New Earth sale may have breached insolvency rules, director claims

by EWAN LAMB

A claim has been made that the prepackaged sale of New Earth Solutions Group, the debt-ridden waste treatment business handed a multi-million pound contract by Scottish Borders Council, may have breached insolvency rules while also scuppering a takeover bid by a Luxembourg recycling company.

The extraordinary allegation has come from John Bourbon, a former director of Isle of Man-based Premier Group and its subsidiaries which had a stake in New Earth and its allied investment fund New Earth Recycling & Renewables [Infrastructure] Ltd (NERR).

Joint liquidators currently investigating the affairs which led to the complete collapse of NERR and the loss of £171 million of investors' cash wanted to bring Mr Bourbon and fellow director Michael Richardson before a Manx court to be interviewed under oath. But a judge has rejected the request from accountancy firm Deloitte acting on behalf of the Isle of Man Financial Services Authority.

Following the court judgement Mr Bourbon - he was once head of the Isle of Man regulator of financial services - has this week given an interview to the Isle of Man's Manx Independent newspaper.

Mr Bourbon told the paper it was ‘absolutely not the case at all’ that the directors of NERR were trying to hide something.

He said: "We have always stressed that we would assist the joint liquidators with their inquiries, and we made all our electronic files available to them.

"Given the volume of documentation and the complexity of the matter the directors wished to provide responses to any questions in writing. We understand that there is in total nearly a quarter of a million documents now in the liquidator’s possession and that these can run in some cases to over one hundred pages."

Mr Bourbon added: "It became clear during the court proceedings that the liquidator had not read all these documents but had used some form of word search engine to process the information."

New Earth had involved many corporate entities and structures both in the Isle of  Man and in the UK.

The principal waste recycling operations were based in the south and south west of England with the largest operations in Avonmouth where the main Energy from Waste plant was located.

Avonmouth was the site which so impressed Borders councillors and officials during a visit in October 2014, Unfortunately the entire plant had to be shut down because of technical issues and has yet to reopen. Some of its waste conversion technology was to have been copied on a smaller scale at Easter Langlee.

These various facilities in England were, and remain, services provided to local authorities in the UK under long-term contracts for the processing of household and food waste, explained Mr Bourbon.

NESG was supposed to develop a £23 million waste treatment facility at Easter Langlee, Galashiels, for Scottish Borders Council using investment money from NERR. But the cash for the Borders project was repeatedly 'put on hold' while NESG's technology proved to be useless. The Borders project was abandoned in 2015 after the council squandered over £2.4 million for no return.

As Mr Bourbon explained in his interview this week external financing for NESG was provided by a coalition of Nord LB and the Co-operative Bank. But the former sold out its interest to the latter which subsequently called in its loan and arranged a pre-package administration process with insolvency experts Duff and Phelps in the UK.

Company documents show Duff & Phelps were appointed administrators on June 7th 2016 and executed the pre-packaged sale of the Group's businesses and assets to purchasers DM Opco Ltd for £5.9 million on June 9th.

An unnamed interested party, believed to be Global Gateways, a waste recycling business with headquarters in Luxembourg, had been in negotiations to purchase NESG's business in the first half of 2016 but withdrew in May of that year. DM Opco was to sell the assets on to Irish based Panda Green in October 2016.

Mr Bourbon told the Manx Independent: ‘We understand that investor groups are of the opinion that the pre-pack may have breached the UK Insolvency Act but are unaware of any action which the joint liquidator [of NERR] may have taken to seek restitution for investors.

"At the point at which the pre-pack was arranged the directors were still in detailed negotiations with Global Gateways for the take-over of the complete business."

He said this could have provided a recovery for investors, although they would have been the subject of a lock-in for up to 10 years.

"It is our understanding that Global Gateways were and remain interested in the acquisition of the former New Earth businesses," he added.

In a report to creditors in September 2017 NERR's joint liquidators stated: "Investors may be aware that we have received an informal approach from Ms Jane Sanders, acting on behalf of Global Gateways and a group of Independent Financial Advisors, mooting a scheme whereby Global Gateways would bring some kind of legal claim in an attempt (as previously attempted without success) to gain control of some of the former assets of the UK Trading Companies on terms and for consideration to NERR, the Company and its creditors and shareholders which have not been specified. 

