Wednesday 06 September 2023
General Update
Madam,
I am pleased to have opportunity to update the Assembly on the work undertaken by the Policy & Resources Committee since my last statement in March and our planned activity for the remainder of this year. It has been a busy six months for the Committee as we've sought to progress some of the key priorities for our community; housing and public finances.
Housing
With the average purchase price for Local Market properties over £650,000, some sixteen times the median wage; it is unsurprising that home ownership is out of reach for an increasing number of islanders. This is not acceptable in Guernsey. The cost of living and interest rate increases have compounded these challenges further. The effects are being felt across our community; both in individual homes and in businesses due to the impact on recruitment and retention.
For my Committee, finding ways to address the continued pressure on housing supply and affordability is of critical importance. The States have previously agreed to considerable capital funding for a wide-ranging build programme and we have continued to prioritise this through the soon-to-be published Funding & Investment Plan. We have, over this term, secured a number of development sites for the Guernsey Housing Association and receive updates on each of the sites. These sites will, once complete, deliver over 275 units but will each take time to deliver. We have a joint meeting with the GHA and Employment & Social Security later this month to discuss the ongoing work and future areas of focus.
Conscious that developing sites can take significant time and energy, we're also looking at other options. We are in commercially confidential talks regarding the purchase of homes - once constructed - at Leale's Yard. As well as providing significant social benefits by supporting the regeneration of the Bridge area, the proposals would, if progressed, provide a significant number of residential units in a relatively short timeframe and with an immediate revenue stream. As a Committee, we are very keen to see this progressed and, subject to the satisfactory conclusion of the ongoing due diligence, will be bringing proposals back to the Assembly by the end of this year. If we want to make a meaningful difference, we need to work together to find solutions. We cannot always say no. We'll be working with various committees in finalising our proposals.
There are considerable advantages to developing sites of a certain size, like Leale's Yard, over and above smaller, more piecemeal development and this is one of the reasons why we strongly believe the Castel Hospital, and in turn King Edward VII, sites provide a unique development opportunity. To this end, we have written to the Development & Planning Authority requesting that a review of the L'Aumone local centre is included in the Island Development Plan review with a view to extending the boundary of the local centre. It is only once these current legislative barriers are addressed that full consideration can be given to the most appropriate use of this central site.
Housing is a critical enabler for the economy as a whole. It is more than that, it is one of the essentials of a decent life in a civilised society. Officers are in ongoing discussions with the construction sector to understand how we can more effectively phase and manage projects in order to support a steady and reliable stream of work which the sector can deliver.
Public Sector Finances
Clearly much of our focus since March has been progressing the resolutions falling out of the Tax Review. The Funding & Investment Plan is due to published next Monday and we have, over the last month or so, spoken to all Committees, industry representatives, and the Unions to explain the work which has been ongoing to develop and model various scenarios.
The propositions that will be contained in the policy letter have been designed to reflect the wide range of views that we have heard through this engagement and will present the Assembly with a choice.
I don't intend to go into the detail of these scenarios in this statement, and I am disappointed that some Members have chosen to selectively share the confidential updates they were provided. As all those Members who have attended a presentation will be aware, they are multi-faceted, combining revenue raising and expenditure considerations that I can do little justice to within a short statement. What I will say instead is that there is a fundamental gap between what services and infrastructure the island wants and what we can afford. We've long spoken of the very real structural deficit and I hope that the forthcoming publication of the Fiscal Policy Panel's report will successfully put to bed any continued misapprehensions around our financial position.
Both the Cost Reduction and the Taxation sub-groups have progressed their work in line with the States' direction. The Cost Reduction sub-group have now spoken to the majority of Committees and Authorities to understand the 'now' and what we can do differently in the future. Combined with the public survey which was undertaken in early summer, the Cost Reduction Committee will be finalising their proposals over the coming months. However, it is important to note that - despite the prevailing view - there is not significant "fat" in the organisation.
We are halfway through a process of engaging with Committees regarding their 2024 budgets. As I mentioned in March, all Committees were asked to develop their 2024 budgets on the basis there would be no real term growth in government expenditure. This effectively meant that Committees, excepting HSC, were asked to achieve saving of 2.5%. With one or two exceptions, it is fair to say that Committees have failed to achieve this. In every case, the Committees have presented very strong cases for why such a saving was unachievable in their area, and why they require the funds requested. Equally in every case, we are having to explain why there is simply not the funding available.
HSC requested a significant increase in their 2024 Budget. We all have sympathy for the challenge that Deputy Brouard and his Committee face in responding to the unprecedented demands being placed on his services and we all want to live in a community which continues to have access to timely and high-quality health care. However, the simple truth is that we can't afford to give HSC the funding needed.
