RECENT events – such as the proposed sale of Aurigny and consideration of an enabling law for GST – have revealed tensions in the relationship between Alderney and Guernsey.

This is no surprise. When two communities operate in a sort of confederation, there are bound to be different perspectives. The smaller partner will generally feel that their concerns are given insufficient consideration by the more powerful player. The bigger community will often feel that they are having to unreasonably subsidise their smaller neighbour and are getting no thanks for it.

These classic symptoms have certainly been present in the ‘marriage’ between Guernsey and Alderney over the years. If they’ve flared up in recent months, that’s to be expected. Such tensions are always greater when cash is tight than during times of plenty.

The close economic and political partnership between Guernsey and Alderney – very different from Sark’s more independent position – goes back to the dark days following the Second World War. Alderney had been totally evacuated and it was considered impractical for the returnees to the devastated island, used by the Nazis as a concentration camp, to be self-sufficient. A new relationship was drawn up, with Alderney joining a common exchequer with Guernsey in return for the States of Deliberation – in which Alderney would be represented – taking over most key services such as Health and Education.

This relationship is sometimes misunderstood. Often Alderney residents will claim that they ‘pay their taxes to Guernsey’. Of course, this isn’t true any more than claiming Guernsey residents ‘pay their taxes to Alderney’. The reality is that taxpayers in both islands pay into a common pot, controlled by a parliament in which Alderney is actually slightly overrepresented on a pro rata basis.

The next subtle but important change in the relationship came in the 1980s. Up to that time, Alderney’s contribution to – and expenditure from – the common tax pot was always shown separately from Guernsey’s in the annual accounts. It was a matter of pride for Alderney that it always washed its own face.

By the mid-80s that was no longer possible. The finance boom in Guernsey meant it was able to offer enhanced tax allowances to its residents, which, when replicated in Alderney, plunged the northern isle into deficit. As Guernsey started being able to afford to spend more on its public services and replicated those standards in Alderney’s ‘transferred services,’ the subsidy to the smaller island rapidly grew.

A committee was set up to consider what could be done, chaired by the then Deputy Bailiff, Graham Dorey. It went back to the original 1948 agreement and concluded that the best way to tackle Alderney’s deficit was no longer to highlight it. After all, there was no requirement for each island to balance its individual books in this pooled taxation arrangement. That was fine, but inevitably once that step was taken, Alderney lost some of its moral authority to tell Guernsey to keep its nose out of its affairs.

The bottom line is that the 1948 agreement was always designed to be reversible. If Alderney ever feels it is being really shafted by Guernsey, it can seek to disengage and return to a Sark-style stand-alone arrangement. I doubt Guernsey would object, although in some areas unravelling the shared assets might prove complicated after so many years.

In reality, such a move would be a disaster for Alderney. Despite the understandable grumbles, it has done very well out of the arrangement. Without the cross- subsidy, its school and hospital would be far inferior, its airport probably open only a few hours each day and its harbour much smaller. Yes, I know that the breakwater was Guernsey’s ‘voluntary defence contribution’, but it’s actually done far more than take on the old MoD commitment to Braye Harbour. It’s clear from the documentation that the British Government was planning to abandon a huge section of the breakwater to save money – whatever the local reaction.

That said, the Guernsey States must be sensitive to Alderney’s unique problems. Its economy is far more fragile than Guernsey’s, despite the e-gambling boom.

Measures that are unpopular but far from disastrous in Guernsey could wreak real havoc in the smaller island. Conversely, Guernsey taxpayers would strongly object if they had to pay more than those in Alderney when the smaller island is already the net beneficiary from the pooled exchequer.

It’s a conundrum that could lead to real tensions. Perhaps we need a constitutional commission to review the 1948 agreement?