States has no need to ‘borrow and pay back’

It is correct that the States have agreed, or are being asked to agree, significant sums of money for major capital projects. The modernisation of the Princess Elizabeth Hospital received unanimous States approval. Both the Future Digital Services programme to upgrade the government’s digital technology and the expansion of the two secondary school sites will be debated by the States this summer.

But it is important all islanders are aware that there is no risk of the government having to ‘borrow and pay back’ anything in order to fund any of these capital projects. Over the last decade the States has worked successfully to bring stability back to public finances. We have achieved a surplus in recent years, successfully balancing the books, and while it will be a significant challenge to maintain in the longer term, we are much better placed than other jurisdictions who face significant deficits.

We have been able to commit more money to the Core Investment Fund – sometimes referred to as the ‘rainy day fund’ – where the government is building reserves to ensure our island has the financial security to withstand any unforeseen future shocks to our economy. In 2017, £13m. was added to the fund, taking the total to £175m. This fund and all our reserves are well invested and have earned decent returns. This forms a genuine buffer to ensure we are prepared for any and all challenges.

At the same time the States’ Capital Reserve, the pot of money that provides funds for capital projects, is fully funded. The security of those funds is strengthened by a process of prioritisation, ensuring we carefully plan how and when major projects are funded.

The reality is the States has been under-investing when it comes to the island’s infrastructure. Our public services must have the buildings and equipment they need and we must go further still, investing to enable transformation in the delivery of our services and, increasingly importantly, to facilitate and drive growth in our economy.

That brings me to a final point about one of the projects the States will have to decide on shortly, our Future Digital Services programme. Mr Peters has described this as a £200m. programme, as have the media. While this ball park figure is not inaccurate, it does not tell the whole story. It is important islanders are aware that the £200m., which is the value of a 10-year-long agreement for managing and upgrading the States’ IT, is broadly similar (and in fact a little less) than what the States would spend on IT if it continued to run it in-house over the same period. Furthermore, by improving our technological capability, the quality of services offered to the community can and will see real improvements, and will enable significant savings in other areas of public spending. £200m. sounds like a big sum, and it is, but it is a sum that will bring costs down overall while raising the quality of public services.

DEPUTY GAVIN ST PIER

President, Policy & Resources Committee.