Let’s free up some of our state assets
Monday 28th December 2009, 2:30PM GMT.
AS THE fallout from the airport firefighters’ secretly lavish pay settlement and the regulator’s decision on post office competition continue to reverberate, there’s a common link that has yet to trigger a public debate: States ownership.
At a time when government is strapped for cash and is looking to borrow hundreds of millions for essential investment, it is sitting on an equivalent amount of assets.
Ports, utilities, States Works, States houses… all have value that could be unlocked – if deputies and islanders are not resistant to change.
The logic of selling off state assets has already been endorsed by the Assembly as part of the fundamental spending review. A key objective of the work carried out by consultant Tribal was to ensure that departments are engaged only in delivering essential services that cannot or should not be provided by the private sector.
Seen in that light, why on earth is the taxpayer owning and operating a power company? Quite apart from anything else, the cost of electricity is higher than it need be because of the expense of maintaining the pension scheme inherited from the States of Guernsey when Guernsey Electricity was commercialised.
In the current climate, another benefit might well be taking the politicisation out of the role of the regulator.
Would anyone really mind if a private company was being told it was inefficient and had to make savings? For the consumer, the only issue would be quality and cost of service, which is where the focus should be, rather than on ownership.
These issues are being pursued by the Policy Council but it is a safe assumption that there will be widespread disagreement on the principle or how widely it should be implemented.
Islanders, however, should be aware that protecting sacred cows will cost them and that sentimental attachments to businesses prefixed ‘Guernsey’ come at a price.
They should also be aware that they are unlikely to realise a full market price because of current and future liabilities in the pension schemes.
And that’s a burden that also affects them as taxpayers – and one that the States is remarkably reluctant to tackle.
That feebleness cannot be allowed to continue.
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I presume this Comment was written when the writer was suffering the excesses of Christmas.
This would explain the predictable anti Policy Council rant in the middle of the piece.
Why does the taxpayer own the power company? Control of important strategic assets might do for starters.We can also throw in the less than adequate performances and reduction in services from the people who run the post and primary telecommunications systems.
Turning to the suggestion of selling off the family silver at this time, seems odd when one considers that most pension funds are at a low ebb and may well show considerable improvement when the recovery comes in one. two, or three years.
Seems daft to advocate selling at fire sale prices. Bit like Pa Boon of downing Street selling much of the UK gold reserves when the price of gold was at its lowest.
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I say nationalise the Guernsey Press!
What dated nonsense this is.
The problems are in management, not ownership.
If the owners are not keeping a good grip on the management then it will fail. In these cases, power, housing, water, health, law and education should all be under public control. It is the only way for the public to have a say on the infrastructure that keeps our communities intact. How they are managed is different. Nobel prize winning social scientist Elinor Ostrom believe that small communities should work as co-ops, rather than top heavy – be they commercial or dictatorial, with neighbouring small communities adapting the same technique, so intercommunity trade becomes effcient rather than competetive. The Channel islands are ready made for this, providing we can get power from the sea within a few decades.
This fire-sale attitude of public infrastructure is a known failed policy. Can the Opinion writer point to a country anywhere in the world, where privately owned public service delivery is good value for money, where value is calculated on an holistic basis for society?
No. It won’t happen. They cannot because it is a myth. Maybe over a very short period of time when private capital has to be seen to be delivering, but as with all investments, priorities of return take over. This really is 18th century thinking. Older even. Give all the stuff to the rich who can then dictate how well we live. What were the revolutions for?
The new aristocracy of financiers (gamblers) are untouchable if we continue with our individualistic outlooks and priorities. We must co-operate at grass-roots to ensure that the infrastructure that keeps us educated, safe and healthy is under the control of those it benefits.
How else will we be able to make it better?
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The heart of this Opinion piece does not make sense. On the one hand it says that the price of electricity is increased by the need to maintain the pension. Then it says that we will not get a good price due to those past liabilities. So if we are not going to get a decent amount of cash for selling the family silver (and as Stephen John says above, an artificially depressed amount of cash in the current climate), where is the supposed benefit of relinquishing control? The pension liabilities will still be there for a new owner, and so the real argument of this Opinion seems to be that GE should be shut down (with the pension liabilities written off, to the expense of the pensioners) and for a completely new operator that has no such costs to come in.
