Veil of secrecy, but nothing to hide

EWAN LAMB reports

An initial attempt  to have confidential information released by Scottish Borders Council following the collapse of the £27 million waste treatment project at Galashiels has been stymied by the local authority on the grounds of "commercial confidentiality."

And according to SBC those secrecy clauses in the abandoned contract with New Earth Solutions will remain in place and continue to frustrate Freedom of Information requesters - and others anxious to get at the truth - for six years.

There have been numerous calls for an independent investigation after councillors at Newtown St Boswells agreed to write off £2 million they spent and squandered on the catastrophic project which should have delivered an integrated waste facility at Easter Langlee.

A number of people have called for the case to be referred to Audit Scotland, the public expenditure watchdog in the absence of any meaningful explanation from SBC as to why the 24-year contract with NES - valued at £65 million -  was hastily abandoned earlier this year.

In a bid to determine whether the council took adequate steps to carry out risk assessments and check on New Earth's technological credentials, a request for information was lodged with SBC at the beginning of March.

SBC was asked: "Can the local authority provide the following information now that the plans have been dropped.

1 – Information contained in risk assessments carried out by for, or on behalf of the council prior to the contract being awarded to New Earth Solutions (NES) Group Ltd.

2 – Apparently the scheme was dropped in view of “project-specific issues in terms of technology and funding.”  So what steps did the council take prior to April 2013 - when the decision was taken jointly to amend the proposals - to satisfy itself that NES possessed the technology and the funding to deliver the project? Please supply information contained in any documentation/emails relating to this aspect of the ground work."

According to the requester it took the council's FOI department more than a month to establish the information was exempt before issuing an answer which we quote in full here:

 "Further to your request for information under the Freedom of Information (Scotland) Act 2002 relating to the above I am now able to respond.

 The answers to your questions are detailed below:

1.            We have such risk assessments but under the terms of the contract with NES they are commercially confidential. (Exempt under section 33(1)(b) substantial prejudice to commercial interests)

2.            We have such documentation and emails that relate to steps taken prior to April 2013. However, under the terms of the contract with NES they are commercially confidential. (Exempt under section 33(1)(b) substantial prejudice to commercial interests)

 Please note that under the terms of the contract with NES the confidentiality clauses remain in place for six years following the end of the contract.

So unless that response can be challenged and overturned it appears a veil of secrecy will be drawn over the nuts and bolts of the financially catastrophic fiasco. This, despite assurances from senior councillors that the matter had been well handled, and in effect there was nothing to hide.

There has even been a confident prediction that the local authority's own external auditor will decide everything relating to the contract is in order in a report to be published later this year. There is therefore no need to refer the issue to Audit Scotland.

Hawick councillor Watson McAteer appears to have been a lone voice in calling for an investigation.

  
But when he did so council leader David Parker told the local press: “Councillor McAteer, who was present when the unanimous decision was taken in private on February 19, now believes it is appropriate to raise questions in public which suggests what happened warrants investigation.
“There is absolutely no reason to believe that the NES project was anything other than well managed throughout.Given that every decision was taken by council over the eight year life of this project and that the documents are all available, Councillor McAteer can conduct his own review if he wishes."

It might help to clarify matters for long suffering Borders council taxpayers if those documents did not remain firmly locked in the council's vaults.

More revelations follow Easter Langlee fiasco

Scottish Borders Council disqualified potential bidders for the £27 million project to build a waste treatment plant at Easter Langlee because their technology was not "mature" enough before selecting a preferred company whose knowledge was also untried and untested, according to the specialist brought in to negotiate the original contract.

Consultant Barry Phelps also warns the cancellation of the 24-year contract between the council and New Earth Solutions means the Borders could be four years away from having a facility operational, something the region could have had in late 2012.

SBC and NES signed a deal in 2011 for the development of a Mechanical Biological Treatment (MBT) plant with the possible addition of an Advanced Thermal Treatment (ATT) facility within eight years of the MBT's completion provided the technology was robust enough.

But in late 2012 councillors approved an amendment to the multi-million pound contract with NES so that both phases of the scheme were to be built together even though NES's ATT technology had yet to prove itself.

