Sir – I wish to offer a few observations on our shipping links and the sale of Condor (Guernsey Matters, 7 July 2019).
The Importance of freight
Although the Portsmouth freight route is the most important to the company, I don’t believe it subsidises the passenger operations. Jersey freight volumes have grown in recent years, probably as the population has grown, whilst Guernsey volumes have been stable. The Islands have become dependent on a regular and reliable freight operation because all the local food retailers have little warehouse capacity on the islands and very little food is produced locally. Several retailers are reliant on having two picks/deliveries a day which means the Islands have to have two freight ferries.
Four-and-a-half ship model
Condor has recently been operating a four-and-a-half ship model as it jointly leases the MV Arrow from Seatruck. It has had to do this because of reliability issues with the rest of its fleet and its maintenance/dry dock programme. The problem with this is that the Arrow is based in Heysham, not Portsmouth, so there is a risk of a hiatus when Condor need it. It was fortunate that the Arrow was in Portsmouth when the Liberation broke down recently.
Is it a monopoly?
Apart from some limited LoLo freight competition, Condor has an effective monopoly and it plays on this position. Condor’s agreement with the States of Jersey makes it very difficult another operator to come into the market as it would have to operate a four-ship model. It is probably not economic for a new entrant to serve just the Guernsey market. Condor certainly behaves as if it is operating in a price inelastic market. I was on the board of the largest retailer in the islands for ten years and I am acutely aware how high the freight charges are. These high freight costs disproportionately affect the cost of living for the less well-off and disadvantaged people living in our communities.
Your article is rightly critical of the introduction of the Liberation, although it was generally reliable after its initial problems and before its more recent operational issues. However, rightly or wrongly, these service issues have put many people off using the Liberation for travel to the UK. There are a lot of theories as to why Condor bought the Liberation and how much it actually paid for it, but the Liberation is the wrong boat for a year-round passenger/car service to the UK. In bad weather, it is frequently unable to travel and a pretty unpleasant experience in fringe conditions. In the summer, when busy, the loading and disembarkation times are unacceptably long for what is supposed to be a “fast ferry service”.
The Guernsey-St Malo route has always played second fiddle to the St Malo-Jersey Route, but the service has grown considerably worse over the last 18 months. Now there are very few direct ferries from Guernsey to St Malo and you have to question whether this is because of the impending sale of Condor.
The sale of Condor
Looking at the recent transactions in the UK market, namely Red Funnel and Wightlink which were sold in 2017, similar assets historically achieved EBITDA multiples of between 12 to 15 times EBITDA. In simplistic terms, based on Condor’s rumoured asking price of £300m, it implies and EBITDA of £20-£23m.
But why would anyone pay this much?
Surely the biggest concern for both Islands is that any purchaser overpays for Condor. With much of the fleet nearing the end of its useful life, overpaying now that will have a detrimental impact of the services the Islands get for years to come. The Goodwill was built in 1996 and the Clipper in 1999. Seatruck depreciates its fleet of similar vessels over 25 years. The Rapide was built in 1997 and due to the stress of its higher operating speeds and aluminium construction must be due for replacement in the next few years. Replacing these three “Old Ladies” with a modern, environmentally friendly fleet will cost in excess of £150m.
If you take into account the concerns with the Liberation, there’s a good argument for replacing the whole fleet in a properly phased manner over the medium term. A small part of the fleet replacement cost will be funded by selling the existing boats, but if the Islands are to get the security of service they need, the operator will have to make a considerable investment over and above the initial cheque the purchasers hand over to Macquarie.
What should the Islands do?
The Isle of Man decided not to agree to give the Isle of Man Steam Packet Company a long-term operating agreement. Because the operator only had a time-limited ramp agreement, the Isle of Man was able to pay less than 7 times EBITDA to buy the operator. This provides capacity to invest in the fleet and earn a sensible return on the investment.
Jersey’s operating agreement is nearing the end of its life and Guernsey just has a memorandum of Understanding with Condor. If the Islands adopted a similar approach with Condor, it would potentially reduce Condor’s enterprise value to around £150m. This could be very beneficial to the Islands. Together with the second-hand value of the existing fleet, Condor’s free cash flow provides ample scope for the new operator to invest in a more appropriate fleet for the islands.
