Sunday, 16 December 2018

Businesses booming at Borders council

DOUGLAS SHEPHERD reports on Scottish Borders Council's expanding portfolio of arms length companies

The creation of Tweedbank Lowood Ltd, a new private company which will be involved in estate and property management means there are now five separate arms length external organisations [ALEOs] in which Scottish Borders Council has either a stake or wields complete control.

As we revealed a few days ago the latest business venture by the council has involved the acquisition of the 109-acre Lowood Estate, near Melrose, for £9.6 million including "an attractive and substantial principal dwelling" and a further eight residential properties.

Following the deal which works out at £88,000 an acre, Tweedbank Lowood Ltd., wholly owned by the council, has been set up specifically to take on the responsibility of managing the shiny new multi-million pounds asset. Councillors will be told at a meeting later this week that officers from the local authority's Neighbourhood Service will take the lead on managing the estate.

So far SBC has not released any details concerning its decision to establish this latest ALEO which has as its stablemates Bridge Homes LLP, Scottish Borders Cares LLP, Scottish Borders Supports LLP and Live Borders, the limited company with charitable status responsible for delivering sport and leisure services, libraries, and promoting culture and the arts.

The lack of public information about Tweedbank Lowood Ltd. does not appear to meet Audit Scotland's recent recommendations regarding ALEOs which included a request for greater openness.

The financial watchdog's 2018 report on arms length businesses run by Scottish local authorities stated: "Councils should put in place more formal processes to demonstrate that their use of an ALEO provides Best Value. They should take steps to be more transparent about their use of ALEOs.

"Councils need to set clearer criteria for councillor or officer involvement with ALEOs. These should consider the associated risks and how conflicts of interest should be dealt with. Alternative arrangements can be made to reduce the risks of conflicts of interest. The principles of openness, integrity and accountability apply to councils in their decisions on spending public money.These apply equally to funds or other resources which are transferred to ALEOs."

Audit Scotland estimates the 130 ALEOs being run by Scotland's 32 councils spend £1.3 billion of public money between them which means it is vital that accountability is in place.

Here is how the report put it: "Councils need to better demonstrate how their use of ALEOs improves outcomes for people (by outcomes we mean the local improvements councils and their partners seek to make such as people’s health and well-being, and a better-quality environment).

"The context in which ALEOs operate is changing and cost pressures remain. Councils must have clear reasons for establishing ALEOs and consider alternatives. In doing so they should be clear on the risks involved, and work closely with local communities and businesses."

The clutch of SBC-run ALEOS have a combined spend running into many millions of pounds. Most of them were established around 2014 when councillors decided to hive off adult social care into two Limited Liability Partnerships. At the same time Bridge Homes LLP was formed to try to increase the amount of affordable housing in the region.

Latest annual accounts show Bridge Homes currently has net assets worth £6.3 million in the shape of 45 houses and flats. It failed to make any further acquisitions in 2017/18.

Scottish Borders Cares LLP which employs 550 full time equivalents who deliver adult social care registered a gross loss of £2.337 million in 2017/18 while its "sister" business Scottish Borders Supports LLP recorded a loss of £316,000.

Meanwhile Live Borders also found the financial going tough in 2017/18 after the council voted to cut its management fee by 10 per cent (£521,000). The end result was a deficit on the year of £459,000.




Friday, 14 December 2018

Statement on Lowood: no mention of financial arrangements

by EWAN LAMB

A statement issued today by Scottish Borders Council - eight days after it agreed to pay a local landowner £9.6 million for his 109-acre country estate - makes no mention of how the deal has been funded or what the financial implications will be for council taxpayers.

The local authority, in an upbeat press release more than 12 hours after Not Just Sheep & Rugby broke the story, confirmed the purchase of the Lowood Estate next door to Tweedbank village, and claimed hundreds of jobs would be created once the land is handed on to house builders and other developers.

Lowood is now in the ownership of a newly formed business, Lowood & Tweedbank Ltd., 100 per cent owned by SBC. But details of the transaction, including where the cash has come from to fund the deal is being kept a closely guarded secret at this stage. Presumably the local authority has borrowed the money.

