Three States trading bodies set for commercial freedom
Water, States Works and the ports – which includes the harbours and airport – will be commercialised if deputies agree new proposals which they are set to debate next month.
They would be incorporated as standalone businesses and have more freedom to operate commercially, while remaining fully under States ownership.
The States’ Trading Supervisory Board, which published the proposals late yesterday, claimed that the three trading operations were currently ‘inhibited from developing their full potential’ and that commercialisation was needed to free them from civil service control over functions such as IT, recruitment and pay.
‘It is no criticism of the personnel who provide these various support functions, but under the current arrangements their wider focus and priorities do not always match the specific needs of each individual trading business,’ said STSB vice-president, Charles Parkinson, who is leading the board’s proposals.
‘A good example is being able to agree staff terms and conditions that reflect their operational requirements and priorities, rather than being determined for the public sector as a whole. In the commercial world, companies simply do not operate that way.’
But the board has ruled out commercialisation of its other three States-owned trading operations – the dairy, waste operations and the lottery – because it believes they are either unviable as incorporated businesses, or better suited to more hands-on government control.
The board’s proposals about which operations should be commercialised and which should remain under closer political control is consistent with recommendations made in a review which it commissioned consultants Interpath to carry out in 2023.
It is asking the States Assembly to agree that Guernsey Water should be commercialised by the end of 2027.
It is also requesting deputies’ support in principle to commercialise Guernsey Ports and States Works, with a direction for the board to report back with more detailed proposals by the end of 2026. The proposals do not contain a target date for those operations to be commercialised.
The estimated cost of preparations to commercialise the three operations has been put at £500,000 in total, which would be funded by the businesses themselves.
Once commercialised, the STSB would no longer provide operational oversight of the businesses, but would instead become the shareholder on behalf of the States, setting high-level objectives for operationally independent boards of directors.
Any profits would continue to be reinvested and used to fund the businesses’ long-term investment requirements.
‘The businesses within the STSB look after a lot of the island’s key infrastructure, which is very capital intensive and requires long-term planning, both financially and operationally,’ said Deputy Parkinson.
‘When you have too much political involvement in decision-making, there is a danger that it leads to more short-term focus, and that is not in the best interests of these businesses nor in the best interest of islander.’
The commercialisation model was first adopted in Guernsey for post and electricity nearly 25 years ago.
‘As incorporated businesses, Guernsey Post and Guernsey Electricity have been able to plan much more long term, while also having the flexibility and agility to respond quickly and effectively to challenges that impact them specifically, and adapt accordingly,’ said Deputy Parkinson.
‘That is the model which we believe Guernsey Water, Guernsey Ports and States Works would perform better under, which will be to the island’s benefit.’
The STSB hopes its policy letter will be put on the agenda for debate at the States meeting which starts on 19 March, but it may slip to April given the backlog in business going to the Assembly before June’s general election.
