Billet Blog: 18 July 2018

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Billet Blog: 18 July 2018

After a couple of relatively quiet States Meetings, the July agenda is full of interesting business, with seven policy letters – including proposals for the future of air transport licensing, and the publication of the KPMG housing market report – and a requete on the future membership of the States’ Trading Supervisory Board.

Billet d’Etat XIX – 18 July 2018 (read it online here)

Statements and Questions

The President of Home Affairs will give a routine update on the work of the Committee for Home Affairs. We have also been told that there is likely to be an update from Policy and Resources on the current financial position.

Elections and Appointments

The States will be asked to appoint two new Overseas Aid Commissioners and to reappoint four Commissioners for a four-year term. Two long-serving Commissioners, Tim Peet and Steve Mauger, are retiring this year, having served the maximum period of ten years on the Overseas Aid and Development Commission. It has been a real pleasure to work alongside them for the past two years, as President of the Commission, and I would like to record my thanks here, as well as in the States, for their dedicated service to some of the world’s poorest and most disadvantaged people, through their work as Commissioners.

We will also be asked to appoint a new member of the Police Complaints Commission (the body which oversees complaints against the police – more information here), and to note the appointment of a new member of the Banking Deposit Compensation board, which operates the compensation scheme set up to provide some protection to savers in the event of a bank failing.

Legislation

There are four statutory instruments to be noted by the States. One allows speed limits to be set more efficiently; two relate to the fees for the aircraft registry and the Director of Civil Aviation respectively; and one explains that the official run-up period for the Island-Wide Voting referendum, during which specific rules apply to campaigning, will run from 11 June until 10 October 2018 (the date of the referendum).

There is one piece of law to be approved by the States. This is the Alderney (Application of Legislation) (Adoption) Ordinance, 2018. Last year, we made some small but significant changes to Guernsey’s 1960 Adoption Law, allowing couples in civil partnerships and long-term relationships to adopt. The recent approval of equal marriage in Alderney gave married same-sex couples in Alderney the right to adopt. By extending this law, we will ensure that unmarried couples, and couples in civil partnerships, also have the same rights to adopt in Alderney as they do in Guernsey. In both cases, we recognise that this is only a small fix, and the 1960 law really needs extensive modernisation – something which is reflected in the priorities of the Committee for Health and Social Care.

Propositions and Policy Letters

The States will be asked to agree that new Customs legislation should be drafted. This is part of Guernsey’s response to Brexit, and is needed because the EU law relating to Customs duties (tariffs on imported and exported goods) will no longer apply in Guernsey after the end of March 2019.

The details of the new Law are vague – like much of our post-Brexit legislation, it’s intended to be a framework that’s flexible enough to adjust to a number of different scenarios for our relationship with the UK and the rest of the world. At the same time as the Law is being drafted, the Committee for Home Affairs will be negotiating new Customs arrangements with the UK – any proposals arising from the negotiations will be put back to the States in due course.

While the new Law is self-evidently necessary, I’ve made enquiries about whether we need additional resources to draft it, given how much Brexit-related law-drafting we’ve approved recently. It is also interesting to read (in para 2.2) that Customs duties should not be considered as part of tax policy, but of trade policy. Trade policy is not something we often consider, and it was not meaningfully discussed in the most recent Economic Development strategy approved by the States last month. As the world and our role in it changes, developing policy in this area may become increasingly important for future States.

The majority of the States’ time is likely to be taken up with the next item, Economic Development’s Review of Air Transport Licensing. If the proposals are successful, then the Guernsey-Gatwick and Guernsey-Alderney air links will be designated as “lifeline routes.” This means that any operator who wants to fly on those routes will still have to apply for a licence. It also means that the Committee for Economic Development will have the power to create a PSO, or Public Service Obligation – effectively, a contract with an airline which gives them exclusive rights to a route (and usually financial support to fly that route) – if it looks like the route will otherwise be unsustainable.

Flights to all other destinations will be exempt from licensing – this means that Guernsey will have ‘open skies’ on all but a couple of core routes. The hope is that this will encourage a wider range of airlines to start offering flights to and from Guernsey, with competition helping to bring down the cost of fares. I’m sceptical – Guernsey is a very small market, and there’s not likely to be a level of demand that will make us attractive to many carriers. But I don’t think the licensing regime adds much value outside the protection of our core routes (it already encourages competition in principle on most routes, but its existence presents a bureaucratic hurdle for new entrants, which some airlines may simply choose not to bother with), so I’m generally willing to accept the trade-off.

I am concerned, however, that the Committee’s definition of “lifeline” routes doesn’t stretch far enough. If I had to spell out my ambitions for our air connectivity, they’d be: air links which are similar in affordability and availability to the rail service connecting a commuter town to its nearest big cities, and connections which allow the Channel Islands to flourish as a shared community and a tourist destination. For the former, our connections to Southampton and perhaps to Manchester are as important as our connection to London; for the latter, our link with Jersey is as important as our link with Alderney.

I think that the Committee has restricted its definition of “lifeline” to routes which we might otherwise be at risk of losing – routes which it needs to create a PSO for. But I think we need to be more forward-thinking than that, and make sure we’ve got a mechanism that allows us to intervene on other core routes if circumstances change, as they’re bound to over time. We have a presentation from the Committee today on their proposals, which may change things; but as I write, I’m considering an amendment that would additionally bring Southampton, Jersey and perhaps Manchester under the net of protection for “lifeline” routes, so that we are able to react in future if needed, to avoid losing important links to healthcare provision, business opportunities, or to our neighbouring island.