Meanwhile, information just released by the Scottish Environment Protection Agency (SEPA) reveals the reasons why New Earth was unable to obtain an operating certificate for the proposed ATT which they first applied for in May 2013. Discussions over unresolved environmental issues were still continuing in January 2015 before NES withdrew its application and the entire project collapsed.

In the course of the protracted negotiations SEPA issued NES with three separate so-called Further Information Notices seeking assurances on a number of topics.

The response to the second Further Information Notice was not fully accepted by SEPA. This was mainly due to only limited emission data from the combustion of the plant's syngas (synthetic gas) and composition data for the syngas having been provided, as well as concerns over the potential noise impact of the whole installation given its close proximity to housing.

NES was advised by SEPA in October 2014 that they could withdraw the part of the application relating to the renewable energy facility whilst they obtained the additional data from a similar pilot plant in England. But NES confirmed they wished to proceed with the application as applied for i.e. the renewable energy facility as well as the recyclate recovery and refuse derived fuel manufacturing facility.

A third Further Information Notice was therefore issued in December 2014 to request the necessary emission data, syngas composition data and other information to support the applicant's ‘End of Waste justification’ for the storage and subsequent combustion in gas engines of the purified syngas from the pyrolysis stage of the process.

The applicant was required to provide a method statement for responding to the Notice by 16 January 2015. The method statement submitted did not fully cover the information required. SEPA were in the process of discussing this with the applicant when it was informed of the decision to withdraw the application for variation of the consent in February 2015.

In addition to the syngas issues, SEPA was also awaiting confirmation of dates for a meeting to discuss the outstanding concerns on noise. The meeting had not be arranged when SEPA were told of the withdrawal decision.

Before this response from SEPA to a Freedom of Information request, Mr Phelps told us: "Some of the bidders were disqualified from the procurement as their technology was not mature enough. SBC essentially amended the contract to accept a technology that was also not mature in its capability, thus not treating all bidders equally.

"If the EU were to investigate the contract amendment and the consequences of how this has distorted competition, SBC may find the variation being overturned and could receive a substantial fine. NES would then in effect have to build the MBT or compensate SBC for any losses under the terms of the contract."

Another day, a different statistic

We're sorry to confuse you, dear reader, but only days after we brought you two conflicting figures concerning the Scottish Borders Council payroll headcount, intelligence has reached us which suggests both of the numbers quoted may be wildly inaccurate or just plain wrong.

You are urged to continue reading this article right to the very end as you're promised a surprising sting in the tail. No peeking now!

But first those confusing statistics on just how many folks are collecting wages at SBC. Those of you with a talent for information retention - we're told a photographic memory is a godsend in these circumstances - might be able to remember there appeared to be a vast difference in staff numbers between the information posted this month on the Scottish Government's website and the response given by the council to a Freedom of Information (FOI) requester.

A table of Scottish local authority employee headcounts included a figure of 5,300 for SBC, rounded up (or down) to the nearest one hundred. This apparently 'official' total, presumably passed to the Holyrood bean counters by the Newtown St Boswells number crunchers, was surely the real deal.

But maybe this particular statistic was not shared with the Information Team handling FOI requests along the corridor or up the stairs from the Staffing Headcount Section. Or perhaps the figures were seasonably adjusted, or failed to take account of those outside having a smoke at the precise moment the count was taken.

Anyhow, the upshot was the FOI staffing question was answered with a figure of 6,421, which is more than 1,100 north of that 'official' calculation. How very odd.

However, yet another total will be added to the mix tomorrow (Thursday) when SBC councillors will be told the local authority's actual (?) staffing level at the end of 2014 was 6,131, down from 6,201 in 2013. In fact the elected members will know that latest in the series of numbers already if they've taken the trouble to read one of the reports at Item 12 (appendix 2) on the agenda for the meeting. It's stuffed full of workforce data.

Among other things, the report says the drop of 70 in staff numbers over the last twelve months is consistent with the reducing workforce trend that has been happening in recent years as the council continues to address the budgetary pressures. So where do the 5,300 and/or 6,421 figures come from?

Some of the other facts displayed in the report are noteworthy, provided they are accurate.More than 72% of council staff are female, and there has been a significant shift in the gender balance among Chief Officers inside a single year. In 2013 56% of the elite were male and 44% female. Now the divide between the sexes stands at over 56% female and 43% male.