"We have sought to obtain further information and supporting evidence from Ms Sanders to enable us to assess whether such a scheme and the legal claim (apparently directed against the Administrators) has any merit or is likely to benefit creditors and shareholders.

"At the date of this report, we have not received any answers or supporting evidence in response to our requests, either from Ms Sanders or Global Gateways. In the absence of such supporting evidence and having obtained specialist legal advice in the Isle of Man and United Kingdom, we are not presently convinced that there is any basis to undo the transactions with third parties who now own former assets of the UK Trading Companies or that there would be a benefit to the creditors and/or shareholders in doing so."

Borders 2017 new build housing completions hit all time low

EXCLUSIVE by DOUG COLLIE

The combined total of new houses completed by all sectors of the Borders construction industry in 2017 fell to its lowest level since official records began in 1996 with just 189 homes delivered.

That statistic from the Scottish Government's latest set of figures will be cold comfort for thousands of applicants classed as homeless or waiting on housing lists held by the region's four Registered Social Landlords [RSLs].

To set the 189 figure in context, new house totals for the region back in 1996 added up to 531 with 870 completions in 2002 and 740 in 2007. Other annual new build totals included 462 in 2015 and 325 in 2016.

Last August we reported that the number of applicants on the housing lists of the four Borders-based social landlords currently exceeded the overall total of tenancies available in the region, according to information published by the Scottish Housing Regulator.

Annual returns from Scottish Borders Housing Association (SBHA), Berwickshire Housing Association (BHA),  Eildon Housing Association and Waverley Housing Association showed there were 12,084 applicants on their combined lists with 6,039 new applications received during 2017/18. The four organisations own 11,212 houses for rent between them. But the actual total waiting for homes will be less than 12,084 as some of the applications will be duplicated across the Borders RSLs.

Meanwhile separate figures published by the Border Telegraph newspaper showed there had been 3,826 statutory homelessness cases over a six year period. In 2017/18 700 households were assessed under homelessness legislation with 590 of them considered to be homeless or threatened with homelessness, the highest number since records began.

A breakdown of the new build completions shows Borders housing associations finished just 16 houses in 2017 against a figure of 90 in 2016 and 115 in 2016. Back in the year 2000 there were 100 new homes completed by the associations.

The Government statistics also reveal an increasing trend in the number of long-term (more than six months) empty properties in the Scottish Borders. The regional total of 1,469 in 2018 is significantly higher than the 2017 figure of 1,419. The vacant property totals for 2015 and 2016 were 1,362 and 1,379 respectively.

However, the gradual withdrawal of council tax discounts on so-called second homes appears to be already having an impact in the Borders.

According to the new data there were 945 second homes across the region in 2018 compared to 1,275 in 2015 and 2,167 in 2005.

The notes accompanying the figures explain: "Second Homes: homes which are furnished and lived in for at least 25 days in a 12 month period but not as someone’s main residence. They are entitled to a council tax discount of between 10% and 50%. In 2015/16, all local authorities had opted for a 10% discount on second homes. As of April 2017, local authorities had the option to remove the council tax discount on second homes."

"Long Term Empty Properties: properties which have been empty for more than 6 months and are liable for council tax. This includes properties empty for 12 months or more and which may be subject to an additional levy of up to 100% according to local authority policy."

Higher profile for Borders Romans!

by DOUGLAS SHEPHERD

A set of ambitious and exciting proposals aimed at promoting Trimontium, the Roman frontier fort near Melrose to a much wider public have come a step closer with an application to develop and extend a local museum in a project estimated to cost £1.9 million.

The Trimontium Trust hopes to increase the number of visitors to its premises in Melrose from 3,000 a year to 12,000 when the visitor attraction is upgraded and ready for business in 2021.

A planning application lodged with Scottish Borders Council includes a report from the trust which concludes: "The new fit-for purpose museum will offer an exciting opportunity to raise the profile and reach of the Trimontium, resulting in a raised national profile.

