Sunday, 28 December 2014

Unravelling the mystery of tapestry finances

The £40,000 report commissioned by Scottish Borders Council from Jura Consultants - a document which apparently persuaded 20 elected councillors to spend millions of pounds on a shiny new centre at Tweedbank to accommodate The Great Tapestry of Scotland - includes comparisons between our expensive venture and other tapestry galleries elsewhere in the United Kingdom and beyond.

But while the Jura report claims to "provide a summary of attractions which bear similarities to the proposed vision of the Great Tapestry of Scotland" no mention is made of the actual balance sheets of these comparable facilities such as The Quaker Tapestry Exhibition Museum in Kendal, Cumbria, or The Knutsford Millennium Tapestry in Chancellor George Osborne's Cheshire constituency.

Perhaps a few extracts from the annual accounts of these long-established tourist lures would have been helpful before a healthy majority of Borders councillors voted for a vast investment of taxpayers' money to pay for a risky venture in the backwater that is Tweedbank. They may or may not have been swayed by Jura's upbeat forecasts of profitability resulting from the hordes (40,000 to 50,000 a year) who we are assured will flock to see the tapestry once the Border Railway is up and running in September 2015.

A few minutes of internet research would have revealed that far from being roaring financial successes, the Kendal and Knutsford centres both lose money despite sizeable grants and donations from both the public and private sectors. But not many of our modern-day elected servants bother to ask questions or ascertain the full facts before sticking their hands up in a "non roll call" vote.

The Quaker Tapestry's latest accounts reveal total income of £221,354 and expenditure of £255,296. The income included grants totalling over £80,000 from 10 organisations including Cumbria County Council, South Lakeland District Council, Kendal Town Council and the Joseph Rowntree Charitable Trust. Income from admissions fell from £12,077 in 2012 to just £10,587 in 2013.

The trustees say: "The cost of running the cafe remains a challenge, partly because of the variability of customer numbers. Donations are particularly important to bridge the gap between trading income and expenditure." The catering side of the operation alone lost £6,000 last year.

Is this what happens when the novelty of a new attraction starts to wear off? The Quaker tapestry panels were started in Somerset in 1981, and over 4,000 people in 15 countries were involved in making the 77 embroidered panels tracing the history of the movement from 1652.

Even the Jura report admits: "Challenging economic times have resulted in some financial difficulties [for the Quaker Tapestry Museum]. An annual review emphasises its need to continue to control operating costs, increase earned income and maintain charitable support".

Meanwhile the Knutsford Heritage Centre, which houses another tapestry, has also been recording financial losses in recent years. The 2013/14 accounts reveal income of £35,221 and expenditure of £37,260. The figures include grants of £9,720 and donations of £8,920.Those returns marked an improvement on 2012/13 with income of £27,628 and spending of £41,467.

The Jersey Occupation Tapestry, which took 228 workers 30,000 hours and seven and a half million stitches to complete is not included in the consultants' report. But our local councillors may be interested to know that the Channel Islands attraction only survived a potentially fatal financial illness in 2009 thanks to an £800,000 bail out from the States of Jersey government. The tapestry, part of Jersey's Maritime Museum, had to be closed in the winter months to save money.

It seems the financial outlook for these works of art is, in many cases, wobbly and uncertain. So is there any guarantee the Tweedbank scheme will not struggle for stability, despite Jura's positive predictions? It is to be hoped Borders council taxpayers are not asked to fill the proverbial begging bowl should this new attraction run into choppy fiscal waters!

Saturday, 20 December 2014

An issue of great interest!

As predicted in these columns many moons ago, the Borders will be playing permanent host to the Great Tapestry of Scotland whether we like it or not, and even though a local referendum would have returned a resounding 'No' vote for this reckless, unwanted venture.

Now, thanks to a score of misguided councillors, we are saddled with a £3.5 million millstone to meet the cost of building a home for a potential white elephant plus a further £6 million in interest payments over the next 30 years. Apparently there was a miscalculation which means the annual loan charge "only" works out at £208,000 rather than the original figure of £275,000. Whew, that's a relief!

But back here in the real world it's worth taking a closer look at the amount of money Scottish Borders Council has to find just to service its massive debts and an ever increasing portfolio of borrowings.

There's also the small matter of paying for three Public Private Partnership (PPP) secondary schools, another irresponsible decision which has left us with £225.6 million outstanding plus interest of just over £41 million. In 2013/14 alone the bill for PPP came to £8.763 million. The demands on the local authority's purse will grow as time marches on, and the debt will be on the balance sheet for a generation.

According to Scottish Government figures SBC's total debt at the end of the last financial year (2013/14) stood at £193.114 million, equivalent to £1,698 per head of the Borders population. But the actual figure depends on which formula you care to adopt.

