Reaction: Hospital rejection may push up costs

Wednesday 10 January 2018

Jersey's politicians have set a budget of £466million for the new hospital, but may end up putting their hands back in taxpayers' pockets for more, following the decision to reject the planning application for the massive development.

The warning comes from Jersey's Treasury Minister who says further delays may push up the cost of the project. Reacting just after the decision was published, Senator Alan Maclean said: “I’m not surprised. It was always going to be controversial.”

Pictured: Deputy Steve Luce delivered his decision to refuse the hospital planning application with Environment Chief Executive Andy Scate yesterday.

The project planning team now have to go back to the drawing board following the independent inspector’s recommendations.

 After a lengthy two-day debate in December, the States took what they dubbed as the most important decision they would ever take, to finance the multi-million-pound project through borrowing up to £275 million and using the island’s reserves.

Following an amendment by the Constable of St John, Chris Taylor, the budget was limited up to £396 million with a £70 million contingency.

But this decision could be jeopardised if the project team’s new planning application push the agreed budget boundaries: “...there is a contingency allocation specifically to deal with recommendations from the planning inspector's report. But it will be critically important that it fits within that budget because otherwise we are talking about going back to the States. If the budget is likely to be breached, then it would be an issue that would have to go back to the States and that changes the picture,” said Senator Alan Maclean.

Pictured: The Treasury Minister has warned of the risks a delay could have on borrowing rates.

There’s also the factor of borrowing rates. The Treasury Minister has constantly warned the States that the funding debate was "time critical" due to fluctuating interest rates – which this delay could mean.

“I’ve been saying for months and months, there is risk. What Government want is certainty, how you get certainty: you lock in your borrowing at a fixed rate which is very low for the term you want to borrow for – in this case forty years. The longer we have to wait, the greater the risk there could be some changes,” explained the Treasury Minister.

He continued: “We’ve seen the volatility this year over the last 12 months in terms of borrowing rates, they’ve been up and down. We were, at the time of the States debate just before Christmas, broadly where we were earlier in the year. The longer we leave it, the greater the risk that it could become more expensive, but we just have to deal with what we have before us.”