The challenge of renewing Guernsey’s infrastructure

January 19th, 2011 by Peter Roffey

It wasn’t obvious at the time but when the States of Guernsey Education Minister claimed that after the rebuild of Les Beaucamps School, “La Mare de Carteret will be next”, it was the first salvo in what will become a desperate fight between departments for very limited capital monies.

Barring an economic miracle the next States of Guernsey simply won’t have the money to carry out all of the vital infrastructural projects they will inherit. The precious “Capital Reserve” built up over previous years will soon be exhausted, while generating big surpluses on the States’ revenue account will be very difficult indeed.

So the “House of 2012” will be forced to prioritise between many compelling but competing capital demands. Either that or they will be tempted again by the siren call of large scale borrowing to improve Guernsey’s infrastructure. That should be resisted at all costs.

So what should they do? It’s good that the States now have a capital prioritisation process, rather than just first come first served, but what should be the top priority?

It’s hard to argue with Deputy Carol Steere that La Mare has a strong case. Indeed it’s puzzling why it wasn’t higher up the department’s modernisation agenda. But it’s far from the only capital priority for Education.

The College of Further Education is an absolutely vital resource both for Guernsey’s youngsters, and its economy, and it’s been promised modernisation for donkey’s years. Instead it operates out of portacabins at the Coutanchez while its designated new home at the former St. Peter Port School is begging for redevelopment. And don’t forget Ladies College. It will point out that while it may be a private school the buildings belong to the States and badly need investment.

The bigger question is whether – having been voted the £37 million for Les Beaucamps – Education should be next in line again. While prioritisation certainly isn’t about taking turns there are some equally compelling projects in other areas of government. For example the new acute psychiatric facilities at the Prince Elizabeth Hospital (PEH) are long overdue. Indeed it had been hoped to build them before the new clinical block. This proved impossible simply because the site wasn’t available until Oberlands House had been replaced with new community homes for people with learning difficulties. In my view these two inter-connected projects should now be the States top priority for three reasons.

1. Those with acute mental health problems have waited far too long.

2. Having relocated three quarters of the patients [the long stay wards] from the Castel to the PEH the acute ward is too isolated to be run cost effectively.

3. Once the move is complete the States have a chance to realise a potentially valuable asset in the Castel site.

Indeed imaginative ways to raise capital are just as important as prioritising spending. For instance with much of the King Edward VII hospital now relocated to the Clinical Block what about looking at the future of the whole Castel/King Edward VII hospital site?

Even more radical what about selling the entire States Housing stock to the Guernsey Housing Association (GHA) for, say, a third of its market value? That could still be £100 million and the GHA should be able to raise the necessary commercial loan against the future rental income? Would that be selling off our assets cheap? Not if there was a covenant ensuring the properties could only be used for social housing and otherwise would revert to the States. Of course the downside is the loss of rental income to the States but it’s still surely better than borrowing.

Nor can the States only consider the “sexy” areas like health or education when prioritising their capital spending. For instance we have only deferred the large scale costs which will come with any new waste strategy. Either the kit involved will have to be bought by the States of Guernsey or by the operator. If it’s the latter it will still be the people of Guernsey who pay for it through gate charges. Experience in the UK suggests Private Finance Initiatives (PFIs) tend to end up costing a lot more and it may be better for the States to find the capital.

Then of course there are the small matters of the airport, the slaughterhouse and a myriad of other mundane but essential capital projects. I don’t envy the next States government their job in deciding what gets the green light. What’s vital is that they stick to an objective prioritisation process and don’t return to the bad old days of the cash going to the department which shouts the loudest.

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