Sunday, 17 October 2010

A Tale of Two Quangoes

Last weekend was the cider festival at Hamptonne, which is now one of the few weekends when the museum is open. We went on a Saturday and it was lively with Morris men, the farm horse dragging the heavy wheel around the cider press, and we enjoyed some cider from last year, some warmly baked Jersey Wonders, and bag freshly roasted chestnuts. There was face painting, juggling, preserves for sale, and of course a pleasant walk down through the cider orchard and back up through the field. But the one thing which was missing from past years was the livestock. There were no roosters, chickens, chicks, no rabbits, the pigsty was empty of pigs, and there were no cows or heifers with the exception of one large artificial plastic cow -- an ominous reminder of what might happen to the Jersey breed.

The reason why Hamptonne is so seldom open is because Jersey Heritage is strapped for cash. And yet the Maritime Museum is an excellent site with nearby moorings and yacht marina, and would make money if it didn't have to pay Jersey harbour rent for the site. It is argued of course (by Senator Terry Le Sueur among others) that the rent is actually levied at below true market value - but nonetheless a most peculiar chain of transactions takes place.

The Maritime Museum which is part of Jersey Heritage pays a goodly portion of its income in rent to Jersey harbour and that goes into the general coffers of the States, after the harbour running costs are taken into account. The State pays out money to subsidise Jersey Heritage because it hasn't got enough cash which it might well have if it didn't have to pay rent to the harbour department.

Now let's look at another quango -- that of the Waterfront Enterprise Board (WEB) and land which is managed by WEB is not rented by WEB from the States but on the contrary has been ceded by the States into the ownership of WEB - for a nominal sum of a few pounds. WEB's income comes from charging its tenants rents or selling leaseholds on the land; it is in WEB's interest to develop the land. Web has a huge wages bill and an extremely high managing director's salary. Money is reinvested in WEB and doesn't seem to go back into the States coffers at all.

One of the sites paying rent to WEB is Liberation Station, which is rented by Connex the bus company. Recently, in the last year, Web raised its rents considerably. Now Connex is paid to operate the buses are certain sum according to the service level agreement by the States of Jersey. The increase in rents including that on Liberation Station went to the States subsidy to Connex had to be increased to take account of that. So that unlike the cash-strapped Jersey heritage, WEB is doing very well nicely thank you, principally because its land does not suffer any rent payable to the States, and some of its rent is even indirectly coming from the taxpayer - with no control on the amount levied. Another bizarre chain of transactions.

It seems to be a manifestly unfair that Jersey Heritage should have such a punitive relationship with the States while WEB has such a generous one. At the very least, the States should cede the Maritime site to Jersey Heritage for the same kind of nominal sum for which WEB obtained its own land.


st-ouennais said...

The situation at WEB,and the new son of a WEB is more distorting than that. Since it is not paying commercial rates to lease or buy the land it is much easier for it to show a better financial perfomance than other development companies. A ruse that in turn will doubtless used to justify the large salaries to the directors.

I heard most of the States debate on setting un the development company son of WEB. While the Chief Minister did make comment on WEB profits comng to the States, I was struck by the complete absence of any comment on what happens if new development company fails or ends up with some excessive liability. Who picks up the tab then?

Anonymous said...

Hi Tony,

Theres so much more you could have said about the bus station situation! but unfortunately what you did say wasnt quite right.

The lease arrangement is a lot more complex. Involving Islands Development (Harcourt) and TTS. Connex do not pay rent on the bus station and never have as this is between TTS and WEB. Connex previously paid rent on the bus depot at La Collette but this is also now dealt with directly by TTS in an effort to cut out the middleman.

What you did touch on was the principle that a market value should be obtained by the States for land or buildings, regardless of whether the tenant is ultimately another States department. The effect on public finances being something to ponder on.