Jersey Heritage Trust - Financial Review - Jersey Heritage Trust - Transcript - 18 May 2010

Public Accounts Committee Jersey Heritage Trust - Financial Review

TUESDAY, 18th MAY 2010

Panel:

Senator B.E. Shenton (Chairman)

Connétable J.M. Refault of St. Peter (Vice Chairman) Senator J.L. Perchard

Senator A. Breckon

Mr. M.P. Magee

Mr. A. Fearn

Mr. C. Swinson (Comptroller and Auditor General)

Witnesses:

Mr. N. Danby (Financial Director, Jersey Heritage Trust) Mr. J. Carter (Director, Jersey Heritage Trust)

Mr.  C.  Jones  (Chairman  of  Trustees,  Jersey  Heritage Trust)

In attendance:

Ms. M. Pardoe (Scrutiny Officer)

Senator B.E. Shenton (Chairman):

Before we start can I just ask you to read the piece of paper on the desk. It just sets out the protocol for these meetings with regard to immunity and such like.

A Member of the Public:

Mr. Chairman, the protocol for the public. Is this an administrative meeting?

Senator B.E. Shenton: No, it is not.

A Member of the Public:

No, it is the wrong protocols they have put out for the public.

Senator B.E. Shenton: It must be, yes.

A Member of the Public: That is fairly normal.

Senator B.E. Shenton:

For the benefit of the tape, as we go round the table if I could ask you to introduce yourselves and we will go right round the table. For the Jersey Heritage Trust, could you also state how long you have been involved with the Jersey Heritage Trust and in what capacity as well.

Financial Director, Jersey Heritage Trust:

Nick Danby, Financial Director, Jersey Heritage since 1990.

Chairman of Trustees, Jersey Heritage Trust:

Clive Jones, Chairman of Jersey Heritage since late 2008.

Director, Jersey Heritage Trust:

Jon Carter. I have been with Jersey Heritage since September 1989. I have been Director since January 2003.

Mr. C. Swinson (Comptroller and Auditor General): Chris Swinson, Comptroller and Auditor General.

Mr. A. Fearn:

Alex Fearn, independent member, Public Accounts Committee.

Senator A. Breckon:

Alan Breckon, member of the Public Accounts Committee.

Senator B.E. Shenton:

Ben Shenton, Public Accounts Committee.

Connétable J.M. Refault (Vice-Chairman): John Refault, Public Accounts Committee.

Senator J.L. Perchard:

Senator Jim Perchard, Public Accounts Committee.

Mr. M.P. Magee:

I am Martin Magee, independent member of the Public Accounts Committee.

Ms. M. Pardoe:

Mel Pardoe, Scrutiny Officer.

Senator B.E. Shenton:

I will start off with when did you first became involved?

Chairman of Trustees, Jersey Heritage Trust:

I have been Chairman since late 2008. I cannot remember when I was appointed a trustee. Probably a couple of years earlier than that, approximately. I am sorry I do not remember, to be honest. It seems like a long time ago.

Senator J.L. Perchard:

Perhaps before we fire away with questions, just explain the way that the Jersey Heritage Trust is constituted. You have got trustees, you have got board members. Can you explain the structure?

Director, Jersey Heritage Trust:

Jersey Heritage Trust is an incorporated body and has a constitution approved by the States in 1999. It is governed by a board of trustees, up to 12 trustees. The trustees are recruited according to a process agreement with the Appointments Commission. The president of the Société is a trustee. There is a member appointed by the States in Simon Crowcroft and previously has been a member for the time being of the Education Committee.

Senator B.E. Shenton:

Does the States-appointed trustee have a full attendance record?

Chairman of Trustees, Jersey Heritage Trust:

I think that is information we have provided previously to somebody. I am not quite sure who it was. No, he has not always been able to attend because of States business. I think the same was probably true when the relevant Assistant Minister was also on the board of trustees as well.

Senator B.E. Shenton:

Okay. What have you learnt from your recent financial problems?

Chairman of Trustees, Jersey Heritage Trust:

I think, Senator, let us start with the Comptroller and Auditor General's report because that is, I suppose, really your point of departure here. The Comptroller and Auditor General made a number of recommendations in relation to our governance. The fact that we have taken most if not all of these on board and implemented most if not all of them already suggests that we agree with them. He came to a number of conclusions based upon the evidence that he saw and evaluated. We did not necessarily agree with all of those conclusions but we accepted that his report was an appropriate and necessary part of this process that we are now going through. It was then supported and supplemented by work done for Economic Development by Locum Consulting and work done for E.S.C. (Education, Sport and Culture) by BDO that have helped to produce, I think, a very clear picture of the trust's financial situation and how we got there.

Senator B.E. Shenton:

The trust lost money each year for the past number of years.   What made the trust feel that it could  operate spending more money than it was allowed within its grant?

Chairman of Trustees, Jersey Heritage Trust:

I do not want to particularly get into a war of numbers if I can help it simply because it could get a bit out of control. I think the Comptroller and Auditor General will agree that he adjusted our reported figures to include certain other categories of expenditure that he felt were appropriate to include for arriving at a figure for unadjusted deficit for Jersey Heritage. We do not necessarily agree that, for example, provision for depreciation or refurbishment of exhibitions would go properly as part of our expenses and so therefore I have to say, with respect, that we felt that the deficit figure was somewhat inflated. That does not depart from the proposition that there was a deficit.

Senator B.E. Shenton:

But if you do not allow for provision for refurbishment, for example, how will you refurbish any attractions?

Senator, you are probably one of the few Members of the States who understands why it is that the States accounts never provide for depreciation, dilapidation, reinstatement, replacement or impairment. It is a fact of life that all such expenditure historically by Jersey Heritage has been funded out of a capital grant. The last one we received was in 1999 for Mont Orgueil.

Senator B.E. Shenton:

So the decision was taken to run the accounts of the trust more along States lines than sort of generally accepted lines. Is that what you are saying?

Chairman of Trustees, Jersey Heritage Trust:

No, it was to try and run them along generally accepted accounting principles but the fact of the matter is we would not have been expected to provide for depreciation or refurbishment out of the revenue grant that we got.

Senator B.E. Shenton:

One of the reports commented on the lack of refurbishment. How were you looking to, say, pay for substantial refurbishment?

Chairman of Trustees, Jersey Heritage Trust:

Our business plan and our report to the Minister has regularly included a list of projects that we would like to see capital funding for. That has never got anywhere. We also recently made 3 requests for funding under the Fiscal Stimulus Plan for work designed to improve the offering that we have, none of which got anywhere either. It is not for want of asking.

Senator B.E. Shenton:

So basically the trust operates on the basis that they would require additional grants for refurbishment?

Unless the whole world changed in order to operate on a generally accepted accounting principles line, yes.

