Trading board sets goal for self-reliant businesses by 2029
- States Trading & Supervisory Board sets goal for unincorporated businesses to be financially self-reliant by end of 2029, with 1% annual real-terms reduction in operating costs
- Board warns of navigational risks with Black Rock land reclamation project and calls for further data collection and modelling before firm decisions
- Deputy Helyar says Aurigny's role must be defined clearly as either commercial airline or strategic asset with corresponding funding model
- Trading group has stabilised finances after pandemic losses, with unincorporated businesses now forecasting operating surpluses for 2025
- Board calls for greater delegated authority over capital projects and fees to reduce bureaucratic duplication and speed up decision-making
States Trading & Supervisory Board has set a clear financial objective for the island's unincorporated businesses like the ports and dairy need to become self-reliant by the end of 2029, Deputy Mark Helyar announced in a statement to the States.
The board president said the target means these businesses should be able to fund their operating costs and a sustainable programme of capital investment from their own income, using borrowing only where it can be properly serviced from revenues. The exception is Guernsey Waste, which is not operated as a commercial business.
"This is not about treating essential infrastructure as pure profit-making enterprises; it is about ensuring they are run with the discipline, accountability and clarity that islanders are entitled to expect, and that the taxpayer is only asked to step in for strategic reasons which are openly debated in this Assembly," Deputy Helyar said.
To support the goal, all unincorporated businesses [currently Guernsey Ports, Guernsey Dairy, Guernsey Water, Guernsey Waste and States Works] have been set a target of delivering a 1% real-terms reduction in operating expenditure each year for the next three years, mirroring discipline already required for General Revenue.
Deputy Helyar acknowledged the challenge ahead. "Pay costs are the most significant component of expenditure and, even with restraint in future pay awards, further efficiencies will be necessary," he said.
The announcement follows a period of financial stabilisation for the trading group. Between 2021 and 2023, several unincorporated businesses reported operating losses against the backdrop of the pandemic, Brexit and rising inflation and energy costs. Through tighter cost control, efficiency measures and more commercial approaches to fees and charges, those businesses are now forecasting operating surpluses for 2025, excluding exceptional items.
Deputy Helyar told the States the board does not wish to return to a position where these assets depend routinely on General Revenue to fund commercial activities.
The trading group has also dealt with significant operational challenges during the current term. When Blue Islands collapsed, the board worked with Aurigny and others to protect lifeline connectivity. "We maintained services, protected critical routes, recovered our debt and avoided the sort of prolonged disruption that would have done real damage to business, tourism and patients travelling for care," Deputy Helyar said.
Key terms
On governance, Deputy Helyar called for greater delegated authority over capital projects and fees and charges, arguing that dual governance and bureaucratic duplication has led to delays and extra costs. He said where capital expenditure could be funded by a business from its own reserves or by borrowing it can clearly service, it is wasteful to duplicate process.
"Within that framework, however, it is reasonable that where capital expenditure could be funded by a business from its own reserves or by borrowing which it can clearly service, it is wasteful to duplicate process by having to repeat the same exercise for treasury officers - the decision to proceed should rest with the STSB," he said.
The Assembly has already agreed that Guernsey Water should be incorporated by January 2028, and preparations are progressing. Guernsey Ports and States Works have also been agreed for incorporation in principle, but Deputy Helyar said both have much work to do before that is likely.
Greater clarity is needed about future harbour requirements, the treatment of non-commercial operations such as Guernsey Coastguard and VTS, and what ongoing contribution from General Revenue is appropriate for the airport's role in economic enablement, he said.
The Dairy continues to be an issue on the States' "too difficult" and "too expensive" list, Deputy Helyar told the Assembly. Members of the board travelled to Jersey in early March to meet representatives of the Jersey dairy and Jersey farmers to examine why their system is more successful.
"We continue to engage with Guernsey farmers directly at their own request to explore how we can best disentangle government from what should be a more commercial, successful and transparently funded industry. We certainly have one of the best products but the whole structure needs a radical rethink," Deputy Helyar said.
On infrastructure, Deputy Helyar highlighted the urgency of resolving the next inert waste disposal site. The Assembly has already agreed a land reclamation project at Black Rock as the preferred option. The board has been stockpiling material at the current site for 18 months to maintain continuity of service for the construction sector, which Deputy Helyar said is expensive, operationally inefficient, and finite in capacity.
