Business and digital

Air links

I made this speech when the States debated an amendment by Deputies Mc Swiggan and Dorey to halt air route subsidies proposed in the budget.

Sir, I think the recent review by Nyras is all the proof that is needed that an air link strategy, governance framework, whatever you call it is needed.

Whether or not Aurigny is run well at an operational level, it was obvious from reading that report that an air links strategy is essential. Indeed it supports what many of us have been saying for quite a while now.

Economic Development subsidise non-States airlines to fly certain routes, which must have had at least some impact on the Gatwick route and then Aurigny launch a service to Southampton undercutting another airline and increasing its losses as a result, despite the fact it is directed to break-even. 

Now Deputy Parkinson said how Health & Social Care don’t just use the services of the hospital. Well no we don’t but neither do we pay for services that are not needed. At the moment we are subsidising routes with empty seats. 

Indeed, according to the report, there has been a 35% increase in capacity in London & SE England, but no commensurate increase in numbers travelling. As Nyras say, 

‘extra capacity has delivered more passengers across routes so the growth has to date been inefficient on what is marginal activity at best.’

Then there’s a requete about a longer runway – I’m not going there. And, as Deputy Ferbrache just reminded us we have a PSO still dragging out.

It’s a right mess as far as I can see but what is obvious is that there needs to be a coordinated approach to air links.

It’s a shame we need a proposition to this budget to make it happen but I am grateful P&R have included it and will support proposition 38.

But I am in two minds about this amendment. I am very tempted to support it as I think the position we are in is quite frankly ridiculous but at the same time understand that we are where we are now. By cutting off the funding before we have agreed what the policy is does seem to be cart before the horse. I’m therefore not going to support it but I do have a lot of sympathy for why it was laid.

Digital transformation

In June 2019, the States of Deliberation approved a major policy letter putting in place a new structure to support the provision of digital services, supporting the appointment of Agilysis as a key partner in their delivery. The cost runs to over £200m over 10 years and is the biggest contract the States has ever entered into. Here is the speech I made in the debate.

Sir, I have to say that the amount of time and effort that has gone into this project so far has been truly astonishing. The fact it has taken 2 years to get to this stage, which even the bidders have said has been a process like nothing they have experienced before, should give us considerable reassurance. It appears from the 2018 accounts that it cost the States at least £1.1m last year alone and goodness knows what it has cost the bidders. BUT this is a major contract after all.

AND absolutely essential. From an HSC point of view we desperately need our main software system upgraded but, far more than that, for a complete change in ways of working that investment in technology will enable us to make. From digital by default such as sending text messages and emails rather than thousands of letters, from telehealth and telecare to enable people to enable continual monitoring of their conditions, to the development of the care passport and use of robotics. The opportunities in the health and social care arena are massive. I’m thankful for the effort that has been put in up to now to replace the LAN which will be a real enabler, and the recently successful implementation of the MOSAIC system for Children’s services.

So what I am about to say needs to be seen in that context.

As HSC President I met each of the 2 finalists once. They had different strengths and weaknesses but I came away thinking either would have been partners we could’ve worked with. So, to that extent I am quite comfortable with how the process was conducted.

But, in all honesty, I suppose my concern is less with who we partner with and more to do with the States’ role in the partnership and what it is we think we will get out of it.

And I suppose what has started the niggling doubt is the costs. For me the cost projections don’t add up. Well, not literally but metaphorically.

We are told savings will be made, but it would appear from page 41 not until year 7. The problem for P&R is the Medium Term Financial Plan. Savings have to be made to the bottom line.

BUT it is a clear as crystal, at least to me, that the reform dividend is far from guaranteed.  The system can be more effective and efficient, but will the overall costs really go down? How can they when you see what the partnership is meant to deliver? Improved service support, provision of on-island and integrated data infrastructure, maintaining information assurance and security, building digital capability and capacity?

Rarely will increased IT provision lead to reduced costs and I speak as someone who has implemented a few IT programmes – on time and on budget – with the right team around me. Admittedly on a smaller scale, but a few million pounds nonetheless.

More often than not, IT investment is needed just to stand still. From a business point of view it can lead to increased profits, BUT rarely IF AT ALL does it actually reduce expenditure. Certainly that has been true for the States of Guernsey since it bought its first computer in 1968 and when it was said at the time it would mean less need to employ  more staff. The number of which at the time totalled 2, 827 and the Guernsey Press was recommending the use of more consultants to prevent the increasing wage bill.

