Business industry supports States' borrowing plans

Wednesday 29 April 2020

Both the Institute of Directors and Confederation of Guernsey Industry are backing the States' plan to borrow hundreds of millions of pounds to see the island through the covid-19 pandemic.

The proposals, which were drafted by the Civil Contingencies Authority, have to be given the go ahead by deputies before the money can be used, and an extra States Meeting has been arranged today for discussion on the topic to begin.

"There is a clear and immediate requirement to address the impending cash flow shortfall given the considerable sums that are being spent in helping businesses and the economy in general coupled with a simultaneous reduction in receipts," said CGi Chairman, Clive McMinn.

"As far as the second tranche of borrowing is concerned, we broadly support the need to create the facility should the initial £250m prove to be insufficient. The approach, however, needs to be coordinated and apply sufficient focus and rigour to any infrastructure-related capital expenditure to ensure that optimal outcomes are achieved for stimulating the economy through employment, a return in confidence and the multiplier effect.

Pictured: Clive McMinn.

"Key to this is project selection. We believe in prioritising those initiatives which provide strategic value, expedience and also those that can be started and completed quickly, which, of course means some should be deferred."

The confederation would like to see a reduction in the States' cost base, rather than an increase in taxes, to pay the loan back without having further implications on the economy.

"The right balance must be found that sets the right level of expenditure now and does not make the future repayment of these huge sums too onerous," Mr McMinn added.

Meanwhile, the IoD believes there is a need for changes to be made to the machinery of government too.

There needs to be a differing mechanism to overview the recovery spend - much in the way the current lock down is being managed. Executive government = governance we have had over this crisis vs consensus (house) = tank wall flip flop and indefinite indecision https://t.co/bFpHxVR5Zv

— John Clacy (@JohnClacy1) April 25, 2020

"Having the money is not enough," said Chair of the Guernsey branch, John Clacy. "The States also need a plan and have the ability to deploy the money not just in reactive countermeasures but in a way that will help stimulate the economy through strategic infrastructure and other investments as we start the recovery phase.

"New mechanisms and governance structures are needed to allow these funds to be deployed to their best effect - if you need any evidence of this just look at the latest flip-flop decision on the tank wall."

The institute is seeking further views from business owners on the borrowing proposals via a short online survey, which can be filled in here.