"It is envisaged that the new museum will attract far greater numbers of visitors which will significantly increase its revenue income ensuring longevity. It will also act as a signpost for similar heritage sites across the Scottish Borders encouraging visitors to explore and visit other locations."

Trimontium was occupied by the Romans intermittently from around 80 AD  to 211 AD. The fort is thought to have been abandoned from c. 100-105 AD until c. 140 AD. At the height of the Roman occupation some 1500 soldiers and a smaller civilian population lived in the camps.The fort included an amphitheatre which could have accommodated between 1000-2000 people.

An archaeological dig conducted by Melrose solicitor James Curle in the early years of the Twentieth Century produced an outstanding collection of Roman armour, including ornate cavalry parade helmets, horse fittings including bronze saddle plates and studded leather tack, more than 240 Roman coins and significant pottery remains. 

Most of the Curle collection of artefacts are on display or in storage at the National Museum of Scotland. The extension and modernisation of facilities at the Melrose museum should facilitate many more of the finds to be displayed locally rather than in Edinburgh.

The trust claims in its documentation which accompanies the planning application that the refurbished museum will act as a hub for community archaeological projects and research projects to increase engagement, understanding and widen access to heritage.

"The Trust already prides itself on its schools engagement, guided walks and lecture series and the new museum will only extend and improve this outreach. Ultimately, the new museum will be a place to house the incredible story of the Trimontium and its native population and the modern interpretive and display technology will only strengthen and supplement this great body of work and artefacts."

The Trimontium Museum, housed within the B Listed Melrose Ormiston Institute, first opened its doors 25 years ago and is the only museum in Scotland dedicated to showcasing the history of the Roman Frontier.

According to the applicants: "Since its original installation, the exhibitions have been expanded with an array of text, images, physical pieces and children’s drawings resulting in a surplus of information that can confuse the onlooker thus being detrimental to the museum’s ethos. Although the content cannot be questioned, it is clear that there is insufficient space in what is already a confined environment.

"The project as proposed is dependent on receiving Heritage Lottery Funding. Currently, the Trust has received funding for a stage 1 development grant. It is anticipated that the HLF stage 2 will be submitted in March 2019. Construction is planned to commence in the summer 2020 and the new museum will be ready for occupation during the second quarter of 2021."

Funding secured for research at palace site

by EWAN LAMB

A historically important site on the outskirts of Ancrum village, near Jedburgh, where medieval bishops from Glasgow are thought to have occupied an extensive palace is to be the subject of further research by archaeologists.

Academics and students from Glasgow University assisted by local volunteers carried out 'digs' at the so-called Mantle Walls site in 2011 and 2012 in a bid to find evidence of the palace's existence. That exercise was deemed a success with a number of artefacts also being discovered.

Now the Ancrum and District Heritage Society [ADHS] has secured funding for a 2019 project estimated to cost £43,000. The Society is currently advertising a contract to be undertaken by an archaeology firm on the scheduled site which was previously a target for metal detectors before it was afforded protected status.

Richard Strathie, joint chair of ADHS, explained: "The society obtained scheduled monument consent to field walk the site and have found masonry, pottery, animal bones, shellfish remains, metal working remains and flints on the site.

"Large  blocks of masonry are still coming to the surface of the site and the purpose of this year's dig will be to determine if the site is suffering from erosion, locate the boundary walls of the site and carry out a geophysical survey to determine the internal walls."

Previous archaeological activity in the field where the palace is thought to have stood was supervised by Dr Adrian Moldanado, of the School of Humanities at Glasgow University.

The reports produced after the fieldwork by Dr Moldanado's team stated: "Volunteer metal detectorists recovered medieval to modern ironwork, melted lead fragments and a small collection of post-medieval coins. Two intact lead musket balls were found along with evidence these were being manufactured on site. 

"Overall, the evidence goes some way to confirming reports of a palace of the medieval bishops of Glasgow in this area, described as a ruin in the 18th century. It also provides a glimpse of the afterlife of the monument and the history of the modern village."

The researchers concluded: "This trial excavation goes a long way toward confirming Mantle Walls as the site of the supposed residence of the medieval bishops of Glasgow. Medieval material culture was found from disturbed deposits, but in situ medieval masonry survived in Trench C to a depth of 1 metre. 