Mr. M.P. Magee:

I guess to give some defence of Chris in this, I think I would agree with you you might have arguments about how he comes to a deficit figure but the very fact that there was an £880,000 overdraft is really quite ... that is a cash figure which you will recognise and according to what we heard from Mario that has now been cleared.

Chairman of Trustees, Jersey Heritage Trust: It has.

Mr. M.P. Magee:

So that has been deficits built up over a relatively short period of time.

Chairman of Trustees, Jersey Heritage Trust:

The bulk of that, and I am sure we will get to it at some point or other, is the amphibious vehicles.

Senator B.E. Shenton:

I suppose the next question is what action has been taken to eliminate the deficits going forward?

Chairman of Trustees, Jersey Heritage Trust:

This is not the first time that we have tried to confront this, as you will probably know, and as the Comptroller and Auditor General acknowledged in his report we did advance a proposal to reduce the overdraft and eliminate the deficit in 2008 but we were told basically not to proceed with that. What we have done since then and since the ...

Senator J.L. Perchard:

Sorry, can I interrupt you there? By whom and on what grounds?

Chairman of Trustees, Jersey Heritage Trust:

By the incumbent Minister on no particular grounds. I do not recall the letter in detail. I think we were told not to do it.

Senator J.L. Perchard:

It was a political decision not to.

Director, Jersey Heritage Trust:

Such action would require very careful political consideration, in the letter.

Senator B.E. Shenton:

Why did it require political decisions? You are an independent trust operating independently of the Minister. Why did you need the go ahead from the Minister to implement cost savings?

Chairman of Trustees, Jersey Heritage Trust:

We are an independent or better put possibly an arm's length organisation. I think it might be a little bit of a stretch to say that we are completely independent because after all we do get two-thirds of our funding, or 55 per cent of our funding, from the States and from that department. So, not to take the Minister's views into account I think might be a little foolish on our part.

Senator B.E. Shenton:

Yes, but your responsibilities as trustees surely outweigh the views of the Minister in running the trust and bringing action forth to cut out deficits going forward.

Can I just pause for a second on the use of the word trustee. We are not trustees in the sense of a trustee under the Trust Law. There is some authority for this. We are closer to being company directors. That still obviously places responsibilities and constraints on our freedom for action but we are not quite the same as a trustee.

Senator B.E. Shenton:

But as a company director you would not allow a company to run insolvent and it would be against the law to do so.

Chairman of Trustees, Jersey Heritage Trust:

As I say, I do not resile from that. I just wanted to get the use of the word trustee slightly out of the way because it can get confusing. But the point about it we felt it was appropriate to take the Minister's views into account by presenting the plan to him. The Minister said he did not want us to do it. That left us with 2 choices. Those 2 choices then were eliminated because the Minister did not get re-elected. So the next priority was to get on the new Minister's calendar and get back there.

Senator J.L. Perchard:

Did that send a signal to the Jersey Heritage Trust that everything will be all right on the night and that you did not need to take this urgent action? What sort of signal did you receive from the Minister?

Chairman of Trustees, Jersey Heritage Trust:

No, it certainly did not send that signal at all. It sent no particular signal other than a wish that we did not do it, or at least that is the way I interpreted it at the time.

You were quite relaxed with this open-ended arrangement with no sort of deadline to the situation you were finding yourselves in?

Chairman of Trustees, Jersey Heritage Trust:

It had been quite clear to us for some time that the lines were intersecting. The gradient of the expense line obviously steepened with the acquisition of the overdraft, mainly following the amphibious vehicles. So action was going to have to be taken at some point. All we can do is, up to a point, state the problem, offer a solution and see if that flies.

The Connétable of St. Peter :

Did you offer a solution when the Minister asked you not to proceed and what was that solution?

Chairman of Trustees, Jersey Heritage Trust:

No, we did not offer a further solution because effectively events overtook us because, as I recall, this was towards the end of 2008 and I cannot remember when the election was but it was not long after that.

Senator B.E. Shenton:

Going back to the £500,000 purchase, did you ask the Minister before you purchased that or did you do that as an independent body?

Chairman of Trustees, Jersey Heritage Trust:

My recollection is that it was decided by the board of the trust and the Minister was told later. I think that is right.

[12:15]

Senator B.E. Shenton:

The Minister was told later? So when it comes to spending money you feel that you can do it independently but when it comes to cutting costs you need the approval of the Minister to do so?

Chairman of Trustees, Jersey Heritage Trust:

I accept the burden of your question, Senator, and there is no answer to that. I can either be a knave or a fool.

Senator B.E. Shenton:

You have a partnership agreement which is different from a service level agreement.

Chairman of Trustees, Jersey Heritage Trust: Yes.

Senator B.E. Shenton:

Are you satisfied that the partnership agreement is tight enough  and  should  it  be  replaced  with  a  service  level agreement that sets you strict criteria?

Chairman of Trustees, Jersey Heritage Trust:

To the best of my knowledge, it is in the process of being replaced with a service level agreement and in fact part of that is at the moment, as I understand it, BDO is working with the department to define key performance indicators for Jersey Heritage. When they have agreed on what they think they should be we will have a look at them and then if we think we can manage them then we will roll.

Senator B.E. Shenton:

Have you had any input in the formulation of those key performance indicators?

No, not yet, but it does not strike me as unfair that the department should have first crack at it and then ask us whether we can do it.

Senator B.E. Shenton:

We heard this morning from Mario the E.S.C. seem to have quite an arm's length relationship with the trust. The representative on the trust appeared to be a political appointment but attendance at meetings was a little bit sporadic and there did not seem to be any reporting back to the department. How do you see the relationship being improved going forward and it being much tighter?

Chairman of Trustees, Jersey Heritage Trust:

I think the relationship already has improved a great deal. When we were able first to get in to see the current, then new, Minister for Education, Sport and Culture in February of last year and gave him a presentation as to the issues that the trust was facing. I have to say that his engagement with us was immediate. As you will know, and as I am sure Mario has already told you, then the department took several significant financial actions to basically get us out of the woods and on to an even keel and commissioned the reports by the Comptroller and Auditor General by Locum and by BDO that effectively led to us all being on the same page, especially as regards financing and what the numbers really are, out of which will come a strategy for fixing it, so first of all in the last 12 months the relationship has become a lot closer. It is clear that going forward and whether or not the Minister is successful with the proposition I believe he plans to take to the States we will have a tighter working relationship. It may not necessarily be the fact that he has representatives on the board. Frankly I think the experience suggests that it is difficult for somebody with Ministerial responsibilities also to be on the board of a

body that is grant aided. But that does not necessarily mean that the effective working relationship between Jersey Heritage and the department cannot be closer. It is already a lot closer.

Senator B.E. Shenton:

When we brought in a service level agreement for Family Nursing we removed the political representation to give them the independence that they ...

Chairman of Trustees, Jersey Heritage Trust:

I am not sure if it would not require a change in the law to get rid of the Assistant Minister off the vase but it is up to the Minister to choose whether he fills it or not.

