Scourge of child poverty remains significant in Borders

by DOUG COLLIE

The level of child poverty in the Scottish Borders continues to be challenging despite the best efforts of local agencies to tackle the issue with a significant number of youngsters going to bed feeling hungry, and "unrelenting demands" on the region's homelessness service.

A new report assembled by Scottish Borders Council shows the number of children living in low income families has risen from 2,740 in 2021 to 3,690 in 2023, an increase of almost 35 per cent. However, the overall percentage in the Borders (19.7% of all children) remains lower than the Scottish average of 21.3%. When housing costs are added into the equation the Borders figure goes up to 23%.

And, according to the report: "8.2% of our children in Primary 7 to Secondary 6 state that they always or often go to bed feeling hungry".

The council ward with the highest levels of child poverty is Hawick and Denholm, which contains one of the region’s areas of highest Multiple Deprivation. Selkirkshire and Galashiels and District also contain deprived areas, indicating that child poverty is strongly linked with deprivation, as is to be expected.

"Apart from having the highest levels of relative child poverty BHC (before housing costs), Hawick and Denholm has also seen the biggest increase in numbers of families living with child poverty since the previous year. Interestingly, the other Hawick ward [Hawick and Hermitage] has seen a decrease in child poverty, showing that there is a complex situation with a lot of inequality within the town."

A number of initiatives have been introduced in a bid to reverse the current trend. As the report points out, significant Scottish Borders Council budgets and funding are attributed to tackling child poverty locally. 

Funding in 2024/25 includes the following sums: Crisis grants £156,000; School clothing grants £390,800; Free sanitary products in schools £44,000; Free sanitary products in public bodies £50,000; Educational Maintenance Allowance £237,070; Pupil Equity Funding £1,919,000; Strategic Equity Fund £448,171; Care experienced Children and Young People Fund £159,250; Whole Family Wellbeing Fund £661,000 - Total - £4,065,291. 

A section of the report covering housing says that over the past 18 months the council's homeless service has been experiencing unrelenting demand from applicants – particularly from the private rented sector. This has increased the demand for temporary accommodation. 

"There is a shortage of new build private supply, few starter and smaller homes for purchasing or downsizing and little opportunity for family accommodation. The lack of supply is increasing the demand on the service.

"The demand for homes over the past few years has increased significant with many contributing factors: Supply of homes cannot keep pace with demand; There has been a significant increase in property values, at a rate well above national and local wage inflation; There is a smaller percentage of housing stock available as socially rented accommodation; Construction prices have increased significantly since 2021".

The average number of bids per available social rented property has doubled over the last 5 years – particularly in large family homes. For example, Scottish Borders Housing Association‘s new homes in Kelso this year had 100 bids for five family size homes.

And the report warns: "Despite successful delivery of the Strategic Housing Investment Programme over recent years and delivery of affordable housing, it remains challenging to deliver new build social rented stock at the necessary volume. The Borders is faced with high construction costs, often significant infrastructure requirements, labour and contractor shortages and increasing finance costs. The Affordable Housing Supply Programme Funding allocation for the Borders has been reduced by 26% for 2024/2025 which will have a detrimental impact on the delivery of new affordable homes. 

The number of Borders households likely to be classed as suffering fuel poverty makes for grim reading.

According to the council: "The 2021 and 2022 Scottish updates on fuel poverty - the 2021 update found that 19.6% of households in Scotland were estimated to be in fuel poverty, but that was very likely to be an underestimate. The initial observations from the 2022 data show that the fuel poverty rate has risen to 31% in Scotland, which is a more credible increase on the 24.6% 2019 revised figure for Scotland. We would expect the rate in Scottish Borders to be about 4 percentage points above the Scottish average, meaning that it could now be as high as 35% in Scottish Borders."

On a more positive note, the report sets out a number of success stories involving a Financial Inclusion Team which secured more than £1 million in financial gains for Borders families in 2023/24. Here are four of the case studies outlined in the report.

Case one - A referral was received for a young person after concerns were raised by a key worker. This led to a conversation with their parent who was struggling to support the young person and their two siblings. After a benefits check was completed, Best Start Grant, Best Start Foods, Council Tax Reductions, Child Benefit, Universal Credit and Carers Allowance were awarded. The young person was awarded Educational Maintenance Allowance and the support provided an increase of over £7,000 per year in additional household income. 

Case two - A single parent lived with their teenage child in a poorly maintained private let. They had not worked for over eight years and on being offered a job were concerned about losing their benefits. They received support from the team to apply for Universal Credit, Scottish Child Payment and Discretionary Housing Payment which meant they would be over £100 per week better off. Once the parent settled into the post, they received advice which led to them working overtime and starting a second job. They were also signposted to support regarding their tenancy which led to several repairs being carried out on the property. 

Case three - A single disabled mother with two disabled children was living in a very rural area in the Borders. A Health Visitor immediately recognised that the family were living in extreme poverty and had never claimed any benefits so contacted the Early Years Financial Inclusion team. A full benefits package was immediately arranged including many disability elements for both the mother and the children. In the end this amounted to an increase in income of over £20,000 a year and the family were able to enjoy a much more fulfilling life. 

Case four - A single parent with two children had their benefits cancelled by HMRC and ordered to pay back over £30,000. Her physical and mental health deteriorated, and she was encouraged by her Health Visitor to get assistance. The Early Years Financial Inclusion team provided support, and the benefits were eventually reinstated resulting in the overpayment being cleared and a backdated payment of over £8,000 being made. 

Move to kill off company at centre of alleged fraud

by LESTER CROSS

As a two-year Police Scotland fraud investigation continues into allegations levelled at bankrupt businessman Martin Frost, Companies House has announced its intention to dissolve a family firm said to have been used to divert hundreds of thousands of pounds of Avocet shareholders' cash for his personal benefit.

Mr Frost was the sole director of Loch Lomond Heritage (LLH) Ltd. between November 2017 and July 2019 when insolvency experts claim more than 70 separate transfers of money totalling over £220,000 were made from his Director's Loan Account [DLA] at Avocet to an account bearing the name Scottish Academic Press.

