Business - Aberdeen Voice

A Tale Of Two Cities In The Youth Job Market

Feb 082013

By David Innes.

The Office of National Statistics report of 23 January shows that unemployment in Scotland among those aged 16 to 24, reduced by 23000 (4.8%) from September to November 2012. 19.9% of our young people remain unemployed. The UK rate is 21%.

John Swinney, Finance Secretary was delighted:-

“These figures show that unemployment in Scotland has continued to fall for the second monthly release. The strong performance in youth unemployment over the year is particularly welcome. This month’s release sees the largest annual drop in the youth unemployment rate since the data series began in 2006.”

Angela Constance, Youth Employment Minister agreed:-

“Youth unemployment in Scotland is at its lowest level since March to May 2011. Our actions to improve youth employment rates have included a guarantee of a place in education or training for every 16-19 year old through Opportunities for All, funding 25000 Modern Apprenticeships in each year of the current parliament and £8.5m to create 1400 jobs in the third sector through Community Jobs Scotland.”

An Employer Recruitment Incentive will be launched to support small companies willing to give young people jobs, backed by £15m of Holyrood funding and by £10m of European Structural funding.

Reinforcing the views he expressed in a Voice interview earlier this year, Anderson Construction Managing Director, Kenny Anderson, commented:-

“We are lucky that the self -financed Construction Industry Training Board screens potential apprentices for interview and recruitment thereafter, but demand for places outstrips supply even in Aberdeen.

“As a small company we do our bit, but it’s harder for the larger companies who used to recruit substantial numbers of apprentices annually, as they are now competing with management contractors who generally do not recruit site staff but use agencies and sub-contractors to provide the labour.”

Yet, whilst the youth unemployment rate sits at 20% and the overall rate is nearly 8%, one boss of a growing national company is frustrated at his business’s inability to fill vacancies in Aberdeen.

Jeremy Miles, Edinburgh-based Managing Director of the Edinburgh Bicycle Cooperative declared:-

“The big problem we have is in recruiting mechanics. It seems the oil and gas industry hoovers up anyone who has all their fingers in place.

“At present we have a couple of co-ordinator roles for senior shop floor staff and in sales. We’re desperate to recruit staff for our workshop and will soon be looking to bump up our head count for summer, but filling the current vacancies is already proving difficult.”

It was Norman Tebbit who made the notorious comment about the need for the unemployed to get on their bikes and look for work during the austerity years of the 1980s. Maybe in Aberdeen, which remains largely prosperous there’s are opportunities to take the Chingford Skinhead’s advice and kill two birds with one stone.

http://www.scotland.gov.uk/News/Releases/2013/01/lmsjan230113
www.andersonconstruction.co.uk
www.edinburghbicycle.com/comms/site_about/job-vacancies.htm

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A P*ss-Up In The Brewery: BrewDog Style

Aberdeen City, Featured, Opinion No Responses »

Jan 242013

19th January 2013, the winds are blowing; the snow is on and off again, and it’s brass monkey weather. Perfect for a BrewDog barbeque and party. Suzanne Kelly reports.

The opening of the shiny new BrewDog Brewery near Ellon was marked by one of those types of events Martin and James, BrewDog’s founders, are now famous for.

Around 200 shareholders (Equity Punks as they are known) were chauffeured from the eponymous Aberdeen bar to the factory and back again for four hours of factory tours, music from The Little Kicks (an act which is really getting stronger all the time), speeches, a great but cold barbeque, and of course, beer.

On the way up, one of the passengers, Curtis, explains that he’s come up from Glasgow for the day to be here. Like virtually all Equity Punks, he bought shares because he loves BrewDog beers.

“I love BrewDog. It’s not about getting hammered on cheap lager.” – a sentiment many echo.

The success of the brand was explained one month ago by James, who spoke to shareholders up and down the country at small venues; his presentation on the company’s growth was impressive and reassuring. At these meetings shareholders demonstrated great enthusiasm for the new brewery – a project undertaken because demand has far outstripped supply.

The old premises are being kept for ‘experimentation’, something this firm excels at and clearly revels in.

As to the new factory and its equipment – I can’t tell you how it all works. However, massive quantities of water meet massive quantities of quality hops in massive stainless vats, turning into beer.

Dials whirred; computer touch screens flashed, some valve was emitting bubbles.

One man turned to me and said with a huge smile:

“It’s all a bit Willy Wonka, isn’t it?”

It definitely is.

