OPINION: Deal or no deal?

‘FLABBERGASTED,’ was Deputy Peter Roffey’s initial response to the proposal that the Guernsey Housing Association take full control, responsibility and ownership of the States’ entire social housing stock, much of which is said to be in poor or antiquated condition.

The idea was first raised early last year by Policy & Resources president Peter Ferbrache at a Chamber of Commerce lunch, when speaking publicly although in a personal capacity.

The Committee for Employment & Social Security is responsible for the allocation of social housing and, as its president, Deputy Roffey called it a bizarre announcement out of the blue, although stressing he was open-minded on it.

By October 2021, Deputy Roffey was describing the ongoing notion as a scoping exercise with a great deal of assessment needed before a decision was made.

Fresh into 2022, the chief executive of the Guernsey Housing Association, Steve Williams, stepped forward saying that the States Housing Authority is expected to maintain the 1,600 or so properties on a shoestring budget. He added that, given the opportunity, the GHA is better positioned to carry out the necessary improvements.

As such, valuations are currently being undertaken, but based on what? The questionable condition of some of the flats and houses will be a negative factor, as will the sub-market-value rental income, nonetheless estimated to be in the region of £20m. per annum. But what of site values?

Some are in prized urban, coastal and rural locations well suited for primary office development, oversized beach houses or grand country residences. Selling these coveted sites would also save on house improvements. The GHA trades as a private company and its directors, or presiding members, may have to consider such options.

More cash for the betterment of other estates, you might say, but where will replacement sites for the lost social housing be found?

Half a billion pounds is being touted as a guide price for the current stock, which the GHA would have to borrow plus a sizeable amount if the property improvement programme is to start sooner rather than later.

Perhaps, however, this level of borrowing is the true motivation behind the scheme.

The States’ 2014 debut bond issue, worth £330m., allows States departments for the first time to borrow money in a more efficient consolidated manner from its own central bank, as it were. But the pandemic’s damaging effects on the economy, and the lack of investment in the island’s infrastructure by past assemblies, has left the exchequer short-funded.

Imminent tax increases are needed for Guernsey’s ageing demographics, as much as for the here and now, and loading more borrowed debt on the island will not help P&R to balance the books.

How much better, then, for the GHA to do the borrowing. The States has to guarantee the GHA’s bank loans, but doesn’t otherwise have to service or repay the debt. The coffers get a huge injection of capital from the sale of houses and the States offloads its responsibility for their future maintenance into the bargain.

On the flip side, profits from the annual rental income are lost and, each year, the taxpayer will have to make up the shortfall. By how much depends on how wisely the house sales windfall is put to work, something about which the general public will be sceptical.

That aside, how much control does the States have over the GHA? It’s not part of the States but merely sponsored by the Committee for Employment & Social Security, as part of the States Corporate Housing Programme.

Back in 2002, with the States’ backing, the association was formed as a charitable company and later vested with limited-by-guarantee status. This means the liability of the voluntary registered members (in effect its board of directors) is limited to the total value of only £70 in the event of the company’s insolvency.

The members have full voting rights but their shares have no right to any dividends or any type of distribution and are not transferable. Their membership ceases upon retirement, resignation or expulsion from the board, having already signed share transfer forms in favour of the GHA. They are refunded legitimate expenses, although this excludes routine costs such as mileage and attendance at local meetings.

Members are selected for their proffered skills and experience, having benevolently applied to join the board.

Short bios on each of them appear on the GHA website.

Staffing the association runs to more than 20 full- and part-time personnel.

GHA projects are funded by bank borrowing (guaranteed by the States), together with direct grant funding from the States Corporate Housing Programme fund. With this comes regulation under a framework agreement that includes provisions for the States to take control of the assets and liabilities should it all go wrong and a default event occur.

This is the essential factor. Once sold, can the States claw back ownership of the properties if it needed to?

Former deputy Andrew Le Leivre has closely studied the history of social housing in the island and tells us that 2022 represents the centenary of Guernsey’s first States-funded units of social housing. He wonders if the present States Assembly is ready to discard 100 years of social responsibility for a cash windfall in hard times.

Is the temptation to shed its moral duty to provide adequate social housing really too great to resist? Surely it can only fulfil that obligation with absolute certainty by owning and controlling the housing stock itself. Can we rely on the private sector to provide an essential service when its primary ethos – even a not-for-profit company – is to make money?

And last week’s announcement that the GHA’s chief executive is stepping down from his post of 17 years is another concern. Steve Williams has been a driving force within the association and will be difficult to replace in the role.

So, is it deal or no deal between the States and the GHA? The matter hangs in the balance and on this occasion, I will defer to the late Roger Perrot, an advocate and long-serving deputy who was renowned for his turns of phrase. Rather than say (heaven forbid), ‘I don’t know’, he would say, ‘I look forward to being educated on the matter’.