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STATES OF JERSEY
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STATES OWNED OR CONTROLLED COMPANIES: RIGHTS AND RESPONSIBILITIES (P.100/2014) – AMENDMENT
Lodged au Greffe on 24th June 2014 by Deputy R.G. Le Hérissier of St. Saviour
STATES GREFFE
2014 Price code: C P.100 Amd.
STATES OWNED OR CONTROLLED COMPANIES: RIGHTS AND RESPONSIBILITIES (P.100/2014) – AMENDMENT
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PAGE 2 –
After paragraph (b) insert a new paragraph as follows –
"(c) to request the Minister for Treasury and Resources, on behalf of
the panel referred to in paragraph (a), to present the draft Strategic Plan of each company to the States for debate at an interval of not less than every three years and to present the Business Plan of each Company to the States annually with any subsequent amendments being approved by the ministerial panel."
DEPUTY R.G. LE HÉRISSIER OF ST. SAVIOUR
REPORT
I fully support Deputy G.C.L. Baudains of St. Clement in his efforts to tighten oversight over States owned companies and utilities. The shift to such entities was made for laudable reasons, like the need to give them more flexibility, particularly in operational matters. In the case of Andium, the new Housing Authority, an important reason was the fact that such a structure enabled it to raise funds on the capital markets.
However, I doubt if it was the intention of the States to allow such bodies to operate with total independence, with the States' shareholder, the Minister for Treasury and Resources, only intervening in the most exceptional circumstances. His understandable wish not to get dragged into micro-management has sometimes led to the perception of a total hands-off approach. However, there have been paradoxical interventions, such as the active role played by the Minister and the Treasury in obtaining finance for the Gigabit project.
Latterly, and in the light of the problems with the new JT billing system, the Minister has announced in the States that he will become an "activist" shareholder.
As with Planning I, like Deputy Baudains, am very concerned at the concentration of power in one person and the heavy, almost impossible, responsibility placed upon such Ministers to be the interpreters and protectors of the public interest.
Background
There appear to be 2 reports which have, in recent years, informed debate on how utilities should interact with the shareholder – the States.
First is the Report of the Comptroller and Auditor General, "States owned companies: accountability – Final Report of the Comptroller and Auditor General" (R.123/2008), presented to the States on 26th November 2008.
This essentially asked that the accounts of the utilities be placed before the States, albeit with some possible restrictions for part-owned bodies like Jersey Electricity and Jersey Water. The Report talks of the differences between accountability required of the then Waterfront Enterprise Board and the other utilities, but does not delve further into the different approaches required. This is tantalizing, as it quite clear that WEB's successor, the Jersey Development Company, is experiencing similar issues of accountability.
Second is the Report compiled by the Consultants, Deloitte, "States of Jersey Owned Utilities Governance Review" (R.76/2010), presented to the States on 17th June 2010 by the Minister for Treasury and Resources.
This is an in-depth piece of work which deserves more prominence, and which concluded that the preferred model of shareholder oversight was that of "Enhanced Engagement".
Essentially, this seems to require the Treasury to be involved in an ongoing dialogue around matters like the Business and Strategic Plans of the Utilities/Companies. The relevant portions of the Report are attached as an Appendix.
Conclusion
While it appears that the "Enhanced Engagement" model was chosen, the actual shareholder – the States – has often been left out of the loop, and a policy of "positive non-intervention" has been pursued at a political level.
I am concerned at the States becoming too involved with micro-management but, to avoid this, it is important that the Board has fully-developed antennae, so that matters like the issues with billing are picked up at an early stage and dealt with.
To strengthen political accountability, I am asking that the Strategic Plan of the Utility/Company be laid before the States at 3 yearly intervals and be subject to a debate so that the Panel, chaired by the Minister for Treasury and Resources, is fully cognisant of the views of the States on the Plan. Similarly, the Business Plan should be laid before the States annually. Obviously, there will be situations in which commercial confidentiality will prevent full publication but, for this to happen, the States will have to approve the presentation of a redacted Plan.
Financial and manpower implications
There are no additional financial or manpower implications other than the additional time required to discuss the draft Strategic Plans in the States.
APPENDIX