That Madam is the challenge we need to address. We must all understand the financial position facing the Island and take the steps necessary, however politically difficult, to achieve a sustainable solution. We will have that opportunity next month through the Funding & Investment Plan debate.
Turning away from housing and finance to other areas which have dominated the P&R agenda over recent months:
External Relations
The External Relations team is preparing for political representatives from Guernsey to attend the UK Party Conferences of the Conservatives, Labour and Liberal Democrats. That is with an eye to forthcoming UK General Elections, which legally must be by January 2025, but which some commentators are indicating are more likely to take place in autumn 2024. As ever, Guernsey's government will work constructively with whichever political party, or parties, is in government in the UK. We do so for the island and, where appropriate, for the wider Bailiwick too. Building relationships with particular postholders and their teams; and with individual members of House of Commons and House of Lords is important in preparation for future opportunities and challenges.
We recently hosted a most constructive and informative visit with Mike Freer MP, Minister from the Ministry of Justice who, amongst his duties has responsibility for maintaining relationships with the Crown Dependencies. I was delighted to discuss areas of mutual interest with him, and I understand he very much enjoyed his visit to both Guernsey and to Sark. Alderney next time for him I hope.
I am also delighted to meet members of the House of Commons' Justice Committee who are visiting Guernsey today [and in the public gallery at the moment] as part of their ongoing interest and as a non inquiry scrutiny work that they are doing in the relationship between the Crown Dependencies and the UK Government.
As part of our overall work on constitutional resilience, we're looking forward to the change to the Royal Assent process so that the Lieutenant-Governor can approve much Guernsey, Alderney and Sark legislation here within the Bailiwick, as approved by the three islands' parliaments in May. That is still on track to come into effect later this year.
We continue to work closely with Alderney and Sark through the Bailiwick Council and the Liaison Groups. Discussion are ongoing in how more Civil Service support can be provided to Alderney and Sark to improve their resilience.
Working with Jersey
I continue to meet with my Jersey counterpart, with colleagues from both islands, to discuss ways in which the two islands can work more closely together. A statement was issued following a meeting in the fringes of the BIC meeting in Jersey and we continue to explore ways in which the islands and look strategically at issues like healthcare and connectivity. A further fruitful meeting was held in August with the Jersey Chief Minister to monitor progress on this work. Officers already work together to the benefit of all the jurisdictions within the Channel Islands on external relations matters - including for the Party Conference season and through our joint offices in Brussels and in Normandy. We have also worked cooperatively across our government and with the other islands during intense and important negotiations and preparation for participation in the UK's free trade agreements and for post-Brexit border measures. Guernsey and Jersey kept each other closely informed whilst introducing the most recent conditions attached to fishing licences (from 01 February this year) to fulfil requirements of the UK-EU Trade and Cooperation Agreement.
Pensions
We are under States' Resolution to consider introducing a Defined Contributions pension scheme for all new starters in the public sector with effect from 1st January 2025. Although the deadline for reporting back to the States with its findings in this respect is September 2024, we have expedited this work with a view to presenting our recommendations to the States within a shorter time scale. We have met the Pensions Consultative Committee, which we are obliged to do under the existing Rules, and will be meeting them again shortly in order to progress the project further. Ultimately any changes to the Public Servants' Pension Scheme is a matter for the States to decide but we intend to produce proposals as soon as practicable for the Assembly's consideration. We are acutely aware that any proposals needed to be appropriately modelled and costed, seeking to both reduce the long-term financial risk to the States as employer and support our wider work to modernise employment terms and conditions in the public sector.
IT Resilience
Since my last statement, we have published the PwC report into the IT outages. We were, of course, disappointed with the scale of challenges identified and have worked very closely with the Head of the Public Service to ensure the progression of their recommendations. This is an ongoing programme of work, combining infrastructure upgrades, migration of services and changes to how services are coordinated and delivered. We continue to receive regular updates and have recently approved, subject to further technical validation, proposals for an accelerated exit from the Legacy Estate. This means that all services will be running from new hardware in new data centres by the end of 2023. In parallel, we have continued to support the Scrutiny Management Committee in their work reviewing the States of Guernsey's IT arrangements and will continue to do so.
MoneyVal
We continue to work towards the MoneyVal Inspection and I am grateful for the continued cross committee work, and wider stakeholders, to ensure we are best prepared as we can be. It is vitally important for our economic wellbeing that we take the steps necessary to ensure that we are as prepared as reasonably possible.
In closing, I am happy to answer any further questions that Members may have on this statement.