The council had 457 job vacancies in 2014 and they attracted 6,522 candidates, an average of 14.3 people chasing each job.

There may be more attention grabbing information for some Borders councillors in a separate report, also at Item 12 under the title Mainstreaming. It is to be hoped they are made aware of the radical if not revolutionary statement on page five which reads: "Elected members are the people voted in by the public. They are in charge of all the services run by the Council."

Told you there was a sting in the tail.

 

Where now for Borders kiln-drying facility?

Yet another potential development project for the Borders, assessed and proposed by a trio of consultancy firms for the council at considerable cost, now stands little or no chance of delivery in the short term following the collapse of the planned waste treatment facility at Easter Langlee.

Only 10 months ago the findings of a 160-page study report confirmed the viability of kiln-drying timber from the Borders forests at a £1.2 million plant alongside New Earth Solutions' combined Mechanical Biological Treatment and Advanced Thermal Treatment (ATT) centre. The kiln was to use power generated by the ATT which would also supply heat and electricity for hundreds of homes and public sector buildings and business premises at Langlee and beyond..

But the council's shock decision to terminate SBC's 24-year £65 million contract with New Earth after just four years appears to have scuppered a project heralded as 'doable' by timber producers, processors and potential customers for the end product.

According to consultants Enviro Centre, Buccleuch Woodlands and Nevin Associates, who between them conducted the 12-month long assessment, the proposed 12-bin wood kiln was capable of producing 24,000 tonnes of dry wood chip per annum or 4,000 tonnes of dried logs.

The carbon saving potential was considered to be significant. The facility would produce 2,804 tonnes of carbon dioxide (CO2) annually compared to natural gas and LPG which would generate 13,336 and 15,440 tonnes of CO2 respectively.

The detailed report claimed: "The financial forecasts indicate the project will generate positive cash flows and be able to meet all obligations placed upon it in terms of taxation, debt service obligations and dividends paid to shareholders."

Scottish Enterprise indicated they could provide support for further assessments, and possible project funding sources were identified by the consultants including Regional Selective Assistance.

"Ownership of the project could be transferred to an entrepreneur who would design, build, finance and operate the facility", according to the report. "Legal protection might have to be built in to any agreement to ensure the facility continues to operate or the council has step-in rights in the event that the owner becomes insolvent".

The Borders proposals were also compared to similar studies in Revelstoke, British Columbia and Burchkirchen, Austria.

SBC's enthusiasm for the idea was illustrated when they organised a seminar for interested parties in June 2014, only a month after the report was made public. There were upbeat presentations from a number of specialist speakers, and it seemed only a matter of time before the plans were progressed to the next stage.

Now, it would appear SBC's mishandling of the flawed New Earth contract and the subsequent decision to abandon it completely means the Borders kiln-dried timber centre may have gone up in smoke.

Waste plant decisions "extremely questionable" says council's expert

The procurement expert who negotiated the original £65 million contract on behalf of Scottish Borders Council for the development of a waste treatment facility at Easter Langlee says the local authority made some "extremely questionable" decisions relating to the project, and he would welcome an investigation following the cancellation of the scheme.

Barry Phelps, who was asked to head up the council's procurement team in 2008, and sealed the deal in 2011 has told Not Just Sheep and Rugby he cannot understand why councillors amended the contract with developers New Earth Solutions (NES) in 2012 to include an Advanced Thermal Treatment Plant (ATT) from the outset at a time when the technology for that element of the facility was unproven.

Mr Phelps was recruited by senior SBC officers while they were on a visit to inspect a waste management centre in Essex where he (Mr Phelps) had procured a similar arrangement for the county council.

He agreed to start work in the Borders almost immediately on a daily rate of £550 plus expenses together with a percentage of any savings he achieved for the council. His normal fee was £1,000 per day, but the radically reduced rate took account of the 20% Gain Share he would receive if he was successful in saving the council significant sums of money.

As is well documented, after the original contract with NES was tied up Mr Phelps was told by SBC officers that the council owed him nothing so he raised a Court of Session action in 2013 in a bid to recover millions of pounds of unpaid Gain Share he believed were due to him.

But after SBC terminated their 24-year contract with New Earth in February of this year and decided to write off over £2 million of public money they'd spent on the project Mr Phelps abandoned his claim.