"Along with the largely post-medieval metal-detected finds, this excavation also raises new and interesting questions about the afterlife of a medieval monument in the Scottish Borders. The quarrying of medieval ruins for the construction of modern villages is a common occurrence in Scotland, but there are hints that this site saw episodes of reoccupation, perhaps even by a military force as shown by the finds of musket ball manufacture. 

"Its location near the Roman Dere Street and the Battle of Ancrum Moor (1451) show that this has long been an important nodal point in the landscape, and any future work will need to bring these later events to bear on the history of this site."

And documents referring to Mantle Walls and its surroundings explain that the only historical evidence which could apply to this site is contained in 12th and 13^th century charters (the last being dated 1258) of the Bishops of Glasgow, dated from Ancrum, in which mention is made of the Bishop's house and his chapel, which was independent of the parish church. 

"Since Nether Ancrum (ie Ancrum south of the River Ale) belonged to the Bishop, and Over Ancrum (ie Ancrum north of the River Ale) belonged to the monks of Jedburgh (although this also was in the Diocese of Glasgow), it is probable that the Bishop's residence was in Nether Ancrum, and not at the site of the mid-16th century Ancrum Castle".

The local heritage society expect to release more details of the new project in March. They have a very informative website at www.adhs.co.uk

Fund director underwent "oppressive and aggressive" interview

DOUG COLLIE concludes our coverage of the New Earth Fund judgement by Isle of Man's top judge.

A former head of the Manx financial services regulator told an Isle of Man court in a written submission of a 'highly oppressive and aggressive'  interview he experienced by liquidators investigating the collapse of an investment fund of which he had been a director.

John Bourbon, who was involved in the management of the New Earth Recycling & Renewables (NERR) Infrastructure Fund along with fellow director Michael Richardson submitted a written statement outlining why he should not be subjected to oral cross-examination under oath by the joint liquidators of the failed fund (see part one of our story posted earlier today).

Deemster [judge] Andrew Corlett found in favour of the two men and rejected calls on behalf of the Financial Services Authority to have the NERR directors questioned in court.

Mr Bourbon's witness statement said he opposed an order that he submit to oral examination. He argued that if the court was minded to exercise its powers such examination should take the form of written interrogatories and written answers.

Deemster Corlett's judgement says: "He [Mr Bourbon] pointed out that he agreed to the liquidators seizing a large amount of electronic data in 2016 and he has sought to assist by way of written answers because he considers that "off the cuff" oral answers in the context of a highly detailed factual matrix involving the affairs and management of the Funds are unlikely to be particularly reliable. 

"He refers to what he regards as "a highly oppressive and aggressive interview" on 30th April 2018, and considers that it is regrettable that the liquidators did not agree to the proposal that he and Mr Richardson should continue to assist, albeit by way of written answers. He addresses the background to the Funds from their inception in 2006 to their cessation in 2016, the Funds investing directly and indirectly through special purpose vehicles in waste management/recycling facilities spread across the UK.".

One of those special vehicles was New Earth Solutions Scottish Borders, formed to carry out a multi-million pounds project for Scottish Borders Council. But the venture was an abject failure and had to be abandoned without a brick being laid after the local authority squandered £2.4 million of taxpayers' money. The NERR fund was incapable of funding the waste treatment plant planned for Easter Langlee.

 According to Mr Bourbon's statement quoted by the judge: "He considers the companies' affairs were, and are, well documented within accountants' reports, legal opinions, and other advisers' reports, detailed board minutes (board meetings were also audio recorded) and the usual emails and written board resolutions.

"In short, his position is that he is at a loss as to what information the liquidators could possibly need from Mr Richardson and himself which is not already in their possession. Every action and decision taken was documented, as was the basis upon which such decisions were made, together with details of discussions had surrounding such decisions.

"Oral examination would also be particularly oppressive because the factual detail is so complex and detailed that oral answers would likely not be reliable and accurate. He notes that asset searches have been carried out in relation to Mr Richardson and possibly himself also for the purposes, he presumes, of a claim by the liquidators, there being also the possibility of proceedings which might lead to him being disqualified to act as a director."

