Scrutiny Panel Announces Publication of Future Hospital Funding Review
Thursday 13 April 13:15
The Corporate Services Scrutiny Panel has today published its report, which reviews the proposed funding mechanism for the future Jersey hospital. The Minister’s proposal is for a bond to be issued up to a maximum of £400 million, being repaid from returns on the Strategic Reserve.
The Panel’s review of the Treasury Minister’s proposal indicates that if a strategy of external borrowing is desired, then this is a suitable model. However, the review also draws attention to the Island finding itself potentially in the most economically unstable period for the last 70 years. With such an outlook, the Panel is concerned that only relatively minor negative changes to the States overall income, would cause such a strategy as proposed by the Minister to become financially untenable.
As such, in conjunction with their report, the Panel last week lodged an Amendment to the Proposition, setting out an alternative funding mechanism. This recommends using some of the Strategic Reserve to pay the capital cost, whilst instigating a recapitalisation mechanism. This would leave the Strategic Reserve at the same level as the Minister’s proposal, at the end of the bond repayment period.
The debate on the funding mechanism, as lodged by the Treasury Minister, commenced on the 18th and 19th of January, before being halted by a referral by States members to the Panel.
The Panel appointed two expert advisors to help evaluate the funding proposition, these being Concerto Partners LLP and Opus Corporate Finance. They have since reported back to the Panel, helping in developing the Panel’s findings.
Chairman of the Panel, Deputy John Le Fondré commented;
“We have released our report in time to give States members the ability to review our conclusions, before the debate on the 18th of April. This report, in conjunction with our 4th April Amendment, gives Members an important opportunity to decide which funding mechanism is in the best interest of the Island and future generations in this time of economic and external political uncertainty. ”