Commerce & Employment

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.

Feasibility of a living wage statistic

I was a member of the group looking at whether it was feasible to bring in a living wage statistic for Guernsey. The conclusion of our work was that, whilst on the face of it  the idea was commendable, the calculation was fraught with difficulty. The speech I made in the States during the debate is set out below. The report was approved by the States.

Sir, before I start I would just like to say what an excellent speech Deputy James made earlier. We have heard so me heartfelt speeches today and I do share many of the concerns but, as Deputy James has said, through our actions we are doing nothing to reduce inequality and it was concerns like these that led to my husband and I setting up a Fair Trade business nearly 10 years ago now.

But I would like to return to the subject matter of this Report, which is purely about the feasibility of producing a living wage statistic and, on that front, I think the Report is self explanatory. Whilst it may seem an attractive proposition to go down the route of producing a living wage statistic, it is fraught with difficulty on many levels and this became quite evident to those of us on the panel that explore the practicalities of doing so.

What is a living wage to one, certainly is not to someone else and this is exemplified by the recent Household Expenditure Survey which showed that the average weekly household expenditure varied, so that a household renting from a private landlord spent £883.50 a week, whereas an owner/occupier with a mortgage spent £1,444.88 a week. Consider that, alongside the fact that a single adult under 65 averages £772 per week, compared to a couple with dependent children who spend £1,477.86 and then weekly expenditure for a household with one child is £1,377, whereas one with three to four children averages £1,561 and then there is more variation, dependent on whether the children are of pre-school age or not.

It became clear to me as the review progressed that the amount of work required to produce a statistic whose reliability could not be guaranteed and which would be accompanied by a long list of caveats, meant that we should not, at this juncture, look to prepare a living wage statistic.

Personally, I think if people want to refer to what could be considered a living wage for Guernsey then there may be some merit in using that produced for London by the Greater London Authority. However, it should only be that – a reference point.

As the UK Living Wage Commission, itself, has stated, setting a statutory minimum living wage would have unintended consequences likely to outweigh any of the benefits, but I do agree with Deputy Harwood that the States of Guernsey should lead through example and consider requiring contractors to have to pay a living wage. I believe we should keep the prospect of producing a

living wage statistic under review.

It may be that as we obtain better quality data, as well as seeing the outcome of the work from SWBIC, we will be better informed not only what a living wage could or should be, but also whether such a statistic will have a beneficial role to play in the future and I therefore urge Members to support the recommendations in this Report.

Dairy Industry Review – 2

I was delighted, as a member of the Dairy Industry Review Board, that we were able to get our report into the industry approved by the States. This was the first time such a report had been successful in 15 years and we believe will give a brighter future for Guernsey’s farmers, Dairy and the consumer.

Sir,

This Report is not just about the Dairy Industry. It is indeed entitled Dairy Farming in Guernsey and the Future, but that future is not just about the production of milk and manufacturing of milk products. No, it is about the environment and heritage that makes Guernsey the unique Island it is and that we, as the States of Guernsey have a duty to protect. As such, this report is incredibly important for this Island.

And at the centre of all this is the Guernsey Cow. Thanks to our entrepreneurial ancestors to the experts of the present day, we have a pure breed that produces high quality milk revered the world over.  As part of the research  I undertook when working on this report I came across an American book entitled ‘The Guernsey Breed’ by a Mr Charles Hill written in 1917 and recorded in the Biodiversity Heritage Library in the USA. In the foreword written by a Mr WH Caldwell of the American Guernsey Cattle Club, he states, ‘The Island people in their manner of handling and caring for the breed and their tenacity shown in protecting its purity have contributed greatly to the development of the breed’.

He went on to say, ‘The future of the Guernsey is a bright one. The public is fast demanding a better class of Dairy products and is rapidly learning to make a distinction between the different grades of milk, cream and butter. The Guernsey and her grade stand without a peer in the economical production of products having the highest natural colour and finest flavour.

Indeed, today Islanders take great pride in their milk, cream, butter and ice cream as the results of the Island Analysis survey, included in the Appendix to the DIRG report has shown.

 

Sadly, since 1917 where the Guernsey cow was once a predominant breed, it is endangered, if not now classed as a rare breed. In fact this Island has 10% of the entire world population of registered pedigree Guernsey cattle. With world numbers having fallen 21,000 in the last 20 years.

However, it is because of this rarity, or more accurately, the dominance of just a small number of high production breeds of cattle, that we can protect our Dairy Industry, our natural heritage and our environment.

 

It is estimated by the Food and Agriculture Organisation of the United Nations that the number of domestic animal breeds are dying out at the rate of 6 per month, with 30% of the world’s breeds at risk of extinction. They are being replaced in both developed and developing countries by a few high production breeds which, increasingly, are coming to rely on commercial feeds, antibiotics and other inputs of industrial agriculture.