Senator B.E. Shenton:

If  we  can  go  back  to  one  of  the  major  causes  of  the financial problem which is obviously the Elizabeth Castle access, I suppose the obvious question is why did the trust not act better in protecting its contractual rights?

Chairman of Trustees, Jersey Heritage Trust:

Well, if I can just take a second to put it a little bit in context. We were faced with a situation whereby the existing provider of amphibious ferries told us unequivocally that they wanted to withdraw from providing the service. It was not a question of whether they could be persuaded to be paid more or to do it some other way, they wanted out, and ideally they wanted us to buy the vehicles. So we were faced with the possibility of being unable to fulfil the obligations that we felt we had to get access to Elizabeth Castle.

Senator B.E. Shenton:

With the obligations to who?

Under the usufruct between us and the States of Jersey. Now I will come to the Comptroller and Auditor General's observations in a minute which is entirely pertinent but that usufruct we felt imposed certain obligations on us and that tended to direct and drive off people. We then obviously looked at alternatives. Buying the existing vehicles was certainly not an alternative and from what I understand the eventual sale price to be I think had we paid the original asking price it would have been equally subject to criticism. It was to find an alternative solution, which we did and the aim is to find a solution whereby we did not end up owning and running vehicles. That was the last thing we wanted to do, we are not a transport company. But in the end the company that did get them built and was running them ran out of room and ran out of money and then we were faced with the situation of do we go back to where we were when we began all this with a ferry service that was going nowhere, do we sit back, watch another local company go bankrupt and hope that we can pick the assets up for next to nothing, but recognising that there were risks in terms of what the Viscount might feel it his duty to do and all that sort of thing, or do we step in and take it over? So bearing in mind that our thinking, rightly or wrongly, was driven by what we felt was our obligation to keep access to the castle open, that is what we did. But there had already been questions in the House about the castle staying closed for longer after Easter and it was by no means clear to us that there was going to be universal approval if we just said: "Watch out for the tide and walk out there." To be entirely fair to the Comptroller and Auditor General he made the observation in a meeting that we had that while we might have had an obligation under the usufruct it did not extend to bankrupting the company and he is entirely right.

The phrase in the usufruct is to use all reasonable endeavours.

Chairman of Trustees, Jersey Heritage Trust: Yes. I accept that.

Mr. C. Swinson:

It is not an unqualified obligation to provide access.

Chairman of Trustees, Jersey Heritage Trust:

But it very much influenced our thinking. I am taking a long time to answer your question but does that help?

Senator J.L. Perchard:

A little bit, I am sure. The questions in the House, I seem to remember them quite well and a certain Deputy had a particular interest and frequently asked questions. One of them was about the reliability of the service access to the castle and the answers given generally were about the particular amphibious vehicles that were operating being unreliable and always broken down, the very vehicles that you had not bought. Were you aware that you were buying some unreliable stock?

Chairman of Trustees, Jersey Heritage Trust:

We were aware that there was a view expressed by a Deputy who, by the way, has been very helpful to us subsequently in these matters. We were aware that there was a view that these were not vehicles that were up to snuff as he saw it.

Senator J.L. Perchard:

You did not agree with him?

Chairman of Trustees, Jersey Heritage Trust:

Well, it was the best deal that we were able to get. I mean there is one of these things cruising around on the Clyde at the moment that was brought into service in the last 6 months and that cost £750,000 for one. That was not an option for us. Buying adapted oyster fishing vessels from France at £500,000 each was not an option for us. Having these things built in the United States that seemed to perform and which I would say to you have performed adequately under the circumstances was the option that seemed best suited to us.

Senator J.L. Perchard:

So the unreliability problems of the vehicles has been sorted out, just as an aside, really?

Chairman of Trustees, Jersey Heritage Trust:

They have carried more vehicles in their ... in their first full year of operation I think they carried more visitors to Elizabeth Castle than the old Duck did. Now it is not to say they have not been cheap to maintain, they have been quite expensive to maintain which cost us, and so there are issues with the vehicles and their useful life is potentially shorter than we might like. But that was the size of the coat we could afford with the cloth that we had.

Senator B.E. Shenton:

Before you made the investment did you have relevant financial information available to you? I mean did you have proper management accounts showing the income and expenditure for the Elizabeth Castle operation in isolation as opposed to the whole of the Trust's assets, because this was an investment into Elizabeth Castle using funds given to the trust as a whole. So did you look at it as a businessman should look at it and say: "This is the income and expenditure on the castle, this is the capital cost, this is how we are going to make it back"?

In this case I think the answer is yes. The reason for that is that part of the if you like financial accounting for Elizabeth Castle included the money that we paid to the original Duck operators for operating the service, so when we looked at the projections for what Pure Adventure were going to be doing for us and what it was going to cost to effectively repay Pure Adventure for their investment over the 10 years or so that we were planning to have them do the contract we looked at Elizabeth Castle revenue. In fact as you will know, there is no reason why you should know, but we have also now changed the basis for our pricing so that it separates the ferry costs from entry costs. So I think I am right in saying that Elizabeth Castle was probably one of the few areas where we did look on an isolated basis, is that fair?

Financial Director, Jersey Heritage Trust.:

We certainly looked at the revenues associated with the castle ferry and the Elizabeth Castle ticket and together an indication of what it would ... what it identified is the loss of income from no longer having access to the castle which would have been in total just under £300,000 so a significant loss in income from simply not continuing to have a castle ferry operation.

Chairman of Trustees, Jersey Heritage Trust:

I think also there might just be an occasional misconception in the public mind that somehow the old Ducks were kind of free and did not absorb public money, and then along comes Jersey Heritage Trust and spends half a million of taxpayers' money on some new amphibious vehicles. Throughout the period of operation of the Duck Jersey Heritage was paying a substantial percentage of castle income to the operators of the old Ducks, so it is not a contrast between free goods and taxpayer funded goods.

Senator B.E. Shenton:

What sort of slightly confuses me is if we go back to the earlier part of this interview where you said you do not count refurbishment as part of your grant. It would be something where you would go to E.S.C. and ask for an additional grant. So it almost implies that capital expenditure or any exceptional expenditure is separate from your grant. Yet when this opportunity ... when this happened you did not go to the Minister and say: "I could do with £500,000 to pay for the Ducks." You took it out of revenue knowing that you were effectively going to run at a substantial loss for that year by doing so. Now you would be very critical of directors of a company that ran a company in that way. Why did Jersey Heritage Trust operate in such an amateurish way, and it was very amateurish?

Chairman of Trustees, Jersey Heritage Trust:

Well, I am sorry you feel that it was amateurish. I will say again that it was effectively driven by our feeling that we had an obligation to keep access to the castle running and the fact that we felt able to sustain an overdraft.

Senator B.E. Shenton:

But you also have an obligation to operate within your grant.