Mr Richardson had also provided a short witness statement dated 19th July 2018 which adopts the reasoning set out in Mr Bourbon's statement but also refers to his age (71 years old), together with various health issues from which he suffers. He also says that his memory has deteriorated significantly over recent years, this being another reason why he prefers to give written answers to further questions from the liquidators.

Joint liquidator Alex Adam, in a written submission, said: "We would like to understand from Mr Bourbon and Mr Richardson the valuation methodology applied to the Companies' assets - which showed continual growth - including the thought process behind the methodology adopted and the challenges to that process; the Companies paid, in total, an amount of approximately £28,000,000 to Premier Group (Isle of Man) Limited (PGIOM)in the period from 2009 to 2016. These fees related to agreements to act as Manager and Promoter of the Companies. Due to the fact that PGIOM was both Manager and Promoter and Mr Bourbon and Mr Richardson were officers of that entity we would wish to explore the thought process in approving the agreements and the challenges made to the level of fees being paid by the Companies and how any potential conflicts of interest were managed".

Miss Chiva Samani, counsel for Mr Bourbon and Mr Richardson, lodged  submissions including "her client's primary position is that the court should not make any form of order.The liquidators had simply failed to satisfy the "reasonable requirement" test, the burden being at all times on them. In this case, the indiscriminate nature of the application adversely affected its potency. There is no list of questions or even areas of proposed questioning. It would, as currently formulated, amount to a fishing expedition."

In his written decision, the judge said: "I agree with Miss Samani that the order sought is in the nature of a "carte blanche". The court requires to be satisfied that the liquidators have a reasonable requirement for the information.

 "I further consider that the liquidators ought to have pursued with the Respondents their offer made on 30th April 2018 to provide further written information and answers to specific questions.

"I add that I do not refuse the current application on the grounds of Mr Richardson's ill-health. In short, there is no adequate medical evidence to support his assertions and he would need to produce a more convincing case in order that I can consider this issue further, were it to arise.

"For substantially the reasons advanced by Miss Samani, I therefore dismiss the liquidators' application. As to the future, the liquidators will of course take their own legal advice. They are faced with the possibility of making written requests to Messrs Bourbon and Richardson for further written responses. 

"Alternatively they may wish to consider a further application under section 206, which sets out as part and parcel of the application as a minimum, the areas of proposed questioning. I agree with Miss Samani that the background to this application makes it clear that the liquidators are perfectly capable of setting out with more particularity the information which they seek." 

Fund directors avoid court grilling - for now

EXCLUSIVE by DOUG COLLIE

A bid by liquidators to have two company directors summoned to court to be examined under oath and explain how an offshore investment fund chosen by Scottish Borders Council lost over £170 million of 3,249 shareholders' cash has been rejected by the Isle of Man's top judge.

John Bourbon and Michael Richardson, two of the bosses of the New Earth Recycling & Renewables [NERR] Infrastructure fund which was supposed to bankroll a £23 million waste treatment plant at Galashiels, had refused to be interviewed orally by the joint liquidators of the firm.

Alex Adam and David Craine, of the accountancy firm Deloittes, are currently ploughing through over 200,000 documents, seized when the fund went down in 2016. The investigation into the loss of £171 million is being paid for by the Manx Financial Services Authority (FSA). The court papers reveal that NERR paid Premier Group, another business in which the two men held directorships, £28 million in fees for management and promotion.

In a 15-page judgment published today on the Isle of Man courts website, the judge Deemster Andrew Corlett refused the liquidators' oral examination request.

Mr Corlett explains the applications sought orders that Mr Bourbon and Mr Richardson, "shall be summoned to appear before this court to be examined on oath concerning the promotion, formation, trade, dealings and affairs of the fund".The application notes that Messrs Bourbon and Richardson have indicated that they are not prepared to provide oral answers to any questions put to them in interview and that the applicants believe that the oral examination would be in the interests of furthering the liquidation and has the potential to assist in the recovery of assets for the liquidation estate.