Privatisation can work in some countries and for some services. In the UK many (although not all) services are probably better and/or better value for the consumer since privatisation. But this is because the market is bigger and can sustain several operators in each sector. We do not have that luxury.
Even the UK is struggling to cope on the postal service – where the primary domestic provider is now arguably unsustainable.
We are blessed with being a wealthy island (on average). We generate a lot of wealth here and we are also blessed with a greater than average community spirit. We should be looking at public services as something that needs protecting and as something worthy of public investment, for the good of the island. It may cost a bit more in the short term, but would cost less in the long term if the result of open commercialisation is the destruction of the local service and then being held to ransom by an international provider once all other competitors have decided we are too small and insignificant to focus any attention on.
Where ther are barriers to entry for any new overseas supplier (due to our island location) then we cannot just assume that there will always be multiple commercial operators waiting to serve us. Telecommunications is probably appropriate for commercialisation. Postal service, electricity supply and air-links arguably are not.
Good management, yes. Value for money, yes. Full exposure to open market forces, no – I don’t think it is appropriate if we want to ensure that we have these services in the long run.
I completely disagree with the article – ownership of certain services is important.
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TL
I can’t agree the the utilities sell off at the prices agreed (between themselves) were any good for anyone but for a coterie of business alliances.
It cannot be argued about public ‘value for money’ because there is nothing to compare it to. The myth that British Rail was useless is perpetuated, but it cannot be argued that the rail travel is better/worse than before. Nor indeed the water and electricity, now owned by the French and German conglomerates.
All that has happened is that potential profits have been syphoned off for the few when they should have been reinvested.
As you point out, it is the business management that make things efficient, not the owner.
We have no control over privatised contracts and agreements with States, if it happens, which means there is no accountability if they up sticks or some such.
I just cannot see the logic in thinking that the private sector is naturally more efficient. Same job, same people, different owners.
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Arnald – certainly, some UK utilities were sold off too cheaply but I was not commenting on that, just on the customer service aspect.
I do think that telecommunications in the UK is better for privatisation, as there is plenty of scope for competition, which I do believe drives efficiency and the need to offer better products, better service and better value – provided that the sector allows genuine competition without serious barriers to entry.
The same applies to energy suppliers. Some offer shockingly bad customer service, but at least it is easy for the consumer to shop around and make their choice. That works in the UK because the suppliers are not supplying power generated by them, just the delivery service. The same is not true here.
The railways are a different issue since there is no real direct competition – just a series of tendering processes. The poor travellers just have to deal with whoever wins the tender on their line. Plus the fact that the infrastructure is separated from the service. So the whole system is a dogs dinner and serves no-one.
I can see that there is an argument for competition in telecommunications here in Guernsey (as there now is). I cannot really see how competition can be beneficial in the remaining public services, since there will not be genuine competition or, if there is competition, it is likely that it will be at the expense of community services which are not themselves viable.
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I’m with you on this one Arnald / TL. Certain services exist solely to serve the community and therefore need to remain in the hands of the community they serve; with any profits being invested back into the service – not siphoned off to the director’s bonus scheme.
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The biggest problem with selling off these assets would be that the people who are running them badly will be incharge of selling them off badly.
We all remember which end of the stick Guernsey got in the sell off of Guernsey telecoms, and also know how we are paying more for substandard services so that C&W can subsidise their operations in more competitive markets
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Once again we come back to panic mongering. Selling off Guernsey Telecoms was the worst thing this island’s “Old States” could have ever done. Especially when they got peanuts for it, mm feel a pay peanuts get monkeys expression coming to mind but heyho! In an uncertain “Black Hole” (and boy do I hate that expression)the last thing we need to do is to panic sell any of the states commodities. I agree with one of the other comments made, it is not the ownership but the management that needs to be dealt with, to ensure that it is being operated to its full potential, and that it will still be there in years to come, whether it be a rented premise or a fully operated business. We cannot keep syphoning from these areas
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I agree absolutely with TL they have put the case succinctly and accurately.
Our utilities are strategic assets of the States, owned by the people who built and paid for them, they are not bubals on a shop shelf to be sold to the highest bidder and they don’t need middle men to run them either, wherever you have middlemen or women for that matter they are always looking for their “cut” and that “cut can only come from the pockets of the people who use these services in other words all of us.
