States “under-investing” in construction

Monday 26 April 2021

A further call for a “sustainable programme of States investment”, has been made by representatives from the construction industry, following years of under-investment in critical infrastructure and unmet government targets.

Concerns continue to be raised about under-investment in island infrastructure. The Guernsey Building Trades Employers Association says many building firms continue to struggle, despite the current increased workload.

“Some sectors of the building trades are experiencing a short term rise in workload,” said Brian Singleton from the organisation. “We recognise and support the ongoing need to bring in off-island labour to assist with specialist trades on specific projects.”

“Many of our members are still struggling with the financial impact of the lockdown and need a good trading year to get back on an even keel,” he said. “The construction industry has also suffered from several years of under-investment by previous States assemblies.”

Pictured: The GBTEA said the SOG co-funding scheme has been a vital lifeline for businesses.

Mr Singleton said the States' strategy in recovery from two lockdowns needs to include investment in infrastructure.

“It is vital that the current States continue to invest in infrastructure as part of the [strategy],” he said.

He highlighted a common point made by many in the industry, that Guernsey has the skills and capabilities in island to undertake any large commercial projects.

“We are confident that GBTEA members will have the capacity to meet the challenge,” he said. “A sustainable programme of States investment in infrastructure over the next 3-4 years, in parallel with a healthy housing market, will allow the construction industry to rebuild the capacity that has been lost over the last few years.”

Pictured: At an IOD breakfast in January, Deputy Neil Inder, said there will be an increased push to raise our current 57% local procurement rate for States contracts to 67%.

Being involved in the conversation and getting local contractors involved in commercial projects was an issue raised earlier in the year, following the re-modelling of the Construction Industry Forum.

 “We have the skills here, too often construction work goes to firms off-island,” said Chair of the GCF and CEO of Norman Piette, John Bampkin.

Express spoke to the Managing Director of Rihoy & Son, who agreed that investment in island infrastructure is well overdue.

“It’s clear that the States haven’t spent on our infrastructure for far too long,” said Gavin Rihoy. “We certainly have the skill base in Guernsey – there is no need to outsource industry work to the UK.

“There’s a good level of commercial inquiry, which is an excellent sign for the Guernsey economy,” he added. 

The States of Guernsey agreed a set of rules called the Fiscal Framework in 2009, which would outline how public finances are spent. It was updated in 2016 and included the requirement to invest an average of 3% of GDP per year in “maintaining and improving the island’s infrastructure.”

Pictured: The original 3% raised in the 2009 Fiscal Framework has rarely been met.

The 3% figure has since been reviewed and dropped to an 'acceptable minimum' of 1.5% of GDP, following 10 years where the 3% mark was only met once.

In a 2020 policy letter from Policy and Resources, it was concluded that capital expenditure in a small jurisdiction is too “volatile” to maintain a consistent medium-term average.