publication.

APPENDIX 4 (cont'd.)

COMMITTEE OF INQUIRY: HISTORICAL CHILD ABUSE – DIRECTIONS OF THE MINISTER FOR TREASURY AND RESOURCES

Presented to the States on 20th November 2013 by the Minister for Treasury and Resources

R.145/2013 REPORT

The  Minister  for  Treasury  and  Resources  may,  under  Standing  Order 150,  give directions as to –

1. the remuneration (if any) of a member of a committee of inquiry;
2. the expenses that a committee of inquiry may incur; and
3. how such remuneration and expenses are to be funded.

The Minister for Treasury and Resources, on 4th March 2013, presented to the States his comments on P.118/2012. These identified an estimated cost of £6 million for the Inquiry  into  Historical  Child  Abuse,  which  was  to  be  funded  from  the  Central Contingency.

Now that the Chairman and Panel have been appointed and their approach to the conduct of the Inquiry has been confirmed, the Minister for Treasury and Resources confirms that the sum to be made available for the Inquiry and the source of that funding are as set out in those comments on P.118/2012.

Rules for the future operation of the Strategic reserve fund

1. SUMMARY AND OBJECTIVE

1. The Minister for Treasury and Resources in his response to the Fiscal Policy Panel 2013 Report proposed before the 2015 Budget "to set out a strengthened definition of capital within the Strategic Reserve " and " provide greater clarity for States members before further funds are withdrawn to invest in our new hospital." (R.149/2013)
2. Therefore itis proposed that a Financial Direction be issued under Article 34 of the Public Finances (Jersey) Law 2005 (hereafter referred to as "the Law") and applies to all States-funded bodies as defined in the Law.
3. The purpose of this report is to set out the mandatory requirements in relation to the Strategic Reserve Fund. Specifically it includes –

• The purpose of the Strategic Reserve Fund
• The powers and limitations placed on the Fund by the Law
• Those empowered to carry out actions on behalf of the Fund
• Strategic Reserve Fund investment structure
• The use of the Strategic Reserve Fund.

4. Who should I contact if I have a question/need further guidance?

Further information and guidance can be obtained from your departmental finance  team  in the first instance, then  if  necessary  finance  may  need to contact:

2. SPECIFIC REQUIREMENTS

1. The purpose of the Strategic Reserve Fund

Introduction

1. The Strategic Reserve Fund ("the Fund") was established by the States in 1986 with an initial capital injection of £10 million to provide the Island with some level of insulation from external shocks.
2. The Fund was enshrined in law as a permanent reserve on the enactment of the Public Finances (Jersey) Law 2005. Article 4(3) of the Public Finances (Jersey) Law 2005 requires that the Strategic Reserve Fund cannot be used for any other purpose than specifically recommended by the Minister for Treasury and Resources and approved by the States (see section 2.2.2).
3. The States'  Economic  Growth  Plan  sets  out  the  importance  that macroeconomic stability has in creating the conditions for economic growth and low inflation. One key requirement for economic growth is the need to

provide a stable economy for businesses and consumers to make decisions in. The credit-rating agency Standard and Poor's awarded the States of Jersey a long-term credit rating of AA+ with a stable outlook in 2014.

P.133/2006

4. The policy for the use of the Strategic Reserve Fund was approved by the States in P.133/200621, which states that "the capital value is only to be used  in exceptional  circumstances  to insulate  the  Island's  economy  from severe structural decline such as the sudden collapse of a major industry or from major natural disaster".
5. An  example  of  severe  structural  decline  would  be  the  financial  services industry becoming uncompetitive and leaving Jersey. P.133/2006 states that "for the Island to deal with that and to try to smooth the process, £450 million is only a few years' worth of insulation against the loss of tax revenue." P.133/2006 further states that a "suitable long-term aspiration is to grow the Strategic Reserve to a minimum level of around £600 million.".
6. P.133/2006 policy for the Strategic Reserve Fund further says that the States may  decide  to sell  assets  currently  outside  the  Strategic  Reserve  Fund, e.g. privatisation,  and  add  the  revenue  received  to the  Fund.  The  income stream  from  the  assets  (e.g. past  dividends)  may  have  funded  States' expenditure. The Minister for Treasury and Resources could use this as an opportunity to invest the income-stream back into the Strategic Reserve Fund, or transfer the return (preferably in real terms) into the Consolidated Fund. Under  P.133/2006,  this  is  the  only  payment  possible  from  the  Strategic Reserve Fund to the Consolidated Fund (outside of conditions being met for the use of the Strategic Reserve Fund).