In a set of annual accounts for LLH up to June 2019 which were signed off by Mr Frost in 2021 he states: "The assets of Scottish Academic Press [SAP] were slowly incorporated which coincided with a gradual switch of assets out of Scotland into Yorkshire. Such incorporation led to a significant reduction in Martin Frost's indebtedness".

A ledger of the DLA records, submitted as evidence in a civil action raised against Mr Frost and his wife in a Leeds court last year, showed the account was overdrawn by £850,747 when it was closed in late 2019. The promoters of the action wrote: "It is considered that this figure underestimates the extent of your indebtedness to the Company (Omega)".

But, according to Mr Frost's evidence in the case brought by the joint liquidators of Avocet Infinite PLC (now called Omega Infinite) the DLA document had been 'fabricated'. He has repeatedly denied the Avocet 'wonder fuel additive' venture was a Ponzi scheme, and has refuted claims by investors of fraud and embezzlement. 

The Leeds action sought possession of two Scarborough flats purchased by Mr Frost for £425,000, again allegedly using company funds.

A Statement of Claim which was sent to Mr Frost by the liquidators' lawyer seeking repayment of £222,872 in transfers made to LLH from the DLA asserted those payments were preferences - payments by an insolvent company to a particular creditor, putting that creditor into a more favourable financial position.

"We consider that as well as being preferences, the payments to LLH were made in breach of your duties as a director of the Company".

The liquidators' representative also wrote in the letter to Mr Frost: "Notwithstanding the claimed transfer of the business and brand of SAP, our clients believe that payments by the Company to SAP recorded in the DLA ledger were payments which were made to you personally.

"Our clients consider that each of the payments to SAP recorded in the ledger of your DLA have been correctly debited from your DLA as they are payments to you personally and for your personal benefit."

A notice to be officially published tomorrow (Tuesday) by the Companies Registrar, indicates that the regulator will strike off and dissolve Loch Lomond Heritage Ltd. 'unless cause is shown to the contrary'. 

No reason is publicly cited for the action, but under the rules all of the company's assets will belong to the Crown. The last published accounts for LLH showed total assets less current liabilities of £263,995. 

Not Just Sheep & Rugby has been told there could be objections lodged against the dissolution of LLH by 'interested parties'.

Meanwhile, we contacted Police Scotland and requested a statement regarding their investigation into the complaints of alleged fraud which were first lodged in March 2022. We asked what stage had the investigation reached, and when it was likely to be concluded. 

A Police Scotland spokesperson told us: "“Police Scotland received information in relation to an allegation of fraud and enquiries into the matter are ongoing.”

Top egg producer's Brexit plea to UK Government

by EWAN LAMB

The directors of Scotland's largest egg production business are urging UK Government ministers to address the agricultural industry's growing labour supply issues caused by the adverse impact of Brexit as the company faces significant costs in sourcing staff from non-European Union countries.

But the remarkable success story of Peeblesshire-based Glenrath Farms - the firm distributes over a million eggs a day to retail outlets - continues unabated with founding chairman Sir John Campbell, who turned 90 in April, still firmly at the helm.

Glenrath's annual report reveals a final profit of £6.9 million in the year to May 2023 compared to £1.633 million the previous year.

The business prides itself on being family owned since 1959 when John Campbell and his wife Cathy (now Lady Catherine) moved into Glenrath Farm, near the village of Lamancha to raise sheep and cattle. Then, Mrs Campbell began to rear hens and delivered their eggs door-to-door to local customers.

Today the Glenrath group owns 5,000 acres of land, and employs 200 people, including three generations of the Campbell family. Sir John was knighted in 2017 for services to farming and entrepreneurship. The company's wage bill last year topped £5.6 million.

The so-called strategic report which is included with the annual accounts, has a short section outlining the impact of Brexit.

It says: "We import feed, plant and machinery regularly from Europe. Brexit has increased the risk that not enough can be purchased or that price increases will not be reflected in sales prices, thus reducing profits. Risks have been further increased with adverse currency exchange rates.

"Additionally, Brexit's adverse impact on the agricultural labour market intensifies: we are mitigating this by sourcing staff from non-EU countries but costs are significant. The UK Government must address these labour supply issues as a matter of urgency."

The Glenrath website shows the business is currently attempting to recruit new staff. The site says: "You can choose from an array of jobs that offer you an opportunity to develop your career". Jobs outlined include logistics/drivers, packing station operatives, administrators, engineers, and poultry personnel.

In his chairman's report, Sir John says the first few months of the financial year had been some of the most difficult in the history of Glenrath, with an over-supply of all egg types in the UK and Europe which kept prices historically low.

He adds: "This was compounded by increasing energy and labour costs which saw the company make record monthly losses. However, the economic fall-out created by the war in Ukraine, which led to a rapid doubling of wheat prices and consequent depopulation of poultry units that were facing vast increases in feed costs, resulted in a fall of some seven million birds in the UK hen population.

"At the same time Avian influenza was becoming ever more of a challenge with over one million hens being culled. The knock-on effect was a significantly decreased supply of eggs leading to increasing egg prices".

Sir John explains that despite the initial cost challenges and uncertain outlook early in the year, the Glenrath board took the decision to maintain production and continue investing in improved production facilities.

"Those decisions were proven correct with a return to profitability as the year progressed and I am pleased to report a final profit for the year of £6,900,951".

But he goes on to warn that Glenrath still faces many challenges going forward. The biggest of these is Avian influenza which continues to linger across the UK and Europe. with wild birds acting as a reservoir for infection which is difficult to control.

"We have significantly increased our biosecurity and associated training for our staff. We anticipate that vaccination, which has been introduced in some countries, may well be the only way of overcoming the challenge of this virulent virus".

The report says Glenrath's investment programme has two 'main imperatives'. First, to continue improving environmental performance by investing heavily in solar panels, the restoration of peat bogs, and planting trees on the group's farms.