In a small community we need to keep control of our strategic assets for the benefit of the community as a whole. Not everything has to make vast profits; it is often more to do with providing a good service and local jobs, which is what is really important to tiny communities like ours. Why is it that we no longer seem to be able to do ANYTHING for ourselves? We spent many happy years ignoring outside advice and we did extraordinarily well without it, enjoying decent and well run utilities right up to the dreaded “commercialisation” and in my view everything has gone down hill since then. Now we have people inside and outside the States who want to move to full blown “privatisation” with everything the public owns being run by those looking to make a profit rather than what is in the best interests of the consumer and I repeat again, those profits can only come from your pockets. Oh! They will tell you that these profits will come from efficiency savings which is code for unemployment and misery for local families and reduced services.
Some of our deputies who would vote for this foolishness will be gone in a couple of years time, leaving everyone else to pick up the pieces of fat cat utilities that become less affordable for the poor and less accountable to our people. As time goes by as the dividends and salaries for management and directors pile up but by then it will all be to late. It is very easy to destroy the fabric of a community by forgetting how we built it in the first place and once its gone you will never see it return, another slice of what makes Guernsey different disappeared.
Guernsey is being ruined by this constant drive towards so called ultra efficiency, what it really is, is a smokescreen so a handful of already well heeled people can make even more money at your expense and at the expense of local jobs that will be exported elsewhere. Make no mistake; our water company will be next, probably Suez who already run several French water companies or someone else looking to make a quick pound from our stupidity. Who thought it was a good idea to give up full control of our telecommunications to someone else? the very asset that our finance industry relies upon above all others, completely out of our control? Now they want to trash our Postal services and put people out of work who have given years to that company sacrificed on the alter of so called further competition. I have heard people like Roy Bisson continually telling us that we are all better off since commercialisation, well I leave it to people like you to tell me if you feel better off as this process has unfolded because it certainly is not the impression I get and I talk to great many local people.
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Agree with Dave Jones above.
Nothing to add other than I hope that these people putting these ideas forward either wake up or ship out.
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Guernsey’s Post Office department had moderate pricing and was very efficent so much so that my family in the UK were often amazed at how quickly after posting letters and parcels got to them. When the department was commercialised all of that went out of the window. There was instant chaos with all aspects of mail delivery and the cost of postage doubled overnight. Dave Jones is right.
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Usual, ill considered ranting from Dave Jones. He’s privatised much of the housing stock by GIVING it away to unregulated and undemocratic quangos. UK resident middlemen run the housing associations, and take their unnecessary cut…
If that wasn’t bad enough we underwrite their debt, too.
Ask him about the detail of GHA – he’ll tell you it’s private. For the sake of supporting his above diatribe, no doubt it’ll be publicly owned today. It’s even outside the OUR’s reach.
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Pete – half of that postal service came about in the UK – Guernsey Post have no control over delivery times there. Praise the Royal Mail too. Gsy Post is still efficient. Parcels can arrive day after having been posted in UK, despite usually allowing 3-4 days. Well done GP and RM.
There’s more to value than a quick capital “fix”. I’d rather keep the assets and borrow if absolutely necessary. Better still, stop spending.
Guern Abroad – presumably you did the latter..
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As Dave Jones points out, broadly socialist policies have served Guernsey well in the post war era; there should be no lurch to the right for the sake of change alone.
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The posters on this thread seem to be pretty much in agreement: no privatisation, no commercialisation.
Interestingly, the background of some of the posters would suggest that the special case of us being such a small community is causing them to modify their natural leanings.
One poster even mentions the dread word ‘cooperative’. This is anathema to the average Guernseyman. It’s rather socialist isn’t it?
Everyday we have boats entering the harbour with “Brittany Ferries” painted on their sides. This successful company has its roots in a cooperative movement of Breton cauliflower and artichoke farmers.
I wish local people were able to see the benefits of cooperation. I think they do at the personal level but, somehow, when any organisation along those lines is suggested, they cool off rapidly.
