Would you lend the States money?

Tuesday 28 April 2020

Willing investors could be offered the chance to help Guernsey out of the corona virus induced recession, rather than the island borrow hundreds of millions of pounds, if the States agree to proposals for 'Guernsey Together Bonds' or a similar scheme.

The idea has been floated by Deputies Peter Roffey and Richard Graham, who have made the first formal challenge to plans to borrow half a billion pounds to help the island's economy recover from the covid-19 lockdown.

The pair have placed an amendment against the plans lodged by Policy and Resources.

The island's already been warned that £100m needs to come from the rainy day fund, while another £500m needs to be borrowed to help the economy recover.

Instead Deputies Roffey and Graham say they believe "there would be very considerable interest from local people in investing in the future of their own community at this critical time if they were guaranteed a modest but reasonable return, together with the security of the States of Guernsey standing behind the offer".

Pictured: Deputy Peter Roffey during one of the virtual States meetings held earlier this month. 

In suggesting an alternative model of funding, the pair has acknowledged they do not have "the expertise to design such an offer in terms of its terms, duration, returns, or whether such returns should be taxable".

They said they would "however, wish the 'Guernsey Together Bonds', or whatever they are to be called to be accessible to ordinary islanders with moderate savings which they wish to invest safely for the longer term, as well as to those who may be able to invest larger amounts".

That would mean anyone who wanted to invest would be able to do so, in a similar manner to the way Premium Bonds are managed. 

Pictured: Deputy Graham will contribute to this week's debate remotely along with other deputies and States officials. 

The proposed amendment, which deputies will have to agree to debate before considering it in detail, could lead to bonds being offered with a minimum size of "say, £5,000 but again we leave the final decision of such detail to those with greater expertise".

Deputies Roffey and Graham say there are a lot of details still to be considered but by encouraging island residents to invest in the community's future it could be an attractive option to some. 

"We accept that there would be some administration involved but believe that would be worthwhile to see the community show faith in its own future by investing in it directly, as well as being attractive as a source of funding in its own right.

"We also accept that much of the borrowings may need to be secured expeditiously, with the cash certain to be available when needed, rather than being dependent on the uptake of an offer designed to attract local investors.

"For that reason we would be happy to see the words 'a significant tranche' interpreted as a target of 10% of the proposed additional borrowings or any such other amount as P+R deem to be reasonably achievable."

The States debate on P&R's plans for funding the corona virus recovery are due to be debated this week. You can read the full proposals and the amendment here. 

Pictured top: Deputies Peter Roffey and Richard Graham.