It seems that experimentation is built into the new factory; there are bespoke pieces of equipment including a ‘hops cannon’. The factory is in part painted with an undersea motif, and a neon sign proclaims: “Love Hops And Live The Dream”, which is just what founders James and Martin are doing. Their dedication to craft beer brewing continues to win fans and new partners the world over.

There are frequent competitions, give-aways, experimental new beers, publicity happenings and events. The marketing is punk, friendly, and filled both with enthusiasm and a genuine, infectious passion.

The brewers were on hand to explain their craft; hops experts were on hand to discuss the finer points of choosing hops.

The heroic efforts of the outdoor barbeque crew cannot be underestimated; long queues for the barbeque never abated through snow, snow, rain, snow and rain.

The tour ended with a visit to the warehouse end of the building, where walls of cases of beer and golden kegs stamped with the BrewDog logo were met with awe. It was a cathedral of beer to me.

If you have not noticed over the past decade, the demographic of who drinks craft beers has radically changed. It is not just blokes in thick sweaters with glasses and beards. I spoke to three women, one who had chosen to spend part of her birthday here. They, like me and many others, enjoy tasting different beers. As they put it:

“I did not drink beer before they opened their bar in Aberdeen. It feels so friendly. They have opened my eyes; I did a food tasting – who would have thought that blue cheese and beer would be a great combination?“

“We used to only drink wine. Now we love trying new beers. It’s (the Aberdeen bar) a place where you can go in as a woman, go in alone, and feel perfectly comfortable.”

Very true indeed.

The highlight was the cutting of a hops-laced red ribbon by a shareholder named Winston Hamilton (he asked me to thank BrewDog for a great day out for him). He had been selected to cut the ribbon for his participation in a BrewDog competition. James and Martin each said a few words before the ceremony, and the crowd was delighted.

Martin told me:

“For us this is just the beginning; we’ve worked very hard these past five and a half years to get here. We’re excited not about what we’ve done, but about what we’re going to do.”

So, congratulations to this creative local success story, and here’s to the next chapters in its future.

Note: I own shares in this company, which I have always been very open about and proud of. I’m not extolling the virtues of this company to get others to invest. In fact, you can’t invest now, anyway. I bought the shares not for any hope of rolling in money (I have the smallest amount of shares that you could buy, worth less than £100), but to support a local fledgling business, one with a great product and great people. I think it’s safe to say that many other shareholders feel as I do.

Tax Is Lax

Creative Writing, Satire and Humour No Responses »

Dec 142012

By Bob Smith.

Amazon, Google an Starbucks
Hiv avoided pyein some tax
Throwe a loophole in the law
Fit’s bin mair than a bittie lax

Multinationals they div employ
Accoontants tae fin sic wyes
Thae chiels are up tae scratch
An in tax laws are richt wise

You an me we pye oor dues
We micht hae a girn an sweir
An fit the tax mannie tells us
Is nae aye sae bliddy clear

It seems its nae agin the law
Fer firms tae use sic ploys
Bit morally it’s jist nae richt
If the law faavour’s “ big boys”

Time fowk pit a stop tae iss
Mak the slippery buggers think
Jist boycott the likes o Starbucks
Fin ye buy yer next coffee drink

Pye yer dues shud be the cry
Yer bunk balance micht tak a hit
Fit wye shud the rest o us suffer
Cos ye employ a tax swerving git

©Bob Smith “The Poetry Mannie” 2012

Old Susannah No. 97: It’s An Ill Wind

Aberdeen City, Satire and Humour 4 Responses »

Oct 042012

Old Susannah looks back on another exciting week in the Deen, even if there was no mass protest by 60 or so members of the Cove Rangers/HoMalone/Kate Dean/boys with megaphones collective. By Suzanne Kelly.

Common Good Aberdeen launched an initiative to put swings and play equipment In Union Terrace Gardens; I wish them well with that.

Old Susannah secured a ticket to the premier of the Led Zeppelin concert film ‘Celebration Day’, and is counting the hours. BrewDog’s competition to create a beer cocktail is, however, taking up most of my spare time. So far my creations run from to absolutely undrinkable to pretty awful.

Still, the contest closes on 8 October, so there is still some chance I’ll come up with something acceptable. Win or lose, it’s been a lot of fun trying.

That nice Mr Milne is busy starting his new housing estate on the formerly open lands in Cove/Charleston. Someone is building right on the main road by the Cove Bay Roundabout.