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Bob
What utter rot. The GHA is a Guernsey run organisation that employs a handful of Guernsey people; there is absolutely NO UK involvement in the GHA whatsoever. It has its own Guernsey board of directors and is a not for profit Housing association which ploughs its income back into its social housing stock. There is not a single penny that goes outside this island.
The GHA IS regulated by Treasury & Resources and The States Housing Department jointly. The grant funding for the GHA is underwritten by T&R, however that has reduced from the 75% at its conception 6 years ago to 10% on the last GHA project which is the Victoria Ave development for older people. If for any reason the GHA got into financial trouble or the regulators felt that is was being mis-managed or for any other serious breach of its agreement with the States, the whole lot, land, properties everything would revert back into full States ownership. The benefits to the taxpayer are obvious, lots of modern social housing at a fraction of the cost to the taxpayer. If the States had to fund the whole thing itself it would never have happened as there simply would not have been enough money in the Treasury to do so when measured alongside all the other much needed projects the island needs. There are also no future maintenance costs to the taxpayer, while at the same time the States gets 75% of all the allocations of these homes, in fact at Victoria Ave we get 100% of the allocations on that project.
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Dave Jones “What utter rot”
1.GHA employees mainly foreign workers, so most of the money does go out the Island.
2.It has a loan of 30 million from RBS, guaranteed by the T&R, which is taxpayers money, for sure.
3. The GHA are given the building site,( latest one Victoria Avenue site)free.
4. The GHA is also given about 6 million of taxpayers money to build these houses at Victoria Avenue.
5. The Dept. Housing then give families to the GHA to house, and the GHA keep all the rent money and maintain the property.
6. On some of the sites they have been allowed to sell off a percentage of the houses and keep the money.
If you can answer these questions Dave Jones and also who owns the States Housing sites, built by GHA.
If you had used all this money and all our own building sites, using local builders. The Dept Housing could have built all the houses themselves.
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@ Bob
Bit direct!
However I agree with the ‘stop spending’.
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Edquet
No1 is not true.
The 7 employees of the GHA all live and work in Guernsey their salary’s are paid in Guernsey and they are all island residents.
No 2 is also inaccurate.
Although T&R as one of the regulators underwrites the borrowing facility available to the GHA, that is done for a very good reason, as the land and the properties can NOT be used as collateral to satisfy the banks provision. As I said before in the event of a collapse of the GHA all the land and the properties would revert back into the ownership of the States. There is no taxpayer’s money at risk as Housing have monthly financial updates from the GHA Chief executive also T&R and Housing have further more detailed 6 monthly financial reports from the GHA together with a yearly audit by external auditors, so only a very small fraction of that facility could be at risk at any given time as any problems would show up very quickly with that kind of Treasury scrutiny.
No 3
I would ask you where you think all this new social housing would be built if it wasn’t on existing brown field sites? The value of the sites are calculated as part of the grant funding from the States of Guernsey to the GHA. In the framework agreement between the States and the GHA, this land can NEVER be used for anything other than social housing, nor can any of the properties be sold off, some properties are part of Partial Ownership scheme and the equity in those properties can only be sold back to the GHA. So they stay under GHA control in perpetuity. Which also addresses your inaccurate point No 6?
Point 4 is also wildly inaccurate.
The grant funding for the Victoria Avn project from the Corporate States Housing fund was 10.4%, the States grant in total to the GHA for this development was £946.850.
No 5
The Housing department have joint waiting lists, with the States having access to 75% and more on certain sites of all GHA developments, this is a legally binding partnership with the brunt of the costs being born by the GHA NOT the taxpayer. All future maintenance costs are also funded by the GHA.
Theses sites are owned and operated by the GHA under the legal framework agreement set up by T&R and Housing previously mentioned. NONE of the houses have been sold off on any of these sites, there are as I have stated before a number of homes that are part of the partial ownership/shared equity scheme, however these homes will never leave the ownership of the GHA. I would ask you where you think all this new social housing would be built if it wasn’t on existing brown field sites?
On your last point you are wrong again. The States could never have afforded to build all this new social housing without the GHA and without a large percentage of private funding. It has been a fantastic deal for Guernsey and many people on low and fixed incomes have been helped by this Corporate Housing programme. Also all these new homes have been constructed by local builders.
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Who cares about the repairs when you have given away the sites and the rental income which were worth far more?
