P&R puts the brake on capital spending
POLICY & Resources is to stop funding all major capital projects until this summer, at the earliest.
It intends to lead a States debate in July during which deputies will decide whether to continue or scrap each of about 30 projects, which have a total budget of around £460m.
They include the Princess Elizabeth Hospital, Alderney airport, coastal defences, post-16 education facilities at Les Ozouets, and affordable housing.
The States’ senior committee wrote to deputies on Friday telling them of its plans to suspend funding in the wake of their failure to agree a tax plan to plug a hole in public finances which is projected to reach nearly £100m. a year.
‘The committee has agreed that no new funding should be considered and approved until the States have been able to consider and agree on the size and shape of the capital portfolio,’ said P&R in a letter signed by president Peter Ferbrache.
‘There may be exceptional circumstances in which committees feel it necessary to submit small funding requests for critical work, which would not be nugatory [futile] should the scheme be suspended, and such requests will, of course, be considered.’
After recently rejecting all five proposed tax plans following six days of debate, the States directed P&R to review major capital projects and report back by March 2024, but the direction did not include stopping all funding for projects in the meantime.
Deputy Ferbrache said P&R had instructed treasury officials to lead a review as ‘a top priority’ to allow it to report to the States ‘in a much shorter timeframe’.
‘Work on the review has already commenced with the intention of the States being able to consider a policy letter at their special meeting in July 2023,’ he said.
‘All schemes in the current capital portfolio will be examined to determine whether they could be paused, delayed, stopped or re-scoped based on strategic fit, affordability, deliverability and impact on related schemes.
‘It is our intention that the policy letter should consider which schemes should remain in the current portfolio as well as proposing the best funding mechanism, including possible borrowing.’
P&R said it would consult with other committees and deputies before finalising any proposed changes to the capital programme.
The committee recently lost its powers to authorise capital expenditure up to £568m. when deputies reinstated a limit of £5m. on its delegated authority. Friday’s letter made no mention of any attempt to reopen that issue.