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Deputies agree in principle to borrow millions for housing

Deputies agree in principle to borrow millions for housing

Friday 20 October 2023

Deputies agree in principle to borrow millions for housing

Friday 20 October 2023


Deputies have backed giving the top political committee the authority to borrow up to £150m over forty years to lend to a housing authority, but it could ultimately be thrown out at the end of the Funding & Investment Plan debate.

An amendment brought by Deputies Peter Roffey and Lindsay de Sausmarez to that end won comfortable support from deputies, being adopted 27-11. This was despite concerns over Policy & Resources Committees far into the future being able to set the terms of borrowing to the Guernsey Housing Association, or some other unspecified housing authority.

But the amendment, focused on partial-ownership, social rental, and specialist housing, may be foolhardy as it has only been added to the long list of options which will be voted on at the end of the debate and could therefore fail at the final hurdle.

GHA housing to date has been delivered through capital grants and long-term borrowing from the States’ bond, with repayments made through the secure income stream of tenancies.

Deputy Peter Roffey told the States yesterday they would be signing up to secure borrowing which would be far cheaper than an organisation, such as the GHA, going it alone, and would provide much needed housing. 

The future homes would “have an uber-reliable income stream… in investment terms this is a financing arrangement, which is, to use a phrase, as safe as houses. 

“The GHA has been borrowing bond money for some years now, and it's not been costing the taxpayer or the States of Guernsey one penny because it's done on terms to make sure that that doesn't happen.”

P&R has now allocated the remaining cash from the bond to general capital spending, which was originally used mainly to support the GHA, and therefore much more will be needed to expand the public housing programme, he added.

Deputy Roffey also revealed that the GHA had advised they would be unable to deliver on the States’ housing targets alone, and the amendment left open the possibility of the cash being lent to an alternative provider of public housing.

“If they're not going to have the capacity, then we have to make sure there are other ways of doing it,” he said.

Guernsey_Housing_Association_logo.jpg

Pictured: If cash is borrowed to accelerate public house building another housing provider is likely to be needed to deliver the required number of new homes.

But Deputy Gavin St Pier and others raised concerns over the scant process and lack of detail available given the huge sums on the table. A large chunk of the bond was historically used to refinance funding given to the GHA, he said. But that was now no longer the case.

“However, now I’ll remind the States that this Assembly has unwound all of that… it rolled back on the conditions around the use of the bond such that we can now use it for anything, and of course the intention is to use the balance of it... for capital projects.” 

Too much power would be given away to P&R which may not bear fruit, he added. 

“Members, that is enormous delegated authority being given to the Policy & Resources Committee, whoever is comprised upon it at any given day, enormous authority without any reference back to this Assembly. It is also open ended - this authority contains no sunset clause.

“This Committee may not use it, the next Committee may not use it. The Committee after that might choose to roll it out and use it on terms that nobody will have any clue on because it will be up to them. It is within their authority. I hope that members have learned during this term that the decisions to grant so much delegated authority over so many aspects, to roll back on all the controls that we had, have not necessarily served us terribly well.” 

Deputy Mark Helyar, P&R’s treasury-lead, commented that the amendment was not about details, and only agreeing to allow the money to be borrowed and lent in principle. 

“The point is we haven't entered into any negotiation with anybody. We haven't been presented with anything to provide security over, so this is it,” he said.

“It is an authorisation. This is not a specific, you know, this is the group of houses we're building and this is the money that we need to do it. We don't have the level of detail required to provide that assurance at the moment. If members don't feel that's appropriate, I completely understand.”

He added that the GHA’s assets were current valued at £200m and £2m in leasehold assets, while there was £94m outstanding to the States on the bond relating to housing lending. The States is guaranteeing £25m for the GHA’s revolving credit facility too.

Debate continues… 

READ MORE…

Bid made for multi-year funding of affordable homes through borrowing

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