Second, to meet customer demands Glenrath has committed to discontinuing 'colony' egg production in 2025 and is continuing a programme of converting sheds to barn production. Further investment is also planned in new free range production facilities.

Live Borders solution will cost up to £50,000

by OUR LOCAL GOVERNMENT EDITOR

Scottish Borders Council is being advised to commission 'external support' costing up to £50,000 as it considers a way forward for cash-strapped Live Borders, the Trust which delivers leisure and cultural services on behalf of the local authority.

It is now expected that councillors will plump for one of four options at a meeting in late June by which time consultants will have examined the pros and cons of each of the choices.

The list of options set down by council officials is: (a) continuation of the current trust model; (b) alternative trust models; (c) some services returning to SBC to deliver; (d) all services coming back in-house. A full council meeting to be held next week will decide whether to sanction expenditure to pay consultants.

That meeting will be told in a report from Avril Marriott, SBC Programme Manager, that in line with other sports and culture organisations, Live Borders has experienced significant financial challenges since the COVID pandemic in 2020/21. 

Ms Marriott states: "The Council supported Live Borders during that period through continuing to pay the full agreed management fee when services were not being delivered. Along with furlough of their staff, this allowed Live Borders to build up significant reserves which they have now fully used. During 2022/23 and 2023/24 the Council has provided additional funding to Live Borders, over and above the management fee, of £2.5m." 

In March officers met with the Chair and acting Chief Executive of Live Borders when it became clear that the Trust had a budget gap in 2024/25 of £2.5m. This was partly as a result of the commitment the Live Borders board had made to pay the Real Living Wage in 2024/25 along with a 3% pay increase for all other staff. 

"Given their reserves had been used across 2022/23 and 2023/24, a request was made to the Council for the additional shortfall. Currently Live Borders have a Letter of Comfort from the Council which runs to December 2024", explains Ms Marriott.

Since the beginning of March no fewer than seven directors of Live Borders have left the organisation which had an average of 354 employees in 2023, up from 298 in 2022.

As the report points out, the high number of resignations by directors means there is an increased risk that the Board may not remain quorate, negatively impacting on its decision taking responsibilities.

And, Ms Marriott warns: "Carrying out an options appraisal in relation to the future delivery of these services will be very unsettling for Live Borders staff and there is an increased risk of staff leaving the organisation."

The report claims it is crucial that key pieces of work outlined in the transformation programme continue, as any decisions which councillors wish to take in June will not, on their own, resolve the £2.5 million financial challenge that Live Borders currently faces, with the key cost elements being pay, energy costs and an aged property estate. 

The report reminds elected members that achieving charitable status was a key consideration when the Trust was set up in 2003, primarily as it enables it to secure relief on non-domestic rates, but also because as a charitable organisation it can access external funding sources not available to the Council.

 The current non-domestic rates (NDR) relief which Live Borders is entitled to as a charity amounts to £1.4 million. This will no longer be available to the Council if a decision is made to bring all the current services back in-house. 

"The budgetary implications of the future options outlined require to be very carefully considered, particularly from a tax perspective given the nondomestic rates relief position and VAT implications. Given the 2024/25 pressure of £2.5 million which Live Borders have reported it should be noted that there are significant financial implications for the Council whether it supports Live Borders in its current form as a Trust going forward or whether it determines that another model of delivery for sport, leisure and cultural services should be pursued."

 

by DOUGLAS SHEPHERD

An investment strategy review is being recommended after the market value of surplus cash deposits from nine Borders Common Good funds and a group of charitable trusts suffered a £339,000 hit, reducing their combined worth by more than six per cent.

Scottish Borders Council, which manages the assets of the various funds, has invested just over £5 million of the 'spare' money in a single fund, Aegon Diversified Monthly Income B Inc, since February 2018. The cash was previously deposited in a different fund, but it was moved because returns were not up to expectations.

Members of the local authority are told in a report to be considered at a meeting next week that approval is needed to undertake a review of the Common Good Funds and Trusts Investment Strategy to ensure that the current fund manager and investment plan is appropriate to maximise return and growth on the funds. 

The report from Kirsten Robertson, the council's Treasury & Statutory Reporting and Business Partner, that in March 2024 there was an unrealised loss on the £5,036,662 invested funds of £339,919, a capital loss of 6.75%.

An unrealised loss is a decrease in the value of an asset that has not yet been sold, but the market value has dropped below the price originally paid. 

According to the report: "Therefore, if we were to disinvest all funds at this time, we would only receive 93.25% of our original investment back. At 31st March 2024, total income received on this investment since original investment date was £1,487,385, an income return of 29.53%. This is distributed to Funds for their use on a monthly basis, not added to the original investment.

"The Aegon Fund’s investment objective is to provide income with the potential for capital growth over the medium term by investing mainly in a diversified portfolio of equities, bonds and derivatives denominated in any currency. The Fund targets a yield of 5% per annum, aims for growth of 2-3% per annum, to maintain the purchasing power of income and is committed to providing a sustainable income by not paying out capital as income."

To date the fund has achieved its target regarding yield however the medium term target around growth has not been achieved. The review will consider if the current fund is still the most appropriate given the changes to the economic climate since 2018. 

It is proposed the review be undertaken by Isio, the Council pension fund advisors, who also advised on the appointment of the Common Good funds and Trusts current investment manager. 

The scope of the review will include a summary of the Aegon fund’s current objectives and expected future income needs; an overview of the current market environment and how this has changed since 2018; an overview of the Fund’s current manager allocation (the Aegon Fund) and the key characteristics of this, how the asset allocation has changed since 2018, along with a peer group analysis of the Aegon Fund; and a high level consideration of alternative strategy options for the investment and the advantages and disadvantages of each alternative. 

