Thursday 07 November 2013
The Treasury and Resources Department has today announced further details of the new arrangements it is introducing for exercising its responsibilities as shareholder, on behalf of the States, for Guernsey Electricity, Guernsey Post, Aurigny Air Services and Jamesco 750 (the company established for the management of the Island's tank ships).
The new arrangements follow the States' consideration of a report in 2011 from the Commerce and Employment Department on its Review of Utility Regulation. One of the issues considered in this report was the establishment of a "shareholder resource" within the Treasury and Resources Department.
Deputy Gavin St Pier, Minister for the Treasury and Resources Department, explained:
"The Department already has established memoranda of understanding with each of the trading companies which set out the relationships between us. Having considered the observations in the 2011 States Report, we have decided to establish a Sub-Committee which will be specifically responsible for engaging with the companies on financial matters and holding them to account in terms of their performance against their strategic plans and agreed shareholder objectives.
"By establishing this dedicated resource within the Department, the overall intention is to become an increasingly effective and active shareholder in the businesses that the States owns."
The terms of reference for the Sub-Committee, which will include three non-States members with significant commercial experience at Director level, include the following:
- Ensuring that the businesses deliver cost-effective and innovative services which are responsive to their customers' needs;
- Ensuring that the businesses operate efficiently and ethically in the best interests of the community;
- Monitoring the business' performance against appropriate industry benchmarks and quality standards;
- Driving value and a commercial return from the businesses for the taxpayer, whilst balancing this with the enabling role that they play in supporting the Island and its social, economic and environmental objectives for the long-term benefit of the Island and its community.
The Department made the decision in principle to establish the Sub-Committee in July of this year and it held its first meeting in October. An early focus of its work will be in setting clear shareholder objectives and guidance for the businesses, including but not limited to areas such as financial performance, quality of customer service, the environment and sustainability.
Deputy St Pier explained:
"In the event that the States approves the Department's proposals this month for securing strategic air links to Gatwick Airport, then the Sub-Committee will work with Aurigny Air Services to establish challenging, updated and more detailed shareholder objectives, guidance and key performance indicators for the airline, with particular regard for the Gatwick route.
"If Aurigny becomes sole operator on the Gatwick route, this may include controls for fares and pricing on the service, as well as targets for service reliability, efficiency and capacity. The Department will report publicly on these and any other targets and Aurigny's performance against them on a regular basis."
The Sub-Committee will be responsible for holding Aurigny to the commitments it has given over fares on the Gatwick service to ensure they do not drift up for no good reason. This will provide the airline with a clear incentive to continue improving its efficiency and ensure that it offers a competitive and attractive quality of product. As part of this process, the Department also intends to commission periodic external efficiency reviews of the airline.
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