Minister fends off criticism of 'unexplained' £200m underspend

Monday 28 February 2022

The Treasury Minister says there is no need for an independent investigation into a £200m underspend following calls from the Chief Scrutineer.

After being called out by Senator Kristina Moore for signing a ministerial order transferring the underspend into various pots for 2022, Deputy Susie Pinel has said that she is following a well-established process which is already independently audited.

£115.7m of budgeted money was not spent by departments or on projects, while the General Reserve, the Government’s savings pot for unforeseen contingencies, underspent by £84.2m.

Senator Kristina Moore, who leads Scrutiny, said that the “budgeting discrepancy” should have been disclosed sooner and meant that December’s Government Plan, which she reviewed on behalf of backbenchers, was based on “fictitious grounds”.

She is calling for an independent investigation to explain why “such a massive budgeting error came about and why it was hidden from Scrutiny, States Members and the public until now”.

The Treasury Minister, however, has said she was carrying out her responsibilities as defined by the law.

“Under the Public Finances Law, the Minister for Treasury and Resources has explicit powers and responsibilities to review and - if required - to transfer amounts unspent in one financial year into the Reserve, or a major project, for the following financial year,” she said.

Pictured: The new Sewage Treatment Works project at Bellozanne underspent by £4.5m in 2021. The money will be transferred to 2023-25.

“The transfer of unspent amounts is a well-established process and has been used for many years.

“The majority of the unspent sums at the end of 2021 are either unspent capital for project budgets as a result of delays, or rescheduling of projects or unspent contingency - reserve - funds. 

“The level of capital project unspent funding for 2021 is broadly similar to previous years.

“£85m of the total unspent was amounts held in the reserve specifically to meet unforeseen pressures. The sums are held in reserve, as the hope is that they are not required. Reserves have been maintained at far higher levels due to the uncertainty of covid, but fortunately, this money was not required in 2021."

She added: “In addition, nearly £80m of the underspend in 2021 related to projects. The bulk of these approvals are being transferred to 2022 to allow them to be spent on these projects, as originally approved by the States Assembly. 

“Where departments have confirmed that the funding hasn’t been required in 2022, funding will be reinstated in the Government Plan for 2023.

“This still allows £93m to be returned to the Consolidated fund [the Government’s current account] to reduce our borrowing requirements for covid, in line with Amendment 25 to the Government Plan 2022-2025, and further to £50m used to also reduce the borrowing requirement.”

Pictured: An upgrade to the Government's fisheries vessel came in £47,932 under budget, which will be transferred to the Consolidated Fund to reduce borrowing.

Deputy Pinel said that the lodging period for the Government Plan was longer than other propositions to allow Scrutiny to carry out its work, and so it was published in September, using information available at that time.She added that the Council of Ministers regularly reviewed reports on the Government’s financial position and latest forecasts were provided on a quarterly basis.

She said: “The Government’s finances are already independently audited by external auditors, and public finances are also reviewed by the Public Accounts Committee (PAC). 

“The Comptroller and Auditor General has recently issued a report in respect of financial management during the pandemic. 

“Given this existing level of oversight, that the unspent sums are straightforward, and that the PAC is entitled to instigate its own review, there is no need for a further body to be established to review these unspent sums. 

“Currently the Financial Statements for 2021 are being audited and once that is complete, the Treasury will be in a position to explain more fully the results for 2021.”