Chairman of Trustees, Jersey Heritage Trust:

Yes, fair enough but ... well, we had an obligation to operate.

Senator B.E. Shenton:

Within your grant. You had an obligation as trustees not to run deficits year after year and certainly not to spend £500,000 of money that you do not have.

I think let us just pause for a second because we were running small operating deficits before the amphibious vehicles came along, simply because running the service cost more than either we could obtain from the States in grant or in terms of income we could generate for ourselves.

Senator B.E. Shenton:

Is there a general view among the trustees that the taxpayers' are a last resort and that financial prudence can somehow take second base to that?

Chairman of Trustees, Jersey Heritage Trust:

No, and I will say that there was a paragraph in the Comptroller and Auditor General's report that I strongly took exception to both personally and on behalf of the trustees because there was an implication at one point that the trustees were almost laughing behind their hands while they palmed on obligations in the knowledge that the States would have to bail them out. Now the ...

Mr. C. Swinson:

Sorry, could you refer me to the paragraph concerned and the words that I in fact used? I do not remember using the words "laughing behind your hands".

Chairman of Trustees, Jersey Heritage Trust:

I did say that they were not your words but I will get to it, do not worry.

[12:30]

The Connétable of St. Peter :

Can I just raise something while you are collectively looking, so I will just talk to the top of your heads, if that is convenient to you. You mentioned that you do not

normally run a deficit, you just have a small deficit. Well if we go back to 2005 you run a £65,000 deficit, in 2006 you run a £180,000 deficit and 2007 a £259,000 deficit. I would not call those small. To me what I would take from that is a culture of overspending and creating a deficit. That is how I would react to that table of increasing deficit overspends.

Financial Director, Jersey Heritage Trust:

As our chairman spoke to earlier there is a removal effect from the published accounts which takes account of the refurbishment of historic buildings which reduces the figure.

The Connétable of St. Peter : I accept that.

Financial Director, Jersey Heritage Trust:

But as was also touched on earlier contained within those figures are some non-cash movements, in particular depreciation on the Archive of about £104,000 per annum and also the non-cash movement in the pre-1987 debt.

The Connétable of St. Peter :

So you are using gap accounting on this side but you are not on the general overall accounts?

Financial Director, Jersey Heritage Trust:

Just to look at the unrestricted fund which is the fund which is generally regarded in terms of our revenue funding, the reported deficits in each of the years was at 2004 £154,000 and that was the year in which the corrective action was taken, i.e. to reduce the opening at the Archive, £10,000 in 2005, £1,000 in 2006, and £67,000 in 2007. So they are non-cash movements which have increased the deficits, the apparent deficit.

Could I just raise another point? Presumably now that the States have introduced gap accounting for its own accounts the point that it is making will be completely invalid?

Financial Director, Jersey Heritage Trust:

Yes, going forward. These are all figures before 2009, but I accept your point that we should be ... capital refurbishment is something that we should be able to have funding to meet.

Mr. C. Swinson:

No, no, no, my point is not that at all. My point is that the States accounts include and always did do what the States reckoned was a provision for depreciation and now includes provision for maintenance and refurbishment. So that in your normal revenue expenditure you would include all of those as other items of expenditure from the beginning of 2009 and you have always been accounting on a gap basis.

Financial Director, Jersey Heritage Trust:

From 2009 it makes no difference in terms of depreciation because most of those assets have been fully written off, as it happens, but yes, I take your point.

Senator B.E. Shenton: Did you find the ...?

Chairman of Trustees, Jersey Heritage Trust:

Yes, it is paragraph 71 and the first part of paragraph 73 which if you like I will read: "In contrast as I have explained the trustees appear to have assumed that the States would eventually be obliged to ensure that the trust could meet its financial liabilities. The result has been that an overdraft has been accumulated largely by incurring

operating deficits." Then at the beginning of 73: "The actions of the trust will thus have placed the department in the position of almost a guarantor of liabilities over whose assumption it appears to have little influence." Now as I say I took exception to that because I felt that it suggested that the trustees had embarked on this as a deliberate course of action and I have to say to you that in no meeting of trustees that I have ever participated in was there anything other than concern for how the financing of the trust and how the States money was applied. Simple as that.

Mr. M.P. Magee:

It links in a little bit with the question I asked Mario, a similar vein but not quite the same. Basically I said: "Well, ultimately what value added does the trust bring to this whole operation?" because ultimately they are putting in £2 million and picking up the residue if there is a problem. You know, it is not to say that you were trying to make a problem but it was just basically saying you have paid in approximately £1.5 million or something, there is the overdraft, the restructuring costs and all this so I think it is the same point. All we are really saying is that ultimately, and I think Mario agreed, that basically they would be there to pick up the pieces, and it is not like a trust. Again, and I do not know this exactly, but it is not like a trust where it is a situation where you have got a, I guess, duty or you would stop the flow like a limited company going back towards the States of Jersey because they own the properties and they are going to pick up the tab. So I think that is the same point. I think you are maybe taking a very ... I can understand the reasons why you are taking that quite personally but I think the point has been made a couple of times that it really is you will pick up ... the tab will be picked up by the States of Jersey. So I said to Mario: "If you want to put in service level agreements to make these guys do what you want why bother? Why do

you not just do it yourselves?" You know, and that was part of the conversation I had with him.

Chairman of Trustees, Jersey Heritage Trust:

That is a perfectly reasonable question and the question of whether something is best done by a body like Jersey Heritage or done by the States is entirely the privilege of the States to decide. Having put that job out to Jersey Heritage I think most indicators would suggest that that job has been reasonably well done, but it is like everything else, if there is not the money to do the job then the job is going to get done less well at some point. At some point we will hit a crunch. I think it is fair to say, Senator, and I should make this point, that one of the responses of trustees to the issue of deficits over the years has been to increase self-generated income. I mean as you will know, we have said this before, we generate approximately 48 per cent of our total income from our own activities. Now if you compare that to other similar organisations in the other Crown Dependencies and in the U.K. (United Kingdom) that is a very large percentage. We have gone from generating just under £1 million in 2005 to £1.7 million in 2009 from a variety of sources. Now it is not as if we have been sitting there waiting for someone to drop a shilling into our cap.

The Connétable of St. Peter :

Are you running a risk of coming up against the law of diminishing returns, because one expects that you may well have achieved some of that increase on gate fee?

Chairman of Trustees, Jersey Heritage Trust:

The Locum report I think is quite clear that there are limitations as to how much more income we can expect to raise, partly because of declining tourism numbers, partly because to paraphrase how they have put it, that Jersey is rather more densely populated with attractions than many other places. There is a lot of competition out there for the remaining visitors.

The Connétable of St. Peter :

Just coming back again to the deficits from previous years, was there an expectation under previous Ministers that should you come to an end of year where you had overspent your budget that you could go back for supplementary vote, going back to the old supply day votes and those types of things? Was that an expectation?

Chairman of Trustees, Jersey Heritage Trust: No.

