St Helena : St Helena Financial Secretary Launches Budget for 2011-12
Submitted by Saint Helena Herald (Public Relations Information Office) 30.07.2011 (Article Archived on 13.08.2011)
The Budget Estimates for 2011-12 represent a significant breakthrough in modernising the public sector’s financial management processes. For the first time, the figures presented in this budget are based on the principles of accrual accounting, where operating expenditure and capital investment have been clearly separated.
Financial Secretary Launches Budget for 2011-12
The Budget Estimates for 2011-12 represent a significant breakthrough in modernising the public sector’s financial management processes. For the first time, the figures presented in this budget are based on the principles of accrual accounting, where operating expenditure and capital investment have been clearly separated. SHG has adopted accrual accounting with effect from 1 April 2011 and these estimates reflect that development. In addition, the budgets for individual Directorates are shown on an ‘Outputs’ rather than an ‘Inputs’ basis. That is, the cost of the various types of services provided by each Directorate is shown, together with a quantitative and qualitative description of the deliverables to be provided under each of those service categories.
Historically, SHG has issued budget estimates which provide great detail about what inputs public money is authorised to be spent on, but not what the government Directorates actually produce with that expenditure. In other words, there was no way to assess whether the public was receiving value for money from their taxes and grant-in-aid contributions. This year’s Estimates concentrate on what Directorates are expected to produce and how much that production will cost. Directors may be held more accountable for what they do with the public funds with which they are entrusted. The emphasis is changed from one of ‘expenditure control’ to one of ‘production management’.
The way in which the Budget Estimates were prepared this year has also altered significantly from historical precedent. In previous years, the process of assessing the budget bids of all Directorates and then rationing them to fit within the available funding was undertaken by the Administration, with final approval provided by Councillors. This year, the budget rationing process has been led by Council from the beginning. Councillors have made the difficult choices of which services should be included and which should be dropped in order to remain within the funding limits. For the first time, Councillors have taken full responsibility for the budgetary management of St Helena. This is a significant step forward in the maturing of the governance processes of St Helena. Indeed, it is an essential precursor to the leadership responsibility which will be placed on future Councils as the level of aid funding declines and St Helena becomes more and more responsible for managing its own economic destiny.
In comparing these Budget Estimates with those of previous years, readers may notice a number of other differences. The Estimates only cover one year (2011-12) rather than the three year period normally shown. This was due to a decision taken by the Department for International Development (DFID) to delay their Development Aid Planning Mission this year and to make it a one-year settlement only. The three year funding cycle will be resumed from next financial year.
Another difference is that the individual Directorate Estimates show no historical comparators. This is because of a discontinuity in the time series as a result of the change to an ‘Outputs’ basis of presentation. From next financial year, comparative information will again become available, but this year is the first of its kind and has no prior year for comparison.
SHG has been restructured from ‘Departments’ into ‘Directorates’. This has meant that some functions previously undertaken by one organisation have been transferred to another, meaning some loss of comparability between the current and previous years.
Finally, these Estimates are based on accrual accounting conventions, rather than the previous cash accounting convention. This has meant that the input costs are separated between operating expenses and capital investment. Although a table comparing current year expenditure to prior year by input category for SHG as a whole is shown, there are differences which mean that the two columns are not wholly comparable. However, they do provide an approximation as to how input costs have changed between the two years.
Overall, SHG has made substantial progress in the development of its Financial Management capability over the past twelve months. These Estimates reflect the progress that has been achieved to date, and establish new levels of public accountability for improved service delivery.
Summary of the 2011/12 Budget
The table below summarise the total budgeted expenditure and income for the coming year.
Total Recurrent Budget
Expenditure within the Recurrent Budget increases in 2011/12 from the 2010/11 budget due to:
· Additional £0.4M in fuel costs
· Increase of £0.9M in Shipping Subsidy
· Further £0.4M for additional Technical Co-operation posts
The chart below shows where each pound of Recurrent Budget income will come from in 2011/12