Center Parcs, a gamechanger for the Borders

by LESTER CROSS

Today's announcement of a £400 million tourism investment by Center Parcs to create their first Scottish holiday resort represents the largest single financial injection of its kind for the Scottish Borders economy, bringing with it hundreds of jobs and millions of pounds in extra spending power.

The massive development is earmarked for a 1,000 acre site close to the A7 trunk road some three miles north of Hawick. The land is currently part of Buccleuch Estates, the region's largest landowner.

According to some campaigners, the delivery of the Center Parcs centre will strengthen the case for an extension of the Borders railway, at least as far as Hawick. But that could still be a long way off.

Statements issued today revealed that the proposals are at an early stage and Center Parcs intends to submit a planning application to Scottish Borders Council in 2025. 

During the construction phase of the project, the company estimates 750-800 regional jobs will be created, and management has pledged to use local contractors.

The site will include a range of indoor and outdoor activities, shops, bars, restaurants, an Aqua Sana Forest Spa and Center Parcs’ iconic indoor water park, the Subtropical Swimming Paradise.

Center Parcs also plans to undertake an extensive programme of tree planting as currently, to transform the site by expanding existing woods.

Representatives of the holiday firm outlined their plans in Hawick to a gathering of community leaders and business and political representatives. The project could transform the economy of the town which has struggled to attract jobs and investment in recent years.

Colin McKinlay, chief executive officer of Center Parcs, said: “This is a tremendously exciting project and offers the opportunity to transform leisure and tourism in the Scottish Borders. Center Parcs is an exceptionally popular destination for families in the UK and Ireland and there is robust demand to support a seventh village.

“Throughout our history, we have demonstrated that a Center Parcs village provides significant economic benefits locally, regionally and nationally."

He pointed out that many Scottish families already visited Center Parcs villages in England, and this village would offer the chance for people to enjoy holidays closer to home, which in turn would benefit the local economy."

He added: “We are at an early stage with these proposals and have a lengthy and thorough planning process ahead. We have already conducted a significant number of surveys to assess the site and we intend to continue with additional site surveys and design development, alongside a programme of pre-planning application consultation and community engagement.”

The estimated investment to build the new village will be between £350 million to £400m.

Benny Higgins, executive chairman of the Buccleuch Group, said: “This project promises to have an outstandingly positive impact on tourism and leisure in the Scottish Borders and we are delighted to have signed an option agreement that will enable Center Parcs to take the next steps towards fulfilling its ambitions.”

Council expected to borrow £170 million in next three years

by OUR LOCAL GOVERNMENT EDITOR

Scottish Borders Council took its borrowing total for 2024 to £76 million last month after arranging another £20 million short-term loan from the Treasury Debt Management Office with further sizeable cash advances likely to be needed over the coming financial years, according to Audit Scotland.

The money will be used to partly bankroll the local authority's £454 million of capital investment which is planned over the next ten years.

A report from John Boyd, the auditor appointed by the public spending watchdog to inspect SBC's books, notes: "The extensive capital plan is primarily focused on economic regeneration and the learning estate. £187 million is on the school estate including the new high schools for Galashiels, Peebles and Hawick estimated at £145 million, with the majority of this invested over the next three financial years. 

"Borders Innovation Park and Borderlands are the two main areas for economic regeneration. The main sources of funding over the ten years for this investment is £115 million of specific project funding, £107 million of general capital grants, and borrowing of £220 million. £173 million of borrowing is expected to be undertaken over the next three years to support, in particular, the school estate projects."

Details of the October loan of £20 million from the Public Works Loans Board [PWLB] show the council will pay 4.93% interest [approximately £986,000] over twelve months before the loan matures in October 2025.

It follows a series of similar transactions over the course of this year. As Mr Boyd points out in his annual audit report - his inspection cost the council £347,980 - at March 2024 short term borrowing increased from £3.5 million to £50.0 million. £40 million of new short term borrowing (1 year) was undertaken in year with PWLB.

"The capital financing need was not fully funded by external loan debt and instead by internal cash. The Council has applied this strategy on the basis that this is prudent and cost effective in an environment where investment returns are low and counterparty risk is high. The Treasury Management Strategy had estimated that £70 million might require to be borrowed in year to support capital investment, but with cash management, it was determined that only £40 million was required to be borrowed."

The report acknowledges  that SBC's total external debt, which includes the council’s long-term liabilities, is within the authorised limit and operational boundary set in the Treasury Management Strategy 2023/24. The current borrowing position complies with the Prudential Code, and the Council continues to consider the affordability of future borrowing.

In a commentary on the council's revenue spending [expenditure on services], the auditor states: "The Council has a good track record of operating within its annual budget. While facing financial challenges through inflationary pressures on pay and non-pay costs as well as demand on services, the Council continues to demonstrate sound financial management maintaining general fund reserves in line with the long term Revenue Financial Strategy."