Director, Jersey Heritage Trust: None at all.

Chairman of Trustees, Jersey Heritage Trust:

The only expectation was that in the cultural strategy that was adopted by the States that E.S.C. would come back in 2006 and ask for more money.

Senator B.E. Shenton:

You mentioned a while back that the last thing you wanted to be was owners and operators of the amphibious craft which you have ended up as being an operator, so a 2- part question. Have you got any plans to manage yourself out of this situation and secondly in terms of depreciation how are you treating the depreciation of those assets that you have acquired?

Chairman of Trustees, Jersey Heritage Trust:

Right. I will answer the first question and then I will ask Nick if he will dive in in response to the second part of that. The answer is no, there are no immediate plans as to how we are going to manage ourselves out of this situation because in the last 12 to 15 months all we have been trying to do is to manage ourselves away from insolvency. It has been simply a question of priorities.

Senator B.E. Shenton:

Is the cost of operating, as operator, working out to be more expensive than the old Puddle Ducks arrangement?

Chairman of Trustees, Jersey Heritage Trust:

I do not know what the old Puddle Ducks arrangement was but I am pretty sure that the new ones are more expensive, yes. But if Nick would answer depreciation?

Financial Director, Jersey Heritage Trust:

Depreciation, we were writing the assets off over a period of 10 years. We have recently changed that to 7 and we will be doing a further impairment review very soon to determine what their book value should be going forward.

Senator B.E. Shenton:

Okay, and going forward to 2011 are you fairly confident that having had £1.5 million of taxpayers' money pumped into the trust that you will be able to operate on an even keel next year?

Chairman of Trustees, Jersey Heritage Trust:

No, not at all. The programme of restructuring we have just undergone will basically take £350,000 a year out of our costs. This has been achieved at the expense of bringing greater seasonality into the opening of a number of our sites including as you well know Hampton which is now opening only on special events type days. BDO identified arguably and confirmed the operating if you like structural deficit, to use a fashionable phrase, is in the region of about £500,000 so therefore we will be £150,000 to £200,000 short. That is the answer to your question.

Senator B.E. Shenton:

How is that going to be addressed?

Chairman of Trustees, Jersey Heritage Trust:

It is my understanding that the Minister is preparing to take a proposition to the States.

Senator B.E. Shenton:

To ask for additional funding for ...?

Chairman of Trustees, Jersey Heritage Trust: And for capital.

The Connétable of St. Peter :

Just coming back to the visitor attractions, what lessons have you learned from the Marilyn exhibition?

Chairman of Trustees, Jersey Heritage Trust:

That if you can get something that good, that cheap, you are on to a winner. You know, I mean I am sorry, I do not wish to sound simple on this sort of thing, but it is a highly unusual set of circumstances to have what is clearly a world class collection of artefacts owned by somebody resident in the Island who is prepared to let us do it and then the cost of staging it et cetera is so much cheaper and it has been an absolute cracker of an exhibition. It has pulled in visitors and is still pulling them in, so one thing ... it has also confirmed something that the States statistical unit observed in their survey which is that to bring people in you need to bring them back to see something new and refreshing what you show people, bringing new things in for them to see is, especially given the percentage of local visitors that we have, crucial if you are going to get footfall. To give you another example, Constable, one of the things that we would like to do but we are not going to have the money to do, is to celebrate the anniversary of the Battle of Jersey by bringing over from the Tate the original Copley painting and get associated other paintings loaned from other institutions, some in the U.K. and some in the United States. Now just the cost of getting the Copley over is about £200,000 so it is not going to happen. That is why the Marilyn exhibition is ... I do not know if it is unique but it is certainly unusual.

The Connétable of St. Peter :

The point I am trying to make is do you see that as an opportunity of looking at that new type of entertainment, if you wish, to attract visitors to your existing premises rather than relying on the premises themselves? We have seen quite a downturn in the sort of footfall you had at Hampton and you have seen a 48 per cent increase at the museum and that is on the back of a 9 per cent reduction in visitor numbers overall to the Island so for me what I was seeking from you was an acknowledgement that putting on some form of attraction within an existing attraction does generate the footfall which would increase your gate take.

Director, Jersey Heritage Trust:

Could I just say on that we have worked very hard over the last 5 or more years to increase the attractions of the sites and I think one of the interesting things about Locum is that they show that we have pushed that towards what they regard as the limit within the constraints of the market and we have very significantly increased the attraction of the sites as far as possible and our admission income has increased pretty much by 30 per cent over that period. I think that the Chairman is right to point out that Marilyn represents a relatively unusual opportunity to do that very cost effectively. The real lesson is that change is important and most change of that value requires investment which is very difficult for us to make without access to the funds required to make that change.

So what plans have you got going forward for change?

Director, Jersey Heritage Trust:

Our plans going forward for change do partly depend on our discussion with E.S.C. about the resources available to achieve that. When we have previously discussed closing sites it is partly because we have felt that it would be better to run a smaller number of more viable attractions than a greater number of attractions which are just clinging on by their fingertips.

[12:45]

The Minister has taken a view that closing sites and knocking too big a hole in Jersey's cultural infrastructure is undesirable and therefore is looking at ways, because it is a political issue and it is not up to me to say whether they will be successful or not, at ways to achieve the investment necessary to do that.

Senator J.L. Perchard:

Just pulling it back to a more generic general discussion rather than the specifics of some of your attractions, while Mr. Jones has said that the new Minister has taken a very keen interest in your activities and particularly the financial predicament that the trust finds itself in, could we just look at your view, the trustees' view or you 3 gentlemen's view on the way that the department has managed its business with you. Do you feel over the last decade that you have been involved with the Jersey Heritage Trust that their relationship or the management of the department or the relationship with the department has been what you would expect?

Chairman of Trustees, Jersey Heritage Trust:

When you create an arm's length organisation to do stuff that you could otherwise do in house, if you like, if I can put it that way, it is I think a reasonable presumption that you manage it at arm's length. I think that has probably from the time that I have been involved characterised the relationship between Jersey Heritage and the department. It may have been that the board felt that the presence from time to time of an Assistant Minister on the Board of Trustees provided a sufficient link back into the political level and the department to ensure that it was up to speed with what was going on. That might have been a misplaced expectation. The relationship with the department has undergone a sea change since the beginning of 2009 and I think also partly based on the recommendations of the Comptroller and Auditor General will evolve into something that is a lot more of an active partnership.

Senator J.L. Perchard:

Okay, so you have avoided ... the good news is that there seems to be a very positive relationship at the moment.

Chairman of Trustees, Jersey Heritage Trust: Yes.

Senator J.L. Perchard:

But was the Board of Trustees ever ... was it ever made clear to the Board of Trustees what the Education, Sport and Culture grant was there to do? Did you ever have a directive?

