By Colin Lever
WE are advised that Jersey does not have the resources for major projects such as building the new hospital but, as part of the tender process, it is important, for the economy, that the government insist on employing local companies as far as possible, as long as they can meet the procurement criteria.
The States of Jersey Development Company has contracted a UK architect to redesign Fort Regent. Government sources stated that there had been no applications from local firms. In response, local companies had said that they had not seen any adverts on the government website. Questions also persist about the efficacy of having a UK architect “on the books” at the JDC.
The Treasury Minister had hoped to alleviate concerns by saying that 60-90% of the work will be carried out by local companies. Is this a figure plucked out of the air? Have preferred bidders already been chosen? And who is going to hold her feet to the fire to ensure accountability?
The furore over the tenancy for the Lido at Havre des Pas is an example of the vagaries of the government’s procurement procedure. We were told that First Point Property Services were the most viable. Maybe they are, but the assessing team did not follow due diligence as per the present government procurement process. Developing and growing small enterprises, community organisations, co-operatives, and municipal ownership is important, because they are more financially generative to the local economy than larger concerns that operate outside of the Island. They lock wealth in place.
Municipal enterprises are set up wholly run by government. Jersey has the equivalent of these in its arm’s-length bodies. There are two types of arm’s-length bodies, arm’s-length organisations (ALOs) and arm’s-length businesses (ALBs). The former are described by the government’s Public Finance Manual as “an organisation which fulfils a role or function that the States of Jersey would otherwise perform”. ALOs are set up by the States to deliver public services, acting independently but still accountable for public funds. They receive grants from the government. They include, Digital Jersey, Visit Jersey, Jersey Sport, Jersey Opera House and many more. Arm’s-length businesses are defined as “unrelated parties dealing fairly (ie fair unbiased transactions) to ensure fairness of transactions”. Unless specifically requested, they receive no capital from the government. Then, of course, there is Jersey Water and Jersey Electricity. The government are majority shareholders in these two organisations.
All arm’s-length bodies are accountable to government. They have chief officers and the government has a ALBOB (Arm’s-Length Body Observation Board) in place that is supposed to ensure compliance. However, in 2024, the Comptroller and Auditor General sought to highlight the lack of accountability in her report: “Arrangements are not in place to ensure all arm’s-length bodies are subject to periodic reviews.” She went on to say that “there is a risk that opportunities to improve effectiveness and value for money are missed”.
The JDC is an arm’s-length business. In a recent report by the Public Accounts Committee, it was stated: “Various organisations operate independently or semi-independently from the Government of Jersey’s procurement systems.” The report goes on to reveal that “there was limited use of the Channel Islands Tender Portal by ALBs”. This perhaps answers the question raised by local architects.
The Ports of Jersey ALB has announced that a UK company has been given the contract to provide a cafeteria and shopping facilities for the Airport. This means that a Jersey-based company has been replaced. This is on top of Ports of Jersey refurbishing the Airport’s upstairs section to create an exclusive area, with the contract being handed over to Lounge 1, another UK-based company.
Ports has promised to provide a space for local start-ups to sell their wares. They have also involved parts of the community in helping to design the space. The JDC has done something similar, inviting school pupils to design aspects of the “new” Fort Regent. While this is welcome, it costs next to nothing to facilitate, and it does not provide jobs for local businesses. Most of any UK company’s profit will find its way off the Island.
This begs the question of how committed Jersey’s ALBs are to supporting, local Island businesses. It stands to reason that if a local firm’s costs are in excess of that put forward by a company outside of the Island, the tender is likely to go to the cheapest bidder. The government’s procurement policy makes allowances for increased Jersey prices tenders due to the substantive costs local firms are saddled with. To what extent this is adhered to is not clear. Large companies are able to offer more lucrative tenders, including social value considerations as a carrot to secure a contract.
Every year, Andium Homes returns £20 million to the States coffers and Digital Jersey has gone on record stating that it has an economic multiplier of 2.1. The JDC turned a profit of £7.3 million and the Ports of Jersey turned a profit of £7.2 million in 2023. What happens if the latter two companies do not continue to turn a profit? Does the government bail them out? If so, how many times before they pull the plug? There are concerns being aired about the level of staffing and of the eye-watering salaries being commanded by some of their chief executives. Yet because of their “arm’s-length” status, staff employed by the 140 or so ALBs are not included in the numbers being bandied around and nobody seems able to temper the salaries being awarded.
If ALBs were to fulfil their commitment to community wealth building, they would have to:
- Follow government procurement processes.lBe not-for-profit.
- Be subject to transparent economic scrutiny.
- Colin Lever is a retired teacher and education specialist, SEND consultant, and commentator on educational and community issues. He also contributes musically to repair cafés and charity events and is currently writing and producing a comedy sitcom podcast.