Moving on to a related issue,  from what I can work out part of the reason for the increased costs is down to the creation of what is described as a ‘small expert team’ to provide service assurance and strategic direction. At a cost of £1.4m that is quite an expensive small team. It is unclear from the policy letter whether this is existing staff, new posts being created, or a bit of both. Given that we are told there has been little in the way of assurance and strategic direction up to now I am assuming quite a lot of that is more new posts. 

The other linked concern I have is in relation to the governance structure that is shown on page 34. The creation of 4 new Boards on top of the three already in existence sitting under P&R does concern me. It would appear we will have an awful lot of people tied up in meetings, writing up minutes and producing lots of schedules. Being seen to be busy and making progress is not the same as actually doing something.

Don’t get me wrong, I do believe that a governance structure is required and that there is the right skill set to achieve it. Previous IT projects have been undertaken on skeleton budgets without the right expertise and have consequently failed, costing the States dearly.

However, this is at a time we are told there are at least 200 posts that can disappear. We have already seen additional senior posts created as part of public sector reform and we will see more under these proposals. At the same time, although we are advised of the, quite considerable oversight structure, we do not know individual responsibilities. Who is accountable? Clearly P&R are from a political point of view, as all these new boards report through to them, but who at officer level? We are after all talking about the biggest programme ever taken on by the States.

Nowhere in this policy letter are individual accountabilities, roles and responsibilities set out other than on page 57 in relation to when the online payments system goes wrong. BUT that is after the event. Who actually are the Partnership Board, Delivery Board, Technology Portfolio Group and Technical Service Management Board? There are a lot of people involved, but where does the buck stop? 

This debate may not be the place to talk about individuals who can’t speak here, but I would like the President to confirm that he would be happy to provide members with such information after today.

The final area I would like to focus on is MedTech. 

I can see real synergies with the finance industry as a relatively low risk investment compared to biotech for instance.

However, other than this buzz word being used here and there, there is little to no detail of what the intention is, which is an incredibly broad and wide ranging but also a highly competitive industry.

What I would welcome is that HSC is kept informed in relation to work on MedTech. We are, under our new model of care, committed to innovation. The desire to take part in clinical trials, for example, is there and the need to do so will, I believe, grow, as we seek to ensure we are adopting the latest technologies not only to support future sustainable but also provide the best care to the people of Guernsey. 

Sir, in summary, I can say that a shake-up of the IT provision in the States is long overdue. The lack of proper focus on it over the last 20 years has been shameful quite frankly. This has reflected the lack of appreciation that you need an effective and efficient back office to get fully customer focused frontline services. This policy letter does represent a step change in thought process as far as that is concerned.

However, the key measurement of success cannot be savings to the bottom line. If it is it will fail like all other programmes before it. No, we have to be open and honest with ourselves and understand that if what we want is for the public sector to be run effectively and efficiently as possible on the back of the latest technology, it will cost more. How much more will depend on how well the programme is managed with P&R really needing to step up to the plate to properly scrutinise and ensure that all the promises being made will actually become a reality and working closely with the Principal Committees.

Sir, I am happy to support this policy letter, but I will be taking considerable interest in progress, not just from an HSC point of view, but for the whole of the States of Guernsey.

Trading Standards

I laid a successful amendment against the Commerce and Employment Department’s policy letter on trading standards. My speech is below.

Sir, This is quite a straightforward amendment

And deals with an omission from the policy letter. Whilst paragraph 7.10 discusses price indications and essentially the need for fair and transparent pricing of products it does not specifically consider sales, offers or price comparisons. I can only believe this was an oversight as these play an important part of any retailer’s operations.

I had originally thought it would be sufficient just to add to 1g, the line, including sales offers and price comparisons. However, advice from Crown Advocate and HM Comptroller was that as thing stand there are not enough policy instructions to refer to. Hence the amendment in this form.

Now, I’m not one to want add more burden to businesses, however I do believe there is a need for some form of protection to the consumer in this area and this is not something that should concern any retailer who acts in an ethical manner. Perhaps as someone with a retail business I see where others may be trying it on. For instance, those that seem to have year round sales, where the original price probably only existed for 1 week in February. Also, seeing a growing trend to display sale offers through comparisons with the UK. For example, stating that an item is now 25% the UK price. That is misaleading and irrelevant.

