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.
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