It is part of an emergency package of financial measures, which also include making £30m. available for direct financial assistance to individuals and businesses to help cope with the coronavirus crisis.
The States is also going to be asked to allow Aurigny to borrow up to £52.7m. this year, either through extending a temporary overdraft or guaranteeing external loans, as it faces up to losing millions because of dramatically reduced demand as a result of travel restrictions in place.
'The Policy & Resources Committee will act swiftly and decisively to put in place appropriate measures to support our community, and businesses, through this period,' it said in the emergency billet.
'There is likely to be a requirement for additional funding in excess of the initial £30m in order to fund measures which are well judged,
proportionate and relevant to the Bailiwick’s needs.'
O fthe £40m. loan scheme, the committe said it owuld enable additioal liquidiity support to be made available to local busniesses.
'This will require the provision of underwriting guarantees of up to 80% of additional lending effected pursuant to the Scheme,
up to a maximum of £40million. The Scheme will not provide underwriting support for any lending currently in place so there will be no transferring of existing risk to the States.'
But the committee warns that it would be unrealistic and unaffordable for the States to support the whole economy and all businesses through this period.
'While it is not possible to commit that no job losses and bankruptcies will occur as a result of this crisis, the reasonable objective is that, as far as possible, the economic and fiscal response will focus on preventing job losses and business failures as a result of this crisis. There is
an expectation that businesses must act responsibly towards, and engage openly with, all their stakeholders: employees, customers, suppliers, landlords and their banks.'
The package of direct assistance measures being developed are:
* Consideration given for companies, and the self-employed, to be allowed to defer payment of employer’s / self-employed social insurance
contributions which are due in respect of the first two quarters of 2020;
* Consideration given for commercial Tax on Real Property to be deferred, with landlords encouraged to pass this benefit on to tenants;
* Where the States of Guernsey is landlord to a local business, consideration will be given deferring rent due up to the end of June 2020, with all commercial landlords also encouraged to consider a similar approach;
* In order to assist individuals who are facing significant hardship and would not otherwise be entitled to States’ benefits, it is planned to
establish a ‘hardship’ allocation for individuals which will be administered alongside our social security benefits and provide targeted support. It is intended that the initial allocation for this purpose will be £5m.;
* The mooring fees for registered and licensed commercial fishermen will be waived until the end of 2020 in recognition of the immediate and
particular difficulties being faced by that sector.
Aurigny normally has an annual turnover in the region of £45m. per annum.
It employs approximately 310 staff, predominantly in Guernsey and Alderney, but with around 40 based in the UK, mostly handling
staff.
'The current restrictions in respect of non-essential travel will significantly increase the company’s losses and cash requirement. The
company currently holds approximately £7m. in forward sales and it is very difficult to forecast how much of that may need to be refunded. In addition, the company has seen a substantial fall in advance bookings, which is also increasing the cash requirements. The current estimate range, based on best information available at this time, is that there will be a cash requirement for 2020 of between a further £23m. and £27m. should the current restrictions remain in place for the remainder of the year.'
During the Budget debate, members had already agreed to make available a temporary overdraft facility to Aurigny or guarantee external facilities of a maximum of £25.7million in 2020 before the coronavirus hit - this will be boosted by £27m. if the States agrees.
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