So, this amendment merely seeks that the department comes back with proposals to deal with a matter that I think should really have been included in this policy letter.

Sunday trading – December 2015

The debate in December 2015 arose out of an amendment laid against the legislation, which itself arose out of the States agreeing to complete deregulation earlier in the year. Debate at that time has been shortened as a result of a successful guillotine from Deputy Kuttelwascher. I didn’t have the opportunity to speak then, but did so during the December debate. My speech is below.

Sir,

Before I start I should declare that I have an interest in this debate as a part owner of a business that runs both a Shop and Tearoom, which both open on a Sunday. And great for your Christmas shopping needs may I say.

I didn’t get to speak when Sunday Trading was debated because of the guillotine. But I was still happy to vote for it at the time as I thought everything that could be said has been said and I’ve heard nothing new today that would make me change my mind. I would just like to make a few points in response to some of the comments made not just today but in the original debate.

I have to say that 2 years ago I was uncertain about whether total deregulation was the way to go. I was probably more in the camp of tidying up the laws. However, having seen the ridiculous amount of legislation and administration that is needed to maintain a system that current retailers are working around, I have become convinced that we should ditch it altogether.

How daft is it that certain businesses have built premises just small enough to allow them to open on a Sunday? Why can one business rake in money on one day a week because others can’t open?

On that note  I do recall Deputy Gillson’s speaking during the last debate about those people who lived near shops and who welcomed the fact that Sunday gave them a bit of peace. Well, I can tell you, that for those people living next door to a certain food store in St Martin, quite the opposite is the case, where it is the busiest day of the week by far. In fact it is not just the immediate neighbours, with standing traffic down the Merriennes that day.

Virtually all the emails I have received against deregulation focus on Guernsey’s way of life changing irredeemably. Well, why, if there are so many businesses that can open on a Sunday now but don’t? Why will the fact that just a few more shops can open change life as we know it forever? It won’t. And if people don’t want to shop on a Sunday, they definitely won’t. The amti-lobby believe a floodgate will open. It won’t. It won’t because Guernsey is different.

The point is this is not really about Sunday trading, it is Sunday opening. Just because you open your shop, it doesn’t mean that you will see any customers. If the customers don’t come, the shops won’t open. But that’s the point. Why should Government interfere? This should be a decision between retailers and their customers.

The argument that small shops will be forced to open is non-sensical given that there are already shops that open now and compete with those that aren’t.

Just why is the retail sector the only industry on the island that is prevented from opening on a Sunday by law? No other business on Guernsey is restricted in this way? There are  huge numbers of businesses who choose not to work on a Sunday. The pertinent word here is choose.  No one stops the lawyers, accountants, fund administrators from working on a Sunday to meet deadlines on the Monday. If a service can be provided and charged on a Sunday, why not physical goods?

Is it government’s job to tell specific businesses when they can open their shop? You can buy a packet of crisps from a pub on a Sunday, why not a supermarket?

By supporting this amendment we are really only putting off the inevitable. It will come back . And honestly, don’t we have more important issues to deal with in this Assembly? Of course we do – issue of population, housing, economic development, public sector reform that will have far more impact on the people of this Island.

So please don’t support this amendment. Now is the time for deregulation, just think about it, we are getting rid of unnecessary laws, not creating more of them – how refreshing is that?!

Aurigny recapitalisation

I made the following speech about the recapitalisation of Aurigny in November 2015. The reference to running an airline arose out of a comment made by Deputy Lester Queripel who said anyone could do it, to which other Deputies responded that it was not so simple.

Sir,

I don’t profess to know anything about running an airline but what I will focus on is something I do know more about and that’s finance and accounting. I agree with Deputy Harwood that we have no choice but to support this report BUT, as Deputy Domaille would say….

The T&R Minister has frequently made the point that we should be making the right decision in the right order. I would question whether we are doing that in supporting the capitalisaition now. Given the issues raised by the Scrutiny Committee report and specifically the need to determine a strategic way forward – should we be investing £25m into this venture above other worthy Capital projects?

 

We are all aware that a number of key social and environmental strategies have been and are going to be laid at this meeting seeking ‘revenue’ funding. In addition, the Budget debate last month highlighted that the ‘Capital Reserve Cash Flow’ is under pressure from numerous commitments.