Where can we see the accounts and auditors report on this public body? Where can we assess the financial risk to us, as guarantors of the debt?You are highly critical of the EU on the lack of accounts and audit sign off – where’s the GHA’s?
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Bob
The continuing maintenance of our social housing stock runs into millions every year, this will include new roofs, replacing old boilers with modern central heating units, rewiring, insulation, internal alterations and extensions where gardens allow for bigger living space, the replacement of doors and windows, kitchens and bathrooms, improving parking facilities, upgrading and replacing external drainage systems and a massive house painting programme. Now you may not care about that but I do. By not having to pay these maintenance costs in the future we can use the money saved in the Corporate Housing Programme to fund more new social housing.
We have not given away anything; these sites still remain in social housing, regulated by us and will do so until the States decide otherwise. The rents from the GHA properties quite rightly go to the GHA and it is from that income that they manage the properties and pay all future maintenance costs. The GHA accounts are matter of public record, also if you wish to asses the financial risk to us you can make an appointment to go along and talk to someone at Treasury & Resources, I am sure they would be more than happy to put your mind at rest.
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My comment January 2nd 2010 at 3.45pm.and Dave Jones reply January 4th 2010 12.05pm
What is the truth?
1.”GHA employees are mainly foreign workers, so most of the money does go out the Island.”
You say 7 employees of the GHA are local residents. Yes they are local residents, but one l know of with a 5 year licence. He is living with his wife and two grown up sons near me in a local market Small cottage, they have just brought.
I will say again Dave Jones that most of the manual workers, on the site come from Eastern Europe.
2.The 30 million pound guarantee to the RBS is not T&Rs money it is the taxpayers money and any guarantee carries risks.
As for your 6 month financial updates. The Independent Audit Report was very critical of cash flow reports,not being updated since 2005.
3.Yes the sites have been given free!, you admit this by avoiding an answer.
4.I was wrong on the 6 million, but at least you said it is 1 million, give or take £50,000.
The Independent Audit Report did say, that between GHA and the one that built Roseville, that 17.4 million of taxpayers money (not T&Rs money)has been given to them, plus the sites free and the 30 million loan guarantee.
5.What l said was correct, you have put it in a more long winded way, but still agree with me.
6.It says this in the Independent Audit, about the Roseville site.
I still believe more local labour and builders should be used and they are cheaper and better in the long term.
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Where exactly are the “public record” GHA accounts, Dave?
In which Billet were they presented to the states – the 2008 accounts for GHA? 2007? 2006, even?
I’m not asking T+R – I’m asking you, as minister responsible for housing, and one of those charged with governance of the GHA.
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This from the NAO report.
“Until early 2006, the Guernsey Housing Association employed a Chief Executive and a Deputy Chief Executive.
The States Internal Audit report of November 2005 noted that their salaries were more than the top civil service salary, and that their benefits and leave entitlements were in excess of those offered to civil servants.” I bet they weren’t local…
This from Dave Jones (above):
” wherever you have middlemen or women for that matter they are always looking for their “cut” and that “cut can only come from the pockets of the people who use these services”.
Edquet – re your point 4 – they’ve probably borrowed the rest, or funded it from earlier years’ grants they could otherwise have repaid.
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Bob & Edquet, you make some very valid points. But I must agree with Deputy Jones posts with respects social housing.
It could be argued that the Housing Department have not had the funds to invest in a suitable social housing construction programme over the past 25/30 yrs and GHA have taken advantage of this and formed a perfectly good working relationship with Housing Department and T&R by providing homes for both first time buyers, (be it on a partial ownership basis) and for those who require social housing. I look on the tri-working relationship between two states Departments and a non profit organisation (GHA) being one of the success stories and long may this continue. I must applaud GHA for the superb builds (all except that awful Rosaire site opp the old B&Q).
I personally would like to see the Housing Department raise much needed funds by copying the GHA model and have partial ownership for those already in States Houses who can afford this offer. Of course, there will always be those members of our community who require social housing and it is the duty of any democratic gov to provide this regardless of public opinion.
