Guernsey has agreed to lend Sark £1.5m.
The plan is for Chief Pleas to use the money to buy the island’s power station and electricity infrastructure – but that deal is far from done, even with the money being loaned from Guernsey.
Chief Pleas still has to agree the terms of the loan – but even if that happens, the owner of Sark Electricity Limited has previously said he will fight any efforts to buy his company, including compulsory purchase.
The States of Guernsey were asked to back the loan on Thursday, with Deputy Heidi Soulsby presenting the case for Policy and Resources.
She said that Sark asking Guernsey for a loan was an unusual situation, but she urged the States to say yes – with certain conditions tied to the loan.
“The (Policy and Resources) Committee is of the view that we should not find ourselves in this situation often, and steps should be taken to ensure that the relationship with Sark is resilient to face the challenges of the modern day.
“There’s been a lot of noise from certain quarters about this policy letter. Sparks have flown, as it were, various accusations have been made against various people, questions and statements about who knew or said what and when, however, really that isn’t central to this debate.
“There is generally support for the loan across the political spectrum in Sark. There are concerns around the taxation review and commission being tied to the loan, but the concept of the tax review and the commission are supported in themselves. Nothing to date has provided the basis for the Committee to change the propositions before the assembly, and certainly not following a failed motion of no confidence against Sark’s Policy and Finance Committee that was debated yesterday.”
The conditions that will be tied to the loan – if Chief Pleas agree – are that Sark will review its taxation systems and that Guernsey can see that review. Sark will also need to be involved in a Bailiwick Commission that the States of Guernsey wants to set up to review Guernsey’s relationship with both Sark and Alderney.
Chief Pleas will also have to agree to repay the loan within 20 years, and if any payments are missed, the impot (duty on alcohol and tobacco products) that Guernsey collects on Sark’s behalf will be withheld.
All but one of the deputies present in the States chamber backed the loan, with Deputy Chris Le Tissier choosing ‘ne vote pas’ (to abstain). He had said that the States need to be very careful with how they spend tax payers money.
“I note that the repayment of this loan is to be by income from the sale of electricity. Well, it seems to me that it would have to be as the Sark government only had a surplus of around £48,000 last year, up from £3,000 the previous year. So there’s no chance of any repayments for the loan coming from that source.
“Most of my criticism is down to the Policy Letter in principle. A loan of one and a half million but we don’t know exactly what the interest rate is that may be negotiated.
“If we assume 5% over 20 years, my calculator tells me that the repayments are £119,000 per annum. That’s a total repayment, including capital, of £2.375m, of which £875,000 is interest. So can Sark afford this?
“I need to be assured with evidence, not optimistic forecasts. We don’t want to have this to be turned into a gift in 20 years time. Hard financial facts are needed, not rose tinted spectacles.”
Despite Deputy Le Tissier’s reservations, all other present States members agreed to back the loan.
Chief Pleas will now have to agree the terms of the loan too, with Sark’s government expected to hold an Extraordinary Meeting to do this in the near future.
More to follow…