"Setting aside the issues relating to my case, SBC has made some extremely questionable decisions relating to the waste treatment facility at Galashiels", said Mr Phelps. He explained that the initial contract was to provide a Mechanical Biological Treatment (MBT) facility with NES requiring to use their best endeavours to bring on board ATT technology within eight years of the MBT being built.

In 2012 SBC took the decision to amend the contract with NES, he said. This made the development of the ATT mandatory at the start of services commencement (i.e. when the treatment facility was built).

"This technology was not fully developed, hence the original eight year agreement", said Mr Phelps. "I do not understand why they had to make such an amendment. Not only did SBC/NES amend the contract to include the ATT at the start, they also adjusted the terms of the contract that shifted risk away from NES to SBC without any financial adjustment, The council is now in a position whereby if they retender and the cost is higher they will not be able to recover those additional costs."

Almost all of the council debates about the waste treatment facility have been held in private, and details of decisions made amount to no more than a line or two at the end of council minutes. None of the detailed technical reports on which it is assumed decisions were based have been made public.

It would appear the original contract was changed in October 2012, five months after a new political grouping took control of SBC in the wake of the local government elections in May of that year.The relevant minute of a full council meeting on October 25th simply reads: SUMMARY OF PRIVATE BUSINESS. Item 3 Waste Treatment Project.. Members approved a report by the Director of Environment & Infrastructure.

According to Mr Phelps: "In the previous unamended contract, if NES did not meet deadlines for construction (amongst other obligations), the council was protected against any additional cost, including if they terminated the contract and had to retender or bring in an alternative contractor to take over the services.

"I do not understand why anyone would set aside this protection. If you compare the gate fees [the actual cost of waste disposal] within the NES contract and the guaranteed minimum of 80% diversion of waste from landfill, this is substantially less than any other contract in Scotland. Therefore if SBC retender it is likely they will have to pay substantially more for the same services. The Scottish Government released expected prices a few years ago and these indicated gate fees of around £126 per tonne, some 50% more than the NES contract."

He went on to predict that if SBC decide to transport waste out of the region, this will cost more in terms of gate fees and transportation costs. Mr Phelps said this was estimated to be well in excess of £1 million per year when the project team undertook this analysis in 2009/10.

THE REMAINDER OF OUR COMMUNICATION WITH MR PHELPS WILL BE PUBLISHED IN A FORTHCOMING NOT JUST SHEEP AND RUGBY REPORT.

Hundreds of staff unaccounted for in latest headcount

The number of employees on Scottish Borders Council's payroll in the final quarter of 2014 stood at 5,300, according to official statistics just released by the SNP Government.

But the council has told a Freedom of Information requester it employs 6,421 people. a massive 1,121 more than the official return published on the Holyrood website.

The huge discrepancy is doubly puzzling as there was a similar glaring difference of well over a thousand in the Government and council's headcounts in 2010. It would appear the quarterly totals for 2014, which show a reduction in Borders local government staffing numbers of 200 over the year may require clarification to clear up any confusion.

Public sector employment across Scotland is updated every three months with the latest set of statistics for the period October-December 2014 released only last week. Two separate tables show the headcount of full-time and part-time staff and the so-called Full Time Equivalents (FTE). The figures are rounded up or down to the nearest one hundred.

In SBC's case the number of FTEs is given as 4,300 in the final quarter of last year, 100 less than at the beginning of 2014.

However, in January of this year, around the time when the latest staffing statistics were being assembled, the council received a Freedom of Information request (FOI number 7408) asking how many people were currently employed, and how many of them were receiving above or equal to the living wage of £7.85 per hour.

According to the reply from SBC's Information team: "We currently employ 6,421 people". The response goes on to say that 6,135 of them receive £7.85 or more. It is only fair to assume the information distributed under FOI rules will be accurate.

However, further research revealed an almost identical discrepancy five years ago when the SBC headcount for the final quarter of 2010 was logged on the Scottish Government chart as 5,700. At the same time the FTE figure was 4,600.

Then in another Freedom of Information request (FOI number 3320) lodged with SBC in November 2010 the requester asked: "How many people are employed by the council, by department if possible".

