Public Accounts Committee - Approved Panel Minutes - 14 April 2008

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PUBLIC ACCOUNTS COMMITTEE (30th Meeting)

14th April 2008

PART A

All members were present, with the exception of Connétable T.J. du Feu and Mr. A. Grimes, from whom apologies were received.

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

Connétable D.J. Murphy

Deputy A. Breckon

Deputy J.G. Reed R. Bignell C. Evans 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 and Part B.

Minutes. A1. The Minutes of the Meeting held on 10th March 2008 (Part A only), having

been previously circulated, were taken as read and were confirmed.

Matters arising. A2. The  Committee  noted  the  following  matters  arising  from  its  previous

Minutes -

1. Follow-up work on reports and recommendations (Minute No. A2
   1. of 10th March 2008) - The Committee noted that responses had now been received from a majority of the departments concerned, with the exception of Property Holdings. The Committee recalled that, on 10th December 2007, sub-groupings of members had been agreed for the allocation of specific responsibilities for ascertaining the status of the matter under their respective purview. It was further agreed that as far  as  possible  the  existing  sub-groups  would  be  assigned responsibility for the areas of interest arising from the ongoing States Spending Review;
2. States Spending Review (Minutes Nos. A3 and A4 of 10th March 2008) - The  Committee  noted  that  with  regard  to  reports  recently published by the Comptroller and Auditor General (C&AG) regarding "Pension schemes for States' Employees" in respect of "governance", "liabilities" and "status", consideration would in due course be given to the publication of a Committee comment on the reports, rather than a public hearing and the publication of a subsequent report by the Committee.

States Spending A3. The Committee, with reference to its Minute No. A4 of 10th March 2008, Review: received a copy of the draft "Report on the States' £35 m expenditure reductions" draft report which commented on particular issues which had been raised in the report by the arising from Comptroller and Auditor General (C&AG) entitled "£35 million Cost Reductions". public hearing on

11th February The Committee noted that whereas the C&AG's report had sought to identify and 2008 - comments verify the reductions in expenditure which had been claimed by the Executive, it invited. was apparent that -

512/1(16)

1. the approach to savings was not consistent across all Departments;
2. the definitions of savings were not consistent across all Departments;
3. the evidence for the savings was not available from all Departments;
4. there  were  doubts  as  to  the  sustainability  of  certain  reductions  in expenditure;
5. there  was evidence of  a lack of  concerted corporate action in the management of finances; and
6. measurement of Performance was not clearly defined.

The Committee further noted that the result of these issues had been that of the £35 million, the C&AG estimated that-

1. £21.9 million represented a reduction in expenditure;
2. £1.5 million represented deferred expense;
3. £5.8 million represented Corporate efficiencies;
4. £4.06 million was a reduction in expenditure from other sources or from exogenous factors; and
5. £2.5 million arose from increased income.

Members were invited to submit their comments on the draft report of the Committee  to the  Chairman  by  the  week  commencing  21st  April  2008, following which it was agreed that the Chief Executive of the States and the Treasurer of the States - who had both appeared at the public hearing held on 11th February 2008 - would be invited to review the final draft.

Draft States of A4. The Committee commenced consideration of the draft States of Jersey 2007 Jersey 2007 Financial Report and Accounts which had been provided to the Comptroller and Financial Report Auditor  General  (C&AG)  under  the  provisions  of  Article 32(1)  of  the  Public and Accounts. Finances (Jersey) Law 2005.

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Having noted that the C&AG had no input into the format of the presentation of the Financial  Report  and  Accounts,  members  of  the  Committee  commented  as previously that it remained difficult to reconcile the figures against prior years, rendering it problematic to obtain clear answers to relevant questions. Further, it was agreed that the approach adopted by Ministers in the formulation of their respective reports contained in the Annex to the Accounts resulted in no clear match being available as between the information provided in the 2 documents.

It was reported that at a recent public hearing under the aegis of the Corporate Affairs Scrutiny Panel, the Treasurer of the States - when giving evidence to a Panel investigating States spending plans for 2009 - had suggested that in relation to additional expenditure Jersey's political system was "inherently incapable of proper financial management." The Committee, having considered whose job it was to ensure that annual expenditure within each area came within agreed budgets, concluded that only departmental Chief Officers could influence the outcome.

The Committee agreed that it would be helpful for the C&AG to present to the forthcoming public hearing (which was scheduled for July 2008) a re-stated set of figures which would be more readily understood than those prepared by the Treasurer of the States. It was considered that if the present emphasis in the Financial Report and Accounts on net revenue expenditure (N.R.E.) was as a consequence of the present wording of the Public Finances (Jersey) Law 2005, then perhaps it would be desirable to seek to change that Law. The C&AG confirmed  that  N.R.E.  was  not  an  appropriate  figure  to  seek  to  establish control over as there was little control over the elements which comprised the net figure.

Harbours A5. The  Committee  noted  that  the  Chairman  had  called-in  for  review  the Department lease recommendation of the Property Holdings Department that the decision of the to St. Helier Minister for Economic Development regarding the surrender and renewal of the Yacht Club of lease to the St. Helier Yacht Club of its clubhouse at South Pier, St. Helier - the premises at South lease term being 26 years with a provision for the lessee to extend the term for a Pier, St. Helier : further 21 years, at a commencing annual rent of £40,000- be accepted (R.25/2008 review of refers).

recommend-ation

of Property The  Committee  noted  that  the  issues  arising  from  the  above-mentioned Holdings recommendation appeared to be -

Department.

1060/62/1 (a) should individual departments deal with issues like property when there (149) was a professional department (Property Holdings) to deal with such

matters?

2. why were the professionals at Property Holdings not brought in until the end of negotiations?
3. why was the lease inconsistent with those for surrounding properties at the harbour?
4. should the Harbours Department be providing subsidies without proper accountability or authorisation and why were these not shown in the accounts?
5. in view of the concerns raised about the various parcels of property held by other trading departments, were matters regarding property being dealt with by those without the appropriate expertise?

The Comptroller and Auditor General (C&AG) indicated some concern as to how a situation had arisen whereby the Harbours Department had apparently agreed to enter  into  a  lease  which  had  no  development  break  clause. However,  it  was recognised that full details of the background to the proposal were not yet available and that the review of the matter was therefore ongoing.

Treasury and A6. The Committee noted that the Minister for Treasury and Resources had Resources delegated  the  approval  of  internal  budget  transfers  within  the  Treasury  and Department: Resources Department to the Treasury Finance Director, the Income Tax Finance Ministerial Director  and  the  Assistant  Director -  Finance  and  Strategy,  Jersey  Property Decision Holdings (Ministerial Decision TR-2008-0035 refers).

TR-2008-0035 re

delegation of The Committee noted that the reasons for the decision were stated as being that the approval of delegation would decrease the administration currently existing around the process. internal budget It  was  noted  that  at  present,  Financial  Direction  5.26  required  a  Ministerial transfers. Decision as supporting documentation for internal budget transfers and that each 1446/1(60) year there were a number of revisions made to the budget of the Treasury and

Resources Department, none of which constituted major policy changes and most of which related to administrative amendments and re-allocation of funds to areas of greater need. Consequently, the proposed transfers would always be internal to the Treasury and Resources Department.

The Chairman indicated that she had requested further details of the rationale for the decision from the Minister for Treasury and Resources.