Concern over tranche one allocations from Fiscal Stimulus Fund
19th April 2021
When the Fiscal Stimulus Fund was adopted in November 2020 to support Jersey's economic recovery from the pandemic, the Government confirmed that the Corporate Services Scrutiny Panel would review the Fiscal Stimulus Oversight Group's drafted recommendations for consideration by the Minister for Treasury and Resources.
On 17 March 2021, the Panel was briefed by the Minister on the tranche one draft recommendations and asked to respond by 24 March. However, the Panel was not provided with evaluation information being gathered by Government from economists, quantity surveyors or other advisers. This lack of information and limited timeframe significantly restricted the Panel's ability to scrutinise the recommendations.
The Panel addressed high-level concerns over tranche one allocations of the 'Fund' of £25 million in a letter and comments to the Minister on 26 March, including concerns that:
- The Fund will be allocated without much diversification benefit across the Island's sectors and demographics.
- Some proposed allocations failing to use public finances in a visionary and innovative way to benefit Jersey in the short and long term.
- Use of the Fund within States Bodies and arm's length organisations risks financing projects that should appear in the Government Plan.
- Information in relation to tranche two should be provided to the Panel earlier.
- Investment into construction-based projects could result in the economy overheating, a concern reiterated in the Fiscal Policy Panel's letter to the Minister for Treasury and Resources on April 7.
The Minister responded to the Panel by letter on 14 April and confirmed that the written report was exempt. The Panel remains concerned as:
- The written report has not been released into the public domain, restricting the Panel's ability to make its full comments public and ensure transparency regarding the use of public finances.
- Fundamental points within the Panel's letter have not been considered, which could prevent the Fund from fulfilling its core objectives to reduce short-term falls in unemployment and long-term damage to the economy.
- It will receive the second tranche of recommendations next week which, given that a States Meeting is being held, will significantly reduce the Panel's ability to complete a review in the one-week timeframe.
Chair of the Corporate Services Scrutiny Panel, Senator Kristina Moore, said: "Although the principles of the Fiscal Stimulus Fund seem beneficial to the Island, we have found that some of the projects supported will be unlikely to support those areas of the economy that have been most impacted by the pandemic. As such we remain seriously concerned in the use of public finances in a way that lacks timely, targeted and temporary support nor performs in a forward-thinking manner, especially when these funds have been borrowed by the Government."
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