Thank you for the opportunity to make a brief statement on behalf of the States’ Trading Supervisory Board. Given the scope of our responsibilities I can’t speak on every issue so I will focus on three things: what has been achieved; how we are now running the trading assets more commercially; and what is required from colleagues in this Assembly in relation to major infrastructure and Aurigny.
Over this term the Trading Group has been tested and delivered. When Blue Islands collapsed, we worked successfully and at pace with Aurigny and others to protect lifeline connectivity for islanders and for the wider economy. We maintained services, protected critical routes, recovered our debt and avoided the sort of prolonged disruption that would have done real damage to business, tourism and patients travelling for care.
We have also stabilised the finances of the unincorporated businesses. Between 2021 and 2023 several of them were reporting operating losses, against the backdrop of the pandemic, Brexit and the spike in inflation and energy costs. That was not sustainable. Through a mix of tighter cost control, efficiency measures and more commercial approaches to fees and charges where appropriate, those businesses are now on a much firmer footing and are forecasting operating surpluses for 2025, excluding exceptional items. The Board does not wish to return to a position where these assets depend routinely on General Revenue to fund commercial activities.
Looking ahead, we have set a clear financial objective: by the end of 2029 the unincorporated businesses should be financially self‑reliant. By that I mean able to fund their operating costs and a sustainable programme of capital investment from their own income, using borrowing only where that can be properly serviced from revenues. The exception is Guernsey Waste, which is not operated as a commercial business. This is not about treating essential infrastructure as pure profit‑making enterprises; it is about ensuring they are run with the discipline, accountability and clarity that islanders are entitled to expect, and that the taxpayer is only asked to step in for strategic reasons which are openly debated in this Assembly.
To support that goal we have set all unincorporated businesses the target of delivering a one per cent real‑terms reduction in operating expenditure each year for the next three years. That mirrors the discipline the Assembly has already required for General Revenue and will help to relieve pressure on customer charges. It will not be easy. Pay costs are the most significant component of expenditure and, even with restraint in future pay awards, further efficiencies will be necessary. We want to help embed a culture which ensures this is a process of continual efficiency improvement rather than a one‑off exercise.
This links directly to the way in which the Trading Group is governed. The Review Committee reports that led to the creation of the STSB envisaged a dedicated board, with the capacity and expertise to supervise the trading entities, balancing political and commercial considerations. That model can only work if the Board is actually allowed to do its job. What it did not envisage, in my view, is the sort of dual governance and bureaucratic duplication that we have increasingly fallen into: two routes for decisions, two sets of procedures and the inevitable delays and extra costs that come with that.
We are already required to demonstrate that investment decisions align with agreed States strategies and that borrowing remains within authorised limits, and the businesses undergo regular external audit and scrutiny. Within that framework, however, it is reasonable that where capital expenditure could be funded by a business from its own reserves or by borrowing which it can clearly service, it is wasteful to duplicate process by having to repeat the same exercise for treasury officers - the decision to proceed should rest with the STSB. That is the position for our incorporated entities, and there is no compelling reason why unincorporated businesses should be treated differently. Granting greater delegated authority over capital projects and over fees and charges would improve accountability, reduce costs by speeding up decision‑making, improve planning certainty and reduce the need for avoidable debates on issues which are often simple binary choices.
The Assembly has already agreed that Guernsey Water should be incorporated by January 2028, and preparations are progressing with that in mind. The business is now in a strong financial position with a clear, long‑term investment and funding plan.
The Assembly has also agreed in principle that Guernsey Ports and States Works should be incorporated, but frankly both have much work to do before that is likely. In particular, we need greater clarity about future harbour requirements, the treatment of non‑commercial operations such as Guernsey Coastguard and VTS, and what, if any, ongoing contribution from General Revenue is appropriate for the airport’s role in economic enablement. Until those points are resolved, the benefits and costs of incorporation remain unclear.
The dairy continues to be an issue on the States’ “too difficult” and “too expensive” list. Members of STSB travelled to Jersey in early March to meet representatives of the Jersey dairy and Jersey farmers to examine why their own system is so much more successful and what can be learned from their experience.We continue to engage with Guernsey farmers directly at their own request to explore how we can best disentangle government from what should be a more commercial, successful and transparently funded industry. We certainly have one of the best products but the whole structure needs a radical rethink.More on this in due course.
I want to turn now to infrastructure and commercial development, because decisions taken – or not taken – in this Assembly will determine what the Trading Group can deliver over the next few years. The Assembly has already agreed a land reclamation project at Black Rock as the preferred option for the next inert waste disposal site. Our role is specific: to ensure continuity of inert waste disposal for the construction sector, and to maintain safe and efficient operations at St Sampson’s Harbour for as long as it remains essential for the import of goods, particularly hydrocarbons. We have been stockpiling material at the current site for eighteen months to maintain this critical service. That is expensive, operationally inefficient, and capacity is finite, so we will seek to extend the existing planning permission beyond September 2027, but that underlines the urgency of resolving the next facility and delivering it.