The Revised Waste Management Plan could also attract some lively debate, although this should only be a technical change, making sure that decisions already made by the States are reflected in the official guidelines for waste management. The Waste Management Plan is the document which sets out how Guernsey will treat and dispose of different types of waste, and is available to read online here – this update is to ensure that it includes the latest States’ decisions about the management of solid waste and inert waste, following debates in the course of the last year.

Following this, there is a short paper from SACC setting out a schedule for updates from the Presidents of the different States’ Committees. This process was introduced this term as a way of improving scrutiny in the States, by requiring Presidents regularly to explain what work their Committees are doing, and allowing questions to be asked on any part of their mandate. You can check the schedule for the year ahead at any time by going to gov.gg/billets and clicking on the “Rota of Statements by Presidents.”

The next item on the agenda could be the subject of as much debate as the paper on Air Transport Licensing. It’s an update from two Committees on the Local Market Housing Review carried out last year.

In many ways, this is an interim report – it presents the independent review, done by KPMG, to the States and asks the States to agree new housing indicators for the next five years to reflect the level of development required to meet anticipated housing need. This works out at 178 (+/- 32) new ‘affordable’ houses and 457 (+/- 117) other new homes. The report outlines a number of areas where more work is needed in order to improve access to home-ownership; safeguard the quality of housing and the rights of tenants and landlords in the private rental sector; and ensure adequate housing for people with particular needs, including older people with some level of care needs. These will be progressed through a Housing strategy, with proposals returning to the States later this term.

Market conditions have certainly changed since the review was originally commissioned, but access to home-ownership remains a challenge in Guernsey, where house prices can be around fifteen times the average salary. This is bound to have knock-on negative effects on family formation and family size; and it creates a double-whammy for younger working-age people, who are not only less likely to own a home than their older counterparts, but are also entering a time where State support for pensions is diminishing: two factors which mean that, if we’re not careful, we are heading back to an age of rising pensioner poverty. This report is a step on our way to addressing some of those issues, but the critical thing now will be for the two Committees to put together a coherent plan for change, and get it moving as soon as possible.

The States will then be asked to note the actuarial valuation of the superannuation fund (the fund which collects contributions for, and pays, public sector pensions) and to approve the level of contribution which the States makes to that fund on behalf of its employees (which is 14.1% of pensionable pay, with additions for some staff groups, such as the police and fire-fighters). The valuation indicates that the fund’s assets are currently sufficient to pay 93% of all the pensions it covers, if they were all claimed at the same time. We are working towards a target of 100%, and the gap has closed slightly over the last three years, but progress isn’t inevitable – if the value of the States’ investments dropped, or people started living longer, for example, the gap would start to widen again.

Next come the 2017 Annual Report and Accounts of the Guernsey Financial Services Commission (GFSC) which, again, we are asked to note. States Members may want to use this debate to comment on the GFSC’s management and finances, or may take the opportunity to look more generally at its performance as a regulator, and the quality and competitiveness of Guernsey’s finance sector. This is one of those areas (we all have them) which I know is important to the island, but in which I lack the depth of knowledge to apply a great deal of sensible critical analysis, so I invite and welcome insights on the matter from within the States and beyond.

Finally, the States will debate a Requete on the make-up of the States’ Trading Supervisory Board (STSB).

At the moment, there are two political and two non-political members of the States’ Trading Supervisory Board. Deputy Peter Ferbrache was recently appointed as President, more or less swapping places with Deputy Charles Parkinson, who has moved on to become President of Economic Development. All members (including the non-political members) are approved by the States, on a recommendation from the Policy & Resources Committee.

If the requete succeeds, there will in future be five political members and two non-political members (who may or may not have a vote – both options are offered) on STSB. Elections will need to be held at the next possible States Meeting. Significantly, the requete removes the requirement for non-political members to be appointed by the States: they will instead be appointed by the political members of the Board.

It is interesting to compare this with the original intention for STSB, set out in the reports of the States’ Review Committee (see section 6.2 of the November 2015 report). This report stresses the importance of “balancing political and commercial considerations” in the management of States-owned corporate and semi-commercial bodies, such as Aurigny or Guernsey Electricity. It recognises that the States will continue to set the policy for these organisations, which have importance public service roles. (I found it especially interesting to note that the bodies would be responsible for “delivering a level of financial return consistent with States’ objectives” which “does not necessarily imply a positive return” – the concept of ‘sweating’ our assets needs to be balanced against their social purpose, which is largely the reason they’re owned by government in the first place.) It also stresses the need for “democratic accountability” within STSB, with a rule that the Board’s decision-making quorum must always include at least one of its political members.

Despite all these safeguards, the Requete reflects a perception that there is not enough “democratic accountability” and more politicians need to be more involved in the management of the various trading bodies. I’m sympathetic to a degree – I think the majority of members on the Board should be States Members, and I suspect that overall the Board is too small. That probably leads me to a position of preferring three States Members and two non-political members. I do think the management of States-owned bodies needs to be done with a sensitivity to public concern and to political direction, which is usually more characteristic of States Members than non-politicians. But I think that overwhelming the Board with States Members, which this requete will do, is also a wrong move – it risks turning it into another policy-making committee, confusing its role with that of other States’ Committees, and losing sight of the reason why it was set up as a separate body in the first place: to provide a more professionalised management of the States’ corporate and semi-commercial organisations. At the time of writing, I’m aware that several possible amendments along the lines I’ve outlined are being considered and, while I can’t support the requete itself, I could certainly be persuaded towards a compromise.

Appendix Reports

There are four appendix reports: the annual report of the CI Financial Services Ombudsman; annual reports from the Prison Governor and the Independent Prison Monitoring Panel; and a letter from the Committee for Education, Sport & Culture confirming the resignation of one non-voting member, who has now taken on a role within the Education service.

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