The Macquarie Fund doesn’t appear to be in a strong position. Apparently, a sale process fell over last year, the fund is beyond the end of its investment period, and it has a limited life on its Jersey agreement. Condor could threaten to run the service for cash, but this would seem to be an empty threat.
Should the States get directly involved?
A number of commentators have cautioned against the States getting involved in the purchase of Condor. There are several ways the States could participate for the benefit of the Island. These range from becoming more active in the sales process to ensure the new owner has the capacity and incentive to invest in the fleet, to actually participating in Condor going forward.
But is it correct to assume that the States shouldn’t participate in the ownership of the ferry services to the Islands? The Isle of Man experience with the Steam Packet has so far been a good one and certainly no worse than our Island’s experience with Condor. In 2017, Red Funnel was purchased by a consortium of UK and Canadian Pension Funds with a long-term investment horizon. Condor is currently generating positive cashflow, is providing a critical service to the Islands, and appears to be an attractive investment to the other potential bidders.
If taking a direct stake was ruled out, an alternative would be for the States consider part funding the fleet and its replacement. A number of Brittany Ferries ships are owned in joint ventures with French regional governments and leased out on normal commercial terms to Brittany Ferries to operate. Recently, Brittany Ferries have obtained funding from the European Investment Bank for the construction of the Honfleur, a new LNG-powered ferry. The ferry leasing market is well developed, and lease rates are in the 8%+ range which offers a long term institutional investor, such as a pension scheme, a return of well over the 4% depreciation rate necessary to sustain the fleet replacement.
Operating a ferry business is clearly not within the current range of competences of the States but I feel we would live to regret it if the States didn’t use its influence to ensure Condor’s new owners had the right long term vision for the business and the capital necessary to ensure they can make the necessary investment in the fleet to ensure the Island has the ferry service it needs.
Sir – I read your summary on Island Wide Voting with interest (Guernsey Matters, 17 February 2019). I take issue with one point and would add a few suggestions which might help to make IWV more workable than might otherwise be the case.
The issue I disagree with is that “name recognition would favour existing Deputies under IWV.” I suggest that, with voter dissatisfaction on various issues, “name recognition” could equally be a disadvantage for existing Deputies seeking re-election.
The results of the 2016 General Election might support my point: only one prior Minister/Committee President was re-elected (Gavin St Pier, ex Treasury Minister), all others were either voted out or did not stand.
My suggestions to make IWV more workable (given insufficient time to test and introduce secure electronic voting before June 2020) include the following:
–Encourage and make maximum use of existing Postal Voting capabilities. Otherwise, the polling booths could become clogged up with voters dithering over 38 choices and re-sharpening their pencils.
–Print TennerFest-style summaries of all candidates’ manifestos and CVs in a supplement to the Guernsey Press at least a month before polling day. This will facilitate advance Postal Voting as well as reduce the cost of distributing paper-based manifestos to all households by all candidates.
–Likewise, provide similar copies of all candidates’ manifestos and CVs online on gov.gg at least a month before polling day, together with the voting histories of Deputies standing for re-election in a separate table.
–Provide further links from gov.gg to any individual candidate’s websites containing more information, such as a video of key points which that candidate might wish to get across as his/her priorities and credentials in any hustings meetings etc.
With the above, I believe I would be able to make a considered choice of the 20-38 candidates I might wish to vote for via Postal Voting during the month before polling day.
I would start with those Deputies I would like to see re-elected as being capable of dealing with our island-wide priorities. Next, I would rule out those Deputies I would not want to see re-elected, based on past performance. Finally, I would select an appropriate number of remaining candidates to make up my list up to a maximum of 38.
John Hollis, St Peter Port
The island’s runway
Sir – The States of Guernsey has recognised for over 20 years that an extension to the airport runway may be required, improving the infrastructure, and has commissioned many reports.
The most recent and much delayed PwC Report is incomplete and it is imperative that the States must be encouraged to get it completed and for it be published in full.