It is understood councillors who sanctioned the multi-million pound deal [even though SBC claims to be extremely strapped for cash] along with those who may have expressed concerns and doubts at confidential meetings have been warned not to discuss the Lowood purchase in public.

According to the press release: "Potentially over 670 jobs will be created with the development of five sites in Tweedbank, including Lowood Estate, which has been purchased by Scottish Borders Council."

A report to full council on Thursday 20 December outlines a series of development plans for four sites on the Borders Innovation Park which could create 160 new jobs as well as another estimated 160 during construction.

The council statement continued: "The multi-use development of parts of Lowood Estate, acquired for £9.6million, could create an estimated 179 new jobs as well as 173 construction jobs.

Councillor Mark Rowley, Scottish Borders Council’s Executive Member for Business and Economic Development, said: “There are a series of opportunities for significant development on some key sites in Tweedbank, with many of those well progressed. This will be carried out and funded by the Council, a range of partners including Scottish Enterprise and the Scottish Government, and the private sector.

“We look forward to all these coming to fruition and seeing very substantial employment opportunities, both in the construction phase and longer term, which is extremely exciting for the whole of the Scottish Borders due to the wider economic benefits this would provide.

“In addition, by acquiring Lowood Estate the Council now controls a vital site which has significant development potential for both the public and private sector, associated employment benefits and the scope for the delivery of a large number of homes.

“The development potential of these sites has been hugely boosted by the presence of the Borders Railway. By maximising the economic impact of the railway in its current form we strengthen the case for its potential future extension to Hawick and beyond.”

A year ago SBC awarded a £400,000 contract to Edinburgh-based Turner & Townsend to prepare a Tweedbank Masterplan incorporating the land at Lowood. A range of consultants have been involved in the process which has also seen parts of the area become a so-called Simplified Planning Zone (SPZ) to speed up development without the need for planning permission.

In their statement the council explain: "The Tweedbank Masterplan identifies the potential for new residential and business space development on Lowood Estate, as part of a wider Tweedbank expansion proposal, which would seek to attract existing and new residents and businesses moving into the area, including those who would wish to use the nearby Borders Railway as a key transport mode.

"The prospectus also identifies opportunities to expand Tweedbank village and reposition the current industrial estate as a new Borders Innovation Park.


"The Tweedbank Masterplan was developed as part of the Borders Railway Blueprint Programme, and was carried out at the same time as a similar piece of work on Galashiels.  Both these masterplans present a variety of proposals to encourage people to live, learn, visit and work in the area, as well as attract inward investment through public and private investment and partnership working."

Thursday, 13 December 2018

Cash-strapped Borders council buys country estate for £9 million

EXCLUSIVE by DOUG COLLIE

Scottish Borders Council, which has repeatedly cut front line local government services in recent years after pleading poverty and laying the blame for their financial woes at the door of the Scottish Government has just completed the purchase of the Lowood Estate next to Tweedbank village for £9.6 million, Not Just Sheep & Rugby can reveal.

Details of the transaction were posted on the council's website tonight (Thursday) as part of a report which will be submitted to councillors next week by the authority's executive director Rob Dickson. The deal with Lowood's owners is for the remaining 109 acres which were in private hands.

Fifty years ago Lowood owner Constance Hamilton fought a long battle with SBC's predecessors to prevent them from taking her land for the construction of Tweedbank. Her opposition was eventually worn down by legal procedures and compulsory purchase orders.

The new report to council reveals that the remaining Lowood land is now in the ownership of a newly formed company called Lowood Tweedbank Ltd., yet another arms length company set up and wholly owned by SBC.

According to Companies House documents the sole director is David Robertson, chief financial officer at the council. The company has just one £1 share with SBC as the shareholder.

Mr Dickson's report confirms that Lowood Estate was acquired by the Council on 6 December 2018. The property comprises a compact residential estate set on the south bank of the River Tweed and extends to 44.38 hectares (109.66 acres). It includes an attractive and substantial principal dwelling and a further eight residential properties. Of the total land area approximately 15.78 hectares (38.99 acres) is parkland and a further 14.28 hectares (35.29 acres) is woodland.  .