The unrealised losses for the various funds and trusts are:

COMMON GOOD   INVESTMENT    MARKET VALUE     LOSS

Duns                            £17,128                    £15,938                   £1,190

Galashiels                   £160,093                  £148,976                  £11,117

Hawick                       £457,995                  £426,166                  £31,829  

Jedburgh                     £967,106                  £903,211                  £63,895

Kelso                          £281,074                  £261,654                  £19,420

Lauder                        £249,977                  £232,604                  £17,373

Melrose                      £15,408                    £14,501                     £547

Peebles                       £506,096                  £470,580                   £35,516

Selkirk                        £259,057                  £240,631                   £18,426 

CHARITABLE TRUSTS

                                  £202,210                    £188,157                   £14,053

ENHANCEMENT TRUST

                                  £177,114                    £164,807                   £12,307

WELFARE TRUSTS

                                  £623,062                    £579,761                  £43,301

UNREGISTERED CHARITIES AND BEQUESTS

                                  £1,105,870                 £1,035,955               £69,915     

    

Story of failed bid to oust Borders council leader

by OUR LOCAL GOVERNMENT EDITOR

The former chief executive of Scottish Borders Council told a senior councillor there would be no conflict of interest if he took part in a debate and voted against a motion to have him removed from the leadership of the local authority, it has been confirmed.

Following the advice in March 2022 from Netta Meadows, the SBC chief who left her £136,000 a year post in mysterious circumstances three months later, Tory councillor Mark Rowley avoided having to resign by voting against the motion to get rid of him as leader. He survived by the narrowest of margins...16 votes to 15 with two abstentions.

But at the subsequent local government elections in May 2022 Mr Rowley was 'replaced' as Conservative Group leader by Councillor Ewan Jardine who remains in the top post.

One of Mr Jardine's first duties was to announce Ms Meadows' sudden departure after just 15 months in the job. He said at the time: "She has and continues to be a true leader. We wish Netta all the best in her future venture".

In the wake of the failed bid to force Mr Rowley to stand down, complaints about his participation in the proceedings were lodged with Scotland's Ethical Standards Commissioner (ESC) together with six other allegations that he failed to declare his employment as a Strategy Manager with South of Scotland Enterprise during council meetings.

As we reported last week, a hearing of the Standards Commission for Scotland upheld three of the complaints after they were handed an investigation report by the ESC. However, the claims that Mr Rowley should not have participated in the 'resignation' debate were not upheld. He was suspended from attending council meetings for a month.

The Commission's written decision, now available on the watchdog's website, states that the ESC’s representative had explained that, at the Council meeting on March 10, 2022, an opposition member [ex-Councillor Davie Paterson, from Hawick] raised an urgent motion calling on Mr Rowley to resign as Leader of the Council “given he is now employed by South of Scotland Enterprise”. 

Minutes of the meeting record that elected members asked the Council’s Chief Legal Officer to provide guidance on the Code of Conduct. The official had highlighted that the objective test, to be applied by elected members to identify whether they had a declarable interest, concerned how the public might perceive any potential interest.

The Commission's panel hearing the complaints were advised that when there was a vote on whether the Respondent [Mr Rowley] should resign, he had taken part, with the motion being rejected by 16 votes to 15 with two abstentions. 

According to the 18-page written decision: "The Council’s Monitoring Officer had advised that the Council did not have any written policy or guidance on the issue of whether councillors should vote on motions regarding their own position. The Monitoring Officer said that while such votes were exceptionally rare, she was aware of two previous occasions where councillors had voted on motions that concerned their specific roles or positions."

It therefore appeared that Council practice endorsed councillors being able to participate in such motions. 

"The ESC’s representative acknowledged the position in respect of the Council’s past practice but argued that the Respondent had a financial interest in the matter given he would lose his entitlement to an additional allowance if he was no longer Council Leader - the post carried a full year allowance of £37,213 in 2022 - and should, therefore, have declared an interest, withdrawn from the meeting and refrained from taking part in any voting on the motion."

In support of this contention, the ESC’s representative argued that members of the public, with knowledge of the Respondent’s financial interest, would reasonably regard this as sufficiently significant as to be likely to influence his discussion and decision-making on the motion. 

Mr Rowley's position was that he should be able to contribute to the discussion, given he was central to the motion and, had it passed, he would have been obliged to resign, which would have resulted not only in a loss of income but also political and reputational damage. And he had been given advice by the Council’s former Chief Executive to the effect he was able to take part. The ESC’s representative advised that it had not been possible to verify that contention. 

In his response to the ESC, Mr Rowley explained the resignation motion had generated significant media interest. 

He claimed that misleading salary scales had been quoted during the meeting and that there had been no opportunity to correct this. Mr Rowley said that one of the complainers had chaired the meeting and, as evidenced by the minutes, had invited him to speak, had allowed the Clerk to call his name and invited him to vote. 

The written report adds: "The Respondent acknowledged that it was his personal responsibility to adhere to the terms of the Code and accepted that he could not rely on the advice of others. The Respondent nevertheless noted that no one present at the meeting (including senior Council officers) had suggested he could not take part in the discussion or decision-making on the matter. 

"The Respondent indicated he had considered “natural justice” dictated that he be allowed to take part in consideration of the motion, given he was the only individual present who was in a position to answer any questions raised. His view had been that the motion was, in effect, a device to amend the Council’s Scheme of Administration and list of appointments."

Mr Rowley noted that it was customary for all elected members to vote on positions and portfolio appointments, in terms of the Scheme of Administration. This included voting on who should be appointed to remunerated roles. He claimed that if every potential appointee declared an interest, there would not be enough elected members present to form a quorum. 

"The Respondent explained, therefore, that he had not viewed his consideration of the motion to be any different to a vote on such matters and had not concluded, therefore, that he had a declarable interest. His thinking had been that, as he was central to the issue, he did not understand how the Council could make an informed decision in respect of it without his involvement. 

"He had found the process deeply embarrassing and awful but had not agreed with the suggestion made by the Complainer that the best thing he could do would be to resign and avoid facing the motion at the meeting. The Respondent stated that the then Chief Executive had advised that it was appropriate and important that he be involved in the discussion and consideration of the motion." 

