This Is Guernsey

THE financial situation at the Dairy could be investigated. Commerce and Employment has used about £500,000 of reserves since it took charge because the price of milk was too low.

The money had been built up by the former Agriculture and Countryside Board to fund capital expenditure.

The department has been forced to secure a £150,000 overdraft and £500,000 loan facility from Treasury.

‘The Public Accounts Committee has been monitoring the situation at the Dairy for some time and has been copied into previous exchanges of correspondence between the Treasury and Resources and Commerce and Employment departments,’ said the committee’s vice- chairman, Deputy Chris Brock.

‘The committee is of the opinion that there may be justification for a value for money review, but is monitoring the outcome of the other reviews before it decides what action it should take with regard to this matter.’

Former president of the Agriculture and Countryside board Peter Roffey urged the PAC to look into what had happened.

‘I find it a surprising judgement by the board of Commerce and Employment to seemingly deliberately erode their financial reserves by running at a loss in order to keep the price of milk frozen in cash terms for three years after it took over,’ said Deputy Roffey.

Commerce and Employment minister Stuart Falla has said it could not act because of the Scrutiny Committee investigation into the delivery system and States resolutions.

Deputy Roffey said its hands were tied only when an amendment in April said there could be no price rise until a milk panel had decided.

‘Up to then there was no reason why it couldn’t certainly rise to keep pace with inflation.’

He did not accept Deputy Falla’s comment that the customer had benefited.

This might be true in the short term, said Deputy Roffey, but the difference would need to be addressed so the Dairy turned a profit and the interest on the overdraft and loan were paid.

He confirmed that the Policy Council had discussed what was happening.

‘I can’t give details of the conversation, but I don’t think I’m alone in being somewhat bemused by the Commerce and Employment Department’s strategy in relation to milk prices.’

It was not a resignation issue, said Deputy Roffey.

But he was disappointed deputies had not been given the full picture when the States debated the department’s report in April - it was then suggesting an increase of 5p per litre on milk.

In the end the price went up 18p.

‘It beggars belief that an extra 13p per litre was needed just because we kept the traditional delivery system by milk retailers. It may have added some cost, but I’ll take some convincing for it to be 13p.’

There were efficiencies to be made at the Dairy, said Deputy Roffey, something even his board had not been able to address because of the problems with oversupply of milk at the time.

This included phasing out consolidated shift payments for weekend work.

* PAC chairman Deputy Leon Gallienne is also a member of the Commerce and Employment Department and so could not speak on the issue.