It might not be a great location for playing footie with the kids, but those overhead power lines and transformers will make for some entertaining kite-flying experiences, I’m sure.

I visited Tullos Hill this past Monday, and the place is a complete, well, ‘sotter’ is the word that springs to mind. What few mature trees there were are now diminished in number; some uprooted, some with very badly broken limbs.

Raised earth filled with rock and rubble is apparent everywhere, and the areas where gorse was cleared, where once animals lived, are now just dead zones. Well done everyone! And don’t worry. The Housing Committee may be done with this scheme, but the opposition still wants to see some justice done, and is working on it.

And now for a few relevant definitions.

Wind Power: (compound noun, English) the strength of the wind whether harnessed or not, the potential energy from wind

The Donald’s back! Donald Trump, celebrity, international superstar, business Moghul, and pin-up breezed into town this week. He’s blowing hot and cold over his new development – will he finish it? Can it still be the world’s greatest golf course if there are turbines offshore?

Don probably just thought that since Alex Salmond fell into line over a few expensive dinners, the rest of the Scots would fall as easily.

We should ignore our other developing renewable energy technologies and just build as many wind farms as we can.

However, it seems some pesky Scots aren’t doing as he wishes, despite the Donald’s granny being from Skye or something. Yes, we might well put up windfarms along the coast, ruining the view for the hordes of millionaires and slebs who want to golf all year round at the world’s most grating – sorry, ‘world’s greatest’ golf course.

I must have missed the part where all these rich people and pro golfers said they simply would not come because of the wind farms. I’m sure they are all at home in the south of France, California, Maui, etc. picking out their thermal golf clothes for when they come in February to play along the North Sea at Balmedie. The wind farms will ruin the Scottish economy if we are allowed to build them where rich folk can see them.

On the other hand, why wait until the technology is perfected – let’s just build windfarms everywhere right now. Just because every one of humankind’s past prototype inventions have all been miniaturised, made more efficient and cheaper doesn’t mean that windfarms will improve as well.

Never mind the science/technology/impacts/economics: there is a tax break to be had (even if it is just a little expensive to get the electricity onto the grid). We should ignore our other developing renewable energy technologies and just build as many wind farms as we can.

If only we could harness Trump’s hot air – that would solve all our energy needs. Still, let’s make sure we put all our eggs into the wind farm basket, take those tax breaks, and ensure the whole countryside and seaside are covered with them. What could possibly go wrong with a scheme that has the Government’s backing?

Culture of Yes: (Scottish Enterprise phrase, modern jargon) Campaign to help Scottish businesses grow, and er, just say ‘yes’

Please forgive Old Susannah for bringing up the ‘Culture of Yes’ – for you will all already know about it and be on board with it. After all, no less a person than Bob Collier of the Aberdeen Chamber of Commerce wrote about it in the June 2012 Business Bulletin. I can’t wait from month to month for my new copy of the Bulletin to arrive, and I am sure you all feel the same.

Bob describes in loving terms how £750,00,000 per annum Scottish Enterprise has come up with a new slogan, ‘Culture of Yes’ (how much did that cost us, I wonder). Without this new Culture of Yes, how else would businesses be able to expand, try new markets, and keep going? Exactly.

You see, it’s important in business to have a ‘can do’ rather than a ‘can’t do’ attitude. I hope I’ve not shocked you too much with this revelation. As Bob writes:-

“…this recession will end when we want it to – when attitudes change – and this should help to advance that process.”

Alas! The web has ceased to be. It is an ex-web.

And here I was thinking the recession was about American toxic mortgage products, bad debts, loans that shouldn’t have been made, manipulation of LIBOR, EU policies, austerity in Spain, Italy, Greece… Wrong! The recession is only about attitudes being bad.

Sadly, I missed Bob’s November 2009 offering in the Bulletin, but he quotes from it for the benefit of those who don’t have the full back issues saved at home. To save you looking through your collection of Bulletins, here’s what he had to say:-

“In my Chamber Viewpoint in November 2009, under a piece headed “no but, yes, but, no…” and taking my inspiration from Vicky Pollard [you don’t say!] I argued: “We’ve all got the choice to be ‘No But’ or ‘Yes But’. There is always a ‘but’ – life is complicated and agreement takes effort.

“But we have a fundamental choice to make. … So we respond on your behalf with “yes but’ to AWPR, Trump, EOWDC, City Gardens and many other positive investments for the region. Our support is considered, and our constructive engagement improves good developments. This is an approach which many in Aberdeen City and Shire would do well to remember when they consider the choices they are given to say ‘yes’ – but that’s another story.”

