Senior civil servants warned Ministers over payroll scheme revival

Friday 24 December 2021

Two of the island’s most senior civil servants warned Ministers that reviving the payroll scheme to support omicron-hit businesses may be an inefficient use taxpayers’ money 24 hours before the proposal was announced, it has emerged.

Amid fears of a consumer confidence crisis caused by the arrival of the new covid variant, Competent Authority Ministers decided on Wednesday that they were ready to offer around £500,000 in Co-Funded Payroll Scheme (CFPS) support for December and January.

Under the relaunched scheme, the Government said businesses spanning hospitality, tourism and events, whose income has fallen by more than 20% this month compared to December 2019, will be able to claim up to £1,250 per worker.

Newly released correspondence has now revealed how, the day before on 21 December, Treasurer of the States Richard Bell and Customer and Local Services Director General Ian Burns warned that bringing back the CFPS may not be the best use of public money.

At its peak, the CFPS supported more than 15,000 jobs and 3,500 businesses at a monthly cost of £21m – but in excess of £5m was later found to have been overclaimed, and more than 500 businesses were chased by Government for repayment.

While Treasury officials were fully supportive of helping businesses, the pair said that “more effective and efficient policy measures could have been adopted.”

Pictured: Treasurer of the States Richard Bell and Customer and Local Services Director General Ian Burns.

Such were their concerns that they requested a ‘letter of instruction’ – a formal for officers to say that they are not prepared to take legal responsibility for the Ministerial decision, and want written notice to proceed with carrying out their wish. 

Writing to the Treasury Minister, Mr Bell and Mr Burns pointed out that the “current circumstances facing the economy differ from earlier in the pandemic” and that the risks to business did not appear “as stark as they were when government was required to place direct restrictions on trading in order to keep islanders’ safe.” 

Though they noted uncertainty-driven risks for businesses, the Treasurer and Director General also said there was “considerable additional risk that reintroducing the CFPS, specifically in these circumstances, could lead to a much higher level of economic inefficiency than has been experienced to date.”

Under normal circumstances, officers would thoroughly analyse a Ministerial proposal, delivering a ‘business case’ on how the idea could work in practice and its impact on public finances. 

However, the senior civil servants said there was not enough time available to do this, so gathering “sufficient evidence… to prove that reintroducing the CFPS in the current circumstances would be the most effective way to increase support” would not be possible. 

In light of this, they said the team could not demonstrate that reintroducing the scheme would “represent value for money to the standards expected of officials under the Public Finances (Jersey) Law 2019 and Public Finance Manual”. 

Pictured: Competent Authority Ministers, who made the original decision to bring back CFPS - External Relations Minister Ian Gorst, Economic Development Minister Lyndon Farnham, Chief Minister John Le Fondré, Health Minister Richard Renouf, Infrastructure Minister Kevin Lewis and Home Affairs Minister Gregory Guida.

“We consider it entirely appropriate for you to make a judgement to proceed given the economic risks facing businesses which you may consider outweigh those we have raised in this letter,” the pair explained. 

“It is important to note that the Competent Authorities Ministers have approved the reintroduction of the CFPS, based upon proposals we and officers have developed, and that in your role you are rightly required to take into account of the views of the Island’s elected leaders alongside those of officials.

“We also recognise that you and other ministers are able to take a broader view of the economic and social merits of intervention that officials are not entitled to in their roles.

“We stand ready to implement the Scheme that you and other Ministers have agreed once your instruction is received.”

Meanwhile, no comments or critiques were made in the letter about the extension of the Fixed Costs Scheme, which Ministers introduced at the same time as CFPS on Wednesday.

Responding to the letter, Treasury Minister Deputy Susie Pinel said she had been convinced the scheme should still go ahead in light of separate economic advice received, representations from the business community, and recommendations from other Ministers.

“I acknowledge the risks that you raised in your letter, but I consider that the outlook is so uncertain that further support is necessary as insurance policy because ultimately the economic and social risks of not providing further support outweigh the potential risks regarding financial efficiency.

“I note that the Chief Minister and other Competent Authority Ministers share my perspective and have approved the reintroduction of the CFPS, as have the other Ministers who are responsible for the scheme.

“I am therefore formally instructing you to implement the decision agreed by Ministers on 21 December to reintroduce the CFPS.”

In line with usual procedure for letters of instruction, the Treasury Minister shared a copy with the Government’s spending and governance watchdog, Comptroller and Auditor General, Lynn Pamment.