With regards the way forwards for our utilities, there is not the opportunity for fair competition. The consumer in the island is paying more and more for water, gas and electricity which impacts on inflation and impacts on whether light industry will remain in the island. The postal service was an easy target for the OUR purely because it can be competed against. We have not got that sort of competition for gas, water or electricity and so they charge what they like when they like, free it seems from OUR regulations.
The down side with a state owned organisation is that millions are poured into the organisation which could be badly run with dire management and a poor business model. Privatisation of any utility in my opinion is a good thing if run properly. Was the privatisation of our Telecoms good for the island and the consumers and was opening the doors of competition good for the island and consumers. It could be said that by introducing competition in this area all of the telecommunications companies in the island have been given a licence to print money and loads of it. The only benefit of having competition in our telecoms industry is there is the choice of service providers and normal retailers can sell mobile phones sim free. Is it certainly not because we have amazing low tariffs or good customer services.
Perhaps in the future certain areas of work within some States Departments may be put out to tender with perhaps consideration given to Beau Sejour and the cleaning of our hospitals. Of course safeguards need to be implemented in protecting local employees and quality of services before any micro privatisation is considered of any States Department or section.
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Edquet
Your latest attempt at the truth is somewhat contradictory, on the one hand you are telling me that ”GHA employees are mainly foreign workers, so most of the money does go out of the Island.” In the next paragraph you agree that they have 7 employees, one who you allege is on a 5 year license. Which really indicates the quality of the information you are posting? The local builder has a contract with the GHA to develop the site, if the contractor employs some foreign labour then that is a matter for the contractor, not the GHA.
As for the rest of your post I think I will stick with the advice of The Treasury Minister and his board and the advice of the Housing board and its financial team, together with the expertise of the GHA board and the two sets of auditors. Now you clearly believe that you know better than this group of people, so I will let the public make up their own minds what the truth is.
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Bob
The two original directors of the GHA were not local and left several years ago, they were on secondment from a Hampshire based Housing Association and were responsible for the setting up of the Guernsey model, once this had been achieved they moved on. It is true that there was some discussion at the time about the level of salary that was being paid to these two individuals, however part of their remuneration was for the temporary move to Guernsey and reflected their level of expertise in setting up Housing Associations. You have to remember Guernsey had never done anything like this before and it was completely new territory for all of us but that was 5 years ago, The GHA today is a completely different animal than it was at its conception and it goes from strength to strength, it has as Peter Burtenshaw says been one of the real success stories of the recent States and to prevent unrealistic salaries being paid in the future, the current Chief Executive and his staff have their salaries agreed by the PSRC in line with a comparable grade in the civil service. There are no middlemen in the GHA it ploughs its income back into its homes and new builds. Peter is also right about the level of States funding, we have the tenancies of hundreds of new homes at a fraction of the cost to the taxpayer had we funded the full cost of these developments ourselves, In fact Treasury have already said that had to fund the full cost several of them would not have gone ahead. It is true we had the land but land needs to be cleared and is no good for housing without the funds to build. We would be back in exactly the same position Housing was in ten years ago. Tell me which other States department is providing more and more housing at less and less cost to the taxpayer? while at the same time having full access to all these properties on behalf of the Guernsey people who are eligible for this tenure of housing. This has been a partnership between the States and the GHA, overwhelmingly supported by successive States assemblies in a joined up corporate manner and the States can be proud of what is has achieved in a relatively short space of time working with the GHA
Peter
We will be supporting a lot more Partial Ownership in the future; we have a waiting list for properties, also this option is already available to any States tenant, not just GHA tenants. You are also right about Government having a duty to provide social housing and this partnership does exactly that although government does not have to run it, if it can get a better deal by not doing so.
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Bob
The Audited accounts can be obtained from the GHA offices on the Bridge St Sampson, if you ring them and ask them for a copy of the relevant years you are interested in, they will be happy to print them up for you, they are not a secret.
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Pete Burtenshaw – yor following comment is very pertinent to GHA:
“millions are poured into the organisation which could be badly run with dire management and a poor business model”
Read the NAO / PAC report on GHA. You could almost be quoting from it – apart from the “could be” and “dire” (NAO though “deficient”).
