"No more Stimulus Fund construction projects," say Scrutiny

Friday 04 June 2021

Backbenchers reviewing the £50m Fiscal Stimulus Fund – an attempt to help the economy recover from the impact of covid – say that no more money should be given to construction projects.

Paid for by borrowed money, the Fund was launched last year and spilt into two £25m tranches.

Open only to Government departments, which can sponsor charity-led projects, and 'arms-length' organisations, the scheme is currently assessing the second tranche of applications.

30 projects received funding totalling £22.8m in the first tranche. 26 of them were construction related. These included a £2.2m project to refurbish the Opera House, the creation of an £1.3m agricultural museum at Hamptonne, and a £750,000 upgrade of the paddling pool at Millbrook Park.

Having reviewed the reviewed the Tranche 2 preliminary recommendations of the Fiscal Stimulus Oversight Group, which assesses applications, the Corporate Services Scrutiny Panel has voiced concern that the Fund will overstretch construction and create bottlenecks at Planning. 

This follows on from earlier concerns about the first tranche.

Details of which projects will be supported in the second round of funding, and how much of the £25m has been allocated, have yet to be revealed.

But Scrutiny, which has had an early look at an initial list, say that - when it comes to construction-based projects - enough is enough.

Pictured: Jersey Heritage-run Hamptonne in St. Lawrence is benefiting from Fiscal Stimulus Fund money.

In a recent letter to Treasury Minister Susie Pinel, the panel said: “There appears to be sufficient optimism from the construction sector, significantly benefiting from tranche one of the Fund, which would suggest that the need for additional immediate short-term fiscal stimulus measures in this area should not be a priority.

“It is clear when viewing this data that the construction industry has maintained relatively high optimism throughout the pandemic when compared to hotels, restaurants and bars, or wholesale and retail.

“The panel maintains concerns that the number of construction project bids not only focuses the Fund to that sector but also risks elongating projects due to lack of capacity, even of smaller construction firms.

“Furthermore, the panel maintains concern that certain projects which require planning permission risk missing deadlines due to the drawn-out process of receiving that approval, which will only be worsened if there are a large number of planning applications being made during 2021. 

“The panel suggests that funding is made available to the planning department in order to ensure that the resources of Government do not delay the process for either the public or private sectors.”

Signed by Corporate Services’ Chair Senator Kristina Moore, the letter adds: “The panel is somewhat surprised and disappointed that the decision was not made to directly advertise the Fund to specific elements of Jersey’s economy outside of construction following the large number of construction project bids made in Expression of Interest, in both Tranches.

“The panel would strongly recommend that no further allocations are made past those preliminary recommendations outlined by the Oversight Group.”

Pictured: The construction industry has been a big beneficiary of Fiscal Stimulus money so far ... and Scrutiny say that enough is enough.

Further concerns include that some bids to the Fund were “off the shelf” projects that should have received normal funding from the Treasury through the Government Plan, and that some culture-related projects will not miss out because a culture strategy is still being developed.

This is despite culture and sport generally faring well in the first tranche.

The panel suggests that projects should be prioritised based on strategies set out in a report from the independent Economic Council in December 2020.

These include encouraging a more entrepreneurial culture, focusing on sustainability and developing education and skills.

A Government spokesperson said: “The Fiscal Stimulus Oversight Group provided recommendations to the Minister for Treasury and Resources, based on the application criteria that projects had to be temporary, targeted and timely.

"The Oversight Group has evaluated those projects that were submitted in Tranche One and Tranche Two.

"There has been a large number of construction-related submissions in the two tranches, which has meant that a proportion of the successful bids are construction repair and maintenance projects.

Pictured: Treasury Minister Susie Pinel is content that the amount of money destined for the construction industry is proportionate.

"Based on economic advice, the Minister is content that the amount of stimulus into the construction sector is proportionate and will meet the objectives of the Fiscal Stimulus Fund.

“The Tranche Two recommendations are currently being considered by the Minister, with her taking into account comments provided by the CSSP and the Economic Recovery Political Oversight Group.

"Any remaining funds will then be considered in line with the aims set out in the original proposition.”