The good, the bad and the full facts
MY ATTENTION was drawn to a headline in last week’s Guernsey Press stating that the infrastructure for the disposal of solid waste at Longue Hougue had been completed on time and on budget.
This was a good news story – just a shame that if you consider the whole story, it turns into a bad news story.
What do I mean?
Before explaining, let’s consider a scenario ...
Let’s say that my wife and I each need a new car.
She gives me £20,000 for me to buy two cars – one for her to use and one for me.
I return some time later saying: ‘Good news – I have kept within the £20,000 budget. In fact, I have spent only £19,000.
‘However, I have only bought one car so one of us is going to have to pay for taxis to get around.’
The total spent would be within the cash budget, but the number of cars bought is below the specification of two cars, and additional monies have to be spent on taxis for one of us.
In this situation, would it really be correct to say I was within budget when I had only bought half the number of cars I was expected to buy?
When you look at the whole picture, that is what has happened with the waste plant at Longue Hougue – within the cash budget, but significantly below the original specification.
Back in 2014, the States agreed the Waste Strategy and a capital budget of £29.5m. was agreed to fund the facilities needed, these being: a materials recovery facility; in-vessel composter for food waste; transfer/station; civic amenity repair and reuse facility; the general site development; a fleet of collection vehicles and the capping of Mont Cuet tip.
Importantly, the States was told the £29.5m. would fund all of those.
In March 2016, the then minister of the Public Services Department told the States that less would be built.
. Gone was the in-vessel composter for food waste.
. Gone was the materials recovery facility.
. Gone was the fleet of collection vehicles.
But he had good news: they would not spend more than the budget of £29.5m.
Being surprised by his statement, I asked: ‘Sir, will the minister explain how he can consider the capital project to be within budget when three of the seven elements contained in the original budget specification are now not being built, but the full £29.5m. is being spent?’
He sidestepped the question – twice.
Roll forward to February 2017, the States was presented with another policy letter, this time to explain that: ‘Capital costs, including contingencies, are now estimated to be £33m.’
On the face of it, an increase of £3.5m. With Mont Cuet filling up fast, the States had no real choice and approved the new, increased budget of £33m., and it is to this new 2017 budget that the actual costs are now being compared.
But that is not the full story.
It is when we compare what was originally expected to be built at Longue Hougue against what is being built there that we see the real cost of those facilities has increased from the original budget by significantly more than £3.5m.
Writing about numbers is not easy to explain, so I have produced a little table.
The first column, headed 2014, shows the original budget – the one the States were told the costs would be when they approved the project in 2014. The second column is the 2017 budget, which reflects the actual costs.
The top four rows are the elements being built at Longue Hougue.
The next two rows, the materials recovery facility and the collection vehicles, are the elements not being undertaken.
The final line is the capping of Mont Cuet, which is a project completely separate from the Longue Hougue development.
What this table clearly shows is that the States is currently spending £30m. at Longue Hougue on facilities which in 2014 were expected to cost only £20m.
A whopping £10m. increase.
The recent media release that the building was on budget was true – but only if you compare the actual costs to the most recent 2017 budget.
The implementation of the waste strategy hugely exceeded the costs put before the States when the strategy was agreed.
I am not criticising the committee’s lead officer, who had nothing to do with the 2014 budget, nor the current committee, who have inherited the project.
The deficiency of the original budget was known before the election and responsibility lies with the previous committee.
Two questions do spring to mind:
Firstly, how could the original budget have been so wrong, increasing by 50% or £10m. in three years?
Secondly, if the real costs had been known in 2014, would the decisions of the States have been any different?
Perhaps this is not such a good news story after all.