ANY area of public administration could be impoved by chucking millions of borrowed money at it. Had education been able to borrow the required millions AND had the interest paid for by the rest of the states, we’d have had Beaucamps rebuilt by now. We could have put it into an Education Association, to be run by someone at double the going rate (as we wouldn’t know how to do it). It isn’t magic money that does the trick for GHA – it is public DEBT, which we are responsible for. Were any of us ever given a choice as to where or when this giant credit card would be used? No.
Other commercialisations or public/private partnerships would gain the same advantages and disadvantages as the “privatisation” of the housing stock. What most of the correspondents here fear is the lack of accountability and the profiteering (as they see it) of the private sector. Dave plays to these fears, yet is responsible for GHA, which has exhibited all the tendencies cited above.
There’s nothing wrong with what the GHA does. But there was no need for the GHA. All the work that has been done could have been done by the department, had it been able to borrow, had it been able to escape the moribund practices of the public sector in tendering and project management. All GHA achieves could have been achieved directly by a forward thinking government, and it could have been achieved with the debt on the balance sheet, where it belongs.
We actually have little to fear from the commercialisation of any states function, as long as the states is being sensible about accountability and risk management. The reports of NAO and PAC on Housing Associations in Guernsey last January suggested that they had been lacking in many of these areas.
Dave Jones letter in response to the reports is that everything is a tremendous success, and the GHA experience is something the rest of the states could draw upon when setting up further public/private partnerships. From that I can only assume that he is broadly in favour of commercialisation or privatisation. Yet to read his early comments above, you’d think it was the opposite.
Dave blows the trumpet about the new housing being “a fraction of the cost” – the NAO report was critical of GHA, in that GHA had little idea of the actual, total cost of these projects, as the land GIVEN to GHA by housing hadn’t been valued. Charles Parkinson in the T+R response to the reports made the same point, and requested that any future land giveaways are properly valued.
Finally, “government does not have to run it, if it can get a better deal by not doing so”
Couldn’t agree more. But how can Dave square that with his original posting? Doesn’t that apply equally to harbour, airport, post office?
Don’t you think the OUR believes that too?
I’m probably against selling them off, but I’m likely to be all for “freeing them up”.
Do we need all these developments? Possibly not, as Dave has a number of demolished properties, or properties awaiting demolition or refurbishment at any time. There is no-one sleeping in my office doorway, so I presume there is enough accomodation. Housing continues to sell-off, give away or empty properties for refurbishment. Bouet is emptied, Mont Arrivee flattened. Where are all the people living? Where are the tented villages? Are we already overdeveloped on the social housing front? Probably. Certainly sufficiently so to put a stop on further GHA borrowings.
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Bob
I will make two final points, firstly the difference between what the GHA does and the possible commercialisation or privatisation of our public utilities is this, The GHA is a not for profit Housing association it takes no money out of the association other than what it needs to run its own administration. The same cannot be said for those wishing to take over of our Harbours, Airport and Water Company. This will be done solely by people looking to sweat the assets and make a profit out of these companies owned by the people of Guernsey and it will cost our people dearly as those profits can only come from one place and that is the public’s pocket. Your idea of “freeing them up” is a euphemism for moving them from providing a good public service and a reasonable cost, to squeezing out of them whatever the market will stand and in the blink of an eye you will have board members on huge salaries making decisions that will be in their best interests not yours.
Secondly you talk about stopping the GHA borrowing any more money, that is a matter for them, there will come a time in the not to distant future when they will not receive any grant funding from the States at all and will be able to stand on there own two feet. We are at the start of a Housing journey not at the end of it , we are building on brown field sites not on green fields and I for one will not be satisfied until everyone in this island who is on a low or fixed income is properly housed in decent accommodation where their families can grow and be part of a modern housing community.
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I am the Chief Executive of Guernsey Housing Association, and would like to point anyone who wishes to know more about GHA to our website, at http://www.gha.gg
GHA is a registered not for profit company working closely with States Housing and T&R who act as our regulator, and part funder. We were created 7 years ago to provide new social housing for local people and have to date built 289 homes, for rent and partial ownership (for first time buyers). We provide monthly management accounts to the States, Quarterly Reports and every building project is approved before we proceed and at completion. Our audited accounts can be available to anyone who wants to see them (we are getting our auditors approval). The States have a great deal of scrutiny over our business, our Board are all Guernsey people and are unpaid giving up their time to put something into the community.