Mr Rowley had accepted that he could be affected financially, politically and reputationally, and he had a personal interest in the matter. He reiterated, however, that his decision to take part was not based on these factors and, instead, was based on what was best for the administration of the Council. The Respondent noted that there was always a political or financial impact when a councillor was appointed or removed from a role and, as such, elected members could not remove themselves from such decision-making on that basis alone. 

"The Respondent advised that he found it painful to recall the Council meeting in March 2022 and the debate on the motion calling on him to resign and noted that not many people are subjected to an hourlong debate about whether they should retain their job. 

"He said it was clear that his contribution was crucial to the discussions, particularly as false information about his role and remuneration had circulated in the press and repeated during the debate. At no stage, had any officers or other elected members suggested that he should not take part in the discussion or voting on the motion."

Commission panel members found that Mr Rowley failed to declare a financial interest and took part in the discussion and decision on a motion that he should resign as Leader of the Council.  

"The Panel accepted the ESC’s position that, on a strict reading of the Code, it could be argued that, as he had a financial interest in the role and could be affected both politically and reputationally by the decision, the Respondent’s connection was sufficiently significant as to meet the objective test. 

"The Panel noted, however, that it could equally be argued that other councillors, who potentially could have been nominated to take the Respondent’s place, could also be said to have an interest. Equally, opposition party councillors who could benefit politically from the success of the motion could be said to have an interest. 

"It was further noted that it was normal practice for councillors to take part in the discussions and voting on their appointments to various roles and committees within local authorities. In the circumstances, the Panel concluded that the Respondent did not have a declarable interest and had not breached the Code by taking part in the voting on the motion about whether he should resign as Leader." 

'Mystery objector' blocks Son of Avocet's demise

by LESTER CROSS

The planned dissolution of the last remnants of the failed Avocet 'wonder' fuel project has been stopped dead in its tracks after a shareholder or creditor of the worthless business lodged an objection with the UK Companies Registrar.

At the same time, another Avocet entity which had total assets of more than £10 million, according to its last published accounts, has been dissolved via compulsory strike off, presumably for repeatedly failing to lodge financial information on time.

It had been expected that Genfro Ltd, or Son of Avocet, would be struck off the register of companies after the firm's joint life president Dr James R Jennings applied to have it terminated. He signed a Declaration accompanying the application dated March 26th of this year.

As a result, the companies regulator gave notice on April 16th that unless cause was shown to the contrary, Genfro, which never got round to manufacturing chemical products or anything else, would cease to exist two months later.

However, there have been claims that Jennings' application is invalid. Although he is listed as the sole director of Genfro, the company's Articles of Association specifically state that he and fellow joint life president Martin Frost cannot be directors and will play no part in managing the firm's operations.

Mr Frost remains disqualified from holding company directorships since he was declared bankrupt in 2021. A judge in a Leeds Court subsequently ruled that Frost breached his fiduciary duty as a company director by using £425,000 of the firm's cash to help buy two upmarket flats in Scarborough.

Meanwhile, the administrators of another insolvent Avocet business have been seeking to recoup £1.25 million from Jennings.

In a notice concerning Genfro which was published today, Companies House state: "Voluntary strike-off action has been suspended. Action pursuant to Section 1003 of the Companies Act 2006 for the striking off and dissolution of the above company has been suspended as an objection has been received by the Registrar".

The grounds for the objection have not been made public.

According to Government guidance for objecting to a voluntary strike-off: "You can object to a limited company being struck off the Companies Register if: you are a shareholder or other interested party, such as a creditor: you have a reason to stop the company being removed from the register - for example, you have a legal claim against them or they owe you money".

The hundreds of investors in the mythical Avocet project - it has been estimated they have lost more than £30 million - may well have been better advised to concentrate their attention on Avocet IP Ltd., another of the countless subsidiaries. 

At one time it was in control of Frost and Jennings' collection of "extremely valuable" patents, intellectual property which attracted interest from global corporations and mystery investors, according to Frost. These exaggerated assertions may well have persuaded individuals to part with their cash.

Companies House has announced it will dissolve Avocet IP on May 21st by compulsory strike-off.

The business had not produced annual accounts since the end of 2019 when Frost was the signatory to the figures. The report claimed fixed assets of £13.060 million, and total assets less current liabilities of £10.1 million.

Then, in July 2021 shareholders were told that 90 per cent of the patents linked to the Avocet companies had been "lost" since 2019, reducing the value of intellectual property from a possible figure of £400 million to just £69 million.

Correspondence said to have been sent by Jennings to Frost at the time warned: "Dear Martin, This is not good news. We have filed some 120 cases in various countries and the majority have lapsed.

"Some others are still live pending further checks, but will need completion fees to be paid by June 30th. All of the rest have lapsed, with little chance of reinstating. The June date is absolute and must be paid if we are to recoup some value."

When told Avocet IP was to be killed off, an observer of the collapsed business 'empire' pointed out: "The intellectual property consisted of only four patent applications, not patents, and these applications had not been approved after four years despite the average approval time in the UK being 2.5 years".

Our source also commented: "Selling shares based on an impending purchase offer from imaginary investors is investment fraud. This is very serious. There have also been lesser offences such as an illegal name change (which requires shareholder approval that was not sought) and, of course, Jennings acting as a director of Genfro for two years despite being prohibited from doing so by the Articles of Association..

"The UK authorities' failure to act to protect investors despite numerous complaints made to them over years and their consistent failure to prosecute wrongdoers no matter how egregious the offence is appalling."

Former Borders Council Leader suspended for standards breach

by OUR LOCAL GOVERNMENT EDITOR

Tory councillor Mark Rowley, who briefly served as leader of Scottish Borders Council, will be unable to attend meetings of the local authority for a month after a Standards Commission panel found he breached the elected members' code of conduct on three separate occasions.

Mr Rowley, who holds a top job with South of Scotland Enterprise as well as representing constituents in the Mid Berwickshire ward of SBC failed to declare an interest during council debates although he claimed at a Standards Commission of Scotland hearing today there had been no subterfuge nor personal benefit. Four other allegations levelled against him were not sustained.