Over the next five years of the revenue budget, revenue spend is planned at £1.89 billion, with savings required of £18.1 million (1%) over the same period. The Council has identified pressures totalling £63.1 million over the five years, which are dominated by pay pressures of £35.3 million, and non-pay and inflationary pressures of £14.9 million.

Although the revenue plan identified savings targets averaging just under £4 million per year, the report explains: "this does not reflect that temporary savings made in previous years will need to be made on a recurring basis. The savings target for 2024/25 has doubled to over £9 million, as a result of non-recurring savings being brought forward from the previous year. If this pattern continues over the medium-term this will make achieving a financially sustainable position more challenging." 

Mr Boyd adds: "One of the key measures of the financial health of a body is the level of reserves held. The level of usable reserves held by the Council increased from £62.2 million in 2022/23 to £72.4 million in 2023/24, a net increase of £10.2 million."

Total capital expenditure in 2023/24 was £90 million against a revised budget of £96.9 million. 

"Whilst there was an underspend on the planned budget, there is still a significant increase in capital investment from 2022/23 when £63.5 million was spent. The main ongoing projects are the Hawick Flood Protection Scheme and the building of new high schools in Galashiels and Peebles, and Earlston Primary School with £52.5 million invested in these projects."

Other areas of expenditure included roads and bridges, plant and vehicles and ICT transformation.

"The main challenges for delivery of capital projects in year has been the high levels of inflation along with supply chain issues relating to construction materials which have affected the public sector more widely. The impact of this has been price increases, material shortages and longer lead times for projects. The macroeconomic pressures of high inflation and significant increases in construction inflation has resulted in increased total expected spend for all the schools’ projects."  

 

Skills shortage challenge for local forestry industry

by LESTER CROSS 

The South of Scotland will need to recruit significant numbers of additional workers into the region's forestry industry if it is to continue producing a third of the country's timber into the future, according to a report  on the sector's prospects in the Borders and Dumfries & Galloway.

But efforts by Borders College to tackle forestry skills provision in recent years has had to be reined in due to a lack of applications for some courses. 

At the same time, it has been estimated more than £5 million of capital investment is needed to provide facilities and equipment for training in the region's key industries of forestry, construction and engineering. 

The report prepared for the Convention of South of Scotland [COSS] warns: "All options are being explored by skills providers – institutions are submitting proposals to the Borderlands Inclusive Growth Deal programme, and this may offer some options for providers to respond to the needs of these sectors. However, the reality of the situation is this – Regional Skills Planning processes have worked well to identify an evidenced based need arising in key South of Scotland sectors but responding to that need comes with significant financial challenges and, at the moment, there is a deficit in resources to overcome."

Official figures suggest that 900 people work within forestry and logging across the region. But industry body Confor estimate that between 3,000 and 5,000 jobs are associated with the wood supply chain in South of Scotland. 

As the report says: "Compared to some sectors, this is not a huge volume workforce, however it is a strategically important sector for the South of Scotland in terms of GVA and in the creation of well-paid jobs and spin off benefits to the associated supply chain. 

"And forestry activity in South of Scotland is strategically important for Scotland and beyond. It produces around a third of Scotland’s timber, which equates to nearly 20% of the UK production. Scotland cannot achieve its aims related to timber production and net zero without a sustainable forestry workforce in the South of Scotland."

COSS is told that forestry presents compelling evidence for future growth for various reasons: Afforestation is one element of the Governments approach to reaching net zero. The Scottish government target is to increase new woodland planting by 18,000 hectares per annum by 2025, as part of net zero plans.

The document sounds a cautionary note by stating: " The tensions between Sikta based afforestation and ambitions around biodiversity and planting of native hardwoods were discussed at the Convention of South of Scotland in February 2024. How these tensions are resolved moving forward will have an impact on the demand for skills somewhat, however it is felt that there is sufficient certainty around this issue; that it shouldn’t hold back plans for skills interventions."

 The issues facing recruitment are outlined by the report's authors. "The forestry industry has reported challenges with recruitment and retention for some time. Workforce and skills shortages are at all levels for the forestry sector – from entry level to higher level business, integrated land management and environmental management skills. There is also a significant lack of diversity within the workforce as traditionally it has struggled to attract women. The issues are compounded by an ageing workforce that needs replaced."

The expanding tourism industry in both local authority areas is also set to fuel demands for more staff.

According to the skills report the visitor economy is estimated to employ 13,000 people in South of Scotland and the South of Scotland. The local enterprise teams have set an ambition to take this employment above 20,000 within ten years. 

"Even if growth in the sector is not achieved, there remains the prospect of strong demand for labour to support the sector. Replacement demand (replacing workers leaving the sector) is forecast to be very high. It is forecast that 3100 workers will be required to satisfy demand in the sector to 2033 but over 90% of this estimated demand is replacement demand."