At the same time, we have to be honest about the risks. Both the Harbour Master and the General Pilots have cautioned that reclamation at Black Rock may increase navigational risk because of changes to already strong tidal flows in that area. The Board has written to the Committees for the Environment & Infrastructure and for Policy & Resources to say that further data collection, modelling and analysis are needed before firm decisions are taken. It may prove necessary to consider an interim solution for inert waste elsewhere if we are to avoid compromising shipping at St Sampson’s. Those are not decisions for the STSB alone, but we will not recommend any course of action that places navigational safety or fuel security at unacceptable risk.
The same is true of energy infrastructure. Together with the Committee for the Environment & Infrastructure we intend to bring a joint policy letter in the third quarter of this year covering the proposed second electricity interconnector and its funding. That is a key element of the island’s electricity strategy: it improves resilience, reduces reliance on on‑island generation, and in time should reduce the requirement to import heavy fuel oil through St Sampson’s. But progress depends on outstanding workstreams which sit with the wider States: a clear hydrocarbons importation and storage policy, decisions on future harbour requirements, and the interface between these and broader climate and energy objectives. Until those are settled the Trading Group cannot optimise its capital programme.
There are also areas where we have recently moved to rationalise assets. The fuel tankers Sarnia Cherie and Sarnia Liberty were acquired because of concerns about the availability of suitable commercial vessels to discharge safely at St Sampson’s. Since then, specialist vessels have entered the market and are now regularly delivering fuel to the island. On the back of a review commissioned by the Committee for the Environment & Infrastructure in the last term, and accepted by the previous Policy & Resources Committee, the STSB was instructed to dispose of the tankers. That sale has now been completed and will allow the remaining loan associated with their purchase to be fully repaid.
In the ports more generally, there is scope to do more with the estate and operations commercially as members will have seen in relation to invitations for commercial development partnerships at the Slaughterhouse site and Boathouse, provided that we remain clear about the non‑commercial obligations that must be met and how they are funded. That applies not only in Guernsey but also in Alderney. The long‑term condition and capability of Alderney’s runways and related facilities are important to connectivity, economic activity and resilience for that island. The Board’s view is that Alderney’s infrastructure should be considered as part of an integrated trading and connectivity strategy, not as an afterthought, and responsibility for its upkeep and management should also be examined and clarified as part of the forthcoming work of the Bailiwick Commission.
Given we collectively have such a short time in office I have become something of a fan of confronting rather than ignoring difficult and challenging political issues, as I did with tax policy last term leading to creation of the GST+ policy.This neatly segues me to the subject of Aurigny and the island’s air policy, where some long ignored and fundamental choices need to be made. The new daily Heathrow service is clearly positive for connectivity. But additional capacity into London, especially on a route which is central to Aurigny’s business, will affect Aurigny’s London services and may have knock‑on effects for other routes such as Southampton, and in turn will generate financial losses in a publicly owned business.
The key point from the STSB’s perspective is that Aurigny’s role must be defined clearly and explicitly. Is Aurigny to be treated and funded primarily as a commercial airline, expected to compete freely and to earn a commercial return on capital? Or is it to be treated primarily as a strategic asset, tasked with guaranteeing specific lifeline routes and minimum service levels, with a corresponding level of subsidy or support? There is room for a position between those extremes, but government needs to make a decision and it needs to be spelled out. Without that clarity, no board and no management team can sensibly optimise the business, and the island will continue to see periodic shocks when commercial realities collide with implicit political expectations and at a cost to the public purse.
Once that strategic policy is set, the division of responsibilities should become more straightforward. The Committee for Economic Development and this Assembly should determine the air policy and Aurigny’s mandate, including the balance between commercial freedom and social obligation and the acceptable level of financial support. The STSB will then hold Aurigny’s board and management to account for delivering that mandate efficiently, transparently and with appropriate commercial discipline. Aurigny cannot be expected to be both a fully commercial carrier and a social utility, and judged as both at once, without that conscious choice being made.
Finally, I want to say something about the role of the Trading Group more generally. The STSB is a policy taker, whose function is simply to give effect to decisions taken elsewhere. That is only half the picture. Within the Trading Group there is deep local expertise in power generation and networks, in airport and harbour operations, in airline management, logistics and fleet, and in the delivery of complex capital projects. In a small jurisdiction where much of what we do is sub‑scale, that expertise is one of our most important assets. Our job is to use it to inform and shape policy as well as to implement it, and to ensure that every pound invested in our trading assets is deployed to maximum effect, in the interests of islanders, businesses and future generations.
That is the approach this Board intends to take: candid about addressing some of Guernsey’s most profound long term challenges, clear about the commercial standards we expect, realistic about the limits of what we can do alone, but determined to ensure that the States’ trading assets are run professionally, with purpose, and with a sharp focus on accountability and value.