I am sure you are feeling as inspired as I am by the above. How good of the Chamber of Commerce to have said ‘yes’ to the City Gardens on behalf of its members! Not all businesses in the CoC backed the City Garden Project, but those ‘no-sayers’ were obviously just being negative.

Of course with Bob Collier who wrote the above also sitting pretty with Tom Smith on one or two little organisations with a strong interest in the project going ahead, the CoC was always going to say ‘yes’ to the web.

Alas! The web has ceased to be. It is an ex-web. Despite the pretty much unveiled threat above (“many in Aberdeen City and Shire would do well to remember…”) to vote ‘yes’, it was just not meant to be. All of the plotting, redacted minutes, hidden votes from the shortlisted design show, now all for nothing. And as Bob concluded this little article of his

“What goes around, comes around.”

Bob, on that point I can only agree.

Old Susannah must leave it a bit short this week; there are BrewDog beer cocktails to be invented. Be that as it may, I’ll be heading to One Up Records over the weekend.

Support your local music shop. A variety of forces to do with people illegally sharing music, piracy, cost of CDs, business rates, competition from chain stores, digital downloads, etc. make it difficult to run a music store. Then again, Bob Collier thinks the recession is all down to attitude. To that I’d say ‘no but no but no.’ Anyway – g’wan – go pre-order the Zeppelin CD, DVD, whatever.

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UTG: The Final Verdict

Aberdeen City, Articles, Featured, Opinion 9 Responses »

Aug 312012

The City Garden Project is dead. It’s difficult to believe after all these years, but despite some horrendous death throws and twitches, the beast has been slain. Mike Shepherd looks back at the good things and the bad things that emerged from this experience.

BAD: Businessmen tried to impose their will over the rest of Aberdeen.
GOOD: The people of Aberdeen fought back and won.

Aberdeen had in recent years drifted politically into a situation where big business interests were exerting too much control for the good of a pluralistic society.

It is shocking that economic policy for the region has been devolved to mainly business interests largely beyond political control (ACSEF).

The UTG decision shows that the people of Aberdeen can still exert a brake on the rampant will of businessmen who think they can do what they want, even to the extent of taking over a public park.

BAD: The local press proved less to be the watchdog of the community and more the poodle of big business.
GOOD: Aberdeen Voice was formed and the internet became a forum for those who disagree with the local newsprint’s version of ‘consensus’.

Freedom of Information releases show how much of our tax money ACSEF have spent on public relations, largely channelled through the local newsprint. However, the days whereby the Aberdeen media creates the message and controls the consensus are slipping away. The ‘editorial column’ has now lost all credibility and the free exchange of opinion and information is passing to community pages on the internet.

BAD: Public consultations and referenda have now proved to be totally worthless.
GOOD: We still have the ballot box.

The first public consultation was effectively run as a marketing exercise and was ignored because it returned the wrong result as far as ACSEF and a section of the business community were concerned. The later public referendum was run with good intentions but business interests left nothing to chance and spent their way to a totally one-sided campaign. Both episodes did nothing to reduce rampant cynicism amongst the disaffected. However, the results of the democratic ballot through council elections could not be ignored or swayed by one-sided campaign spending.

BAD: National politicians sided with power and wealth against the interests of the public.
GOOD: You can still punish them for the abuse of political control through the ballot box.

The involvement of senior Scottish Government politicians in a local dispute over a public park was despicable. Sectional party interests look to have been involved in an attempt to curry favour with wealth, power and influence in the Aberdeen area. The politician’s willingness to get involved in a divisive local issue despite potential fallout from the electorate suggests that over-riding political objectives at a national scale were at stake. That potential fallout from the electorate happened.

BAD: Aberdeen Council turned over wagging paws in the air at the behest of business interests.
GOOD: We are on their case.

Of all the shockers perpetrated by our Council, the worst was to allow the proposed developers of the City Garden Project, a limited company, to influence the business case for Council borrowing of millions of pounds for the project. To show how bad this is: under normal circumstances an “allegation” like this would have provoked outrage and perhaps lawyer’s letters; but this is not an allegation; it is all there in black and white in the council’s report. We are now alert to the knowledge that our council can do these things. They will be watched like a hawk.

BAD: The political powers have stopped bothering with building consensus over big planning issues where conflict could arise.
GOOD: The might is right approach has failed miserably.