For clarification, the PwC’s planned work was split into two main phases:
–PwC report Part A looks at the main options and background considerations. It is the PwC Part A report which will accompany the P&R Policy Letter and recommendations.
–PwC report Part B work and Report, which has not been done because P&R are withholding funding, goes on for a further 4 months or so to evaluate costs and benefits of the agreed/selected main options, and completes the relevant business cases and makes final recommendations.
It is imperative that the States agree to provide proper funding for the PwC report Part B and for it to be completed as soon as possible, so as to produce a proper business case evaluation with costs and benefits of alternative ways of achieving the runway extension, as it will be for the benefit of the whole island. I urge the States to consider and approve the funding necessary.
It is very important that the PwC report Part A, and in due course Part B, gets published in full. I urge the SwG to agree to this and ensure it happens.
It must surely be poor governance if such a major infrastructure investment decision were to be made without a proper professional evaluation of the business cases!
Some may have forgotten that the BAe Systems Report January 2003 concluded a recommendation that a runway extension to 1,700 metres as the minimum necessary in order to sustain the needs of Guernsey over the next 25 years.
The States had recognised that an extension was necessary, and during the Lagan pavement rehabilitation works, the runway was moved west and the Stopway and full Runway End Safety Area (RESA) was constructed at that end so that no further work would be needed at the western end of the runway. Plans were put in place so that when the runway would be extended it would be at the eastern end of the airport.
During the Planning Enquiry leading up to, and during the ratification of the Island Development Plan, the States proposed and it was accepted that a Safeguarded Area be introduced to the east of the airport for an extension that could incorporate a 1,700 metre Runway, a Stopway and 240 metre grass RESA without the need for a further Planning Enquiry. This was approved by the States with the Island Development Plan on 2nd November 2016.
Since then the States has agreed to an ‘Open Skies’ Policy (other than the licensed Gatwick and Southampton route) to encourage more airlines, routes and better connectivity to the island, with airlines commenting that a 1,700 metre runway would be necessary for their operations.
The lengthening of the runway would provide advantages for local airlines including Aurigny with the larger aircraft, as operating from a longer runway would reduce maintenance costs on engines, wheels etc. and would enable better fleet utilisation including adding destinations further afield with full loads, without reduced weight penalty (with fuel, baggage or passengers) as this will help significantly to reduce operational costs and reducing fares.
The objective of the runway extension should allow all airlines, including those currently flying to Jersey, to operate here with standard regional aircraft such as the Airbus A319/320 and some Boeing B737 srs, as with these aircraft most airlines are capable of offering low fares (similar to those on the Jersey-UK and Jersey-Gatwick route with BA and Easyjet). These lower fares will stimulate the demand and it then follows that frequency will not be reduced significantly in the long term. There will also be benefits to the airlines in the standardization of fleets used with Jersey.
In addition, this would benefit the summer charter flights which used to be enjoyed by Guernsey before aircraft fleet changes took place making the present runway unsuitable.
When considering operations off the runway, aiming for the shortest possible runway (1463-1580 metres) with configuration allowable just inside the safety limits, may for many be inappropriate and risky. With Guernsey Airport’s crosswinds and changeable weather, the longer runway of 1,700 metres is necessary and there is no doubt that it would provide considerable improvement on safety.
It is a fact that it is possible to achieve the runway extension of 1,700 metres and also part of the Stopway within the airfield boundary at the eastern end. The remaining part of the Stopway plus the EMAS RESA would take up in the region of only the first half of the valley in the Safeguarded Area. The use of an EMAS RESA provides a huge advantage over a grass RESA, reducing land needed and leaving the remaining eastern half of the Safeguarded Area and Les Blicqs Road untouched.
The Business case and the benefits to Guernsey are large, but this is for PwC to report on.
For locals and environmentalists, it should be noted that all this is achievable with:
–No change necessary at the western end of the airport.
–A runway extension at the eastern end, within the existing airfield boundaries.
–A Stopway and EMAS RESA taking up only half of the approved Safeguarded Area.
–No change necessary to the section of the natural valley along Les Blicqs road.
This would provide a win-win situation for all.