P.84/2009

7. The States subsequently approved P.84/200922, in which they agreed to vary the policy approved in 2006 –

"to enable the Strategic Reserve Fund to also be used, if necessary, for  the  purposes  of  providing  funding  for  the  Bank  Depositors Compensation Scheme to be established under the Banking Business (Depositors Compensation) (Jersey) Regulations 200-; and to agree that  monies  from  the  Strategic  Reserve  Fund,  up  to  a  maximum combined23 total not exceeding £100 million, should be made available if required to meet the States' contribution to the Bank Depositors Compensation  Scheme  and/or  to  meet  any  temporary  cash  flow funding requirements of the Scheme".

21 P.133/2006 Establishment of a Stabilisation Fund and Policy for Strategic Reserve', adopted

by the States on 5th December 2006.

22 P.84/2009 Strategic Reserve Fund: use for Bank Depositors' Compensation Scheme',

adopted by the States on 6th November 2009.

23 P.84/2009 capped the total cost of the proposed Scheme at £100 million, regardless of the

number of banks operating within the Island which may fail.

8. Under P.84/2009, if the Fund makes a loan to the Bank Depositors Compensation Scheme " itis envisaged that the loan will be repaid with interest and terms and conditions agreed by the Minister for Treasury and Resources".

P.122/2013

9. A fourth use of the Fund was approved by the States under P.122/2013[1], which agreed that –

" the Fund could be used in order to enable the creation of new hospital services as part of the proposals agreed by the States on 23rd October 2012 in adopting the proposition Health and Social Services: A New Way Forward' (P.82/2012) – to agree, as an exception to the approved policy for the use of the Fund, that the Fund may be used for the planning and creation of new hospital services in the Island, and to approve the transfer of an initial sum of £10.2 million form the Strategic Reserve Fund to the Consolidated Fund in 2014 so as to provide for these purposes, in accordance with the provisions of Articles 4(3) and 10(3)(f) of the Public Finances (Jersey) Law 2005".

10. The States have approved the cost of the new hospital services of an estimated £297 million will be financed from the investment returns of the Fund.

2. The powers and limitations placed on the Fund by the Law

1. Under Article 4(1) of the Law, the Strategic Reserve Fund " shall not be used to defray directly expenditure of the States".
2. In accordance with Article 4(2) and (3) of the Law, transfers to or from the Fund must be approved by the States through a proposition lodged by the Minister for Treasury and Resources.
   3. Those empowered to carry out actions on behalf of the Fund

1. The Accounting Officer of the Strategic Reserve Fund is the Treasurer of the States, who is personally accountable for the proper financial management of the Fund in accordance with Article 38(A)(2) of the Public Finances (Jersey) Law 2005.
2. Under Article 56C of the Law, the Fiscal Policy Panel (FPP) is required to prepare and publish an annual report upon the state of the economy in Jersey and the States' finances. Article 56C(2) of the Law states that the matters commented upon in the report must include –

1. the strength of the economy in Jersey;
2. the outlook for the economy in Jersey and, generally, world economies and financial markets;

3. the economic cycle in Jersey;
4. the  medium  and  long-term  sustainability  of  the  States'  finances, having regard to the foregoing matters; and
5. transfers to or  from,  the  Strategic  Reserve  Fund  and  Stabilisation Fund, having regard to the foregoing matters.

3. The Comptroller and Auditor General (C&AG) has a duty under the Law (Article 46(2)(a)) to provide the States with independent assurance that money withdrawn from the Fund has been used for the purpose for which it was authorised to be withdrawn.
4. The Public Finances (Transitional Provisions) (No. 2) (Jersey) Regulations 2005 (hereafter referred to as "the Regulations") (Chapter 2 – Investment of money owned or controlled by the States) requires the Minister for Treasury and Resources to develop and keep under review an Investment Strategy for money to which Article 6 of the Law applies (Regulation 3), which includes the Strategic Reserve Fund. The Investment Strategy must be presented by the Minister  to the  States  (Regulation 4).  Once  presented,  this  empowers  the Minister and the Treasurer of the States to carry out the required transactions necessary to invest the money of the Strategic Reserve Fund in accordance with the Investment Strategy.
5. The Treasurer  must  ensure  compliance  with  the  Investment  Strategy (Regulation 5) and is responsible for appointing investment managers and other qualified persons (Regulation 6).