"The Council paid £9.6 million for the estate (lower than the price cap previously agreed by Council) and is now finalising the expenses due on the purchase which will form part of the overall project cost", says the report.

"The existing Lowood Estate has several tenants occupying the residential properties. The Council has ascertained the basis of those existing agreements. Following extensive legal review these residential properties are now held by Lowood Tweedbank Ltd, a company wholly owned by SBC. 

"The tenant’s existing lease arrangements will continue and the Council will act as property manager. SBC Property officers held face to face meetings immediately in advance of acquiring the estate with each tenant. These were positive discussions with no immediate issues identified by any tenant.


"It is now possible to commence work on the Supplementary Guidance in the light of the acquisition of Lowood Estate and this will commence early in 2019 and is anticipated to be completed in the final quarter of 2020. In parallel with the development of the Supplementary Guidance an appropriate marketing and development strategy will be developed for Lowood Estate. This will require careful analysis of both desirable public and private sector potential uses and will need to ensure an appropriate balance between the two. This strategy will be heavily influenced by the emerging Supplementary Planning Guidance and is likely to be come forward to Council for approval at the same time."

The purchase of Lowood is seen as part of a so-called Tweedbank Masterplan.

According to Mr Dickson's report: "Lowood Estate - This project would cost £90 million, including the cost to purchase the land. It would potentially generate £150 million of Gross Value Added (GVA) in the Scottish Borders economy. It would create a maximum of 179 jobs and a maximum of 173 construction jobs. The project would give a benefit-to-cost ratio of £2:£1 (comparing the value of the economic benefits with the cost of the Lowood Development).

"Overall Tweedbank Masterplan. This project would cost £203m and would potentially generate £1.3 billion of GVA. It would create a maximum of 1,412 jobs and a maximum of 1,276 construction jobs. The project would give a benefit-to-cost ratio of £8:£1 (comparing the value of the economic benefits with the cost of the overall development). It is that evident from market analysis and the lack of current speculative development in the region, that without a comprehensive approach, strong Council leadership and public-sector pump priming these development opportunities are unlikely to be delivered in the immediate future."
Councillors will also be asked to consider a financial model for the entire venture. Mr Dickson writes:

"The Council has developed a detailed financial model for the costs of acquisition of the Lowood site and the wider redevelopment of Tweedbank. The model shows the costs of development of the various tranches of the Tweedbank development, including Lowood, as these are currently understood along with and the associated economic benefits and a range of scenarios associated with funding. The full development appraisal of the site is now in draft; however, initial modelling indicates that the Council’s investment in the site should be recouped through the development phases through the onward sale of the site with 179 jobs created during the construction phase and a further 173 jobs created in the post construction period, and a potential economic impact of £150 million GVA in the economy.

"The Council is currently assessing whether to opt to tax the new site; to ensure there is no future impact on the Council’s partial VAT exemption."

In a previous report to the council in November 2017 Mr Dickson claimed that the overall cost of delivering Lowood/Tweedbank was (at that time) estimated to be £58 million.

He explained that Scottish Borders expected to get £15 million from the Edinburgh and South East Scotland City Deal (against an “ask” of £26.9 million). After all financial factors were taken into account there was an estimated shortfall of £25.7 million to deliver the project.

He wrote: “The annual cost of borrowing to meet the shortfall would be £1.2 million. Commercial rents and contributions of £10.6 million are assumed as part of the funding package”.

The City Deal provision of £15 million was said to be payable over 15 years. Mr Dickson claimed: “The key risk to the council [from the City Deal] is that it will be required to front fund the net costs of capital and revenue projects taken forward within the Scottish Borders. At present the grant funding levels and mechanisms around the City Region Deal and whether any ‘payment by results’ model will apply remains subject to agreement with the UK and Scottish Governments”.

Wednesday, 12 December 2018

What's the point of a Scottish Borders Council TPO?

EXCLUSIVE by EWAN LAMB

In 2016 Scottish Borders Council committed "environmental mayhem" by chopping down 150 mature trees at Tweedbank, many of them fine specimens and which were supposed to be shielded from destruction by one of the council's own Tree Preservation Orders (TPO). It was as though the TPO did not exist.