Mr Adam stated in his submission to the court that the primary objective of NERR and two feeder funds was to provide investors with long term growth by investing directly or indirectly in waste treatment facilities in the UK and in the development of such facilities. Two of the companies were feeder funds for the third and in turn investments were made in three companies in the UK. The companies had 3,249 investors and in total approximately £171 million was invested by them in the companies.

According to the liquidators as matters currently stand, no value will be recovered for investors, "unless opportunities for recovery are capable of being identified and successfully pursued".

Mr Adam stated that attempts were made to interview Messrs Bourbon and Richardson and a meeting was set up in the Isle of Man for 30th April 2018 to which he and others had travelled specially. Before the meeting a number of documents were made available to Miss Chiva Samani [counsel for the pair] and her clients, together with a list of topic areas for discussion.

However, at the outset of the two meetings Miss Samani made it clear that her clients would not be answering any questions but instead would rely upon a pre-prepared written response termed "the Position Paper". 

Mr Adam said he was extremely surprised and disappointed at this stance and he does not consider that Messrs Bourbon or Richardson have provided the requisite assistance to the joint liquidators. Their attitude is regarded as being in contrast to that of a Mr Fogg and a Mr Whittaker, two other directors of the companies, who have voluntarily attended and undertaken interviews with the liquidators.

Mr Jonathan Fogg and Mr David Whittaker are both former directors of New Earth Solutions Scottish Borders, the company specially formed to deliver the waste treatment facility for SBC.

The court judgment states: "It is relevant to add that the positions of Messrs Fogg and Whittaker appear to have altered significantly since they were interviewed by the liquidators in February and March 2018. According to a letter of 14th May 2018 from Reed Smith, Solicitors, they are now of the firm view that the process undergone to date has failed to ensure that they have been afforded an adequate opportunity to respond to the liquidators' enquiries with considered, full and accurate answers. The interview process is said not to be being used as a fact-finding exercise but 'has swiftly developed into something that appears to be far more accusatorial in nature'."

Mr Fogg and Mr Whittaker will continue to co-operate fully with the fact finding investigations through a written process of questions and answers, with documents and detailed questions allowing then for considered responses.

Mr Adam took the view that the Position Paper was of little assistance in understanding the affairs and the demise of the companies. The responses consisted largely of generic statements and references to documents already seen by the joint liquidators. They were not sufficiently detailed and did not progress the investigation materially or at all.

Said Mr Adam: "I do not believe, given the wide-ranging topics and detailed issues for enquiry over a long period of time, that providing questions for written answer would be viable. Such a procedure would be extremely time consuming and costly. This would not be conducive to the interests of the Companies' liquidation. 

"As the affairs of the Companies are complex, it was always anticipated that interviews with Mr Richardson and Mr Bourbon would be required. Many rounds of questions and written answers would be needed to cover ground that would be more easily and cost effectively dealt with orally. This would certainly take months to complete. All the more so, if the Position Paper is reflective of the answers that are likely to be produced by or on behalf of Mr Richardson and Mr Bourbon. 

"Further, the costs incurred by both sides in the generation of written answers would be enormous and potentially self-defeating. It would be considerably quicker and more cost effective for Mr Richardson and Mr Bourbon to attend interviews voluntarily as originally arranged with them. However, it is abundantly clear from the statements made by Ms Samani that neither Mr Richardson nor Mr Bourbon are prepared to attend and participate voluntarily in an interview and are only prepared to give written responses to specific pre-prepared questions.

 "Given the lack of real cooperation to date, Mr Craine and I have concluded that, in order to progress our investigations, it is necessary to apply for an order that Mr Richardson and Mr Bourbon be summonsed to attend upon dates to be fixed for the purposes of being examined on oath". 

TO BE CONTINUED...

Lowood utilities could cost many millions, council was told

EXCLUSIVE by DOUGLAS SHEPHERD

The expenditure required to provide electricity and other utilities to facilitate the development of up to 400 houses and business premises on the Lowood Estate - purchased last month by Scottish Borders Council - could run into many millions of pounds, according to technical reports provided for the local authority in 2017.

At a council meeting in December when councillors were told the 109-acres of land together with a collection of properties at Lowood had been acquired from the Hamilton family for £9.6 million it was claimed the estate was not worth that amount of money.