It is imperative that the States be encouraged to agree to provide further funding so that further work can be carried out by PwC to complete the PwC Report Part B with the alternatives for achieving a runway extension to the east within the Safeguarded Area and considering all alternatives including grass and/or EMAS RESA. Once complete the report should be published in full.
In addition it is very important that the PwC report Part A and, in due course, Part B get published in full. I urge the States to agree to this and ensure it happens.
Robert W Le Page MRICS FCIOB FASI FCABE FBEng FIPD
Appointments at the ESC Committee
Sir – As someone who I suspect is closer to the coalface than the contributor to your website, I feel I must enlighten you on aspects relating to the Education Sport and Culture Committee (ESCC).
1 – ESCC supports the concept of non-States members. Soon after it was constituted in February this year to replace the previous committee, it proposed the election of the permitted two non-States members.
One was a former reforming head of the GTA and a current senior board member of Bournemouth University. He was recruited partly to help drive through the resolution of the States to integrate the GTA into the new model of further education and technical and professional training. It is worth noting that the GTA, with no funding from the business community, eats up £750,000 of States grant each year, £250,000 going on rent for its premises in town. Without integration, the GTA is at risk of losing its hard-won status as a University Centre.
The other non-States member was a widely-experienced former local headteacher who enjoys the respect and support of the local teaching profession and who was recruited to help drive through the much-needed reform of our outdated education system.
The appointment process for such members need not be set in stone, but this example demonstrates that electing via the States Assembly can produce the right results.
2 – It does not necessarily follow that recruitment of non-States members permits the employment of fewer Deputies. On ESCC the five political members are fully stretched. We have over 20 schools and colleges in the States sector. Each of them has a school/college committee which by law requires the membership of at least one ESCC political member. Each school/college expects political members to attend concerts, plays, speech days, sports days, you-name-it days.
Furthermore, the sport and culture side of the ESCC places huge demands on the time of its five Deputies. They are expected to be represented and show support at countless cultural and sporting events. There is a never-ending process of consultation with the professionals, policy planning and sitting on numerous boards that are constituted under the Education Law. Fewer than five might not cope. The alternative is to opt out and simply not engage with parents, teachers and students.
3 – Two of your examples of ‘questionable’ governance in recruiting senior civil servants should also be challenged. The short-lived appointment of a new Chief Secretary at ESCC had little or nothing to do with governance. The post was advertised, the best candidate was chosen and appointed and a few months later he was head-hunted from the private sector with the offer of terms and conditions which were far beyond those available to a civil servant of his rank. It was unfortunate, and we were sorry to lose him, but it was his choice. He left having made a successful beginning to changing the culture in the Education Office.
4 – You refer also to the ‘ongoing saga’ of how three senior appointments were made at the ESCC. The only reason there is a saga at all, and that it is ongoing, is that accusations have been made implying that all was not above board. Those associated with our predecessor committee are still upset about being voted out of office, and remain attached to the education model they were pursuing. Yet all the questions which they have asked of the current committee have been properly answered.
The reality is that the previous committee’s department was not functioning well, not least with the committee itself. The political membership, like their predecessors, had been ‘captured’. The new members elected in February confronted this challenge. Change followed, affecting some officials and overall structure. The three new officers mentioned in your article were appointed by due process, a process overseen and approved by a participating independent member in the person of Dame Estelle Morris, a former Secretary of State for Education in the UK government. The three appointees are top-rate professionals with relevant recent experience.
It is regrettable that our predecessors continue to brief against them and participate in a campaign of disinformation on social media. Perhaps a dozen deputies want to see us fail to transform education and are more concerned to see La Mare de Carteret High School rebuilt, even though we already have surplus capacity.
At stake is the educational future of generations of our young people. Despite claims to the contrary, our educational standards are significantly below the best of state comprehensive schools and colleges in England. We barely match the English average, whereas with our social and demographic make up we should be matching the best. Bear in mind, the English average is in the context of hundreds of inner-city schools where English is a second language for most students. The best English comprehensive schools achieve higher academic standards than we do at only just over half our annual per pupil costs. The current committee is determined to meet this challenge and, I acknowledge, must earn public support for its efforts.