The clear felling was said to be necessary to make way for a £6 million gallery and visitor centre to accommodate the Great Tapestry of Scotland close to the Tweedbank rail terminal. But shortly after the chainsaws had completed their needless carnage it was decided to shift the tapestry gallery to a site in the centre of Galashiels. It meant the death of many fine trees had been in vain.

Two years on and concerns are being expressed over the potential destruction of dozens more mature sycamores, limes and rowans bordering the Tweedbank estate even though they too are supposed to be protected by the same council TPO Number 39 which failed so miserably to spare their near neighbours the axe.

This time the bulldozers are set to move in and facilitate the much trumpeted multi-million pound Borders Gateway retail park complete with hotel, shops and drive through coffee houses once councillors give the project planning approval.

And suddenly many of those trees previously deemed worthy of protection have been branded virtually worthless by consultants in landscape reports which support the development.

However, misgivings at the loss of so much tree cover close to the Gateway entrance has already been voiced in written submissions linked to the planning application from developers New Land Assets, of Edinburgh.

According to an Arboricultural Assessment by Tree Consultancy: The development  would necessitate the loss of all of the trees comprising Group 2 of SBC Tree Preservation Order  No.39, and the majority of Woodland 1. These trees would either be lost to enable construction  directly, or have to be removed due to the significant changes in the existing ground levels which  would be required across the site.

Group 2 was described in the 2016 report on the Tree Preservation Order as follows: "A group of 11 individual trees comprising mostly limes with several rowans and dominated by a  large 'A' category sycamore. The limes are mostly 'B' category in satisfactory condition but a  couple are poorer and only warrant 'C' category due to their limited future potential. The rowans are  useful group components but are of negligible long-term value. 

Woodland 1 was described in the 2016 report as follows: "A large and diverse woodland belt which, due to the choice of species planted, can be readily  identified as defined areas. All have  been densely planted with the component trees being mostly narrow and drawn due to competition,  with some groups of Corsican pines starting to blow over. However, there are many  trees with the potential to develop into worthwhile long-term trees if selective thinning is carried out.  The areas described in the survey as W1/A2 and W1/A3 are generally the best with the most  individual trees likely to make good long-term specimens...."

The re-assessment carried out in July 2018 confirmed the generally poor quality of the component  trees. The better quality trees tend to be on the outer edges where availability of sunlight and reduced  competition has allowed the trees to develop fuller crowns and root systems.

And Pritchett, the Edinburgh-based planning consultancy, in a Supporting Statement lodged with the planning application explain: "The subject site whilst relatively flat has a significant amount of vegetation particularly around the periphery where there are mature trees set within embankments and other raised ground. The trees are also the subject of a Tree Preservation Order (TPO) which means that they cannot be lopped or felled without prior approval from the local authority.

"The detailed landscape appraisal considers that the tree belt is too dense and has not been actively managed over the years. There is therefore a requirement to manage the trees to enable the better 
specimens to flourish. As stated earlier it is also important to seek to maximise the development potential of this site as it is costly land to develop for whatever end use. The site configuration has therefore been carefully considered to retain a substantial landscape buffer around the majority of the site whilst allowing views into the development and beyond. 

"This will enhance the gateway access into Tweedbank and also lead visitors towards Tweedbank Station. It will also allow road users to clearly see the services that are available on the site within a high quality landscape setting. It is therefore considered that an encroachment of development into the tree belt has been fully justified. 

"It should also be noted that there is precedent for the removal of TPO trees on the industrial estate with the site clearance that the council undertook on the proposed Scottish Tapestry Museum site in the north west corner of the industrial estate which is also covered by the same TPO."

But those views are not shared by Scottish Natural Heritage nor by Liz Hall, an ecology officer with the council.

In her written observations, Ms Hall says: "I note the woodland has a TPO. I do not agree that the trees have a negligible ecological value. The proposals for the site do not appear to offer like for like compensation or enhancement in terms of biodiversity, in conflict with [Scottish Borders Council's] Local Development Plan policy".

From an ecological perspective, Ms Hall says her recommendation would be to avoid removal of trees on site.

