Public Accounts Committee - Approved Committee Minutes - 10 December 2007

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PUBLIC ACCOUNTS COMMITTEE (25th Meeting)

10th December 2007

PART A

All  members  were  present,  with  the  exception  of   Connétable  T.J.  du  Feu  and Connétable D.J. Murphy, from whom apologies had been received.

Deputy S.C. Ferguson, Chairman Senator L. Norman

Deputy A. Breckon

Deputy J.G. Reed R. Bignell C. Evans A. Grimes M. Magee

Advocate A. Ohlsson

In attendance -

C. Swinson, O.B.E., Comptroller and Auditor General

P. Monamy, Clerk to the Public Accounts Committee

Note: The Minutes of this meeting comprise Part A only.

Minutes. A1. The Minutes of the Meetings held on 26th November (Part A only) and 3rd

December 2007 (Part A only), having been previously circulated, were taken as read and were confirmed.

Away Day' A2. The Committee, with reference to its Minute No. A4 of 26th November 2007, proposed. agreed  that  further  consideration  to  the  desirability  of  holding  an away  day' 512/1(14) meeting would be held in abeyance, given the ongoing work being undertaken on

the Jersey Spending Review', until such time as the reports of the Comptroller and Auditor General were available.

States of Jersey A3. The Committee, with reference to its Minute No. A5 of 26th November 2007, Accounts for considered  possible  arrangements  for  further  public  hearings  in  relation  to  the 2006: further States of Jersey Accounts 2006.

public hearings.

512/1(10) The Committee recalled that the Comptroller and Auditor General had provided to

the Treasurer of the States an explanation of the Committee's aims and objectives in relation to the States' Accounts 2006 and that a response was presently awaited. The Committee further recalled that it was considered that there remained a lack of clarity around the financial figures which appeared in the States Accounts.

The Committee agreed that reference would be made in its annual report of the hearing it had held with the Treasurer of the States and Accounting Officers of a number of major spending departments, with the Treasurer's reply to be added in due course as an appendix to the annual report.

Summary of A4. The Committee, with reference to its Minute No. A6 of 26th November 2007, findings and received from the Chairman a paper which summarised the conclusions from the recommend- reports issued by the Committee to date.

ations in reports

published by The  Committee,  having  noted  that  the  summaries  also  included  text  from  the PAC to date. reports  in  order  to  clarify  their  context,  recalled  its  conclusions  and 512/(15) recommendations in respect of -

1. Report on the Property Plan;
2. Comments on Ministerial Decision MD-TR-2007-0057: Review of the Public Finances (Jersey) Law 2005;
3. Comments on report on Overseas Aid Commission;
4. Comments on report of the Comptroller and Auditor General on the Jersey Financial Services Commission;
5. Comments on the report on the notes on States Aggregate Expenditure;
6. Report on the Battle of Flowers.

The  Committee  also  noted  that  the  paper  included  the  summary  and recommendations arising from the Management of Sickness Absence within the States  of  Jersey,  which  had  been  published  by  the  Shadow  Public  Accounts Committee in 2004.

The Committee agreed to allocate specific responsibilities to individual members of the Committee in order to progress review of the recommendations made to date, with a view to following-up relevant matters with the respective Chief Officers involved. The under-mentioned sub-groups of members were appointed to consider the reports indicated -

Property Plan - Senator L. Norman

Mr. M. Magee

Review of Public Finances (Jersey) Law 2005 -

Chairman

Advocate A. Ohlsson

Overseas Aid Commission - Chairman

Advocate A. Ohlsson

Jersey Financial Services Commission -

Connétable  D.J.  Murphy  of Grouville

Mr. T. Grimes

States Aggregate Expenditure - Connétable T.J. du Feu of St. Peter Battle of Flowers - Deputy A. Breckon

Mr. R. Bignell

Management of Sickness Absence - Deputy J.L. Reed

Mr. C. Evans

Each  sub-group  was  asked  to  ascertain  the  status  of  the  matter  under  their respective purview with a view to including details in the Committee's annual report in due course.

Summary of A5. The Committee, with reference to its Minutes Nos. A6 of 26th November findings and 2007 and No. A4 of this meeting, noted from the summary of recommendations in recommend- reports published by the Comptroller and Auditor General (CAG) that a response ations in reports was awaited from the Treasurer of the States in respect of the Drugs Trafficking published by Confiscation Fund and the Criminal Offences Confiscation Fund and that it had CAG: Spring been indicated that said response in due course would encompass the comments of 2006 - Autumn all the various Treasury and Resources sub-groups involved.

2007.