The council's own set of accounts tell us that more than a third (37%) of the £27.6 million capital expenditure programme last year was funded by borrowing. Meanwhile interest payable and similar charges for the 'carrying amount' on the range of outstanding debts totalled £11.908 million in 2013/14. So the decision by councillors to add another £208,000 to that annual bill doesn't matter much, does it?

How many teachers would that kind of money pay for? Or how many service cuts could have been avoided had the spiral of borrowing and the collection of debts not existed? Pressures on budgets meant SBC had to find £6.3 million in efficiency savings during the last financial year, yet that was only a fraction of the money required to service loan charges.

If all this sounds distinctly downbeat, then its only fair to point out there's an even scarier set of figures included in the accounts under the heading of Fair Value of Loans. The eye watering total stands at £239.899 million.

An accompanying explanatory note tells us: "The fair value is higher than the carrying amount because the council's portfolio of loans includes a number of fixed rate loans where the interest rate payable is higher than rates available for similar loans in the market". The average rate of interest on the various loans was 5.2% last year.

Taken together, the £12 million of interest payments together with the £8.763 million to keep the PPP payments on schedule works out at more than twice the entire Cultural & Related Service budget (£10.552 million) and is also well in excess of the £15.9 million spent on Roads & Transport.

As long as the open-ended permission to borrow even more from the Public Works Loan Board (PWLB) continues to be available, and while we have irresponsible elected members who don't particularly care how high SBC's debt mountain rises then there will be no chance of cutting this scandalous level of indebtedness. Many more millions of pounds of public money are certain to be flushed down the pan as the black hole of near insolvency becomes a veritable galaxy.

Monday, 15 December 2014

Open letter to all Borders councillors

Dear elected member,

Scottish Borders Council - like every other local authority in Scotland - may be on the verge of bankruptcy, with accumulated debts of more than £170 million. And millions more will have to be found from existing revenue budgets by cutting services still further over the coming financial years.

Yet on Thursday of this week (December 18th) each one of you will be invited to sanction expenditure of £3.5 million on a single capital project, the construction of a purpose-built 'shed' at Tweedbank to house The Great Tapestry of Scotland. It is a crazy venture which we Borders taxpayers simply cannot afford, and you have the chance to confine it to the dustbin of local government history when you're called upon to vote on the issue.

This is not the time for vanity projects dreamed up by council leaders without any thought for the long term financial implications which, as the report to council points out, will be hanging round our necks like the proverbial albatross for 30 years.

When interest re-payments coupled with instalments on the original £3.5 million are totted up the actual cost appears to come in at £8.25 million. So the burden of bringing the tapestry here - it has no link or direct connection to the Scottish Borders whatsoever - will join our extremely costly PPP/PFI secondary schools in syphoning tens of millions of pounds from the council's near-empty coffers. A number of other 'Consent to Borrow' successes simply add to the drain on cash.

The document compiled by your officers suggests there will be revenue surpluses resulting from the £10 admission charge for visitors to the Tweedbank tapestry venue. There's even a prediction of between 40,000 and 50,000 visitors a year although those numbers cannot be guaranteed.

And the plan to take money from visitors does not appear to be in line with the objectives of The Great Scottish Tapestry Charitable Trust which state: "The Trustees will endeavour to transfer the tapestry to a public museum or other public body of similar status where it will be held for the benefit of the nation and be made available for viewing at no cost to the public."

The proposal to find a home in our midst for this large textile should have been strangled at birth. Instead it looks as though the cash-strapped council taxpayers of the Borders are about to be presented with an unwanted Christmas stitch-up, if you'll pardon the pun.

But it is not too late to save the day...and a great deal of money which would need to be borrowed at considerable expense if this daft project is to proceed.

All it takes is for each and every one of you to vote 'No' when the motion is proposed. So show a bit of backbone and do us all a favour. You never know, you might just reap your reward at the next council election. Whichever way you vote I'm sure many of us have long memories!

Tuesday, 9 December 2014

Who'll take the rap for this classic cock-up?

Nine months in and it seems Scotland's first and only municipal DECYCLING scheme is working a treat with a record fall in the amount of household waste being composted or recycled and spiralling tonnages of refuse going straight to landfill.

While virtually every other local authority in mainland Scotland is participating in a Government led drive to hit ambitious recycling targets and an eventual aim for zero waste, Scottish Borders Council's latest set of statistics on the garbage front can only be described - perhaps appropriately - as rubbish.

Our sharp-eyed chief reporter Doug Collie warned earlier this year there would be grim repercussions after the councillors who hold the reins and crack the whips at SBC took the puzzling and daft decision to suspend collections of garden waste and render tens of thousands of green wheelie bins redundant.

However Collie was not alone in condemning the move which lacked credibility during the 'green' age we live in. There was bound to be fall-out as gardeners grappled with the issue of disposal of grass cuttings, rotting apples from Borders orchards, and the vast collection of dead bedding plants at the end of another growing season.