Her arguments are echoed by Stuart Macpherson, Scottish Natural Heritage's Operations Officer for the South of Scotland.

He has told SBC: "The site currently has a thick wooded boundary, making it very representative of the surrounding landscape. This wooded landscaping helps to screen and soften the view of buildings within Tweedbank Industrial Estate from the main road and when seen from elevated positions within the NSA (National Scenic Area).

"This woodland is protected by a TPO and its landscaping and screening qualities are important in the local setting. The proposal is to remove virtually all of this woodland and open up views into the application site. Whilst accepting the economic value of the proposed development, SNH would like to see further consideration given to maintaining a landscape structure around the proposal that fits with the traditions of the NSA. 

"This will ensure a continuity of landscape between the NSA, the proposal site and the wider countryside. There is a danger of setting a precedent, especially where loss of a TPO is concerned, that erodes the wooded character in and around Tweedbank. Woodland provides an important sense of place for the community, which will be damaged by piecemeal removal. We would also highlight the local biodiversity benefits of this woodland, on its own merits and as part of the wider wooded landscape of Tweedbank and Darnick.

"In this regard, Scottish Borders Council should consider the Scottish Government’s Control of Woodland Removal policy. This policy aims to maintain woodlands as an important aspect of the Scottish landscape, and places a presumption against the felling of woodland to facilitate development. Where woodland is felled, compensatory planting is required.

"SNH is not necessarily seeking retention of the existing woodland. However, if woodland is felled it is important to maintain its landscape qualities in any subsequent scheme: continuity of landscape; filtering and screening views of the industrial estate; biodiversity; sense of place. Any new landscape should adopt and reflect these principles, and compensatory planting should ideally benefit Tweedbank and Darnick directly."

So will council planning officers recommend retention of the trees or will yet another Borders local authority TPO not be worth the paper it's printed on?

Sunday, 2 December 2018

'Disastrous' Tweed salmon catches down 25% in 2018

by DOUGLAS SHEPHERD

The annual hauls of salmon and sea trout by anglers on the world famous River Tweed fishing beats fell to their lowest levels for decades this year, fuelling even greater levels of concern for the future of the multi-million pound industry.

First estimates for the 2018 fishing season which ended on November 30th suggest a total of 5,580 salmon were taken by rod with 763 sea trout hooked. The figures are said to be 90% accurate at this stage with minor adjustments expected before official statistics are published by the River Tweed Commissioners in their annual report.

The figures compare very unfavourably even with last year's disappointing statistics of 7,003 salmon and 2,594 sea trout. And the figures for the five years before 2017 read as follows: 2016 - 7,680 and 1,671; 2015 - 8,091 and 2,323; 2014 - 7,767 and 2,050; 2013 - 20,316 and 4,608; 2012 - 14,556 and 3,314.

Factors which have been advanced as reasons for this year's devastatingly low catches include the so-called Beast from the East snowstorms in the early part of the year, the extreme drought during the summer, the continuing operation of the North-east Drift Net Fishery off Northumberland which is blamed for intercepting salmon and sea trout heading for Scottish rivers, and the activities of fish eating birds, notably goosanders and cormorants.

The poor prospects of catching fish has meant many stretches of the Tweed and its tributaries have lain unbooked by angling parties for significant periods of the season.

In an end-of-season report on its website, Fishpal Ltd., the Tweed angling business based near Kelso, declares: " Well that's the 2018 Salmon and Sea Trout fishing season over, quite a few will say finally as it has been a very tough one all round.

"The beast from the east played havoc in the early part of the spring, then the long hot drought which seemed to last forever. These conditions by no means helped the catches this season, but it's undeniable that there was a severe lack of fish in the river system, especially fresh fish in the autumn with the majority of fish caught been coloured.

"What does the future hold? Is it a cycle? Is it something more drastic? Predation is a huge concern on the river and recent report from the RTC says during the latest count the numbers of goosanders has fallen. Down with us this season we haven't caught a single grayling and very few trout compared to recent years - would appear they have been gobbled up or went on their holidays!"