And Councillor Stuart Bell, leader of the opposition SNP group at SBC added: "We'll need to sell it all for over £11 million just to break even. Reports we have seen in private say there will also be significant infrastructure costs to develop the site."

So far the council has not published any details of the investment needed for infrastructure at Lowood/Tweedbank which is the subject of a so-called master plan. But some information regarding utilities is available in a 105-page document containing reports from several firms of consultants commissioned by SBC. To date that information does not appear to have attracted the attention of the press and media, and it has received little if any publicity.

Not Just Sheep & Rugby was particularly interested in documents from engineering consultancy K J Tait setting out a proposed utility servicing strategy for the area. One of the report indicates the cost of a new electricity sub-station for Tweedbank/Lowood would be in the region of £4 million.

Here is Taits' assessment so far as electricity provision is concerned. Note: MVA stands for mega volt amp, and if total load requirement is 1,000 volts and 5,000 amps it can be expressed as 5MVA.

"Our load study shows a total of 5MVA of new load. This is based on estimated diversified loads at each site identified for development. The rated capacity of the Tweedbank – Melrose 11kV ring is 6MVA and its current maximum load is 5MVA.

"It is anticipated that this will be inadequate for the anticipated eventual load at Tweedbank. The limited available capacity on the Tweedbank/Melrose 11kV ring will require early intervention to establish a solution to the issues outlined in this study and allow network reinforcement works to be carried out in line with the proposed timescales of the development.

"Developing any of Phases A, B and C north of the railway line at the initial stage would require a significant infrastructure extension to the existing 11kV network within Tweedbank and a budget cost of £100k should be allowed for this plus an additional £60k for each phase to establish a substation although there may be some scope for rationalisation with regard to the number of substations required. Developing phases D, E and F initially would be less expensive because of the proximity to the existing Tweedbank 11kV infrastructure but a budget cost of £60k should be allowed for each phase to establish a substation although there may be some rationalisation with regard to the number of substations required.

"Once the capacity required for the new Tweedbank Development reaches 1000kVA a new 11kV network ring will be required to be established out of Netherdale Primary Substation. This may prove problematical because of the geography and the difficulty crossing the Tweed at this location. Provision of this new 11kV network ring is budgeted at £400k and will require at least 18 months to design and construct.

"It may be necessary to establish a new Primary Substation in the Tweedbank area depending on final loads or other developments in the wider area. The budget cost for this is £4m. This may be considered as an alternative to a new 11kV ring out of Netherdale Primary substation but the high cost and potential future load growth would require careful consideration before this option was implemented."

The utilities report also looked at gas, water and telecommunications provision although no specific monetary values had been put on bringing these on site in the 2017 document.

A separate report from K J Tait examined the likely Carbon Strategy for future developments at Tweedbank.

It explained: "At present, the site at Lowood has no gas infrastructure. If no gas infrastructure could be provided to this site, solutions such as air source heat pumps or district heating would need to be investigated to pass building regulations. There is potential for the Lowood site to be constructed with a new district heating system with perhaps biomass as the heat source.

"The council would support such a network if it can be accommodated without unacceptable significant adverse impacts or effects, giving due regard to relevant environmental, community and cumulative impact considerations. In connecting to an existing network, there are none at present near to the proposed zones.

"The first of these areas, Lowood, is located to the south of the River Tweed and north west of Tweedbank railway station. The plan for this area is for the development of a minimum 250-400 dwellings which includes a provision of 25% affordable housing. Allied to the housing development, there is the expectation that ancillary retail and commercial developments are incorporated. This will provide a modest level of employment within the area. There will also need to be an investigation into impacts the development will have upon Tweedbank Primary School".

The report said ownership of the district heating system was important as the owners would be responsible for providing sufficient funding for maintenance.

"If the system deteriorates it will become inefficient and consequently may lose customers", the report warned. "The reliability will also be compromised. The infrastructure of a system may not be adopted or owned by existing utility infrastructure providers. Consequently, it is likely that a special purpose vehicle [a company] will have to be created to manage and maintain the infrastructure so that it efficiently serves, attracts and maintains customers.