A big lesson from the recent history of political decisions in Aberdeen - Involve everybody and make sure that all opinions are heard and considered seriously. If you don’t do this, expect a political quagmire of horrendous proportions – UTG, the bypass, Loirston, etc, etc. It doesn’t matter who is right or wrong, you have to do this properly and thoroughly

GOOD: A public park, Union Terrace Gardens, has been kept as a public amenity.
GOOD: They will think twice before ever trying that again.

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A Hunner Snipers An Aa An Aa

Creative Writing, Satire and Humour No Responses »

Aug 172012

By Bob Smith.

Noo a hunner business billies
Faa support City Gairdens Trust
Tae destroy Union Terrace Gairdens
They aa think iss is a must

They’re aa the usual suspects
Faa stan tae mak a killin
An ding doon ony cooncillor
Faa disna show ony willin

Ye hiv the likes o Martin Gilbert
Twa Stewarties, Milne an Spence
An woe betide ony business chiel
Faa micht sit upon the fence

A letter tae oor toon council
Wis sint wingin on its wye
If ye vote agin the plans
We micht hing ye oot tae dry

Think o the bigger picter here
Is their affa mournfu plea
An Sir Ian he’ll jist waak awa
If oor biddin ye dinna dee

Their PR machine is gearin up
Wi helpfu freens at the P&J
Faa canna say onything naistie
Advertisin revenue cums intae play

Fit richt hiv aa thae buggers
Tae tell us fit’s best fer oor toon?
An try tae dictate tae oor council
Fit they can or canna vote doon

We wull sin fin oot fit’s fit
The cooncil’s back is tae the wa
Can they haud faist agin the critics
An a hunner “snipers” an aa an aa?

Lit’s Hear It Fer Iss Warld

Creative Writing, Satire and Humour No Responses »

Aug 102012

By Bob Smith.

The warld’s noo an affa place
Is the spik ye fyles div hear
The planet itsel’s nae tae blame
Jist some fowk fa’s on’t a fear

Oor warld’s there tae be enjoyed
It’s faar aabody’s born and bred
It keeps us aa fed an wattered
In Aiberdeen or aroon the Med

Heich snaw capped muntins
Faar ower valleys ye can look
In clear an crystal rivers
Brave fowk can hae a dook

There’s buttercups an ither flooers
In leys aa ower oor sphere
Wild animals an bonnie birdies
As weel as aa kines o deer

Noo aathing’s nae hunky dory
Aat a div ken richt weel
We hiv a puckle greedy fowk
Fa tell lees or try tae steal

Politicians and bunker chiels
They fair div tap ma list
An bliddy big business diddy men
Fa only wint tae full their kist

Tak nae heed o sic buggers
There are fowk far mair genteel
Fa dee a lot o unsung gweed
An dinna parley wi the deil

Lit’s here it for iss warld o oors
An the gweed fowk on iss planet
Ignore the Trumps an their like
Listen tae yer auld Auntie Janet

TIF Business Case Complaint – An Open Letter

Aberdeen City, Featured, Opinion No Responses »

Jul 092012

Mike Shepherd has lodged a complaint in a letter to Aberdeen City Council Chief Executive Valerie Watts regarding the recently published TIF business case. Mike shares the content of the letter with Aberdeen Voice readers.

To The Chief Executive, Aberdeen Council

I am lodging a complaint about the TIF Business Case “Aberdeen City Centre Regeneration Scheme” which has been written as a report to inform a council vote in August. This document should be a disinterested analysis of the case, or otherwise, for Aberdeen Council borrowing £92 million through Tax Incremental Financing (TIF).

It is not. The report is a constructed narrative that contains major factual mistakes, errors of omission, false statements and flawed data. It is not credible.

The key argument of the report is based on input by private developers and their advisors who have a clear interest in a positive outcome to the council vote. The conclusions of the report are therefore incompetent.

I request that Aberdeen Council withdraw the TIF business case as unfit for purpose.
http://www.aberdeencity.gov.uk/TIF_business_case

The details of my complaint are as follows:

The TIF business case contains a major factual mistake concerning funding for the Art Gallery:

On page 11 it is stated:

“It is expected that a further £20 million of funding will be secured via Grants and other funding mechanisms to enable the City Art Gallery Redevelopment.”

In a table on page 42, it is stated that:

“The City Art Gallery redevelopment: Funding identified from existing sources – £20 million”

This is incorrect. There is no identified £20 million funding for the Art Gallery. Council minutes show that the appropriate figure is £4 million.