However, he warned of navigational risks. Both the Harbour Master and the General Pilots have cautioned that reclamation at Black Rock may increase navigational risk because of changes to already strong tidal flows in that area.
"The Board has written to the Committees for the Environment & Infrastructure and for Policy & Resources to say that further data collection, modelling and analysis are needed before firm decisions are taken. It may prove necessary to consider an interim solution for inert waste elsewhere if we are to avoid compromising shipping at St Sampson's," Deputy Helyar said.
The board intends to bring a joint policy letter with the Committee for the Environment & Infrastructure in the third quarter of this year covering the proposed second electricity interconnector and its funding. Deputy Helyar said this is a key element of the island's electricity strategy, improving resilience and reducing reliance on on-island generation.
He said progress depends on outstanding workstreams including a clear hydrocarbons importation and storage policy, decisions on future harbour requirements, and the interface between these and broader climate and energy objectives.
The board has completed the sale of fuel tankers Sarnia Cherie and Sarnia Liberty, which were acquired because of concerns about the availability of suitable commercial vessels to discharge safely at St Sampson's. Since then, specialist vessels have entered the market and are now regularly delivering fuel to the island. The sale will allow the remaining loan associated with their purchase to be fully repaid.
Deputy Helyar said there is scope to do more with the ports estate and operations commercially, including invitations for commercial development partnerships at the Slaughterhouse site and Boathouse.
On Alderney, he said the long-term condition and capability of Alderney's runways and related facilities are important to connectivity, economic activity and resilience for that island. The board's view is that Alderney's infrastructure should be considered as part of an integrated trading and connectivity strategy, with responsibility for its upkeep and management examined and clarified as part of the forthcoming work of the Bailiwick Commission.
Deputy Helyar also addressed fundamental questions about Aurigny's role. He said the new daily Heathrow service is clearly positive for connectivity, but additional capacity into London will affect Aurigny's London services and may have knock-on effects for other routes such as Southampton, generating financial losses in a publicly owned business.
"The key point from the STSB's perspective is that Aurigny's role must be defined clearly and explicitly. Is Aurigny to be treated and funded primarily as a commercial airline, expected to compete freely and to earn a commercial return on capital? Or is it to be treated primarily as a strategic asset, tasked with guaranteeing specific lifeline routes and minimum service levels, with a corresponding level of subsidy or support?" he said.
Deputy Helyar said without that clarity, no board and no management team can sensibly optimise the business, and the island will continue to see periodic shocks when commercial realities collide with implicit political expectations.
"Aurigny cannot be expected to be both a fully commercial carrier and a social utility, and judged as both at once, without that conscious choice being made," he said.
Once strategic policy is set, the Committee for Economic Development and the Assembly should determine the air policy and Aurigny's mandate, including the balance between commercial freedom and social obligation and the acceptable level of financial support. The board will then hold Aurigny's board and management to account for delivering that mandate efficiently, transparently and with appropriate commercial discipline.
Deputy Helyar concluded by emphasising the role of the trading group more generally. He said within the trading group there is deep local expertise in power generation and networks, in airport and harbour operations, in airline management, logistics and fleet, and in the delivery of complex capital projects.
"In a small jurisdiction where much of what we do is sub-scale, that expertise is one of our most important assets. Our job is to use it to inform and shape policy as well as to implement it, and to ensure that every pound invested in our trading assets is deployed to maximum effect, in the interests of islanders, businesses and future generations," he said.
Q&A
Q: What does financial self-reliance mean for the trading businesses?
A: Financial self-reliance means the unincorporated businesses should be able to fund their operating costs and a sustainable programme of capital investment from their own income, using borrowing only where that can be properly serviced from revenues. The exception is Guernsey Waste, which is not operated as a commercial business.
Q: Why is the board concerned about the Black Rock land reclamation project?
A: Both the Harbour Master and the General Pilots have cautioned that reclamation at Black Rock may increase navigational risk because of changes to already strong tidal flows in that area. The board has written to committees saying further data collection, modelling and analysis are needed before firm decisions are taken, and it may prove necessary to consider an interim solution for inert waste elsewhere.
Q: What happened to the Sarnia Cherie and Sarnia Liberty fuel tankers?
A: The fuel tankers were acquired because of concerns about the availability of suitable commercial vessels to discharge safely at St Sampson's. Since then, specialist vessels have entered the market and are now regularly delivering fuel to the island. Following a review, the board was instructed to dispose of the tankers. That sale has now been completed and will allow the remaining loan associated with their purchase to be fully repaid.
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