 

The decision to invest £25m of public money, is a major decision and must be done so based on a strong evidence-based rationale that provides a convincing argument.

With regard to this specific SCIP project, the investment of ‘capital’ into a wholly-owned subsidy could quite frankly be perceived as a somewhat academic accounting exercise given that the ‘liabilities’ are effectively already held by the States.

However, the advantages to the Company of an influx of capital to address its insolvent position are obvious. Certainly ‘refinancing’ unattractive / uncompetitive overdraft and loans would certainly appear to be sensible. And if that is the purpose, I’m not entirely sure, even though the T&R Minister tried to explain this in his opening speech, quite why the Bond can’t be used.

The problem is that the management of the Capital Reserve is a complex balancing act involving £100s of millions of public money and the Policy Letters of this nature MUST provide clear rationale presented with ABSOLUTE clarity but it really doesn’t seem to be the case here.

Sir, prior to the debate I did ask the T&R Minister and CEO of Aurigny what the accounting treatment would be should this policy letter be approved. It was unclear from the States accounts, which is probably not a surprise, and it was difficult to ascertain when we did not have the accounts of Aurigny. The publication of the latter has helped, although it is still not completely transparent. Presumably the provision for accumulated losses of £19.9m within the States accounts will be reversed and a benefit will be seen in the general reserve where the provision has been posted to date. Interestingly, the provisions haven’t gone through the revenue account; this would be the expected normal accounting treatment and would have the effect of reducing surpluses or increasing deficits. It will be interesting to see how future losses are treated.

Furthermore, the ‘Return on investment’ is NOT clearly stated within the Policy Letter. In many ways, less would have been more in this Report; less background and more specifics on the rationale for this investment.

Whilst the recapitalisation course of action may be reasonable there is a lack of a coherent convincing argument presented within the Billet why this spending should be prioritised. I attended the Deputies’ briefing given by Aurigny and it wasn’t very clear from that. So I guess where I am on this policy letter is I want to support it, but that the authors to this report have hardly done their best to make a convincing case. Disappointing to be perfectly honest, especially given the sums involved.

I do welcome the review that will come out of the amendment we have just approved. It was something that I was pushing for when I was on Commerce & Employment.

So whilst I do have reservations over the recapitalisation I will support the report, as amended.

Milk Distribution System

Commerce and Employment Department laid a policy letter in September 2015 setting out its recommendations for a new milk distribution system. In effect it opened up the system to anyone and allowed shop retailers to transact directly with the Dairy. During the debate an amendment was laid that gave 2 options. The first proposed leaving things more or less as they are, the other sought to adopt the Department’s recommendations, but requiring the Department to look at possible compensation. My speech is below.

In the end, the latter option was supported and Commerce and Employment was instructed to come back to the States with their revised proposals.

Sir, now we have got a choice: keep things more or less as they are or pay the milkmen off.

The current model is nonsensical, and perpetuating it just retains an inherently inefficient model. The Dairy do not want it and this is all about the optimum distribution regime for the Dairy.

I said, when we debated the Fallaize amendment last year… it became abundantly clear to me when I was on the original Dairy Review Group that this was an industry suffocated by its past and never more so than in the distribution system. As a result of Members approving the amended report last year, the dairy industry has been able to start looking to the future – and a positive one at that – except that it has to retain the current distribution system. So I will oppose option 1 which makes no sense at all.

So can I support option 2?

 

Well, this does not say ‘pay compensation’ nor does it say from where that compensation should be paid. However, I do have concerns about what the potential impacts of paying compensation would be. The first is I will not support any compensation being paid for by the Dairy – that is something I fundamentally oppose. Should this amendment be passed, and C&E come back with that proposal, I will not support it.

Deputy Fallaize’s draft amendment did include the use of Dairy funds to pay compensation and I made it clear this would not be acceptable to me – and I therefore thank Deputy Fallaize for making the changes that he did, which then became incorporated into Deputy Le Lièvre’s amendment.

I have been in communication with the Guernsey Farms Association since before the debate and they had already voiced concerns that there would be calls for compensation, and that it would be to use Dairy funds. Dairy reserves are there to invest in the machinery and equipment to maintain the Dairy, to ensure we have a 24/7 supply of milk and the Dairy is a 24/7 operation. Equipment does not come cheap, especially for what is a micro-dairy operation in a time of mass-consolidation in the dairy industry in the UK, EU and beyond.

