Incorporating Guernsey Harbours by law could give this key piece of infrastructure in the bailiwick’s economy some much needed commercial agility, says Tom Carey, Partner at Carey Olsen
In recent months, we have been bombarded by plans relating to the future of Guernsey, its harbour, the economy and the property owned by the States, to name but a few.
At the heart of all these plans is the recognition that Guernsey needs to stimulate its economy by developing and modernising its infrastructure and commercialising its property portfolio.
I do not disagree with this, but implementation is key and I worry that any attempts to deliver these plans may not be effective if strategy and management are scattered between various committees of the States.
Taking the harbour as an example, I want to make the case for a new law to incorporate Guernsey Harbours. I see incorporation as being the best means of implementing the plan to enhance the harbour area and secure its financial future.
Nothing new
Incorporation is a not a new governance and ownership structure for the States to grapple with. Guernsey Electricity and Guernsey Post are incorporated and are independent and successful businesses. They have the ability to respond to threats and opportunities and react to the market in a commercially agile manner.
Guernsey Harbours should be able to do the same. This could enhance services for customers, allow the development of the estate and remove the future financial burden to the States.
From a financial perspective, the harbour may require a substantial capital investment over the coming years simply to maintain the essential infrastructure needed to enable it to remain secure, open and safe.
This is against a background of what I understand are declining business volumes and a cost base that’s rising faster than revenue. Without an incorporated harbour, such a shortfall could only be addressed through other measures such as subsidy derived from general taxation or year-on-year increases in harbour dues.
Incorporation would enable Guernsey Harbours to build cash reserves that could be used to address any capital investment programme through the delivery of commercial development projects on the estate. These reserves could also be used to provide financial benefits to Guernsey through dividends and taxation.
In order to ensure the continued safe operation of the harbour, the law would need to ensure that the company retained its responsibility for the duties that Guernsey Harbours is currently responsible for under existing legislation.
Furthermore, so that the company can develop and maximise the returns from what is prime real estate, the property portfolio within the harbour area should be transferred to it. This would also give the company the ability to raise finance to further enhance its commercial activities.
Incorporation can cause concern among staff about the security of their jobs, but where incorporation has happened elsewhere, staff have been transferred to the company on identical terms without redundancies.
In order to support the many clubs, associations and organisations connected with the harbour, the company would be required to follow best practice in corporate social responsibility, with these clubs continuing to enjoy security of tenure as required notwithstanding incorporation.
Safeguards needed
Transforming the harbour into a company would represent a significant change in its operation, so safeguards in the law would need to be put in place, including:
• 100% States ownership, with the power to take control when it is in the national interest
• A memorandum of understanding between the States and the board of directors to provide clarity on the governance and operation of the company
• The production of a business plan, an annual set of accounts and an annual general meeting, to which deputies could be invited.
Incorporation of ports is not a new concept. Across the world it is the norm, and the evidence is that incorporated ports, led by experienced boards and executive teams, provide improved social and economic returns in the area of their operation.
I hope that the States of Guernsey gives serious consideration to the benefits that the incorporation of Guernsey Harbours could bring to our community.