Wednesday 21 March 2018
General Update
Sir,
It is three months since I was elected as President of the Committee for Economic Development, and two months since Deputies De Lisle and Tindall were elected to the Committee. The weeks since then have been an eventful period.
The new Committee has a good balance of skills and expertise, and we have met formally five times in the past 10 weeks in order to ensure that we build momentum.
In January, the Committee voted by majority to withdraw the economic vision devised by the previous Committee. This will be replaced by a plan for economic development, which has just been shared in draft form with the members of the Committee. Subject to their comments, our intention is to bring the new plan to the States in the second quarter of this year.
The new plan sets a course for the Guernsey economy of the future, and maps out the route to get there. The core theme is diversification, as our economy transitions from one based very heavily on financial services. But more of that in due course.
Our approach is consultative and collaborative, and we are keen to involve the private sector in every stage of the development and implementation of policy. In January I met with a number of business representative bodies to understand what they saw as opportunities, threats, challenges - and their views on driving growth and productivity.
In the meantime, while our long-term strategy is developing, we have been dealing with 'business as usual', and specifically a number of 'burning issues'. One area of priority has been air and sea links.
The air transport licensing framework has been accelerated and completed over the last three months, and the final draft is now being consulted on with airline operators, other States departments and business representative bodies. It will be put before the States in the second quarter of this year.
Following on from Alderney Representative Graham McKinley's update, I am pleased that the work on a public service agreement for the Alderney route is now underway, with the input of colleagues in Alderney. We have agreed an ambitious timeline for the establishment of public service agreements during 2019. I should add that the Committee recognises the importance of the rehabilitation of the Alderney runway in securing the best possible response from commercial operators.
In May 2017 the Policy & Resources Committee wrote to the Committee for Economic Development with its recommendations after its strategic review of Aurigny. Given the work that is now being completed on air transport licensing and that which is ongoing on public service agreements, the Committee will finally respond to the Policy & Resources Committee this week. We will support Aurigny's role as an economic enabler, but ask that further thinking is done in order to reconcile this with the need to reduce losses.
The Committee's approach to air links is to introduce competition where the market allows, and to actively explore potential new routes. We have been able to announce that a scheduled weekly service to Glasgow will operate this summer, and we are pleased that charter services to Dusseldorf and other destinations will operate again this year. We are actively engaged in discussions with potential operators on other routes, and expect to be able to make some important announcements soon.
Our sea links are also critical to our economic and community wellbeing. We have announced a new inter-island passenger ferry service, which will operate from Easter onwards, at little or no cost to the taxpayer, and this will provide 26,000 seats on the Jersey - Guernsey route this year.
The Committee has considered options for improving Guernsey's sea links, and directed officers and legal advisers to undertake further detailed work with three objectives:
To identify ways of improving resilience and affordability in the short-term
To consider the best approach for the long-term provision of sea links
To ensure preparedness for any developments which might emerge in relation to the sale of Condor by Macquarie
This work will be informed by the strategic review of air and sea links infrastructure, which is being undertaken by Policy & Resources, but it is, however, important to note that the work that the Committee for Economic Development is now undertaking will be in parallel with the States-directed review, and supported by it - but it will not be delayed by it.
In relation to the potential sale of Condor, I met with Macquarie and Condor on 22 February to discuss these matters. I understand that this was the first meeting undertaken by the Committee with Macquarie since the meeting of 20 September 2016 when the Committee's then President and Vice-President were advised that the life of the fund which owns Condor would not be extended by Macquarie.
The work that is now being undertaken is focused on assessing and testing the market, on understanding more fully Guernsey and Jersey's shared and also different requirements, and on building reliability. It is clear that less progress than we might have hoped has been made in this area over the past 12-18 months, but we are getting up to speed with this issue quickly.
The Committee also continues to make progress on digital connectivity. The Vice-President, Deputy Dudley-Owen, has done an excellent job in leading and co-ordinating the implementation of the digital strategy, and was rightly commended for her work in that area a week ago at the Institute of Directors 'Mid Term' conference. I echo that commendation, and am pleased that over the past few weeks the Committee has put in place a plan to secure the Digital Greenhouse for 2019-21 in order to further establish its role in developing and diversifying our economy and our skills.
Over the past few weeks the Committee has recognised its role in supporting the work on Brexit, on which the Vice-President of the Policy & Resources Committee will shortly provide Members with an update.
We need to be global in our approach. The International Monetary Fund predicts that 80% of world growth is likely to come from outside of the EU in the near future, and It is clear that the Committee has a lead role to play in developing new markets globally. This month the Committee has joined the Commonwealth Enterprise and Investment Council as a strategic partner, which will assist us as our economy pivots towards the world outside Europe.
The economic plan policy letter that the Committee will bring forward will recognise that we need to encourage entrepreneurialism, and also that we need to remove red tape and barriers. In 2015 the predecessor Commerce & Employment Department completed a red tape audit, a report that appears to have been sitting on a shelf since the start of this political term. This Committee will dust it off, add to it, and see how we can make a series of changes to make Guernsey more competitive - including in relation to population management, planning and land use, and the processes involved in setting up and running a business.
In respect of the fintech, fiduciary and insurance sector reviews, over 90% of the recommendations have commenced, or are well progressed or completed, showing the commitment of government and others to implement recommendations which are intended to benefit these sectors. The investment sector review is also close to completion and will be published soon.
I'd like to finish as I started - with some good news.
First, the Guernsey Registry. This past month has seen the first set of beneficial ownership returns, and there was a response rate of over 98%, with those yet to respond to now receiving reminders. This was a big task being undertaken for the first time, and under international scrutiny - and the Guernsey Registry showed that it was more than up to the task. Well done to all involved.
Second, in 2017 Locate Guernsey was responsible for 24 relocations - 15 corporate and nine high net worth individuals). Locate has created a direct economic return of nearly £1.7m over its first two years of life, and a considerably greater return to the wider island economy through use of professional services firms, hospitality firms, construction companies and off-island travel
With regard to tourism, overall visitor numbers to Guernsey for 2017 were up by 4% on 2016, and staying leisure and business visitors - the value driving sector for the industry - was up by 5% at 178,500. Some 105 cruise ships have been confirmed to visit the islands for 2018, with over 122,000 disembarking passengers expected. Guernsey has been voted Cruise Critic's' Best UK Port of Call', and is in the top five 'Best European Destinations'.
The Guernsey Literary and Potato Peel Pie Society film goes on national release in the UK on 20th April. Release dates are also confirmed for the USA, France, Germany, Holland, Belgium, Luxemburg, New Zealand and Australia, and a campaign to capitalise on the movie's release and the book's re-release is underway.
To conclude, it is clear that the economy faces some serious challenges, particularly as the Brexit process unfolds, but we are also now identifying opportunities which will we set out in our upcoming policy letter.
My Committee will meet those challenges and respond to those opportunities with imagination, energy and vigour, and we will work collaboratively with other States Committees and the private sector to support Guernsey's economy.