Chairman of Trustees, Jersey Heritage Trust:

No, I mean the Comptroller and Auditor General I think probably quite accurately characterised that when he said that it effectively suggested that it was a payment made to

Jersey Heritage by the department in discharge of what it saw as its obligations.

Senator J.L. Perchard:

So there was never any clear directive of what was expected from you?

Chairman of Trustees, Jersey Heritage Trust:

I cannot say never but it would be interesting to see if ...

Senator J.L. Perchard:

Mr. Jones, were you ever provided with some sort of clarity over the department's longer term funding strategy to the trust?

Chairman of Trustees, Jersey Heritage Trust:

I was never particularly aware of the longer term funding strategy towards the trust.

Senator J.L. Perchard:

So the trust were ignorant of the strategy of the States?

Chairman of Trustees, Jersey Heritage Trust:

No, the States had a strategy. The States approved a cultural strategy and they gave us a big wodge of it to implement. The States also in the same document acknowledged that there was a need for funding to cover that. Sadly that funding was not forthcoming.

Senator J.L. Perchard:

So there was an assumption that funding would be forthcoming with the strategy but it was not, is that what you are saying?

Chairman of Trustees, Jersey Heritage Trust:

It is a part of the long and well hallowed tradition of pulling the ends but not the means, Senator.

Senator J.L. Perchard:

Okay, that is fine. It is important that this goes on record and I think ... I have every sympathy, I have to say, with the Jersey Heritage Trust's predicament over this and I think ... I hope my questions make that clear. Okay. The previous Minister never quite made it clear to you as to what was expected of the Jersey Heritage Trust for the monies that were being made?

Chairman of Trustees, Jersey Heritage Trust: I think that is correct. Is that fair, Jon?

Director, Jersey Heritage Trust:

When E.S.C. was formed we did develop, in fact the Heritage Trust drew up the first one, the basis of the partnership agreement. I think that the department's view at the time was that something more broad brush than our early draft would be appropriate, so I think that in their own terms the department was clear what it wanted. I think that it was probably not expressed in the detail that I think we would all like to see now.

Senator J.L. Perchard:

There was never any indication from the States of Jersey side  as  to  the  governance  arrangements  that  the  trust should adopt?

Chairman of Trustees, Jersey Heritage Trust:

In some ways I think the trustees could have been excused for believing that their governance arrangements were adequate up until the Comptroller and Auditor General's report because in 2005 the Chief Internal Auditor presented an audit of the revenue grant paid to the Jersey Heritage Trust and the Mont Orgueil project to the shadow Public Accounts Committee at the time and concluded: "No significant control weaknesses or errors had been found. Some recommendations for further

improvements to controls have been made" and they were addressed. Then in 2007 Treasury and Resources engaged Deloitte to conduct an internal audit of associated bodies which included Jersey Heritage. Deloitte were met, material was provided and although we never saw any final report or got any feedback I think it is safe to assume that had we not heard anything back that therefore there were no Augean Stables that Deloitte felt needed clearing out in Jersey Heritage. So I think while I have said that we agree with a number of the Comptroller and Auditor General's recommendations I think the sin if we committed one was that our governance arrangements had not particularly changed and could usefully be brought more into the modern age and that is what we are doing.

Senator B.E. Shenton:

There is a feeling that perhaps even E.S.C. is the wrong department to be providing the grant and that E.D.D. (Economic Development Department) would be a more appropriate department to provide the grant given the link into the tourism activities and the promotional side of the business. I mean would you perhaps have a view on this?

Chairman of Trustees, Jersey Heritage Trust:

Well, you can construct arguments around a range of possibilities there. It is certainly the case that having E.S.C. exclusively responsible for some of our activities including for financing them lets a number of other States departments off the hook. In particular if you continue to work as Jersey Archive does under the Public Records Law and is going to have to do under Freedom of Information there is a very clear example there. It is also true that a lot of what we do is relevant to economic Development and to Tourism, but that would be to ignore the management of the cultural estate that we are also charged with doing. I have suggested informally in the past that just as a skills board was formed out of Social Security, Education, Sport and Culture and Economic Development to address the future skills need of Jersey some similar triumvirate body for heritage involving Planning and Environment, Economic Development and E.S.C. could also be considered and that would then allow views to be balanced, but that is only my suggestion.

Director, Jersey Heritage Trust:

Could I just say on that I think that it is an interesting question that we have talked about. It is clearly not possible to capture heritage completely in one area of government. We do operate in a tremendously difficult environment in relationship with planning, we have an element of tourism, clearly, we have relevance with education. In the U.K. learning has been the big driver. When we spoke to the Economics Unit last year their view was that our biggest economic impact was in fact education.

Senator B.E. Shenton:

You have just laid off your 2 Education Officers, though, have you not?

Director, Jersey Heritage Trust:

Yes. None of these changes really I think are hugely desirable but they are just necessary to get us through this current stage and we are going to have to look at different ways of providing an educational service. It remains the case that learning in a general sense is a very important ...

Senator B.E. Shenton:

So having just laid off your 2 Education Officers how are you going to provide education?

Director, Jersey Heritage Trust:

What we have laid off in fact is one Education Officer who mainly worked with schools. I think learning is much more broad fronted than just working with schools. We see about 8,000 schoolchildren a year. We in fact see about 11,000 local school children outside school hours through a series of informal learning which we have obtained the capacity to do and that is in fact what has driven a significant increase in our local use. With schools we, as with other areas of outsourcing, have to experiment with different ways of doing it and we do believe that it may be possible as we have retained some of the value of the cost of that, to achieve that on a riding programme of seconded teachers, but that is new territory for us. It works a bit like that in the Isle of Man although they do have permanent educational staff to support the management process but we are going to try it, it is something new, and see where that takes us.

Senator B.E. Shenton:

You mentioned Jersey Archive which was a cost that the trust acquired. Also there were some Forts and Towers also transferred to the auspices of the trust. In your opinion was the additional funding that went with these transfers sufficient and if not why not?

Chairman of Trustees, Jersey Heritage Trust:

I think I need to disentangle 2 elements to that question if I may. The first is in relation to the position of sites, if you like. The trust has acquired no additional sites, leaving aside Forts and Towers, since the funding of the development of Mont Orgueil in 1999, I think that is correct, is it not, Jon, so nothing in the cultural estate of Jersey Heritage has changed since 1999. Forts and Towers was acquired on the basis of funding from Tourism and Development and as a discrete operation it washes its face. It does not make a fortune but it pays for itself and it brings those sites into public access which is part of what we do and part of what T.D.F. (Tourism Development Fund) wanted to do.

Senator B.E. Shenton:

Okay, so you were happy with the level of funding?

Chairman of Trustees, Jersey Heritage Trust:

In relation to Forts and Towers it works. Now if you want to talk about the Archive that is a whole different matter.

Senator B.E. Shenton:

Okay, well let us talk about the Archive then.