4. Strategic Reserve Fund investment structure

1. In line with the Investment Strategy set by the Minister for Treasury (see section 2.3.4) and Resources25in order to meet the purpose of the Fund, the entire investment portfolio of the Strategic Reserve Fund is invested through the Common Investment Fund26.
2. The financial implications of P.84/2009 include the need for the Strategic Reserve Fund to hold £100 million in readily marketable assets if the Fund is to provide a source of funding to support the Banking Business (Depositors Compensation) (Jersey) Regulations 2009. This is within the scope of the current Investment Strategy.

25 R.139/2013 States Investment Strategies', presented to the States on 11th November 2013. 26 R.139/2013 States Investment Strategies', presented to the States on 11th November 2013.

5. The use of the Strategic Reserve Fund

Definitions

1. For the purpose of interpreting this report, the following definitions apply –

• Initial Capital Invested: the cumulative net capital invested in the Strategic Reserve Fund from inception (1986) to 31 December 2012 (£117,175,224). (Capital In – Capital Out = Net Capital Investment).
• Investment Returns: the actual or forecast cumulative investment returns  on  initial  capital  settled  into  the  Strategic  Reserve  Fund. Investment  returns  are  achieved  based  on  the  current  Investment Strategy in operation at that time.
• Total  Fund  Value:  the  initial  capital  invested  plus  investment returns, i.e. the Net Asset Value (NAV).
• Initial Capital Invested in real terms: the initial capital invested increased by annual Jersey RPI(Y) increases, using 31st December 2012 Fund value as a base (£651 million).
• Real  Investment  Returns:  the  difference  between  the  total  Fund Value and the Initial Capital Invested in real terms.

The Strategic Reserve Fund balance of £651 million is defined as the Capital Value of the Strategic Reserve Fund. The Capital Value of the Strategic Reserve Fund will be maintained in real terms using the Jersey RPI(Y) for the Inflationary factor.

Use of Real Investment Returns for the New Hospital Services

2. Any  future  Real  Investment  Returns  of  the  Strategic  Reserve  Fund  from 1st January 2013 onwards will be used to fund the costs of the new hospital services. The States have agreed to the draw-down of up to £297 million from the Strategic Reserve Fund for this purpose.
3. For calculation purposes, all Real Investment Returns will be accumulated from 1st January 2013 going forward, for future years. The Total Fund Value as at 31st December 2012 of £651 million will be used as the start position for the calculation of forecast Real Investment Returns for future years. The Real Investment Returns will then be available to be drawn down to meet the total costs of the project up to £297 million. Cash-flows will be drawn down in line with the project cash-flow requirements.
4. The following chart and supporting information forecasts the Real Investment Returns for years 2014 to 2024. This includes the latest assumptions available for future forecast Investment Returns (based on RPI(Y) +3%) and RPI(Y) as at June 2014.

5. The Forecasts above are estimates based on the actual forecast information available as of today, therefore actual results are likely to vary from the above.

6. The Treasury  Department  is responsible  for  tracking  the  actual  level  of Investment Returns available for draw-down from the Fund. They will prepare a schedule on a quarterly basis which shows the actual amount of returns available for use.
7. A  Treasurer's  Decision  is  required  to transfer  funds  from  the  Strategic Reserve Fund to the Consolidated Fund as and when monies are required to be withdrawn from the Fund.

3. GOVERNANCE

Legal Responsibilities

1. Details of those empowered under the Public Finances (Jersey) Law 2005 and the  Public  Finances  (Transitional  Provisions)  (No. 2)  (Jersey)  Regulations 2005 to carry out actions on behalf of the Strategic Reserve Fund are covered in section 2.3 of this report.

Scheme of Delegation

2. Where  the  Minister  and/or  Treasurer  delegate  their  financial  authority,  a Scheme of Delegation must be documented. The Scheme must detail what authority  has  been  delegated  to whom  and  any  limits  placed  on  that delegation.

Required/Assumed knowledge of this report

3. Accounting Officers: All

Finance Directors: All

Treasury Officers

Directors.