The £20 million figure stems from an unrealistic aspiration to apply for funding from the Scottish Heritage Lottery Fund (SHLF):

“Both the Art Gallery redevelopment and a Museums Collection Centre would be eligible to apply for Heritage Fund Lottery grants, although the value the City Council would wish is beyond the annual allocation, which for all of Scotland is currently £20 million.”
http://committees.aberdeencity.gov.uk/mgConvert2PDF.aspx?ID=7314

The Council have yet to apply for funding from the SHLF and intend to do so later this year, in November. They have approached the SHLF:

“Officers have also discussed the current status of the project with the Scottish office of the Heritage Lottery Fund; the Fund advises that if matched funding can be raised within the City, then their Board would accept this as the Council’s contribution to the project within the application.

“The Art Gallery redevelopment is also included as one of the projects within the Tax Incremental Fund BID to the Scottish Government and if this is successful, that funding can be counted as part of the city’s contribution.”
http://committees.aberdeencity.gov.uk/mgConvert2PDF.aspx?ID=18050

The Art Gallery component of the TIF application is for £4 million (Ref: Table on page 42). Matched funding from the SLHF for the TIF sum would be £4 million, not £20 million.

In the table on page 42 it is also stated:

“The TIF Scheme creates the opportunity to invest in the City Art Gallery and even if after this investment the City of Culture bid is unsuccessful, the City will still have a state of the art asset for future generations to enjoy, as a result of the TIF mechanism.”

This is misleading. The Art Gallery redevelopment costings are as follows:

“The Development Study was fully funded by the Marguerite McBey Trust. Gareth Hoskins Architects provided an options appraisal in 2010 outlining 5 schemes ranging in scale and costs from £15.7m to £24.3m [2010 prices].”

TIF plus matched funding from the SHLF would only account for £8 million of the total sum required. The conclusion that “the City will still have a state of the art asset for future generations to enjoy, as a result of the TIF mechanism” is false and incompetent.

The TIF business case is misleading about funding from the private sector:

On page 11 there is a statement concerning private funding for the City Garden Project:

“This includes £55 million that has already been pledged to the City Garden Project by private donors and a further £15 million to be raised”.

It is also mentioned that Aberdeen Council are confident that the extra £15 million can be found even though that this has been an unfulfilled aspiration for the last two years. Although the full £70 million has not been pledged, this figure has been assumed as valid for the rest of the report.

By page 42 this has become “funding identified from existing sources: £70 million.” This is incorrect, only £55 million has been identified.

On page 89 the conclusion states:

“The estimated total cost of the assets and enabling infrastructure for the TIF Scheme is £182 million.

“Pledged donations towards the City Garden Project of £70 million and potential grants for the City Art Gallery of £20 million creates a public sector investment requirement of £92 million, or marginally over 50% of the total cost, which will be borrowed by ACC as part of the proposed TIF Scheme.”

This conclusion is incompetent. The sums are wrong. A consequence of this blunder is that Aberdeen Council may be required to borrow more than £92 million to ensure that the ‘city centre regeneration project’ is enabled.

An overlooked detail of critical importance to the business case:

The report quotes extensively from the conditions voted through at the January 25th Council meeting. However, I have failed to find the following information mentioned.

From the report to Council of 25th January and voted through:

“Instructs officers to enter into negotiations with a view to putting in place a development agreement with Aberdeen City Garden Trust (ACGT) and/or their representatives, which sets out the terms upon which Aberdeen City Council (ACC) would be prepared to make necessary Council owned land available, to realise the proposed development described in Appendix 1 of this report after 1st March subject to;

“(x) Requires ACGT to confirm, in a legally binding form, that they have access to at least £70 million of private sector funds to invest in the CGP, prior to the signing of;

“a. An appropriate Development Agreement, and

“b. A TIF agreement confirming ACC’s ability to invest at least £70 million in enabling infrastructure related to the CGP. “

http://committees.aberdeencity.gov.uk/mgConvert2PDF.aspx?ID=18252

In other words, councillors have already decided that if the extra £15 million of private investment is not guaranteed, they are not going to apply for TIF funding. This should have been stated in the business case.

Flawed data:

Part of the justification for the City Garden Project is based on a questionnaire that was sent out to two selected groups in Aberdeen. This covers several pages of the report. One ‘cohort’ was a small group of 35 developers, landowners and agents in the City Centre area; the second comprised

“four hundred local private, public and third-sector organisations, representing a wide range of views.”

