Trading assets return £38m. to the States
ABOUT £38m. has been returned to the States by its trading bodies, including Guernsey Post, Guernsey Electricity and Guernsey Water.
More than half that came from money that had been allocated for the Belle Greve outfall and the Guernsey Harbour cranes projects – States borrowing from the bond will be used to finance them instead.
Following the statement being made in the States Assembly yesterday, deputies focused their questions on Aurigny and the States-owned airline’s losses.
States’ Trading Supervisory Board president Deputy Charles Parkinson was updating the States on its portfolio.
‘In terms of financial contribution to the States, in the past 18 months the trading assets collectively have returned £38m. to the treasury,’ he said.
‘That has been achieved through a combination of ordinary and special dividends, and the refinancing of infrastructure projects previously funded through the capital reserve. That total of £38m. also includes a first-year contribution of £5m. to the medium-term financial plan target of £30m. over five years.’
However, he noted that while contributing towards the long-term savings targets was important, it was important that public services were used to serve the people and not maximise profits.
A refund of £18m. to the capital reserve was made last year from the Belle Greve outfall project, while Guernsey Harbour returned £4m. from its crane project.
Over the 18 months Guernsey Post dividends returned £1.76m., while Guernsey Electricity’s dividend returned £1.75m.
Share buy-back schemes by Guernsey Electricity and Guernsey Post returned £10m.
Guernsey Water contributed £1.5m. from the distribution of property reserves, while the last £500,000 came from States Works’ distribution of property reserves.
Deputy Parkinson said the board’s vision was to ensure States assets were an ‘well-managed, efficient group of companies’ which deliver returns in the best interests of islanders.
‘However, we are also very clear that acting commercially does not mean always maximising financial return,’ he said.
‘That in part reflects the essential nature of the services they provide to islanders. It also reflects a challenge they all face from being in public ownership. The States may have determined they should behave commercially, but the public generally have higher expectations of publicly-owned operations than they would of private companies.
‘Such expectations are if anything amplified in a small community such as Guernsey. That is something that we as a board and each of the trading assets are acutely aware of.’
One example was Aurigny, where nearly 6,000 people signed a petition for cheaper flights. The airline predicts losses for 2017 and 2018, with only the Gatwick route turning a profit. In 2015, the airline was re-capitalised, with States paying off the airline’s £19m. debt.
Outside the States chamber, Deputy Parkinson said that Aurigny believes once the decision on the Alderney route was taken the airline would start to break even, because either it would lose the route or it would be subsidised by the States.
Back in the chamber he said the States was asking Aurigny to run regular services to Alderney and Gatwick, as well as linking the island with other airports across the UK.
‘The fundamental problem is that we are asking Aurigny to do lots of fundamentally different things,’ he said.
‘The result is a very disparate fleet.’
He said it would be impossible for commercial airlines to be able to do the same thing.
Deputy Lyndon Trott noted that 40% of all Aurigny services were to Alderney and queried whether any other communities were provided with such a service.
Deputy Chris Green suggested that this was a good time to have an independent management review of the airline to look at efficiency and Deputy Parkinson said they would welcome that.