Relatively speaking, the cost of equipment is expensive and, as in any industry which has to comply with environmental health regulations, the requirements for more equipment – and more modern equipment – just increases.

I can say from my first-hand experience, having been on the Dairy Management Board, we have a fantastic Dairy. The management and workforce are doing a brilliant job converting a first-class raw material – thanks to the hard work of our farmers – into a first-class product that is loved by Islanders and, in the case of our butter, by those beyond our shores.

I am not prepared for our Dairy to have to stump up any cash for the retailers that will pump up the price of our milk and affect sales to the disadvantage of our farmers who, let us not forget – and it is so easy to do so – will have seen a massive £1 million reduction in subsidy in less than four years’ time. Why should they suffer again? After all, if it was not for our farmers the milk retailers would have nothing to sell.

The GFA – thanks in no small part to their Chairman – have approached the original report in a very professional manner. We should not abuse their professionalism or do anything more that could impact on their livelihoods.

My second reservation is the precedent that compensation might set. If we pay off these retailers, who else is going to come out of the woodwork and claim that because they have suffered a loss because of the States of Guernsey they should be compensated – businesses that took out leases on the Pollet because of passing trade from cruise liners but who now do not see that because they land at the Albert Pier, and the businesses losing money as a result of roadworks?

Whilst this amendment does not state that we should give the retailers compensation, I will not approve any subsequent report recommending compensation until I have assurances that this will not set a dangerous precedent. There is nothing in the report that gives me an assurance in relation to that and I will not support it.

Finally, I would just like to say that I think this is the time for the retailers to start working with C&E. I think the engagement has not been there in the past and now it is their opportunity. I agree with C&E’s recommendations as to the optimum distribution method and I am minded to support the alternative Proposition that was not fully considered in the policy letter – and I believe it should have been. But I would ask C&E to bear in mind my concerns as, unless they are addressed, I will not and cannot accept any recommendations for compensation that are subsequently tabled.

Leopardess Replacement – Sursis

In September 2015, the Commerce & Employment Department submitted a policy letter to the States, recommending the replacement of the fisheries patrol vessel, the Leopardess. I was not convinced that the replacement was necessary nor the highest priority. There were also concerns about the process that has been undertaken in reaching the recommendations. Myself and various other Deputies has called on the Department to withdraw the policy letter before the debate, but they had refused to do so. Consequently, I laid a Sursis against it seeking an independent survey and analysis as to whether it would make more sense maintaining the Leopardess, or to build a new vessel. The Sursis was passed.

 

My opening speech is below.

Sir, Members will be aware of the concerns that have been raised by various parties as to the recommendations within this policy letter since it was published. Whilst we have to be cognisant of the fact that some may have a financial interest in a different decision, that has certainly not been the case of the vast majority.

I am laying a sursis because of the uncertainties arising, not only from the representations made by those with marine expertise, but also from the contents of this report. Firstly, I question the immediate need for replacement. According to the outline business case attached to this report the vessel was surveyed by – excuse my pronunciation – Van Woerkom, Nobles & Ten Veen in 2012 who concluded that, ‘She is in good, to very good condition for her age. The… engines and hull life could last for a further 10 years… if she is maintained to the highest standards… ‘ And unsurprisingly with age can come ‘an increasing risk of age related failure.’

I therefore question the urgency of a replacement now. Those with a knowledge of the vessel believe that with the appropriate planned maintenance, the risk of age-related failure and emergency repairs is reduced and that there are many serviceable years ahead for the Leopardess. This is a vessel that only undertakes 600 to 700 running hours a year. To replace a vessel in such a condition concerns me, that the best value for money option has not been chosen.

Secondly, I am concerned that the tender process did not give a sufficient opportunity for local businesses to tender. The decision to choose an aluminium hull at an early stage, as well as the fact that the requirement for prior experience meant that all other potential bidders were effectively disqualified, does not bother me that due process has not been followed and therefore the best value for money option has not been chosen. Commerce & Employment, of all Departments, has a duty of care to ensure that local businesses are given every opportunity to do the work they want. After all, its mission statement is, ‘To strive for the creation and maintenance of a dynamic and diversified economy for the benefit of the island community’. And surely marine trades are areas of expertise we should be encouraging.