Chairman of Trustees, Jersey Heritage Trust:

The Archive is an interesting story inasmuch as the States decided to and funded the building of what is probably one of the top 10 archive centres in the British Isles and it handed it over to Jersey Heritage to run it and by and large I believe, based on the evaluation by the National Archive, that we run it well. It is in, in terms of physical facilities, the top 8 per cent of archives in the United Kingdom. It is in the bottom 10 per cent because of the lack of public access, because we cannot afford to run it more than 3 days a week, so we fail the national standard even though it is a world class building. The other thing, and we touched on this before, is that when the Archive was handed over no provision was made for depreciation, dilapidation, reinstatement and so forth which at some point is bound to be necessary. It is partly a problem of States accounting and it is partly a problem of willing the end but not the means.

Senator B.E. Shenton:

So what are the long term plans for the archive, then? The long term plan is a 3-day week?

Chairman of Trustees, Jersey Heritage Trust:

Well, the 3-day week was part of the cost cutting exercise that we undertook some years ago, again to try to deal with the lack of funding and the increasing deficit and that is not likely to change in the short term. I think the biggest risk is going to be the continued backlog of archiving in relation to the Public Records law and the anticipated tsunami under the Freedom of Information law. We have talked to the Minister about this, I understand the Minister does intend to develop plans and bring those to the States in due course. But I use the Archive as a good example of an entirely good decision to create a marvellous asset for the Island but not really looking forward to the implications.

Senator B.E. Shenton: Should it be under Heritage?

Chairman of Trustees, Jersey Heritage Trust:

It does not have to be. You might want to have Heritage run it but it does not have to be.

Mr. M.P. Magee:

Could I just touch on something you said earlier, Clive, just similar to that comment, was you said there was a structural deficit of £500,000 of which you have taken some difficult decisions in terms of making people redundant et cetera, and that has moved it down to £200,000 which means that probably £2.2 million or something if you got that as a grant would probably cover you, and then you said ...

Chairman of Trustees, Jersey Heritage Trust: In the absence of ...

Mr. M.P. Magee:

Then you said excluding capital, so it is that that I just wanted to pick up. Is there something because we have not seen any of the BDO report or anything like that, so we have no access to that. Is there a big capital sum in there that is going to now go to millions of pounds?

Chairman of Trustees, Jersey Heritage Trust:

This is the refurbishment of exhibits kind of capital as well as repairing buildings and that sort of thing. That is what we are talking about. I mean there is major capital which would be for example refurbishing Elizabeth Castle. Now clearly that is a very big project in cost terms as well as in effort terms and that would have to stand on its own, but to give you a much smaller example, the Story of Jersey which sits in Jersey Museum and is still a remarkably fresh looking exhibit was there on the day the museum opened and it has not changed since. Now it is hard to expect people to come back and pay another £8 to see something that they have already seen once and it would make a whole lot of sense to spend some money on refurbishing that. One of our fiscal stimulus funding bids was to refurbish Number 9 Pier Road which would have increased the exhibition space and also given us some more space for corporate hire. That sort of capital. Now ...

[13:00]

Mr. M.P. Magee:

Is that in the plan? Is it going to be ad hoc exceptional things that are going to come forward over the next few years that are going to be in addition to this £2.2 million?

Chairman of Trustees, Jersey Heritage Trust:

Yes, they would be in addition, yes, that is my understanding. I should also point out that the £2.2 million only works if we continue to generate the amount of income that we generate ourselves.

Director, Jersey Heritage Trust:

What we have done over the years with the business plan is just ask for some clarification about how applications for funding for big projects might be made in the future.

Obviously in the U.K. things like the Heritage Lottery Fund have driven the changes, transformed the landscape of museums, certainly. Here there is no such fund and we do not have access to that fund. What is important is that if any fund is ever established that the criteria are very clear. I think the Tourism Development Fund has made a significant contribution to our capital items in the past, we have discussed with E.S.C. a business stimulus package, but I think what is really needed is access to some funding which has clear cultural outcomes and in the U.K. that has been driven by learning outcomes and inclusivity in citizenship development, but I think what is needed is a debate locally about what the cultural outcomes are intended to be from cultural investment, so it is not just about tourism or just about outcomes.

Senator B.E. Shenton:

There was some criticism within the report about the level of management accounts that was available to the trustees. Is this something that has been improved upon since the publication of the report?

Chairman of Trustees, Jersey Heritage Trust:

Yes, it has. A couple of things have happened and this was part of the stuff that we have taken on board from the Comptroller and Auditor General's review. (1) We have appointed an honorary financial adviser. (2) We have recruited 3 additional trustees. We had quite a large number of vacancies on the board, mainly because we did not feel that it was sensible to go out and try to recruit trustees while we were still figuring out whether we were wading or drowning and once we had stopped drowning we went out and specifically sought to recruit people with commercial and financial experience and have got 3 excellent new trustees, 2 with financial and business experience and another with substantial human resources and business experience. We will recruit more later on in the year and working with BDO we have developed, we have recreated the Finance and Audit Committee. It has had a meeting, and it has looked at management accounts and those management accounts have been brought up to speed in consultation with BDO on an activity basis.

Senator B.E. Shenton:

So if I was a trustee I would be able to ascertain what the income and expenditure for say La Hougue Bie was in a certain month?

Chairman of Trustees, Jersey Heritage Trust: Yes, but not for 2006.

Mr. M.P. Magee:

I made a comment earlier on about your website and the fact that the last set of accounts that you could access were 2007. I assume that is partly to do with your financing issues?

Chairman of Trustees, Jersey Heritage Trust:

Yes, well the problem with the 2008 accounts was that the auditors wanted to qualify them on the principle of going concern and the problem with that was in order to effectively get them to issue qualified accounts would have cost us quite a lot more in audit fees because of the additional work they felt they would have needed to have done to produce qualified accounts and we did not think that it was worthwhile spending the money. We have had since discussions and maybe, Nick, you could explain?

Financial Director, Jersey Heritage Trust:

Yes, part of the problem of course is that if you use a big firm like E.Y. (Ernst and Young) which we do and have done in the past is that of course it is very difficult to get them to schedule their audit any time other than the

summer, but we have re-engaged them and in fact we re- engaged them in completing their final audit work for 2008 and going forward for 2009 6 weeks ago, once we had the announcements that funds would be released to enable us to complete our reconstruction and obviously we had resolved our insolvency issues towards the end of 2009. I mean the problem for audit is until we had got funding for the restructure it was unclear, or would have been unclear to them, whether or not we would remain a going concern going forward. So removing those uncertainties is a big step. The next uncertainty of course continues which is how the revenue funding gap between what is needed going forward, £2.2 million and what we have available, £2 million will be filled.

Senator B.E. Shenton:

E.Y., have they been your auditors for quite a long time or are they ...?