512/2(7) The Committee agreed that the status of each of the matters arising from the recommendation of CAG which remained outstanding would be included in the Committee's annual report in due course.

Jersey Spending A6. The Committee, with reference to its Minute No. A1 of 3rd December 2007, Review' project: recalled that it had agreed that the major portion of the cost of the Jersey Spending request for Review' - which was now to be undertaken under its aegis without the involvement funding. of the 3 Assistant Ministers - should be met from the budget of the Comptroller and 512(3) Auditor General (CAG), subject to finalisation of the details regarding the source of

the necessary funding.

The Comptroller and Auditor General outlined to the Committee the view which had been expressed by the Council of Ministers that it supported the desirability for the proposed review to be demonstrated as being entirely unbiased. Review work to date had been aimed at assessing the extent to which it might be possible to reduce  States' expenditure  further,  and  under  what  conditions  this  could  be achieved. Whilst it was evident that Ministers were aware that some areas of expenditure  could  be  cut,  it  was  recognised  that  there  was  some  political sensitivities involved regarding any potential re-structuring of services in a different way.

It was recognised that the provision of financial resources to CAG by the Chief Minister was a requirement of the Public Finances (Jersey) Law 2005 [Article 50 refers]. The Committee noted that it was envisaged that the review work would be undertaken in 3 parts, namely -

1. Examination of the claim that savings of circa £35 million will have been made by 2008. The Committee noted that work on this aspect of the review was substantially complete, with a report examining the evidence put forward as validation of the claim being in the final stages of preparation in readiness for publication in January 2008, following which the holding of hearings would be considered.
2. A series of reviews, including both departmental reviews and cross- cutting reviews, involving the key departments of Health and Social Services, Home Affairs and the Law Officers' Department (in respect of  Court  and  case  Costs). The  consultancy  firm  PKF  had  been identified by CAG as potentially suitable to undertake the task on his behalf. That  firm  had  no  office  in  the  Island  and  their  proposed engagement would be on the basis of a fixed-cost contract @ £65,000 for each of the 3 elements, a total of £195,000. Following questioning of CAG, the Committee accepted that the cost envisaged represented value for money and that this part of the budget requirement was to be requested from the Chief Minister's Department. It was confirmed that any other costs associated with the review would be met from within CAG's existing budget allocation. The Committee noted that it was envisaged that the consultants' reports would be available at the end of March/beginning of April 2008.
3. The third stage of the review would examine the operation of the expenditure control mechanisms currently in place under the Public Finances (Jersey) Law 2005. Whereas current work had concentrated upon  ways  of  saving  expenditure  which  would  lead  to  potential reductions in services, it remained unclear as to why the normal' budgeting  processes  had  failed  to  achieve  reductions. The  overall message to be delivered by the review was accepted as being that a broad approach to States' spending would be adopted, with there being no  areas  not  capable  of  being  examined  in  detail  and  difficult questions asked.

The Committee, having examined the rationale for the review to be carried out, recalled that previous "Fundamental Spending Reviews" of States' expenditure had been undertaken internally over a wide-range of areas, with little ownership' of the outcome  being  evident. The  current  proposal,  however,  represented  a  close examination by external consultants, held in high regard by the National Audit Office, of short-term effect within limited but important areas of expenditure. It was noted that the involvement of departmental Chief Officers would be limited to the preparation of a lists of suggested potential savings.

The Committee accepted that the quantity of work to be undertaken was clearly too great for CAG to attempt unaided and that therefore consultants working under contract to CAG was an appropriate methodology to adopt, on the basis that the outcome of the individual reports would be channelled to CAG, who would produce an overall factual report therefrom. It was recognised that CAG's report would be published without delay and distributed directly to all interested parties, including the 3 Assistant Ministers previously associated with the review, and also the media, simultaneously.

The Committee, having considered the matter at length and being satisfied with the nature and scope of CAG's proposal to undertake a States' Spending Review which would feed into the 2009 Business Plan process, approved the request to the Minister for Treasury and Resources to reallocate funding from the Chief Minister's Department in the sum of £195,000 for that purpose.

The Chairman was requested to write to the Chief Minister accordingly.

Date of next A7. The Committee, having recognised the desirability of dove-tailing dates of its meeting and meetings with those of the Comité des Connétable s, noted nevertheless that the dates throughout dates of the Comité's meetings throughout 2008 were not yet available.

2008.

The Committee agreed that in view of the work being undertaken on the States' Spending Review, it would need to meet in mid-January and, notwithstanding that the date might clash with that of the Comité, decided to meet on Monday 14th January 2008, commencing at 12.30 p.m. in the Blampied Room, States Building, Royal Square, St. Helier .