Thirdly, I have concerns over the costings that have been used in the policy letter as follows: capital costs that calculate increase at higher than the rate of inflation, but maintenance costs are not. It is unclear why that is the case. Option 6 is to replace at the end of the vessel’s design life in 2018, but capital expenditure is included into 2019 and 2020.

Similarly, option 8 is to replace in seven years’ time, but capital expenditure is shown in 2022 and 2023. Both changes would reduce the capital costs and maintenance over the period. The level of maintenance from refit costs are not explained. In terms of the refit, it is unclear whether this has been assessed by an independent surveyor or a marine engineer.

Now, the outline business case states that the costs of the Leopardess since 2007 have been approximately £500,000, but it is not clear whether all these costs arise from general maintenance or include specific one-off incidents that should be excluded in any assessment of the costs of running the vessel.

There are also other uncertainties that arise from claims that have been made by local marine experts who hear that engines could be procured at significantly less cost than quoted in the report, with the work being able to be done here. The outline business case shows on page 2335 that the different between the discounted total whole life cost of option 6 and option 8 is only £170,245 or 4% of total cost, which could be considered negligible given the uncertainty surrounding estimates, such as a discount rate of 3½% compound for MPV, building inflation, which has been set at 6%, and the maintenance cost.

These issues raise enough uncertainty to me that we should not be making any decision today to approve the recommendations in this report. And given the fact that we have a funding deficit on the Capital Reserve I believe extra care and caution is needed to ensure we do not approve a project which may not be of the highest priority. Whilst we could just reject the recommendations, this will give no direction to Commerce & Employment. Accordingly, this sursis seeks to have the Department commission an independent survey to establish the Leopardess’s present condition and future likely maintenance costs, to see whether she should be replaced now or not. At the same time, it also makes sure that if replacement is found necessary that the tender process is reopened.

I request that Members support this sursis.

GFSC Accounts 2014

The GFSC’s 2014 accounts were debated in July 2015. My speech is set out below.

 

Sir, Before commenting on these accounts, which incidentally have been prepared in accordance with recognised accounting standards and are accompanied by an audit report that gives a true and fair view, I would like just to thank the Commission for the informative sessions that they have held for Deputies over the last couple of months. I think those of us, small  in number that we were, were impressed by the tone of the meetings and the greater approachability that seems to have developed.

For years the Commission has been focused on instituationsl investors and large international businesses. However, it is evedent that there is a strong realisation of the need to protect to the smaller, local investor. Sadly, this will not help those who have suffered through a lack of focu in the past. However, with a FSO and new rules setting minimum qualifications for investment advisers, as well as helping in the campaign to make people aware of scams, I think this is changing.

In terms of the accounts, I should ike to inform this assembly that the PAC did contact the Commission last year regarding disclosures in their accounts relating to pay bandings. I am thankful to the Commission for taking note of our comments which has resulted in an improvement in the disclosure this year.

Finally, I admire the the Commission in the way it has restrained their costs, but note that I believe it  likely, from the meeting we had with GFSC, that we will receive a request for an increase in fees later this year. Whether the savings in 2014 ae sustainable, therefore remains to be seen.

Having said that, the Commission should be commended for listening and taking action at a time of increasing pressure of work from beyond our shores.

Green Acres Dementia Care Home

It became obvious to me very early on as a member of HSSD that the ageing demographic of Guernsey would result in growing pressures on the department in the next ten years. We want to be able to see people supported to be able to live independent lives as far as possible in their own homes and that it is a major strand in the transformation of health and social care services that we are now developing. It makes sense economically and socially.

However, there is currently, and there will increasingly be, a need for specialist care homes for those of our community who can sadly no longer look after themselves as a result of dementia.

After a long saga of refusals and appeals, the application finally went to an open planning meeting. I spoke at the meeting and my speech is below. In it I focussed on the discrepancies in Commerce and Employment’s argument that Guernsey could not afford to lose the bed stock. I supported the planning application and change of use request for Green Acres whilst on the Commerce and Employment Board and I continue to believe that the Department needs to review its policy of opposing any application for change of use of existing tourist accommodation.

Common sense prevailed in the end and the application was granted.

Speech to Open Planning Meeting

“I would like just to focus on the adequacy of bed stock both now and in the foreseeable future.