They got no replies from the first group (“a small response”), and later tried to phone them to get any views at all. Eventually seven people replied and several pages of analysis ensues in the report based on the comments of only seven individuals. There was a bit more interest from the second group, a group that included me.

I found that the questions were framed in such a way that it was virtually impossible to register any negative opinions about the City Garden Project. By dint of answering almost all the questions you ended up agreeing that the project was worthwhile.

This is typical:

“Considering each of the development schemes, which of the following benefits do you envisage they might deliver to the wider Aberdeen City economy?”

There is a clear intentional bias to the questionnaire that looks designed to elicit positive statements in favour of the City Garden Project. My opinion is that this is propaganda not data, and it should have no place in what should have been a dispassionate report informing councillors regarding the decision they have to make about the TIF business case.

Inappropriate input from the Aberdeen City Garden Trust:

The bottom line of the business case is that the City Garden Project will “will act as a catalyst for regeneration and economic growth” in Aberdeen and gives “The potential to unlock significant private sector investment and generate up to 8121 jobs and an average of £142.0 million per annum of economic growth over 25 years.”

The business justification is that take up of commercial space in two large business parks being built in the north of the city will be significantly under-subscribed unless the City Garden Project is built. An additional assumption concerns extra business activity in the city centre.

There is no discussion concerning how these assumptions have been made, yet this is the crux of the business case. We are being asked to trust that these assumptions are valid without any cogent analysis provided.

Yet, trust is a major issue concerning these assumptions. On page 74 under the section “ASSESSMENT OF NEW DEVELOPMENT AND BUSINESS RATES UPLIFT” we read that:

“In undertaking this assessment of development uplift ACC has received specialist research support from property advisors CB Richard Ellis as well as input from ACGT and PwC.”

(ACGT –Aberdeen City Garden Trust, PwC – Price Waterhouse Coopers, CBRE – CB Richard Ellis)

The relationship between CB Richard Ellis, PwC and the Aberdeen City Garden Trust is made clear on page 52:

“ACC, with support from ACGT Enterprises and their advisers (PwC and CBRE)”

Thus it appears that major input has been provided to the critical argument in the business case by Aberdeen City Garden Trust and their advisors. A private company seeking to take over a lease and operatorship of council property, has been allowed to dictate input to a report recommending that Aberdeen Council borrow £92 million for a project in which the company has a direct interest. This is entirely inappropriate.

The Aberdeen City Garden Trust has a clear interest in a positive outcome for the City Garden Project. They and their advisors should not have been allowed to have input into this report.

Conclusion:

Aberdeen Council operates at both a corporate and political level. Politicians make policy while key council officials provide a detailed examination of the background that commonly informs the decision making process.

In this regard, it is important that council officials provide a rigorous and dispassionate analysis, with any recommendations based on logic and a clear basis for the arguments that have been set out to justify these recommendations. In the report detailing the business case for the City Garden Project and other ancillary schemes, they have failed abysmally.

The most recent version of the business case is a travesty of synthesis and thesis. Rather than setting out a well argued case leading from careful marshalling of data towards a conclusion, the report appears to proceed from conclusion (the City Garden Project is a good thing) via a constructed narrative that includes mistakes, flawed data and wishful thinking.

Given that a consequence of this report is that Aberdeen Council could end up borrowing £92 million on the basis of ‘economic regeneration’, this may result in major reputational and financial damage for the council. The vote to approve submitting the business case to the Scottish Government is likely to take place in August this year.

The outcome I would like to see:

The TIF business case should be withdrawn immediately as incompetent and unfit for purpose.

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Reaction To City Garden Project Business Case

Aberdeen City, Opinion 2 Responses »

Jun 282012

Following the release of the City Garden project business case on Thursday afternoon, youth councillor Kenneth Watt comments on the financial plan.

“The report highlights initial concerns with the City Garden Project. All risks featured in the business case are of high or medium risk.
Most concerning is the risk of running out of private sector donations, which is the most severe risk in the report, at 75%. Aberdeen City Council are expected to gamble over half of the funding through the risky TIF scheme.

“There’s no substantial back-up plan for failure to capture private investment.”

“Even if capital costs increase by just 10%, the loan won’t be repayable in 25 years and the council will have to increase its borrowing to over £100m. A leading economist said last year that capital projects such as these could easily cost double.
( Ref: Neil Baxter, Press and Journal 14/5/2010 )

“This project could really drive the city in to more debt which is not what my generation needs.”