Deputy Richard Graham, Castel
Sir – Your latest article on our ‘Almost-a-referendum’ does a good job at pointing out the complexities of the multi-choice preferential vote we are being asked to take part in. The structure of the ‘referendum’ makes the whole thing very unpredictable and it is just about impossible for voters to work out their optimal voting strategies. No wonder the Electoral Reform Society prefers a simple binary referendum.
There are two points you make where I disagree with your analysis although I recognize that you are reflecting arguments put forward by promoters of some of the options:
1 If you want status quo you can equally help it come about by not voting.
Surely if you have an opinion you should vote for it. Not voting gives your favoured option less chance of getting more votes than other options.
Further, if the turnout is less than 40% then the vote is not binding. This doesn’t mean nothing will change, it means the States are free to introduce whatever scheme they choose which may even be none of the options on the table now. You may take the view that the States would not be able to agree on any change by 2020 so things will stay as they are. This is a bold assumption. You would have more chance of keeping the status quo if Option B wins the most votes.
It is a mistake to think that voting for Option B or not voting will be equally effective in retaining the status quo.
2 If you are confident about option X, to help it win, you might want to avoid ranking anything else, in order to deny any other options the chance of winning.
If you rank X first, your vote for X is the only one which counts so long as X is still in the game. It makes no difference to X’s chances of winning that you have ranked another option behind it. Your second preference is ignored until X has been eliminated.
Only if X is eliminated does your next preference get considered. At this stage your favoured option has no chance of winning so you have not harmed its chances by expressing a second preference.
If you express no second preference then you have no vote once X has been eliminated. X will not win but one of the other options will. Even if you dislike all the alternatives, you can express a preference for the ‘least bad’ option.
Not expressing a second preference will not deny the other choices any chance of winning: it will just deny you the opportunity of influencing the outcome once your favoured option has been eliminated.
Despite the serious deficiencies in the process, I agree with most commentators that voters should be encouraged to exercise their vote to make the best of a bad job. My analysis would also suggest that voters should take the opportunity to rank all the choices to minimize the chances of the worst option winning.
Mark Thompson, Vale voter
Sir – One has to respect your columnist for entering the thorny thicket of the forthcoming referendum (A surfeit of choice 27 September).
However I take issue with his suggestion that voters with a preference might benefit by not voting – that is, by reducing the turnout below the 40% threshold which makes the outcome binding.
Can such voters be sure how the States will react to their silence?
If the turnout is say 25%, the whole subject should wither on the vine.
However, a 35% turnout won by the extreme version of island-wide voting (“IWV”), Option A, might force the States to compromise. They could choose a hybrid form: perhaps Option C – 10 conseillers with their own IWV every four years; or Option E – IWV for 1/3rd of the States every 2 years; or some further blend as yet but a twinkle in Deputy Roffey’s eye.
It seems unknowable in advance, and rather cavalier to say otherwise.
It also seems a bit self-centred. In 2013, Jersey voted by over 80% to abolish island-wide senators – their version of option C. The turnout was only 20%. The threatened senators hung on.
I mention this not as an argument against Option C, although it is, but because the outside world laughed – it looked so tin-pot. This was exactly the “self-perpetuation” foreseen in Guernsey’s 1986 Carey Report when it advised against island-wide voting.
Unfortunately the laugh was on us by association. Guernsey is now lumped with a jurisdiction whose 2018 general election was doubted by an international observer mission to be “fully genuine” because the turnout was so low – 43% of registered voters against Guernsey’s 72% in 2016. Jersey’s voter registration is admittedly higher than Guernsey’s, but we still come well ahead on electoral engagement.
Guernsey’s hope for the 21st Century lies in preserving our tremendous right of self-determination. Without a military deterrent of our own, the “will of the people” expressed through the ballot box is all that can hold off an over-mighty neighbour.
One day, maybe in not many years, an existential vote will appear. Then our Referendum Law will come into its own – a kind of nuclear button. But meanwhile we must ensure we have an electoral system that continues to engage us and keeps us in the habit of voting.