But we haven't even had to wait that long for the proverbial manure to hit the fan! SBC has been kind enough to publish the evidence of its own tumbling recycling rates which we now see were on the slide by the end of the first quarter of 2014/15, a couple of months after garden waste collecting was binned.

Few councils can have achieved a ten per cent fall in their own recycling levels within the space of a year by taking direct action to halt composting of garden waste. But that's exactly what has taken place in the Borders with recycling now down to an embarrassing 34.52 per cent against 44.44 per cent in the first quarter of 2013/14. It should be borne in mind that all Scottish councils were supposed to be striving for a 50 per cent figure by 2013 and 60 per cent in the year 2020.

The same locally elected members who decided on this unique waste disposal strategy will, in all probability, not give a hoot when they're told the amount of household rubbish going to landfill has increased by a distinctly unimpressive 12 per cent in the two comparable quarters...up from 7,281 to 8,152 tonnes.

In quarter one of 2013/14 the cost of sending Borders waste to landfill was £524,205. In the corresponding quarter of 2014/15 the cost was £652,160, that’s an increase of £137,955 or a massive 26.32%. And remember this is the increase in costs for just one quarter. Multiply the £137,955 by four and you get the possible annual increase in landfill costs - £551,820. How does that sit alongside the alleged “savings” from scrapping the green bin collection?

So there you have it. Another potential half-million pound legacy for council taxpayers thanks to the sheer incompetence of those running local services.

But if you're waiting for someone to put up a hand and plead guilty to a bout of stupidity or admit responsibility for sending our recycling rates to the bottom of the Scottish league table, then please don't hold your breath.

There's no doubt that heads should roll after this latest classic cock-up in the annals of Borders local government. But with so many previous examples of councillors getting it wrong I don't suppose yet another costly error at taxpayers' expense will result in drastic action to ensure the perpetrators are held to account. Why change a flawed system that's aye been?

Wednesday, 3 December 2014

Council job cuts: myth or reality?

Despite “savage” reductions in their budgets, the removal of a wide range of local government services altogether, the privatisation of many operations through the formation of so-called trusts, and tens of millions of pounds spent on severance/redundancy and early retirement packages, staffing levels in many Scottish local authorities are significantly higher than they were fourteen years ago.

Back in 2000 council taxpayers enjoyed a far better standard of service than they do in 2014, yet it appears those services were delivered by a smaller payroll than the current staff numbers. It may be tempting to ask how this has happened as the public sector continues to complain about multiple job losses and is still paying out huge sums supplied by taxpayers to terminate the employment of high earners.

The thousands of employees who have left local government service in Scotland in recent years have only enabled their employers to reduce the bloated staffing levels of 2005/2006. Between the year 2000 and 2006 the number of so-called Full Time Equivalents (FTEs) in the public sector soared from 238,400 to 263,400.

According to the Scottish Government’s latest figures the combined total of FTEs  on the books of 28 local authorities (excluding the four city authorities) now stands at 151,600 – 900 higher than the 2000 total of 150,700.
No fewer than 18 councils have more FTEs now than in 2000, eight authorities have reduced their employee numbers while two have reported identical figures for 2000 and 2014.

While councillors and senior officers whine about front line staff being cut to the bone it would appear from the statistics there's a fair layer of fat remaining to be trimmed. It seems logical that employee numbers should be below 2000 levels rather than above them given the decimation of services over the last seven years.

Some of the increases within individual councils are both eye catching and breathtaking. Aberdeenshire's statistics show FTEs up by 2,500, Falkirk 800 higher than in 2000 and Fife by 600. Here in the Borders the local council's FTE count is 100 higher than it was 14 years ago.

The data for the 28 authorities is as follows with statistics for the second quarter of 2014 given first and the equivalent numbers for 2000 in brackets: (figures rounded up or down to the nearest 100)

Aberdeenshire 10,400 (7,900); Angus 4,400 (4,200); Argyll & Bute 3,700 (3,900); Clackmannanshire 2,100 (2,000); Dumfries & Galloway 5,600 (5,400); East Ayrshire 5,100 (4,800); East Dunbartonshire 3,700 (4,000); East Lothian 3,500 (3,400); East Renfrewshire 3,800 (3,100); Eilean Siar 1,600 (1,600); Falkirk 6,400 (5,600); Fife 15,900 (15,300); Highland 8,000 (8,700); Inverclyde 3,500 (3,900); Midlothian 3,600 (3,300); Moray 3,700 (3,200); North Ayrshire 5,500 (5,600); North Lanarkshire 13,000 (13,300); Orkney Islands 1,700 (1,300); Perth & Kinross 4,900 (4,600); Renfrewshire 6,900 (7,200); Scottish Borders 4,400 (4,300); Shetland Islands 2,300 (2,100); South Ayrshire 4,300 (4,800); South Lanarkshire 12,500 (12,400); Stirling 3,500 (3,300); West Dunbartonshire 4,800 (4,800); West Lothian 6,800 (5,700).