For anyone who wishes to know more about the real facts behind GHA, I and a member of my Board are happy to meet with you.
The concept of Housing Associations is not new, and was started in the UK in the late Victorian era by industialists such as Peabody, Guinness, Bourneville and Octavia Hill. The majority of Housing Associations in the UK were created in the 1960′s and 1970′s and now manage over a million social housing properties throughout the UK. The GHA was created on the same legal basis, and with the support of the States it means that if the GHA were to get into financial difficulties the housing stock will revert to the States ownership.
I hope that this information helps to clarify the position. I would finish by saying that we endeavour to use local contractors, consultants and suppliers wherever possible and to date our record is very good. I have been in this job for just over 3 years and in that time we have only used Guernsey main contractors and Guernsey architects. We press the main contractors to use local sub contractors wherever practically and financially possible, and monitor this monthly. On the Victoria Avenue site with JW Rihoy they currently have 90% local workforce. Some skills are not available on island, or sub contractors may be too busy and hence not sufficiently competitive. Through our work we have encouraged local training and this has meant that new skills have been gained that where not on island previously.
If you would like to meet to discuss how GHA works please email me at ghaenquiries@gha.gg
I hope this helps.
regards
Steve
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Steve Williams
Can you tell me that the most recent move into the new development went smoothly? Or was it an utter shambles? How much money was lost in the poor management of just that one event that will lead to potential future problems for the GHA and, of course, a future tax burden on the Guernsey public? How able is the GHA to manage such projects? Anyone can expect a few teething problems, but to move everyone in to an unfinished development smacks of incompetence.
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Thanks to Mr Williams for his contribution.
Does “we are getting our auditors approval” mean the accounts haven’t been signed off yet, or that the auditors’ approval is being sought to make the accounts (and the auditors’ report) public? Dave has repeatedly stated (whenever I ask) that they already are/were a public document. Presumably, they aren’t, as yet. Thanks for nothing, Dave.
They would be a useful addition to the website – like many UK housing associations have found.
Mr Williams rightly points out that the housing stock would revert to the states in the event of a collapse of the GHA. What he does not state, and which Dave will not openly state is that similarly, we would also be saddled (directly) with the debt (and of course, the rent roll and repairs).
Like Belinda, I am curious as to who manages the GHA projects. I was aware that JWR had built most of them, so far. (interesting in itself, that – as risk exposure to a single contractor…sounds like clinical block…where Dave J wasn’t happy that RGF got too much states work…)
As for the commercialisation or privatisation of other states assets, the profiteering or otherwise will be up to the states. If a “not-for-profit” body were set up to run them, or if a state-owned commercial enterprise (like Aurigny, say) were to run them, then any profits would revert to the states. The states of course have the choice in who runs these things. OUR would regulate, and prevent excess profiteering and promote efficiency – like at the Post Office! OUR – another unaccountable quango.
The GHA may be a “not-for-profit” organisation, but its management have to be paid. It must set out to make a profit in the accounting sense, else it will struggle to repay any of its debt, or to set aside any reserves for eventual repairs, future projects, or whatever. It may not pay out dividends to its “shareholders”, but why not, if the states are those shareholders, and there is little need for further additional projects? Housing Associations in the UK are often run by a very well remunerated executive. They strive for growth using the “social housing” label, but executives can be remunerated – as are those of many “charities” – like public company fatcat directors. The organisation may not turn a long term profit, but the managers and directors certainly can, as can the contractors, project managers, and so on, all without too much inconvenient, independent scrutiny.
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Steve Williams
Nice to see that there’s more than one person at the GHA who posts on this site.
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Bob
What I said was that the accounts are a matter of public record, in other words they are not confidential and the public can see them on request, secondly the GHA has to get approval to put these accounts on their website from their auditors, not an unreasonable request. If you contact the GHA they will give you a copy of their accounts.
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That doesn’t seem to be what the Chief Executive’s view is. I read into his comments that the auditors’ approval is being sought before making them available to the public. He doesn’t mention web availablity – I raised that.
The alternate interpretation of his comment is that they haven’t been signed off by the auditors yet, which would be odd, as there’d be several years historic accounts.
That wouldn’t surprise me, however, given PAC’s report, but it would be disappointing.
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