This year’s referendum may be a fire-drill. It may be a real chance to blow away some political bubbles. I rather hope it isn’t a small step on the Long March to executive government and party politics, but it could prove a moment to celebrate something good about Guernsey.
However we rationalise it, if we have a particular preference, and are so entitled, we should also feel obliged to vote.
Nominated Official, Campaign Group B
(Let it B, the Campaign to Save Guernsey’s Electoral System)
Sir – In general, I agree with the article on traffic policy (“Quick Wins & Harder Tasks”) but would like to comment on the four most significant points listed under Quick Wins.
This proposal may be seen to favour those who are financially better off compared with those of us with lesser means. The cost of equipment and attendants might not produce an adequate return throughout the year at an acceptable charge (not costed). The proposal may also discourage shoppers from coming to Town – at a time when shopkeepers are suffering reduced trade.
Workplace parking levy
This might discourage the provision of parking in new developments. Some employees require the use of their cars during the day. The idea will be complicated to administer in relation to expected return.
The law already deals with cars mounting the pavement. Reducing speed limits or introducing more speed bumps would not to seem to solve the problem of non-compliance with the law.
Garages may be expected to favour this but, at island speed limits, are many accidents attributed to poor maintenance? Belching toxic emissions & non-functioning lights can be observed without an MOT.
St Peter Port resident
The Ecclesiastical Court
Sir – Personally I am glad to see the demise of the Ecclesiastical Court. I feel it should have been abolished decades ago. In the 1960s I used this historic office when executing Wills in the Bailiwick, and even then it was laborious and it became more so in the 1980s and beyond.
I am happy, therefore, to see the States bite the bullet. The Dean can take the glory but as he rightly said, “The States can do what they like,” and the retirement of the Registrar means the question of compensation for loss of office disappears.
Your report lacks an answer to the question “Was the EC an efficient organ?” or “Was it fit for purpose?”.
One misstatement: you say the Court also issues marriage licences. It does so only for marriage in an Anglican Church. Everybody else has for years gone to see the Registrar-General at the Greffe.
Currently a civil wedding is only allowed to happen if the content of the ceremony contains “no religious music or readings or words drawn from the Anglican marriage service” and here the Church of England has an archaic influence over the way society now wishes to live its life. Quite why it is allowed to interfere in civil ceremonies is beyond me. I hope this changes as well.
The next step will be to remove the rates Parishes demand for upkeep to Rectories. I don’t mind paying towards the upkeep of the church fabric (if an ancient building – not for any newly built Anglican church). But for the Rectory? No. If the parishioners who use the Church wish to house their Minister, fine. Otherwise let the user pay.
No other religion in Guernsey gets such a subsidy and the CofE benefits from quite a one-sided arrangement. I’m not saying the other churches should seek funding too. Far from it. They are stronger because their congregations care for their Priests, Ministers and preachers and so pay for everything.
As for the Deanery Fund, I feel it should now be sequestrated by Government. The money given “to other charities” came from the people and it should go back to them via our Exchequer. Hopefully this will start to happen soon.
CEO, St Peter Port
Sir – I fully agree with the concerns raised in the article about the Ecclesiastical Court, particularly with reference to the implications for the Charitable sector.
My concern is both the assumption by the States of the surplus raised by the Court and the centralisation of funding with the new Social Investment Commission.
This attitude of the States is also apparent in the latest accounts for the Lottery, where a significant additional administrative cost has been loaded against that proportion of the funds donated to the Association of Guernsey Charities.
Lawyer, St Peter Port
Sir – One issue that needs addressing is this. How good is the body politic at developing social policy? Hitherto in Guernsey it has been pretty inept, and only recently has it improved its attempts to develop a cogent set of policies. They are mostly grabbed from the UK and slightly adapted for local circumstances.
If the money available to the new Social Investment Commission is directed in accordance with States existing social policies, greater care must be given to the development of those policies in the first instance. My recent experience with one large government department in particular has been less than perfect. Civil servants and politicians pay lip-service to the delegation of responsibility and authority as they wish in most cases to remain in full control. It seems trust is not a word with which they feel comfortable.