The breaches related to Mr Rowley's failure to declare his employment as a Strategy Manager with South of Scotland Enterprise at three council meetings held between February and August 2022, when matters linked to, or that could have impacted on the work of South of Scotland Enterprise, were being discussed.

Following the hearing at Borders council HQ,  Ashleigh Dunn, Standards Commission Member and Chair of the Hearing Panel, said: “The Panel found that Mr Rowley failed to declare an interest in relation to agenda items relating to matters in which the South of Scotland Enterprise was involved and, instead, took part in the discussion and decision-making.” 

The Panel acknowledged that Mr Rowley had recorded promptly his employment on his Register of Interests and, as such, was satisfied there was no attempt to conceal it.

Panel members nevertheless considered that, having applied the objective test, as required by the Code, Mr Rowley should have reached the view that his connection, being his paid employment with a local enterprise agency, would reasonably be regarded as being so significant to the agenda items in question as to be likely to affect his potential discussion and decision-making on those matters. 

It was decided that Mr Rowley should have declared an interest, withdrawn from the meetings and taken no part in the discussion and decision-making on the specific matters in question. The Panel further found that on one occasion, having declared an interest in relation to an item being discussed,  Rowley emailed a fellow elected member and suggested that they could comment on a particular point. 

A Commission statement said: "While the Panel accepted it may not have been the Respondent’s intention to influence anyone remaining in the meeting, it found that by suggesting that a fellow councillor could “comment on the challenges” arising from the item, the Respondent had continued to participate, in breach of the Code.

"In reaching its decision on sanction, the Hearing Panel noted that Mr Rowley had co-operated with the investigative and Hearing processes, and had a previously unblemished record as a councillor. The Panel accepted Mr Rowley had registered his employment and, as such, there was no suggestion he had tried to hide or conceal his interest. 

"The Panel agreed, nevertheless, that it was necessary to impose a suspension in order to reflect the seriousness of the breach, to promote adherence to the Code and to maintain and improve the public’s confidence that councillors will comply with the Code and will be held accountable if they fail to do so."

Ms Dunn noted: “The Panel emphasised that the requirement for councillors to declare interests is a fundamental requirement of the Code as it gives the public confidence that decisions are being made in the public interest, and not the personal interest of any councillor or their friends, family or employer. A failure to comply with the Code’s requirements in this regard can erode confidence in the Council and leave its decisions open to legal challenge.” 

In mitigation, Mr Rowley told the hearing he had been under considerable pressure at the time the breaches took place.

SBC had admitted liability in a "very high profile" child abuse case involving a teacher, and the council was the subject of national media scrutiny. Other challenges included the annual budget process and the departure of the authority's chief executive.

Should Have Listened To Drew Tulley?

by OUR LOCAL GOVERNMENT EDITOR

As Scottish Borders Council sets about its latest self-made outsourcing mess and considers how best to deliver sports and leisure facilities in future it might be useful to recall the events of 2002 and 2003 which appear to have cost long-suffering local taxpayers many hundreds of thousands of pounds. 

Live Borders, the arm's length company developed by the council from small beginnings in 2003 as Borders Sport & Leisure Trust, has struggled financially for years. Hardly surprising when the local authority has consistently cut the annual management fee before sanctioning a series of bail-outs, including three separate sums totalling more than £2.5 million since March 2023.

And over the years, teams of consultants commissioned by SBC to produce business cases for change have trousered wads of cash for schemes that have invariably failed. Remember the debacle that was SB Cares LLP?

Only last month - according to the Border Telegraph - Councillor David Parker, a former leader of SBC, told a council meeting "what is absolutely clear is that the current size, shape and scale of Live Borders can’t continue as it is, unless SBC can grow a magic money tree. I do think that our officers need to be careful that they are making sure that as a council we are properly ensuring value for money and doing the right thing by the public purse."

However, as council minutes testify, it was Mr Parker who led the way down the arm's length route back in 2002 when the first decision to move swimming pools and 'dry' sports facilities out of SBC's control was taken. 

The crucial vote came at a full council meeting on October 8th of that year. This is an extract from the minutes of the meeting: "Motion by Councillor Parker, seconded by Councillor Borthwick, that the recommendations in the report be approved. Amendment by Councillor Tulley, seconded by Councillor Dumble, that the Council should proceed no further in respect of the establishment of a Trust and that the leisure facilities should be retained in Council control. On a show of hands Members voted as follows:- Motion - 21 votes Amendment - six votes".

It is clear the late Drew Tulley - he led the council before Mr Parker took the reins - was not a fan of outsourcing council leisure services. And he was unhappy that so much of the debate was being conducted behind closed doors.

The official record of proceedings at the January 2003 council meeting shows: "LEISURE TRUST TRANSFER - Councillor Tulley, seconded by Councillor Dumble, moved that the report on the Leisure Trust Transfer proposed for discussion as Private Business, should be considered in Public. Councillor Parker, seconded by Councillor Wight, moved as an amendment that, as various elements of the report fell within the definition of Exempt Information under Schedule 7A to the Local Government (Scotland) Act 1973, the item be not considered in Public, but that the appropriate matters be covered in a subsequent Press Release. VOTE On a show of hands Members voted as follows:- MOTION – 11 votes. AMENDMENT – 18 votes. The MOTION was accordingly defeated."

Despite losing both votes, Mr Tulley would subsequently make a last-ditch (unsuccessful) bid to keep the pools and sports centres under council control.

According to minutes from a full session of council on March 26th, 2003: "There had been circulated copies of a report by the Director of Lifelong Care on the progress made with the transfer of leisure facilities management to the Borders Sports and Leisure Trust. The report indicated the further work undertaken by the Council Working Group and the Shadow Board and the outstanding issues, and recommended that the timescales for the transfer be extended. 

