Policy and Finance Committee chairman James Dent has warned of the ‘fundamental challenges’ the island faces because of the fluctuating fortunes of the Alderney Gambling Control Commission.
Mr Dent spoke of his concerns while presenting the audited accounts for 2019 for approval by the full States.
Although the States managed to balance the books for last year, reporting a modest surplus of £48,000 on the Revenue Account – which is cash supplied by Guernsey to run the States – the state of the capital budget was less encouraging.
Alderney’s Capital Reserve is used to pay for infrastructure projects. An extension to the Royal Connaught Care Home and the purchase of a new harbour crane were two major projects which had faced slippage.
Capital Reserve cash is generated solely from the financial surpluses generated by Alderney Gambling Control Commission from the issue of licences to online gaming establishments.
Alderney’s Capital Reserve is used to pay for infrastructure projects. The extension to the Royal Connaught Care Home and the purchase of a new harbour crane were two major projects approved in 2019.
But between 2018 and 2019 income from the AGCC almost halved. In 2018 the AGCC passed £2.6million to the States of Alderney. In 2019 that was down to £1.4million – the number of licences issued having fallen by 38 per cent compared with the previous year.
The £0.19m surplus in Capital Reserve at the end of 2019 had made it appear healthy – this did not tell the full story said Mr Dent.
‘If the projects we had in the pipeline for 2019, and which had been budgeted for, had been realised we would have seen our capital reserves fall by £1.51 million. As it is, two major projects were delayed and we, instead, reported a surplus of £0.19 million. So, although our capital reserves may appear healthy, this is only because of the challenges we have faced in progressing much needed investments – and, of course, the underlying uncertainties in income continue to cause us concern.’
Mr Dent explained that as last year, the gambling industry as a whole and Alderney’s own regulatory businesses continued to come under pressure from external sources.
‘This year, I must report this pressure to be continuing, not least because of: consolidations in the gambling industry that are reducing the number of candidate operators; and uncertainty over Brexit. Having said this, and if Alderney is careful, it may well be that we can capitalise on these shifting forces. The high regulatory standards that Alderney has achieved should stand us in good stead with those operators wishing to protect their hard-won reputations and to be seen as responsible. The future impact of variations in the AGCC receipts on our spending plans, clearly, must continue to be monitored.’
Covid-19 has also of course impacted on the Island’s financial health and a revised budget for 2020 was approved by States Members in April but has not yet been made public.
Mr Dent said it took account of reduced revenue, granting of concessions and attempted to reduce expenditure in general.
Being part of Guernsey’s £650m economic recovery plan – a strategy called ‘Revive and Thrive’ was central to Alderney’s own fortunes in the wake of the pandemic.
It will focus on improvements to transport links, digital and physical infrastructure and supporting businesses and a creating a revitalised health and social care service by 2023.
Mr Dent said:
‘Our fiscal union with Guernsey is now more valuable and important than ever and we are fortunate in being able to access the common Bailiwick-held and sought funds for supporting our businesses during this first lock-down phase of the crisis. Our major challenge for this year will be a credible Recovery plan. If this means closer ties with Guernsey, so be it. Guernsey have made plans for major borrowing and have indicated that austerity should not be a feature of their Recovery Plan. We need to: run closely with Guernsey; make sure we can access the funds we need for any capital investments that recovery will require; and invest for the future of our island.’