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Statement by the President of the Committee for Economic Development

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Wednesday 30 March 2022

General Update

Madam, Members of the States,

In the Committee's last update, I informed members of the work that the Committee had conducted in the previous year. However, we are in very different times. Russia has invaded Ukraine, the impact on the economies of the West is real and it would be remiss of me not to reflect on what is likely to be coming down the tracks for our joint economies; Guernsey does not live in glorious isolation. We are affected by geopolitics.

The price of oil and gas and other commodity prices are at a record high and that will impact on every aspect of our lives from transport, heating and the production of goods.

There are some analysts that are predicting double digit inflation rates by the end of the year. It is a fact that many businesses will be dealing with increased costs and residents of the Bailiwick will be faced with rises in the cost of living.

How different the world looked only 6 months ago when we were at the end of a pandemic and were looking forward to a life beyond Covid. No one expected a life beyond Covid and straight into a war.

Finance Sector

Guernsey follows the United Kingdom's sanctions regime.  I can report that every effort has been made by the financial services sector to apply those sanctions correctly and diligently.

And I would like to complement the Financial Services businesses that have gone beyond the current sanctions and have taken a pragmatic view and de- risked their Russian book. Those business leaders that have taken an immediate Environmental, Social and Governance standpoint are to be commended.

More broadly, the Committee has been working with the Policy & Resources Committee in respect of the new Lending, Credit and Finance Law. I am pleased to report that we have consulted on the draft Law and the intention is for the Law to be presented before the States in June of this year.

In respect of the Committee's work on personal insolvency, an industry led working group has assisted the Committee in the development of proposals in respect of the creation of low value debt relief orders. The Committee intends to present a policy letter to the States in June of this year.

The Committee also intends to develop policy proposals in respect of individual voluntary arrangements and/or a personal bankruptcy regime in due course.

Housing

Although not under our mandate, probably one of Guernsey's worst kept secrets is that there is an imminent Planning Application for the development of Leale's Yard.

The Committee is encouraged to see this privately funded initiative being advanced and would encourage the applicants and the Development and Planning Authority to work together at pace to enable development to be delivered.

The Island needs housing; the private sector could deliver hundreds of new units of accommodation, new retail units and entirely reinvigorate the Bridge and surrounding areas. This is an important project for every part of the economy.

In a recent Financial Sector Forum meeting, it was made clear that Guernsey's ability to even maintain, let alone grow, the finance sector is at risk without developers and government ensuring that there is housing and homes for those highly skilled jobs that the Island desperately needs, so that all of us can maintain our lifestyles.

Population and Skills

The Committee is on record as saying that we need a modest increase in our working age population to support our economy and deliver economic growth.

Many businesses have struggled to recruit staff during the last 12 months - particularly in the hospitality sector. A lack of staff constrains businesses' ability to operate and will restrict their ability to grow. A lack of housing for those staff entirely limits the Island's potential.

The Committee is involved in the Population and Immigration Policy Review, in conjunction with the Committee for Home Affairs, and is keen to ensure that businesses are able to access the staff and the skills that they need.

And I'm happy to report the working group on Skills made up of Education, Sport and Culture and our Committee should be reporting back to their Committees' shortly.

Trade Agreements

In terms of trade agreements, officers continue to work closely with the Department of International Trade to ensure the Bailiwick's inclusion in any upcoming Free Trade Agreements that the UK is negotiating. 

The President of the Policy & Resources Committee referenced the update on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is welcome news. The beginning of 2022 has also seen Guernsey's inclusion in the UK - New Zealand Free Trade Agreement as well as securing provisions to take our interests forward within the UK-Singapore Digital Economic Agreement.

The rest of the year will include developing Guernsey's negotiation positions for other agreements including the UK-Japan Comprehensive Economic Partnership Agreement, UK-India, UK-Canada and the agreements with the Gulf Cooperation Council.

We are doing our utmost to achieve extension of the services chapters of certain Free Trade Agreements to Guernsey. Such agreements have been identified as a priority through close consultation with industry representatives on the Trade Policy Forum as well as economic analysis completed by the Guernsey Financial Services Commission.

Registry and AML

The Guernsey Registry has a significant role as one of Guernsey's competent authorities in relation to the jurisdiction's strategy for countering financial terrorism and anti-money laundering.  The Registry continues to work closely with the other authorities to ensure compliance with the international standards and preparations for the upcoming MoneyVal assessment.

Civil Aviation/ Aircraft Registry

Turning now to Civil Aviation. In my last update, I informed the Assembly that a review of the Aircraft Registry, known as 2-REG, had been completed.  Fundamental to the review was the re-negotiation of the existing contract with strategic technical partner, SGI Guernsey.

I'm pleased to inform the Assembly that an interim agreement has now been entered into with SGI Guernsey. This includes a legal commitment by SGI Guernsey to underwrite the recruitment of additional staff for the office of the Aircraft Registry and the Office of the Director of Civil Aviation, as was identified within the recent review. Recruitment of these posts is currently underway.

I'm also pleased to confirm that recruitment for a pan-island Director of Civil Aviation has also advanced and a candidate has been offered the position. Details are still being negotiated and so I cannot comment further on this at this time.

2-REG continues to see success with over 300 total registered aircraft. I can also confirm that none of the aircraft currently registered on 2-REG are owned by any of the named Russian citizens on the UK's sanctions list.

Sea Links

In terms of sea links, the Committee is currently working with the Policy & Resources Committee to deliver an operating agreement with Condor Ferries. I won't add to the update from the President of the Policy & Resources Committee other than to say the Committee is progressing the work on ramp licensing to support the future arrangement.

Future Policy Letters

Skills, Runway and Tourism

The Committee will be bringing a number of policy letters to the Assembly during this year as set out in the Government Work Plan.

We are working closely with the Committee for Education, Sport and Culture on a Human Capital Development Plan and the intention is to bring a joint Policy letter to the States later this year.

The Committee is under a States' resolution to bring a business case for the extension of Guernsey Airport's runway to at least 1,700m to the Assembly. The Committee has received the updated cost benefit analysis from Frontier Economics and further work is currently being undertaken on the technical and regulatory feasibility of various options that would utilise an EMAS. Once that work has been completed and further work on the Airport Masterplan has been progressed, the Committee will bring a Policy letter to the Assembly later this year.

The Committee is keen to improve the Tourism product, which is long overdue, and will bring a Policy letter to the States on this matter later this year.

Madam, this concludes the Committee's update and I am happy to answer any questions that members may have.

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