The departmental breakdown contained within the response was as follows: Chief Executive 95; Education 2,936; Planning 101; Resources 918; Social Work 2,223; Technical Services 862. Total employed 7,135 or a whopping 1,435 above the official Government figure.

Perhaps the numbers supplied by the council demonstrate that those official national tables cannot be relied upon and are therefore virtually worthless. Or is it the case that the SBC statistics released in 2010, and again in January of this year are flawed. They certainly cannot both be correct.

As recently as July 2013 council leader David Parker took issue with the FTE figures for his authority - 4,500 - when that number was published by the Scottish Government. He said the actual FTE headcount at the time was 4,395.

Maybe someone can solve the mystery of the extra 1,100 employees who appear to be working for the region's largest employer. Job creation is laudable, but this is ridiculous!

Smoking gun for new health alliance?

EXCLUSIVE - Doug Collie reports

One of the members of a new Borders partnership which will be responsible for promoting public health, including quit smoking sessions, has had a sizable sum invested in global cigarette manufacturers British American Tobacco for many years.

The Scottish Borders Health & Social Care Integration Joint Board is being formed by Scottish Borders Council and NHS Borders, and is due to ‘go live’ on April 1 although services currently delivered by the two public bodies will not be delegated until a so-called strategic plan is agreed by April 2016 at the latest.

This latest layer of bureaucracy is a result of the Scottish Government’s Public Bodies (Joint Working) (Scotland) Act 2014 which requires health boards and local authorities to integrate planning for, and delivery of, certain adult health and social care services. Each integration scheme must be submitted to Scottish Ministers for approval.

The two Borders organisations already have a joint Director of Public Health while the local integration board has appointed a chief officer, the post having been advertised with an annual salary of between £74,296 and £100,255. The board will also have a chief financial officer, and is currently advertising for a communities and engagement officer for health and social care integration who can expect to earn between £26,000 and £28,000 annually.

Scottish Borders Council’s Public Health web page sets out the various initiatives across the region “to improve health and reduce health inequalities”. Included in a list of services is the statement: “We offer stop smoking clinics to help people quit smoking”.

The message was reinforced in the NHS Borders Quit for Good statement, issued in September last year.

It begins: “NHS Borders and Scottish Borders Council Joint Health Improvement Team are looking to encourage smokers to stop smoking for good by using NHS Borders Quit4Good service.” The statement promises that the support being offered will be consistent and ongoing.

But the council’s involvement in the stop smoking initiative appears to be at odds with the investment strategy of its own staff pension fund, which was worth £486 million in March 2014, according to the latest published accounts.

The fund’s value increased by £40 million from the previous financial year and included £5.2 million in investment income. It currently has 9,500 members including 2,898 pensioners who are either employed by or worked for SBC and eleven other organisations, among them housing associations, sport and leisure trusts and colleges.

The accounts for 2013/14 list the top 20 direct equity holdings of the Fund. They include £4.3 million lodged with Prudential Assurance, £3.6 million invested in Google and £2.7 million with Royal Caribbean Cruises. The seventh highest equity holding is shown as £2.3 million invested in British American Tobacco (BAT).

 

Ten years ago the fund’s accounts for 2005 show investment in tobacco companies at that time was split between global rivals BAT (£1.344 million) and Philip Morris (£1.2 million).

But by 2008 the stake in BAT had increased to £2.326 million with no mention of Philip Morris on the list of equities.

A council statement of investment principles relating to socially responsible investments declares: “The Pension Fund Sub-Committee is of the view that its prime responsibility is to maximise the returns on its investment for the benefit of the beneficiaries of the Pension Fund. It is aware that should it fulfil this responsibility then the financial contributions required of employers will be minimised.

“The Sub-Committee will hence place no restrictions on its investment managers when choosing individual investments in companies in either the UK or overseas markets. It will furthermore not place any particular responsibility upon its managers to engage in discussions with companies on non-financial matters”.

Statistics compiled by the Scottish Public Health Observatory for their Smoking Ready Reckoner – 2011 Edition showed 239 Borders deaths during 2009 were attributable to smoking, and an estimated 19% of the population were smokers at that time. Tobacco was also said to have been responsible for 1,229 hospital admissions, and costs to the local health services associated with smoking were between £6.1 million and £9.5 million, based on two separate methods of calculation.