We are the Public Accounts Committee (PAC). It is our role to make sure public money has been applied for the purpose intended by the States, extravagance and waste are being eradicated and sound financial practices are being applied throughout the administrations of the States. Instead of holding Ministers to account we hold the Chief Executive and Accountable Officers to account for their actions. We also follow up on the work of the Comptroller and Auditor General (C&AG) to make sure their recommendations are being taken forward by the Government.
The Annual Report and Accounts contains a breakdown of the activities and initiatives carried out by the different elements of the States of Jersey, including government departments, non-ministerial departments, funds and some subsidiary companies.
The Annual Report provides information on how the Government of Jersey has performed over the course of the year in the context of its objectives (‘the Performance Report’) and on how the States is governed (‘the Accountability Report’). It also provides information on the financial performance of the States of Jersey covering both assets and liabilities and income and expenditure
EVIDENCE CONSIDERED
We undertook a 'desktop' review of the Annual Report and Accounts 2023 in order to identify key themes and issues. We also requested information from the Government on the processes it uses to inform the various sections of the report.
We also wrote to Chief Officers of Government of Jersey Departments to raise several questions about their performance in 2023.
We then held a public hearing with the Treasurer of the States on 5th June 2024 to question them on the processes and key themes we found and gather more information about the manner in which the accounts were put together. We also held a public hearing with the Chief Officer for Health and Community Services on 3rd July 2024 to understand what was being done to address the financial position in the department that was identified in 2023.
In total, the PAC made 35 findings and 10 recommendations within its report.
So what did we find out?
The PAC found the following key points in relation to the Annual Report and Accounts 2023
Accessibility of the Report
The view of Government officials is that the principal audiences for the Annual Report and Accounts document are Islanders, States Members and investors/businesses wishing to do business with the Island and it is intended to be focused towards the different audiences in different parts of the report. The PAC found from social media polls that the majority of respondents on X and Instagram were not aware of how to find or access the Annual Report and Accounts, however, on LinkedIn the majority of respondents were aware. There is a commitment to improve the accessibility of the report and promote it further to Islanders.
The PAC has recommended that the Treasurer of the States, in collaboration with the Communications Directorate, seeks feedback from Members of the Public in relation to how to improve overall awareness of the report, the information provided and the mechanisms for accessing the Annual Report and Accounts document. This should identify the channels through which islanders would prefer to access information with a view to incorporating these improvements within the presentation of the 2024 Annual Report and Accounts. The overall length of the Annual Report and Accounts document has decreased 28% from 411 pages in 2021 to 295 pages in 2023. It should, however, be noted that the departmental annual reports have been presented as an annex in 2023. A summary version of the 2023 Annual Report and Accounts has been presented on the government website alongside the overall report in line with previous recommendations of the PAC. Whilst the PAC notes and appreciates this improvement from previous recommendations, this is still not a true digital summary which should provide engaging links that can be accessed easily on each topic.
Assurance to Ministers on Departmental Performance
An assurance process is in place to identify which information is included within the Annual Report and Accounts. Service Performance Measures are verified by the Chief Statistician, after which assurance is provided by the Chief Officers as to the information being provided for the report. Contextual information that is provided within the Annual Report and Accounts stems from the departmental annual reports where key messages and stories are identified for inclusion. These are then taken through the Chief Officers and the Chief Executive Officer for consideration as to whether the messages are to be included in the document. There is an expectation that Ministers would be provided with the Departmental Annual Reports prior to being submitted for inclusion in the Annual Report and Accounts. The PAC has, however, not had assurance that this is a mandated part of the Annual Report and Accounts process.
The PAC has, therefore, recommended that formal guidance is updated that mandates a departmental annual report must be submitted to the relevant Minister for review through the form of a briefing, prior to it being submitted for inclusion in the Annual Report and Accounts.
Reporting on staffing numbers
Information in relation to employee numbers per pay bracket was removed from the 2023 Annual Report and Accounts with a link to the States Employment Board annual report provided instead. This information, however, was presented in a different format to the 2022 Annual Report and Accounts. The PAC is of the view that this has not improved openness and transparency in this area, especially given the current public interest in public sector employee numbers. Within the 2024 Annual Report and Accounts, reporting on employee numbers per pay bracket should be included and compared with prior year actuals, as set out within the 2022 Annual Report and Accounts. This should be expressed as number of employees per pay bracket as opposed to only percentages of overall headcount within the departments as in the 2023 States Employment Board Annual Report.