In a long running war of words, representatives of the proprietors of the prime Tweed fishing beats have kept up pressure on the UK Government to close down the 150-year-old drift net fishery, accusing the licence holders operating out of ports in the north-east of England of "taking our fish".

In March this year it looked as though the netsmen had finally been "defeated" only to receive a last minute reprieve.

Borders Tory MSP Rachael Hamilton told local newspapers in the spring that she had received confirmation that the Conservative UK Government intended closing all drift-net salmon fisheries in 2018.

In a letter to Mrs Hamilton her party in government also confirmed its intention to stop the take of salmon from the majority of the remaining net fisheries by 2019. Genetic testing had apparently revealed over 70 per cent of fish caught by the North East drift-net fishery were of Scottish origin, the nets preventing fish reaching their home rivers.

The MSP for Ettrick, Roxburgh and Berwickshire, said: “I welcome the UK Government’s commitment to close all drift-net salmon fisheries in 2018. This action will help increase salmon stocks in the River Tweed. The UK Government is committed to keeping our Scottish rivers healthy with strong salmon stocks.” 

But it turned out to be one of the shortest "victories" in fishing's political history.

In April this year, the small number of drift netters who remain in northeast England won a significant victory following a strong campaign of opposition on their behalf by the National Fishermen's Federation with the announcement that proposals by the Environment Agency (EA) and DEFRA to close the traditional drift-net fishery with immediate effect, and severely curtail inshore beach fisheries for salmon and sea trout, would not be implemented for the 2018 season. 

According to a recent article in Fishing News there is almost certain to be a renewed effort to have the inshore fisheries shut down in 2019. And pressure seems certain to grow following the latest catastrophic drop in Tweed catches.

But there will be stiff resistance from across the Border. The Fishing News reported: "The drift netters argue they are just a convenient scapegoat. They say their small-scale, tightly controlled and limited fishery is insignificant when viewed against the huge area of the North Sea and out into the North Atlantic, and against the loss of fish to the constantly increasing number of predatory seals that kill unknown numbers of salmon and sea trout along the coast and in river estuaries annually.

"Further evidence that far more significant natural forces are affecting Atlantic salmon stocks comes from a recent report that argues powerfully that exploding mackerel stocks are eating salmon smolts and depriving them of food".

" The recreational salmon angling sector has applied pressure on the commercial salmon fishery for decades, maintaining that netsmen are one of the main reasons for reducing numbers of migratory fish – salmon and sea trout – returning to their rivers of birth to spawn.

"The angling lobby is feeding ministers the line that catches by netsmen are extremely high in the fishery this year, given the lower than average levels of water in the rivers because of the unusually hot weather experienced in June and July. This opportunist claim is completely fake news, as conclusively shown by the netsmen’s daily catch returns".

In 2017 the North East Fishery took 9,157 salmon (2016 18,824). Environment Agency figures include a five-year average of 11,930 salmon. Meanwhile sea trout returns for the two years were 35,148 and 38,863 respectively with a five year average of 41,569.

The Fishing News article warned: "Fishermen say the closure of the salmon and sea trout net fisheries  would make their whole operation unviable.The almost inevitable result would be further fleet downsizing and job losses in coastal communities where alternative forms of employment are few and far between."

Thursday, 29 November 2018

The rich rewards for failure

CONTRIBUTED

It was fascinating, sickening and frankly heart-breaking to learn this week that the four former Tweeddale Press [TP] newspaper titles which circulate throughout the Scottish Borders had been valued by an administrator who is currently cleaning up the mess within publishers Johnston Press at just £102,000.

Each one of the former independent groups of weeklies [and dailies] which had fallen under the control of the Johnston empire during the last 30 years or so has been given a price tag, apparently at 'fire sale' rates although for now each of the titles has been swallowed up by a newly formed business named JPI Media.

The complete financial collapse of Johnston Press with debts of £220 million and a pension fund it has been forced to hand over to others is one of the biggest disasters in the recent history of the British newspaper industry.

But back to the Scottish Borders where the scale of the catastrophe can be graphically illustrated in terms of hard cash.

The generations who used to rush to get their Southern Reporter, Berwickshire News, Selkirk Saturday Advertiser and their more recent stablemate Hawick News may have largely deserted these bastions of local democracy after watching each of them starved of investment and denied adequate levels of of staff by their 'new' overlords.

