Innovation Fund Report: Confusion reigned

Tuesday 02 May 2017

A second damning report has now been published on Jersey's ill-fated Innovation Fund, this time castigating the way it was overseen by politicians and civil servants, with the result that no one seemed to know for sure who was actually responsible for it.

It's the first of three reviews of the Fund to be published, which were all commissioned after it emerged earlier this year that loan repayments totalling up to £1.4million of public money had fallen overdue, and may not be recovered, and one of the companies it supported had gone into liquidation. In the aftermath, Senator Philip Ozouf resigned his position as an Assistant Minister responsible for Innovation.

But today's report, written by Jessica Simor QC of Matrix Chambers, reveals that determining which politician was actually responsible for the Fund was at the heart of problems with the way it was organised.

The problem began in November 2014, after the last elections, when Senator Lyndon Farnham became Economic Development Minister, which was the Department in charge of the Fund. But, the Chief Minister wanted to move that responsibility to his own Department, with Senator Philip Ozouf running it as Assistant Chief Minister. Until that happened, Senator Ozouf was made Assistant Economic Development Minister so he could still take charge of innovation. 

But the report shows that although it seemed to be understood that Senator Ozouf was responsible for the Fund from late 2014, the actual process for transferring the legal responsibility wasn't finally completed until April 2016.

It seems that during that period, Senator Lyndon Farnham thought he had delegated responsibility for the Fund to Senator Ozouf, but this wasn't done properly:

"Senator Farnham therefore had legal responsibility for the JIF from 12 November 2014. In accordance with the intention of the Chief Minister, he appointed Senator Ozouf as his Assistant Minister for Economic Development for an interim period pending transfer of the JIF (along with Digital, Innovation and Competition) to the Chief Minister’s Department. Senator Farnham believed that in so doing, he had delegated his powers and responsibilities in relation to the JIF to Senator Ozouf. However, whilst I have found that he did delegate his powers, he did not make a written Ministerial Decision to that effect, nor was the delegation reported to the States in accordance with the requirements of Article 30 of the States of Jersey Law 2005 (“the 2005 Law”)."

But despite this confusion, the reports notes that Senator Ozouf thought he did have responsibility for the Fund from November 2014, and that was the true intention of both the Chief Minister, Senator Ian Gorst, and Senator Farnham, even if the correct legal steps to implement it hadn't been correctly taken: 

"One of the problems was that during the interim period Senator Ozouf understood that he had sole responsibility for the JIF and was answerable to the Chief Minister in relation to it. This he understood from three factors. The first was his letter of appointment as Assistant Chief Minister dated 4 November 2014, in which he was informed that he would have responsibilities in the areas of ‘Digital, Innovation and Competition’. The second was the nomination letter for Senator Farnham of the same dates, which excluded those areas from Senator Farnham’s (proposed) responsibilities. The third was advice he received to that effect. This was incorrect because the relevant areas of responsibility were only transferred to the Chief Minister on 1 January 2016 by the Transfer Regulations; neither his appointment letter nor nomination letter affected the fact that ministerial responsibility for the JIF ultimately rested with Senator Farnham until that date. Senator Farnham, correctly understood that as a matter of law he retained ultimate legal responsibility for the JIF."

In light of that intense confusion, Ms Simor has recommended that all Ministers receive better training:

"Ministers need to understand (1) the scope, meaning and effect of a letter of appointment; (2) the source of their powers, namely delegations and the enactment under which the relevant power(s) arise; and (3) their obligations to complete written Ministerial Decisions in accordance with Appendix 3, paragraphs 3 and 4 of the 2015 Code and to report delegation decisions to the States under Article 30 of the 2005 Law. It would also be useful if they were given training on their legal responsibilities, the roles and responsibilities of their officers and decision-making and recording."

She also recommends that each States Department is clearer in setting out who is responsible for what, and the relevant deadlines. 

Finally, Ms Simor recommends that the States find a quicker and simpler process for making organisational changes.