Internal IT Controls
There are multiple timescales in place for implementing improved internal controls within government IT systems. The professional standards programme is expected to have three processes in place by August 2024 for incident management, change management and problem management. Privileged access users controls is expected to be implemented by the end of December 2024. The wider programme on cyber-control is a 3-year programme with the level of investment anticipated and budgeted for.
The PAC has recommended that the Chief Information Officer provides it with the detailed action plan for introduction of new internal IT controls by the end of Quarter Three 2024.
Consolidation of States Owned Entities
There is an intention to consolidate both Jersey Telecoms and Jersey Post within the 2025 Annual Report and Accounts. The PAC notes, however, that the current position of four states owned entities not being included within the overall group accounts is not a consistent approach when others are included within the accounts and does not meet International Accounting Standards and this position was accepted.
The PAC has recommended that the Treasurer of the States should, by the end of Quarter Four 2024, bring forward an action plan that sets out the intent and timescale for the full incorporation of the remaining four States Owned Entities within the overall States of Jersey Group Annual Report and Accounts.
Health and Community Services Financial Recovery
The Health and Community Services Department had a budget deficit of £32.5 million in 2023 resulting from funding for various programmes being withdrawn (including COVID-19 related spend and Jersey Care Model funding) plus required services not being included in the budget (£17 to 20 million). It is expected that the underlying run rate of deficit has existed since 2019 but was masked by additional funding for services. Spend in 2023 within Health and Community Services was £330 million which was an increase of £83 million (33%) from the 2022 level of £247 million.
The increasing costs and resulting deficit within Health and Community Services has arisen from a number of factors including increased pay awards in 2023, drug inflation and an increased reliance on agency staff and additional overtime payments for substantive staff. Health and Community Services Agency staff costs within 2024 are estimated to total between £14 million and £15 million. This is, however, tempered slightly by the net gain in terms of recruitment to permanent staff positions within Health and Community Services. This has now reached a point where more staff are being retained rather than leaving the department.
The Financial Recovery Plan within Health and Community Services is focused over a three-year period and intends to achieve savings through a reduction of the reliance on agency staff (£12 million over a three-year period), improvements in procurement processes (£3 – 5 million over a three-year period) and an increase in income generation by the department (£3 million in 2024 with an increase to £5 million by 2025). This will equate to £25 million of savings over a three-year period. The Financial Recovery Plan within Health and Community Services is being delivered by a turnaround team with a budgeted cost of £546’000 in 2024. The team has been appointed externally due to the limited capacity within the management roles within Health and Community Services to deliver the additional savings on top of their existing workloads. The percentage of management posts within Health and Community Services currently sits at 1.5% of the total headcount.
The PAC has recommended that the Chief Officer for Health and Community Services presents a quarterly report to the States Assembly which details the progress of the Financial Recovery Plan delivery team within Health and Community Services in delivering the agreed savings and efficiencies within the Financial Recovery Plan. These reports should also provide a risk rating to identify any areas where savings are being impacted and any potential associated additional risk that might occur.
Value for Money
£7 million worth of efficiency savings (as part of the Value for Money Programme) were achieved in 2023 through not allocating the full amount of non-pay inflation with a further £3 million being removed from departmental budgets for a total of £10 million. £3.2 million of specific savings were made within Health and Community Services, however overall expenditure within the department had risen by 23% in 2023. There is ongoing work within each Government of Jersey Department to achieve Value for Money savings throughout the financial years 2024 – 2026. The PAC has, however, found that there are inconsistent interpretations of what items are to be included within the Value for Money savings.
The PAC has recommended that the Government of Jersey brings forward a consistent definition for what is meant by ‘Value for Money’ and ensure this is applied across all departments with the aim of ensuring better prioritisation of resources. The presentation of the Annual Report and Accounts 2024 should include this definition.