Financial Director, Jersey Heritage Trust:

They have, and in fact one of the first decisions by the Finance and Audit Committee is to review whether they would continue as auditors and we may find someone who is able to deliver to the timescale that we need, because we need to obviously file the annual report and accounts within 6 months of the year end and with E.Y. that is going to continue to be problematic because of their timescales.

Chairman of Trustees, Jersey Heritage Trust:

To be fair to them I mean we are not exactly their prize catch.

Senator B.E. Shenton:

No, but you should review your audits on a regular basis as you know and that should be minuted. The recommendation of the Comptroller and Auditor General was that you appoint an audit and risk committee. Has that been done?

Financial Director, Jersey Heritage Trust:

Yes, Finance and Audit Committee we have called it, yes.

Chairman of Trustees, Jersey Heritage Trust:

I should say that there are elements of governance that the Comptroller and Auditor General's report did not touch on because his report was predominantly on the financial aspects of the management of the trust and there are other governance arrangements that we had in relation to the curatorial activities of Jersey Heritage, but I just mention that in passing. It is not that governance gets low heeling(?) and we believe we are now brought up to speed on the financial side.

Senator B.E. Shenton:

You mentioned about the Education Officer being made redundant and there were a number of other redundancies caused by the financial crisis. How did you approach the reorganisation? Did you sort of start with a clean sheet of paper and sort of take a top down approach and say what we should be providing and what should we not be providing? Because at some point you obviously decided that an Education Officer was not a core activity.

Chairman of Trustees, Jersey Heritage Trust:

There was an overarching desire on the part of the department which we accepted was that we try to craft a solution that did not involve the permanent closure and/or abandonment of any of our sites, simply because obviously if you abandon it you are unlikely to get it back. That therefore indicated a number of courses of action, given the bulk of our costs are staff costs anyway, it was going to always have to be people. We were going to have to look at a couple of aspects to it. One was the

increased seasonality of the opening times of our sites in order to reduce the number of site staff we required and the second was reducing some of the activities such as education and outsourcing or preparing to outsource some of the craft activities, carpentry, design, electricians et cetera.

Senator J.L. Perchard:

Could I ask, just change tack again, I am good at doing that it seems, about the sites at the back of your very own document, the  Jersey Heritage Trust Financial Review, there is a very impressive and extensive list of sites that the Jersey Heritage Trust manage and the top of the list is of course Mont Orgeuil Castle. But browsing the list I notice 3 sites stand out as being leased or having a lease, and one of them is the Maritime Museum, another is a lease from the States of Jersey from the Jersey Archive which we have just discussed and another from the Parish of St. Clement , Le Hocq Tower. Are those the only 3 that you lease and have to pay a rental for? Could you tell us a little bit about those 3 leases and rental agreements?

Chairman of Trustees, Jersey Heritage Trust:

Well, the property affairs if you like of the cultural estate that Jersey Heritage looks after are complicated to put it mildly, and a little reminiscent of the old Irish joke: "Well, I would not start from here" but that is where we are, nevertheless. We do not own anything outright, I think it is correct to say.

Mr. M.P. Magee:

We do, it is the Sir Francis Cook Gallery.

Chairman of Trustees, Jersey Heritage Trust:

Thank you. I will ask Jon to help me out with the Le Hocq Tower. The Maritime Museum is ...

Can I just interrupt you, Clive? For example Elizabeth Castle, it says here: "Deed of Gift from the States of Jersey."

Financial Director, Jersey Heritage Trust: Yes, Deed of Gift of the Usufruct.

Senator J.L. Perchard:

Not all of them: "The Jersey Museum and through deed of Gift from the States of Jersey." No usufruct. So I am not sure, you are right, it is complicated, but you do pay rent to 3 people for sure. I am particularly interested in the Maritime Museum.

Chairman of Trustees, Jersey Heritage Trust:

Well, the Maritime Museum was opened in 1993 ... sorry 1997, my apologies and at that stage the building that it was in was leased from Harbours. The annual rental at the time of opening was about £40,000 a year and our grant was increased in that year by that amount in order to cover it. The lease had an inflation escalation in it, the grant did not, and now the rental is getting on for £90,000 a year.

Senator J.L. Perchard:

Right, so it is an accident of fate and I will say, and you may wish to endorse me, it is an accident of fate that that property comes under the curtilage of Jersey Harbours rather than Property Services?

Chairman of Trustees, Jersey Heritage Trust:

I guess that is probably true, I mean there is presumably a reason somewhere for it.

Senator J.L. Perchard:

How do you feel about taking ... receiving support from the States in one hand and paying it back with another?

Chairman of Trustees, Jersey Heritage Trust:

I think we can say that it is not an ideal arrangement.

Senator J.L. Perchard:

What is the future for the Maritime Museum if you do have an annual ... if you are paying Jersey Harbours an annual rent of £90,000?

Chairman of Trustees, Jersey Heritage Trust:

Well, the actions that we are taking by increasing the seasonality and reducing the opening hours of the Maritime Museum are to try and cut out the expense in the most heavily loss-incurring months of a museum that operates pretty much close to breakeven most of the rest of the time. So in other words to try to keep the museum open at low let cost. If the rent keeps escalating obviously there is a point where ...

Senator J.L. Perchard:

Have you considered giving notice and asking the Minister if he perhaps could move the Maritime Museum to perhaps Fort Regent?

Chairman of Trustees, Jersey Heritage Trust:

We were asked to investigate by the E.S.C. Minister whether the Maritime Museum could be relocated in Mont Orgueil, I think it was ... Elizabeth Castle, sorry, and we did do a short study on that and it was a very expensive proposition. I mean having a Maritime Museum somewhere close to the harbour seems logical and in terms of tourists and visitors having it not far from the Jersey Museum and things like that seems sensible. It is really a question I suppose of what the alternative use Harbours has for that building at any time in the future.

By the time the Planning Minister has got his evil eye on it, not a lot I should not think. Unless it is listed of course.

Senator B.E. Shenton:

I used to take my kids to the Maritime Museum an awful lot because it was a very good museum, but this is part of the problem, is it not? There is no reason for me to go back there. I mean I can memorise more or less the whole museum so ...

Chairman of Trustees, Jersey Heritage Trust:

This is the thing. Visitors who go in for the first time like it, and they think it is rather neat and it is great for their kids. But it is hard to get to you to forego £8 a hand to keep going back there if you have been there once or twice already.

Senator B.E. Shenton:

Now the Jersey Archive, the lease on Jersey Archive, who is that paid to?

Financial Director, Jersey Heritage Trust:

We do not pay a rent, but we ... we do not have a lease, it does not exist but we ... it is with Property Holdings in that particular case. The problem for us has always been that we were never given a grant to maintain and look after the buildings so of course we cannot enter into an agreement with Property Holdings because otherwise we will be building a rod for our own back going forward.

Senator B.E. Shenton:

When you say maintain and look after the buildings, if you have got no lease how does that work? I mean surely the responsibility for depreciation and maintenance remains with Property Holdings if you have a lease?