JT Group Limited: meeting concerning Gigabit project (P.181/2014) – comments.

STATES OF JERSEY

JT GROUP LIMITED: MEETING CONCERNING GIGABIT PROJECT (P.181/2014) – COMMENTS

Presented to the States on 19th January 2015 by the Minister for Treasury and Resources

STATES GREFFE

2014   Price code: A  P.181 Com.

COMMENTS

The Minister for Treasury and Resources opposes P.181/2014. The proposition of Deputy G.P. Southern of St. Helier asks the States –

"to  request  the  Minister  for  Treasury  and  Resources,  as  shareholder representative  of the  States,  to  organise  as  a  matter  of urgency  a  private meeting between the stakeholders in the delivery of the Gigabit Jersey project (JT Group, Gigabit Field Force (GFF) and CH2M) and elected members of the States to discuss –

1. the  contractual  relationship  between  Gigabit  employees,  their employers, GFF, and subcontractor CH2M which has resulted in a long-running unresolved dispute;
2. whether  the  contractual  relationship  between  GFF  and  CH2M  is affecting the ability of the latter to deliver broadband connections within budget and within target timescales;
3. updated projections for the completion of the Gigabit Jersey project; and
4. the impact of the Budget 2015 decision to withdraw, for a 2 year period, the dividend reduction of £3 million per annum proposed in 2011 and require instead the payment to the States as shareholder of an additional £6 million of dividend.".

Parts (a) and (b) are simply not practical to deliver. Contractual relationships are legal matters and are confidential between the parties involved. The States have no power to compel CH2M Hill to attend a meeting (the size and scale of which is not clear from Deputy Southern 's proposition). Even if they did agree to attend, then it would be wholly  inappropriate  to  discuss  legal  matters,  or  those  relating  to  individual employees, within such a forum.

As far as part (c) is concerned, the Minister has discussed projections for the Gigabit project with the Chief Executive Officer of JT. The full revised position will not be clear until the current staffing and contractual matters are resolved. However, at the Minister's request, JT agreed to brief all States Members on Monday 19th January. The Minister hopes that Members who were able to attend this briefing received satisfactory assurances over the handling of this project and its delivery. It should be noted that JT have given a number of "update" briefings to States Members in the past.

The Minister has discussed part (d) of the proposition with JT's Chief Executive, who clarified that the repayment of all or part of the £6 million deferred dividend would naturally reduce the pool of funding available for capital expenditure. This would therefore result in a re-prioritisation of JT Group investment programmes, but not necessarily the Gigabit Jersey project, which is a clear priority.

In summary, the Minister considers that this proposition is unnecessary. There is an established  process  and  Memorandum  of  Understanding  for  liaison  between  the Minister  as  shareholder  representative  and  JT.  The  Minister  has  been  open  and transparent  with  the  Assembly,  through  States  Questions,  in  relation  to  his

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communications with the JT Board over the Gigabit project and its staffing issues. The latter are, ultimately, a matter for the Board, and the Minister is satisfied that he is able to exercise appropriate scrutiny of the Board's management of the matter. The States have  agreed  how  the  shareholder  function  should  be  delivered  on  behalf  of  the Assembly. The Minister believes that process is working and must be allowed to operate without direct intervention by the Assembly. The Minister urges Members to reject all parts of the proposition.

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