"MOTION by Councillor Parker, seconded by Councillor Borthwick, that the recommendations contained in the report be approved. AMENDMENT by Councillor Tulley, seconded by Councillor Dumble, that as it now appeared that the transfer would not be in the overall interests of the Borders, the process should be aborted forthwith and the facilities retained in house. On a show of hands Members voted as follows - MOTION – 20 votes. AMENDMENT – 10 votes. The MOTION was accordingly carried."

There were no dissenting voices in 2014 when cultural services - museums, libraries and the like with 200 staff and an annual budget of over £4 million was outsourced to another trust on the recommendation of two sets of consultants.

Coverage of the issue at the time included this: "The council's priority is to save money, and there have been dire warnings that any alternative solution would involve a cull of halls, libraries, museums and community centres. As many as 13 of them would have to close to comply with lower budgets and the need to deliver £275,000 in savings.

Minutes from a full council meeting of February 27th: - Members discussed the proposals including community use and transfer of assets, consultation, staff, and Common Good properties. The general direction of travel was broadly welcomed. Councillor Davidson, seconded by Councillor Aitchison, moved approval of the report.

But yet another 'restructuring' was under the spotlight a little over a year later later with the recommended amalgamation of the two trusts into one large organisation with a £12 million budget. 

An October 2015 meeting was told: "The specific benefits that would accrue to the organisation [Live Borders] are broadly related to its increased scale. For example, the organisation could benefit from economies of scale associated with managerial and back office functions. In addition, it would immediately have a larger combined customer base. It would also have a greater number of physical contact points with customers, providing opportunities to deliver and promote its services. Officers have also considered the extensive experience gained in 2014/15 and lessons learned in setting up SBCares". Oops!

The integration of the two trusts from April 2016 was agreed unanimously.

Fast forward to last Thursday's private meeting of councillors to consider the "challenges" facing Live Borders.

SBC officers will now bring forward yet another report later this month outlining a number of possibilities for the provision of sport, leisure and cultural services currently provided by Live Borders on the Council’s behalf.

The options will be: continuation of the current trust, an alternative arm's length outfit, or services returning in-house to deliver in part or as a whole.

Transfer of School of Textiles from Borders to Edinburgh 'recommended'

EXCLUSIVE by LESTER CROSS 

The "progressive transfer" of the world-renowned School of Textiles and Design's (SoTD) activities from its Scottish Borders base in Galashiels to the Edinburgh campus of Heriot-Watt University is being examined by a review group following a recommendation from the university court.

Any decision to remove the educational facility from the Borders will almost certainly meet with strong local resistance as there has been a 'wool textile college' presence in the town for over 140 years. The School is a centre of excellence in design and dates back to 1883, when classes in weaving, dyeing and chemistry were introduced to train workers for local textile businesses.

And although the manufacture of cloth and knitwear has declined dramatically in the region over recent decades, the School of Textiles has retained a global reputation with leaders of fashion. It attracts students from all over the world.

Following the recommendation from members of the Court early last year, the ruling body established a Borders Strategic Review Oversight Group chaired by chartered accountant Marta Phillips. She is also a member of the Court. The group is expected to conclude its work (including a final report) by the end of July. 

According to Heriot-Watt: "The purpose of the Borders Strategic Review Group is to provide oversight of the Strategic Review agreed at the Court meeting in March 2023 in relation to the University’s presence and impact at the Scottish Borders Campus, advising on the detailed plans as they are developed. 

"The work sits in the context of Strategy 2025 and discussions about the longer-term future Strategy 2035. The Group will receive reports from the Borders and Global Design Futures Programme so it can oversee progress, consider and advise on risks and issues, and provide onwards reporting to the University Executive, Court and its Committees. The Group will operate with delegated authority from Court for approval of budgets and decisions relating to the delivery timelines."

And under its Terms of Reference the university court has delegated authority to the Borders Review Oversight Group to oversee, advise and report on the Strategic Review of the Borders Campus and the specific plans based on the recommendations approved by Court in February 2023.

These were: "1 - Reshaping and reframing Borders Campus activities to contribute to the South of Scotland, engaging all Schools; 2 - Working across all Schools and Campuses to realise future opportunities to achieve excellence in design, in teaching and research 3 - Consulting the Scottish Funding Council, Scottish Government, local government and people, and other relevant stakeholders, including Borders College, in the development of the plans. 

"The consultation was expected to shape and inform the approach to the three recommendations above and allow the University to develop the more detailed plans that the Court wished to receive in order to fully consider the remaining recommendations. These were: • Progressively transferring Borders Campus School of Textiles and Design (SoTD) activities to the Edinburgh Campus; and • Maintaining SoTD academic identity with planning to include opportunities for integration with a larger School.

Review Group members are also tasked with evaluating and advising on "the planning scenarios brought forward by the Executive on the recommendations, reporting to the University Executive, the Court and its Committees to help assure effective, informed decision making in relation to the Strategic Review and its outcomes."

University Court minutes from December 2023 include the following references to the ongoing review.

"The current focus was on strands of work that were time critical for July 2024, including decisions regarding use of space at the Borders College. The overall aim of the Review was to ensure a better student and staff experience at the Borders Campus, as well as developing a portfolio that was attractive for students, aligned to the local economy in the region and to the University’s global work. 

"The Vice-Principal and Provost reported that the current recommendations focused on teaching activity, with consideration of research activity to follow in 2024. As previously agreed with the Court, the University would not be withdrawing from the Borders and was therefore considering what opportunities there were to better align its offering with local and regional requirements."

In view of the importance of the issue to the Borders, we asked Heriot-Watt University  if the progressive transfer of the SoTD from the Borders Campus to the Edinburgh Campus was still under consideration, or had the idea been dropped? 

And, in addition we asked: "How will the University ‘better align’ its offering at its Borders Campus; and - What was the rationale behind the formation of the Borders Oversight Review Group?"

Today we received the following response:

"Is the progressive transfer of the SoTD from the Borders Campus to the Edinburgh Campus still under consideration, or has the idea been dropped? 

The University has been carrying out a Strategic Review, considering options which will best refine and enhance our contribution to the Borders, and more broadly to the South of Scotland. We have been working closely with the Borders College and will be finalising the outcomes of our Strategic Review in the coming months. 