The 65% occupancy level set by C&E is stated in the RAP supplementary booklet as

‘minimum occupancy rate which, it considers, will be necessary to sustain a viable sector. It states, and I quote ‘the quality of accommodation offered by the Island’s visitor sector has been in overall decline, relative to the market. This is probably due to a lack of investment resulting from low average occupancy figures.’

The cumulative average occupancy rates for the last 10 years has been 56.77%, lower than the 57.42% in 2004, with an all time low of 51.17% last year. Not only that, but this is signifcantly below the 65% minimum occupancy levels set by the Department. So the Department is actually resisting a planning application that supports its policy.

Reference to seasonal occupancy levels are a red herring. If demand increases in the winter period, hotels may look to open year round, or extend their operating periods, to meet it, especially if it means that the room rates they can charge do not have to be heavily discounted.

In terms of losing bed stock were Green Acres disappear, it shouldn’t be forgotten that it is not included in the Aries figure. Were it to be, given it is has zero occupation, the average occupancy levels will reduce further. It should also be remembered that plans were submitted and permission approved to build a new hotel with roughly the same number of rooms as Green Acres, just a mile down the road at Jerbourg.

In terms of the future adequacy of bed stock, reference is made to  C&E having developed a policy for the future for tourism and that is to grow tourist population to 400,000 by 2025. It should be pointed out that this is an objective, forming part of its strategic plan. It has not been approved by the States of Deliberation and does not represent States policy. Set out in that strategy are action plans, some of which will require funding. The one that stands out being the extension of the runway. Given that the strategy has not been approved by the States and the Department will have to go to the States to obtain funding, the success of the strategy is far from assured.

Whilst it is an excellent document certain statements do raise question marks over  comments made by the Department in its submissions.

For example, in its submission the Department makes the point that there are very restricted opportunities in planning terms for the development of new or additional visitor accommodation. However, in the strategy it lists one of its action plans being to facilitate access to States land and property for Tourism Development.  By resisting this application it implies that the Department doesn’t hold out much hope of success.

Finally, and going back to the objective of increasing the tourist population to 400,000 by 2025, this represents a 25% increase in tourist numbers. If it is assumed, and there is no reason to believe it shouldn’t be, that this will also mean a 25% increase in staying visitors, there will still be sufficient capacity to absorb the increase for the next 10 years based on occupancy levels over the last 10 years, averaging just 57%.

It is clear that there is a surplus of bed stock that is unsustainable. Far from seeing Green Acres as a problem, this should be seen as an opportunity both to maintain a sustainable and viable tourist sector, and to support a desperate need for members of our community.”

 

 

GEL, GP deregulation

I made the following speech in respect of the proposed deregulation of Guernsey Electricity and Guernsey Post, with a strengthening of the shareholder role.

 

Sir, I’ll speak briefly. I support the findings of this report.

I’ve always found it odd that States owned entities should need to be regulated in the way they are. I do appreciate this was considered appropriate a decade and a half ago nearly, but circumstances have changed and we have learnt over that period that applying a model that may fit the commercial sector, probably isn’t the best when dealing with public sector bodies and in many ways, what works for a population of 62m may not be appropriate for one of just over 62,000.

It certatinly doesn’t make sense when some trading entities are regulated and others, like Guernsey Water, are not.

 

BUT, what is important here is the States understanding its role in relation to its trading entities. There was a time when commercialisation was seen as synonymous with privatisation. When these bodies were set up it did appear, at least from the outside, that the States very much took a hands-off position –  let them get on with it. But, this is not a sustainable position to have.

It is for that reason I fully support the desire to strengthen the shareholder role.

Companies are answerable to their shareholders and it is important that the States of Guernsey as the shareholder asks the right questions and holds the management of those companies it owns on behalf of the people of Guernsey, to account.

 

Far  from weakening control over these trading entities, these proposals should lead to greater accountability and at the same time ensure those entities can focus on their strategic objectives, in the longer-term interests of islanders.

I welcome the introduction of key performance indicators and benchmarking. This is something that we should be developing across the States, whether through trading companies or directly in terms of the work done within each department.

Finally, it is my belief that at least one of the non-executive directors should serve as a shareholder representative. This would be standard practice in any company with a dominant shareholder and I would welcome further research into this possibility.

So, I think this is a positive move that reflects changing times and better governance and I will therefore be supporting this report.



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Email: heidi@heidisoulsby.com