"In addition, the owner of the system cannot force take up and so cannot guarantee householders or other users will sign up to the system. In terms of size, it would be likely that a biomass boiler in the region of 406kW would be able to provide a large proportion of the heating needs of the residential development. This would have the potential to mitigate around 19.8% of carbon emissions. The estimated installed cost of the network would be around £263,765 which would produce a payback of 11 years’ due to RHI payments."

Readers may recall that SBC spent a significant sum of money in 2013 on a consultant's report which outlined plans for a district heating system linked to an incinerator which would have treated Borders waste and converted it into electricity.

A special vehicle was set up to take forward the project. But the waste treatment facility never got built after councillors awarded a multi-million pound contract to an insolvent company from Dorset and an Isle of Man investment fund now under investigation by liquidators after shareholders' and investors' money "disappeared".

The special vehicle called Scottish Borders District Heating Company Ltd was dissolved in May 2016. 

Council debt mountain soars another £10 million

by DOUG COLLIE

Scottish Borders Council borrowed £10 million from the Public Works Loans Board [PWLB] the day after it finalised a £9.6 million property deal to purchase a country estate near Melrose.

Not Just Sheep & Rugby was first to report last month that the poverty stricken local authority which has repeatedly cut front line public services in recent years had assumed ownership of the remaining 109 acres of Lowood after completing negotiations with the previous owners, the Hamilton family.

But details of how the acquisition of the estate with its nine properties including a substantial residence had been financed were not included in a report published by SBC in advance of a full council meeting shortly before Christmas. It confirmed the deal had been concluded on December 6th.

This week the UK Government's Debt Management Office published a list of cash advances made to councils, police authorities and other public bodies during December 2018.

It shows that on December 7th Scottish Borders Council arranged a £10 million loan from the PWLB with the money to be spent "immediately". According to the published data SBC will pay interest of 2.74% on the loan which will be repaid over 30 years.

There has been no indication that this multi-million pound loan was needed to pay for Lowood. And we understand elected councillors are not able or willing to discuss the terms of the purchase which is designed to free up land principally for house building but also for other development purposes.

Last month's council meeting was told in a report: "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".

There have already been claims the £9.6 million paid for the estate was excessive.

Councillor Stuart Bell, leader of the opposition SNP group at SBC told the December council meeting:"The £9.6 million outlay, plus expenses, plus cost of maintaining the land and assets, plus the cost of borrowing mean we’ll need to sell it all for over £11 million just to break even.  Reports we have seen in private say there will also be significant infrastructure costs to develop the site.

"I don’t believe this site is worth £9.6 million, when you go into the detail of the terms and conditions of the sale; and that – as we know – was the opinion of the District Valuer whose assessment with vacant possession (which we will not have) was much lower than 9.6 million. Even when adjusted up for a “special assumption” she valued the land at a price lower than we are paying".

Perhaps the authority's hard-pressed council taxpayers and some councillors will be concerned at the size of the escalating debt mountain on the council's books.

The audited accounts for 2017/18 record total financial liabilities of £252.8 million as of March 2018. That figure had increased by more than £3 million over twelve months (£249.6 million at March 2017).

Latest financial information shows total borrowing - mainly from the PWLB, but also including a series of so-called LOBO loans - stood at £202.7 million, a significant increase from the 2017 figure of £196.5 million. PWLB debt on its own went up from £112.4 million to £119.6 million in the space of a year.

On top of that must be added £47 million of outstanding interest on three secondary schools built using PFI arrangements which will continue to drain money from council coffers for many years to come. SBC expects to pay £10.8 million in 2018/19 to service its overall PFI debt.

The annual charges including interest payable on loans used for capital expenditure totalled £11.68 million in 2017/18. The overall figure to service debts of more than £22 million when PFI is included equates to a sum capable of paying for a range of local government services.

If local taxpayers are expected to foot the bill for the purchase of Lowood over the next three decades then surely they are entitled to see the full details of the deal and the background which persuaded a majority of their elected representatives to spend £9.6 million of other people's hard earned money. For example what price did the District Valuer put on the Lowood land?

Unfortunately it seems every effort will be made to prevent information reaching the public domain.