Operating Balance
There has been an increase of 17% in overall expenditure between 2022 and 2023. The main reasons for this increase have been growth within Health and Community Services and inflationary pressures including pay awards. There is a commitment in the current Common Strategic Priorities to curb growth in the public sector through reprioritising and reducing existing budgets where appropriate to deliver government objectives. The Government of Jersey should ensure that a clear narrative is provided within the 2024 Annual Report and Accounts to highlight the effectiveness of measures to curb growth in the public sector in line with the Common Strategic Priorities.
Overall Government Performance Reporting
In response to written questions asking about the percentage of service performance measures not being met in 2023, the PAC was redirected to the performance report within the Annual Report and Accounts as well as the Annual Service Performance Measures on the Government website. Whilst this information is available, the manner in which the information is presented is difficult to analyse by a member of the public wishing to learn more about the overall performance of a specific department. There does not appear to be a ‘birds-eye’ view of performance across the organisation that can be made readily available to interested parties. The information is available on the Government website; however, there does not appear to be a format for this information to be presented that clearly identifies areas where performance has been strong and areas where performance requires improvement.
The PAC has recommended that The Chief Executive Officer should ensure, in time for 2024 Annual Report and Accounts, that tables are included which highlight the number of service performance measures which have been meet, or not, by the individual departments along with appropriate and easily understandable narrative stating how plans to improve performance shortfalls. Whilst annual service performance measures are available elsewhere on the government website, the PAC suggests that this information be included in an easily accessible ’bird’s-eye’ view of the whole organisation.
Customer Feedback and Complaints Handling
Data in relation to customer feedback and complaints within Health and Community Services and schools is not included within the overall figure presented in the Annual Report and Accounts. Health and Community Services utilises an independent 'Picker' survey to gauge customer satisfaction which scored 83%. Due to the differing nature of the data that collected by Government it has not been included in the overall percentage reported and is therefore missing from the overall performance assessment in this report regarding customer feedback on these important government provided services. Schools do not currently utilise the central feedback management system to record and handle complaints. A decision has been made, however, for this to be implemented across schools in time for the academic year commencing September 2024.
The PAC has recommended that, given the importance of Education and Health in the overall performance of the Government, some form of customer feedback from these two areas should be included in subsequent States of Jersey Annual Report and Accounts.
CONCLUSION
In conclusion, the PAC is pleased to note that improvements have been made to the presentation of the Annual Report and Accounts for 2023, including a reduction in the number of pages and separation of sections for improved access. There is, however, concern that limited feedback has been sought from relevant stakeholders to understand how best to improve accessibility of the document and provide clarity for members of the public. Furthermore, there was limited promotion of the publication of the report and limited public engagement about its presentation and headlines.
Having reviewed the themes presented across the evidence gathered, the PAC would also highlight the need for focus to be placed on the following key areas alongside the recommendations it has made within the report.
Government costs – overall costs have increased between 2022 and 2023 by £146 million (a 16.7% increase). There are efforts ongoing to continually improve efficiencies and deliverables in key performance areas while reducing or removing expenditure in non-essential areas. There are, however, concerns in relation to the spend required within Health and Community Services, and the financial recovery plan will need to be monitored closely to ensure it is achieving its stated outcomes.
Information Technology – a number of Internal IT controls have been scheduled for improvement and work is ongoing to ensure this is implemented and actioned accordingly. There are a number of key projects within the IT space underway at present and these will need to be monitored to ensure they are achieving stated outcomes as well as providing value for money.
Recruitment and Retention and Use of Consultants – this area has particularly interested the PAC and evidence gathered highlights the continued reliance on agency staff, especially within Health and Community Services (though this is decreasing compared to previous years). There will need to be greater focus on undertaken local training in order to better upskill the workforce in the coming years and reduce the need to rely on agency staff. This will need to be considered as part of the overall value for money programme of Government.
The PAC would like to thank all of the Officials who provided evidence for its review and answered its questions. We hope that the recommendations made within the report constructively assist Government in its work for the 2024 Annual Report and Accounts and we look forward to receiving the Executive Response to this report.
PAC MEMBERSHIP
Deputy Kristina Moore and Deputy Karen Wilson did not participate in this review due to previous Ministerial responsibilities held during 2023. Deputy Inna Gardiner and Deputy David Warr noted conflicts of interest as previous Ministerial Office holders during 2023 and did not participate in any aspects of the review related to their previous positions.