HSC and ESC heads deny U-turn on States’ borrowing

They both previously led amendments which defeated or restricted plans to borrow.

But they are now backing Policy & Resources as it prepares to give deputies the option of borrowing to avoid having to choose between their committees’ capital projects – developing the Princess Elizabeth Hospital and building a post-16 campus at Les Ozouets, each of which is now expected to cost more than £120m.

They insist they have not changed their views only because their current committees’ projects stand to benefit from any additional borrowing approved when capital projects are debated again in September.

In 2020, Deputy Dudley-Owen successfully led opposition to a proposal for the States to authorise £250m. of borrowing during the Covid pandemic. She said then that such a move could change the island’s economy and public finances forever.

‘That amendment asked for P&R to return with a spending plan and the basis upon which the proposed borrowing would be repaid. This recent announcement from P&R is going in a positive direction,’ said Deputy Dudley-Owen.

'In line with my previous expectations, I am keen to learn more about the detail of the proposals in the lead up to September and want a clear view of what the borrowing will be used for and how we proposed to pay for it.’

At the 2020 general election, Deputy Dudley-Owen pledged to promote ‘a cautious approach to debt’ and said one of her main achievements in politics was ‘to ensure that we have sufficient controls and oversight regarding the long-term borrowing proposals so that future generations were not left indebted for insubstantial reasons’.

In the States before last, Deputy Brouard successfully proposed an amendment to restrict borrowing to projects with a secure income stream through which it could be repaid, which excluded using debt to fund schools and hospitals. P&R has confirmed it is considering tearing up that policy for capital projects over the next few years.

At that time, he said: ‘I do not believe we need to start off a national debt.’

Deputy Brouard has now insisted that his ‘basic principle has not changed’.

‘If the States is to borrow for the general good – the hospital modernisation project or education transformation – it needs to ensure it has sufficient revenue earmarked for the borrowing to be repaid, in my view,’ he said.

‘I would rather use savings to fund the projects, but for many reasons our savings have not been rebuilt and are a reflection of keeping taxes low to islanders and not having increased taxes earlier.

‘Unless we are prepared to deplete what saving we have, an alternative consideration will be to borrow, if the States want these projects to go ahead, but that will entail ensuring there is enough revenue to pay for it.’

Although the States Assembly has authorised additional borrowing of a total of £500m. since the outbreak of the pandemic, P&R said recently that a £330m. bond issued in 2014 remained the only external borrowing carried by the States.