For it is less than 20 years - December 31st 1999 to be precise - that Johnston Press was happy to pay £7,799,765 to get their hands on those Tweeddale Press titles currently valued at £102,000. A year earlier The Hawick News had been snapped up by North-east Press - soon to become another Johnston acquisition - for a very respectable £875,000.

Readers were promised investment for the TP Group with expansion on the editorial front. In fact the reason cited by the Smail family for selling their highly respected [and profitable] weeklies  to Johnston was "the firm could no longer compete when it came to investing in titles."

Instead Johnston soon welched on its pledge. It began to close local newspaper offices in most Borders towns while journalists and other members of staff were saddled with heavier workloads as employment levels were cut repeatedly to save money. Those who are left perform miracles each week just to get the papers out in a scenario which exists throughout Johnston offices nationwide.

The first 'threat' to the Johnston newspapers was probably delivered in 2000 when, after trumpeting a £65 million profit for the previous year, the bosses announced they would be investing heavily in "new media" having launched their first website in 1997.

According to the Johnston executives in their 2000 annual report: "The new media represents an exciting and rapidly growing opportunity. We believe we are strongly placed to resist any threat these new developments may pose to our traditional publishing activities".

So how did that forecast work out?

Well, so far as the Tweeddale Press is concerned failures by their proprietors since the takeover mean the Borders titles appear to be worth a miserable 1.5 cent when compared to their valuation for sale by previous owners back in 1999. However, even £102,000 looks like a small fortune compared to The Galloway Gazette where two titles have been valued at £4,000.

Apparently Scotsman Publications whose papers still sell in small numbers in this part of the world has been awarded a £4 million value by the administrator having been bought for £160 million in December 2005 from publisher Andrew Neil, of Press Holdings Group.

While hundreds of skilful, long serving and often dedicated reporters, photographers and sub-editors in Johnston subsidiaries throughout the land have had their employment terminated by redundancy, the rewards for those running the show seem to have been kept firmly in place as each annual report clearly shows.

Chief Executive Officer (CEO) Ashley Highfield, whose tenure stretched from 2011 until earlier this year presided over much of the so-called digital revolution as well as the more recent staff culls. At the same time newspapers, almost without exception, suffered significant losses of circulation and advertising revenue.

In 2016 and 2017 Johnston Press spent a total of £14.5 million on redundancy packages for hundreds of workers. Indeed the company told shareholders in 2017: "The need to invest in cost reduction limits the company's ability to invest in the business. The company's ability to invest in new digital product development is limited. This hinders its ability to stay competitive". Sound familiar?

However, the last annual report (for 2017) before the collapse into administration included a detailed  section on the work of the Remuneration Committee which recommends the levels of executive pay. It says the committee made "a careful assessment of performance": presumably after the annual loss of £29.6 million.

The report continues: "Over the period bonuses of 58% and 48.3% of salary were earned by the CEO and CFO (Chief Financial Officer David King)". This level of bonus was approved by the committee, and subsequently by shareholders at a desperate time for the business even though the two directors concerned voluntarily agreed the bonuses be deferred until the company had "a sound financial base". Some hope!

Mr Highfield's 2017 earnings, including deferred payments, totalled £808,000 (2016 total £556,000) made up of of a basic salary of £430,000, £11,000 in benefits - health insurance, car allowance,, telephone and life assurance - a bonus of £249,000 plus pension benefits of £115,000. Mr King's earnings in 2017, including deferred payments, totalled £452,000 (2016 £319,000).

It means their respective remunerations increased by 45% and 41% over 2016 levels at a time when the flagship Johnston Press was about to hit the rocks and be crippled fatally below the waterline.

Now it is to be hoped at least some of the smaller ships which make up the fleet, including Tweeddale Press, manage to sail into calmer waters after the financial storms that have buffeted them all in recent times.









Monday, 26 November 2018

Directors of council's chosen investment fund raked in over £1 million

EXCLUSIVE by EWAN LAMB

A director of the offshore investment fund which was lined up by Scottish Borders Council (SBC) to finance a £23 million waste treatment plant received £907,000 in fees during his tenure even though the fund itself turned out to be worthless and could not deliver the vital Borders infrastructure project.