How will the University ‘better align’ its offering at its Borders Campus?

Our plans are focused on improving student experience, including social engagement and access to support. We aim to ensure that the balance of activities between all our campuses provides a first-class experience and enables staff and students have access to the services required to support a flourishing community.  

As the skills audits for the South of Scotland have also shown, student demand for courses has changed in recent years. We are also considering how best to align our offer with the skills needs in the region alongside preferred study choices of our students while also continuing to work in partnership with Borders College and other FE providers where practicable. 

What was the rationale behind the formation of the Borders Oversight Review Group?

The University’s governing body, the Court, established the Oversight Group to provide oversight, advice and reporting throughout the Strategic Review process."

In an attempt to clarify the situation regarding the proposed transfer of SoTD to Edinburgh we contacted Heriot-Watt again to suggest the recommended re-location remains an option under consideration.

We were told: "For guidance, the University is not planning an immediate change to its Borders Campus".

As well as the historic site in Galashiels, SoTD operates in a new state-of-the-art campus in Dubai.

The Borders facility received a £31 million refurbishment in 2009, and the 50 staff and 500 students have studio space, workshops and dyeing and chemistry laboratories. The campus is jointly used with Borders College although the two institutions maintain their independence.

The SoTD website declares: "Described by Dame Vivienne Westwood as “The best in the UK”, our facilities have been tailor made to help students thrive." 

Borders council has already borrowed £46 million in 2024

by OUR LOCAL GOVERNMENT EDITOR

Scottish Borders Council which has warned of a double digit rise for local taxpayers next year borrowed a further £6 million from the Public Works Loans Board (PWLB) last month, adding to the £40 million already acquired in loans since the beginning of 2024.

Figures for April from the UK Treasury's Debt Management Office show the Borders local authority took the additional £6 million on the 23rd of the month with an interest rate payable of 5.4 per cent. The loan has a maturity date in April 2026.

As we reported previously, SBC had racked up £40 million of new debt between January 2024 and the end of the 2023/24 financial year on March 31st. 

These were separate loans from the PWLB of £30 million on January 30th with an interest rate of 5.35% and a maturity date of January 30th 2025, followed by a further advance of £10 million taken on March 27th at 5.39% and with a maturity date of March 27th 2025.

The council confirmed it would pay interest of £1.605 million on the £30 million loan, and a further £539,000 on the money borrowed in March. 

In 2022/23 total annual costs of loan charges linked to 46 PWLB loans together with LOBO loans and PPP financing stood at £16.1 million, equivalent to 7.6% of the overall revenue budget.

The PWLB loans are used to pay for capital expenditure projects.

The revenue expenditure to pay for council services in 2024/25 [including interest charges] required a £10 million raid on balances together with savings of £4.4 million with at least £5 million to be trimmed from spending in 2025/26.

According to a statement issued in February: "Significant financial pressures, including inflationary pressures of £6.7 million leave us in the stark position of having to both increase council tax rates and make permanent service reductions in the future to balance the books.

"Budget plans include an indicative increase of ten per cent (in council tax) for 2025/26 followed by five per cent increases in the three subsequent years. These will however not be formally set until the annual budget is considered each year as normal".

The Debt Management Office has also provided all public authorities in England, Wales and Scotland with audit statements showing the outstanding balances and year end values on their PWLB loans as of March 31st, 2024. It shows SBC owes the PWLB £213.736 million.

This is the data for Scottish Borders Council's 46 loans. The first column shows the year the loan was taken; column two indicates the maturity date; then the outstanding balance in each case; and finally the so-called year-end value or fair value of each transaction.

1993    2053           £507,816           £834,793

1993    2053           £60,839             £98,726

1994    2053           £1,354,176        £2,002,246

1995    2024           £381,114           £402,770

1995    2055           £2,031,264        £3,412,901

1996    2055           £2,031,264        £3,395,661 

1996    2055           £1,692,720        £2,895,476 

1996    2055           £1,692,720        £2,895,476 

1996    2055           £1,692,720        £2,895,476

1996    2055           £1,692,720        £2,895,476

1996    2054           £667,088           £1,134,683

1996    2054           £667,088           £1,134,683

1996    2053           £1,963,556        £3,154,484

1997    2051           £2,288,994        £3,484,444

1997    2057           £1,354,176        £2,072,768

1997    2057           £1,354,176        £2,072,768

1997    2057           £1,354,176        £2,072,768

1997    2057           £1,354,176        £2,072,768

1997    2057           £1,354,176        £2,072,768

1997    2057           £1,354,176        £2,072,768

1997    2027           £1,291,858        £1,450,520

1997    2026           £3,385,441        £4,749,084

1997    2026           £1,608,589        £1,742,327

1997    2057           £1,354,176        £1,889,755

1997    2047           £2,350,104        £3,085,537

1997    2047           £1,354,176        £1,777,947

1998    2052           £1,481,383        £1,930,334

1998    2058           £2,708,353        £3,270,966

1998    2054           £2,031,264        £2,268,670

1999    2057           £1,692,720        £1,905,898

1999    2057           £1,692,720        £1,905,898

2000    2054           £2,031,264        £2,406,181

2000    2054           £1,354,176        £1,570,671

2001    2061           £3,031,233        £3,589,540

2007    2052           £10,000,000      £10,347,132

2007    2052           £24,000,000      £25,638,166

2007    2052           £24,000,000      £25,638,166

2007    2057           £2,000,000        £2,108,566

2016    2026           £4,000,000        £3,790,797

2017    2027           £8,000,000        £7,604,304

2017    2027           £10,000,000      £9,433,494

2018    2048           £10,000,000      £7,728,433

2019    2034           £7,500,000        £6,121,689

2022    2032           £20,000,000      £18,245,852

2024    2025           £30,000,000      £30,493,169

2024    2025           £10,000,000      £10,098,005

NOTE: The £6 million loan was arranged after the end of financial year 2023/24 and is not included in the table above.