‘User pays principle will be lost if Capital Reserve used’

Environment & Infrastructure and the States’ Trading Supervisory Board have proposed partially funding the strategy’s costs through the Capital Reserve.

However, Policy & Resources president Gavin St Pier said the States reserves were already over-subscribed.

The £330m. government bond has long been earmarked for financing the strategy, and Deputy St Pier said this was a more suitable way of financing it. ‘Funding the waste strategy from the Capital Reserve effectively means that general taxation is being used to fund provision of an asset for use by a trading entity which operates under a “user pays” concept.

‘The provision of trading entity assets through borrowing from the proceeds of the States of Guernsey bond issue is fully in line with the criteria for use of the bond agreed by the States, including a secure income stream to repay the borrowing.

‘The provision of a loan from the bond to fund the waste strategy was one of the uses detailed in the justification for the issue of a bond, representing some 10% of the overall amount borrowed.’

As set out in the 2017 Budget report, the anticipated funding of £282m. in the Capital Reserve from 2017 to 2020 was allocated to maintaining, growing and transforming the economy.

‘The 2018 Budget report revised the forecast capital availability for the 2017-2020 period as £340m. which resulted in an estimated unallocated balance of £58m.,’ said Deputy St Pier.

‘However, there is a pipeline of large projects identified for which planning is commencing and are likely to require funding in the next capital portfolio, for example hydrocarbon supply and PEH re-profiling, with an estimated value in the region of £250m.

‘Therefore, this £58m. should be held to contribute towards the funding required in the next prioritisation period.

‘The Capital Reserve does have sufficient funding available to meet the costs of the capital elements of the waste strategy.

‘This project would result in the “transform category” being further over-subscribed, before taking into account any changes that could be required following the approval of the alternative model for secondary and post-16 education, and therefore, as part of the 2019 Budget report, the Policy & Resources Committee may need to recommend a redistribution of funding between categories.’

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