This latest revelation concerning the Isle of Man-based New Earth Recycling & Renewables [Infrastructure] fund (NERR) emerged during a Manx court hearing last Thursday when a judge was asked to order former director Michael Richardson and his colleague John Bourbon - Mr Bourbon was paid £138,000 for his involvement with NERR - to be summoned and examined under oath.

Both men have declined requests from Deloitte's, the NERR liquidators, to be interviewed as part of the winding up process of the fund and two of its feeder entities. Premier Investment Opportunities Fund and Eclipse Investment Fund.

The highly complicated liquidation involving the examination of more than 200,000 documents has been ongoing since 2016 - a year after SBC terminated its failed contract with NERR's business partners New Earth Solutions Group. The investigation into NERR's affairs is being paid for by the Isle of Man Financial Services Authority (IOMFSA).

Ironically, Mr Bourbon was once Head of Supervision at the Isle of Man Financial Supervision Commission, IOMFSA's predecessor, then served as Managing Director of the Cayman Islands Monetary Authority from 2000 until 2002. He has previously accused the Manx regulators of mounting a witch-hunt against the managers of the ill-fated fund.


It is understood that the application in the IOM High Court to have both men examined on oath is the first such application to be made in the island.

A report of the court proceedings by Isle of Man newspapers says Deemster (judge) Andrew Corlett was told 3,000 investors had placed a total of £171 million in the NERR fund. But the investigation had so far failed to establish what had happened to the money.

"Last audited accounts at the end of 2014 showed the companies had a net asset value of £200 million. But despite that massive investment, the group of companies had failed and the assets are now zero or near zero, with no likelihood of any return to the investors", the court heard.

Advocate Rob Long, for the liquidators, told the court that neither Mr Bourbon nor Mr Richardson are subject to any proposed proceedings and currently there was no intention to bring proceedings against them.

‘In this case there are no proceedings afoot. They are currently not litigation targets although that may change,’ he said.

Although the liquidators had in excess of 200,000 documents relating to the companies’ failure Mr Long said these only told part of the story.

He said the liquidators wanted to know the ‘thought processes’ of the key individuals in relation to the companies’ promotions, affairs and dealings. ‘There is no other means of obtaining this information. It’s not in the documents,’ he said.

But the advocate for the three companies said the liquidators had failed to demonstrate a reasonable requirement for the information sought in the order.

She said this was an ‘indiscriminate’ application that was ‘carte blanche’ in its scope.

In another interesting twist Isle of Man Newspapers has requested that Deemster Corlett makes a ruling on whether the examination, if it is approved, should be held in public, arguing it is in the public interest to have any proceedings conducted in open court.

Mr Long said the hearing would be held in private, although the section of the appropriate Companies Act used does not specify this. It is for the Deemster to decide one way or the other.

Judgement in the case has been reserved.

When SBC finally ditched New Earth Solutions Group and NERR after squandering at least £2.4 million of local taxpayers' cash the reasons given in a council press release were "project specific issues in terms of technology and funding".

It is only now, three years out from the abandonment of the disastrous venture that the public is beginning to learn why the funding aspect of the rotten deal collapsed. Perhaps there will be further disclosures to come as the liquidators continue their work.

The Borders local authority has repeatedly claimed that it carried out adequate "safety checks" on New Earth Solutions and its financial backers before and after it got into bed with them.

Yet it has since emerged that it was investors' cash from NERR which was used to keep New Earth Solutions from going under during the four years the contract contract was 'live' and long before the Group became officially insolvent. In fact the 'waste management specialists' handed a multi-million pounds contract by SBC owed NERR £39 million by the time both partners went bust.

Disgruntled investors believe NERR's links with Scottish Borders Council and other local authorities gave the fund credibility and assisted those financial advisers who promoted it even though NERR was unregulated and 'high risk' .

Unfortunately all efforts to have an independent investigation carried out into SBC's role in the Easter Langlee waste project debacle have fallen on deaf ears.