The world is beginning to wake up to this problem and whilst some of us here may think that only negative things come out of the EU, that organisation is very much aware of the issue having calculated that the loss of biodiversity  costs it EUR450 billion year after year. This culminated in May 2011, with the European Commission adopting a strategy to halt the loss of biodiversity and ecosystem services in the EU by 2020.

So, the need to preserve the Guernsey cow breed means that not only must we continue to ban the import of Dairy cattle, but also we must ensure that the threat of imported milk is lifted. This has been a cloud hanging over the industry for many years and resulted in uncertainty and concern that impacts investment and efficiency in the industry. It is therefore imperative that we get a new Ordinance in place as soon as possible to ensure we can effectively control importation.  I cannot say strongly enough how important that approval is given for that today.

With effective controls on importation, we can focus on moving the industry forward to a sustainable future. And that means change. The one thing I have realised as the review progressed, was, as I stated in the earlier debate, that this is an industry suffocated by its past and that the status quo is definitely not an option.

The industry needs to be more sustainable, which means the current subsidy must be reduced and with it, greater efficiencies achieved. And a key means of attaining this is through the farmers and Dairy working in partnership. The farmers on the one hand in providing an even supply of milk to the Dairy and for the Dairy to have a governance structure that enables it to act in a more commercial manner.    I would like to say at this point what an excellent job is  being done by the manager Andrew Tabel and his staff at the Dairy. As a member of the DMB I have seen first hand the challenges they have faced over the last couple of years, the SAP implementation being high on that list,  and I admire the professionalism with which they have dealt with them. The DMB believe these proposals will make a real difference.

In particular, the transition from the quota system to milk supply agreements will benefit both the farmers and the Dairy.

Quotas played a useful role in the past, in stemming over production when it reached 9.8m litres, but they have also had the effect of stifling growth and making it difficult for new entrants into the industry. They are inflexible and inhibit business development. Milk Supply Agreements will provide an element of control but flexibility at the same time, enabling a matching of total farm milk supply to the needs of the market.

It is true that the farmers did have some concerns about aspects of the report, the reduction of the subsidy, understandably the biggest. However, instead of stomping their feet and making loud noises about it the GFA were happy to speak openly to us and articulate the concerns that they had. Much credit needs to be given to the GFA and James Watts in particular, for the manner in which they have conducted themselves throughout the review and since the report was published. The proposals will mean change for them and with change comes uncertainty. As such, I thank them for the trust that they are placing in Commerce and Employment and for expressing their support in what we are trying to achieve.

This bodes well for the future as we work together with the farmers and the Dairy in developing a sustainable Dairy industry.

So, we have developed a new structure that results in more modern arrangements for the farmers and the Dairy.  I won’t talk about the distributors now, I have made clear how we got to where we did in the Fallaize amendment debate. What I will talk about however, is the one key stakeholder who has been generally forgotten in all this  – the consumer. We know there is incredible brand loyalty but are consumers getting value for money for their litre of milk?

It became abundantly clear to me during this review that they are not and in the current economic climate, this should not be allowed to continue. Fixed pricing is an outdated anachronistic mechanism that was brought in against the threat of imports. However, with the approval of this States to modernise this Ordinance, the reasoning for it goes away.

Consumers are paying over the odds for their milk and I will give a few examples just so there can be no doubt.

But before I do so I would like to thank the officers at the Hub for their assistance. This was a good test of SAP and I am pretty sure that the information they have provided would not have been so easily available, if at all previously and shows how it can assist us in making evidence based decisions.

The Hub was able to provide me with details of the cost of milk supplies to States of Guernsey premises. Excluding schools, the total cost of milk supplied for the first 8 months of this year was £111k, that is an annualised figure of £166k. And of that £112k is spent by HSSD. With the disitrbutors getting a margin of 23.46p, this means it costs £24k a year to have milk delivered to that Department’s premises. Now there would be an FTP saving! Interestingly it is also more than the cost of the water coolers that were taken out of the PEH.

And talking of the PEH, it costs over £13,000 to have milk delivered a mile up the road from the Dairy to the hospital – by 2 retailers to 2 different entrances! Madness. There’s a clear saving that the HSSD Board could, and I’m sure would, make, but currently has no means of doing so.

Concern has been expressed that if we end the fixed pricing on 1 January the prices will zoom up and there will be a clamour for imports. That’s not how it will be.  With the knowledge that a new Ordinance is coming in no one is going to benefit from importation and the likelihood is, with competition, there will be no price rise in the first place and with exclusivity in place until the end of 2015 the retailers will be protected.

We have a report here that gives a coherent and sustainable vision for the future of the Dairy Industry that deals effectively with what are its most important stakeholders– the farmers, the Dairy and the Consumer.

We must action it now. Action it to produce greater self-reliance and sustainability and, as far as possible in a changing and commercial world, more clarity for the industry, providing it with the most positive future it has had in decades.

I therefore urge all members to support the report [ as amended.]

 



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