“I’m worried about the long-term impact the project could have on the city. There has been no investigation in to the effect of building another theatre on our existing arts venues. I fail to see real evidence on how over 8000 jobs are going to be created by replacing a park with a park, adding an extra floor to the Art Gallery and improving pedestrian routes in the city centre.”

“The risk is just too high and I remain unconvinced by the business case. People inAberdeenvalue public services and are already feeling the effect of £618m of debt. They don’t need more worry caused by short-sighted economic plans centred around a park pushed only by the city’s out-of-touch wealthy elite.”

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Cuckoos In The Nest: Latest In Aberdeen Gardens War.

Aberdeen City, Featured, Opinion 39 Responses »

Jun 072012

What is the probability that the City Garden Project will actually happen? Mike Shepherd looks at some of the obstacles it currently faces.

The City Garden Project cannot proceed if £70 million of private finance is not in place to fund it:

The nominal cost for the City Garden Project is £140 million, with £70 million each to be contributed from the private and from the public sector.
So far, only £55 million of private money has been pledged, although £70 million has always been the target figure. The project will stall if the full £70 million of private funding is not committed.

Aberdeen Council voted in January to agree the following:

“(x) Requires ACGT to confirm, in a legally binding form, that they have access to at least £70 million of private sector funds to invest in the CGP, prior to the signing of;

a. An appropriate Development Agreement, and

b. A TIF agreement confirming ACC’s ability to invest at least £70 million in enabling infrastructure related to the CGP.”
http://committees.aberdeencity.gov.uk/mgConvert2PDF.aspx?ID=18252

A council vote to give final approval to signing the Tax Incremental Financing (TIF) agreement will probably come up this summer. This is basically a request for a £92 million loan from the Scottish Government, £70 million of which would fund the City Garden Project.

The £55 million of pledged private money has been on the table since early 2010 and the full £70 million remains an unfulfilled aspiration two years later. The funding gap of £15 million will be difficult to make up.

One issue is that big companies who could afford to make donations on the scale of millions may be reluctant to get involved with such a controversial project. They will not want to come under severe criticism from either the public or their workers.

Sir Ian Wood could come up with the extra £15 million, perhaps anonymously. This would however be an admission that the project has failed to motivate the business community in the place where it matters: the bank vault.

The TIF business case is risky:

Noted academic Professor Tony McKay has criticised the business case for public funding through TIF as “the worst he’s seen this year”.

Claims that the project will create up to 6500 jobs and add £122 million per year to the city’s economic output are ludicrous, he says. He thinks that the Scottish Government will reject the application for a loan from central funds.
dailyrecord.co.uk/aberdeen-city-garden-business-plan-is-worst-i-ve-seen

TIF funding is based on the idea that without the core project, new businesses will not happen. These are the “But For” criteria that give the green light for putting a new TIF scheme in place. The new businesses created provide business rates to pay for the loan.

The Aberdeen business case contends that much of the commercial activity in two new business parks in the north of the city, and in the city centre, will not happen without the City Garden Project.

I suspect that few truly believe this, as the new business parks will attract inward investment to the city on the back of a currently resurgent oil industry anyway.

Nevertheless, I suspect that the Scottish Government will give a few knowing nods and winks to the “But For” criteria here. They may be amenable to allowing new business rates to be captured to pay off the Council’s loan of £92 million for the proposed city centre redevelopment.

But will it be enough? The business case makes it clear that the revenue will pay off the £92 million loan and accrued interest with a small margin to spare after 25 years. And required to do this are 6,500 new jobs and £122 million added to the city’s economy each year for the next 25 years, a “ludicrous” estimate as mentioned previously.

Let’s take the lesser case whereby the city gets 5,000 new jobs and about £100 million per year of added value. This would also be miraculous news for Aberdeen if it were to happen, but it would be a disaster for Aberdeen City Council. The council would be left with a shortfall on a very large loan. It might have to sell off assets to pay the difference.

Audit Scotland was aware of these problems when it expressed concerns about the City Garden earlier this year, stating that “a key risk will be the affordability of the project and its impact on the council’s finances”.
[Audit Scotland: ACC Annual Audit Plan 2011/2012 p. 10]
http://committees.aberdeencity.gov.uk/mgConvert2PDF.aspx?ID=18879&txtonly=1

The land issues are complex:

At some point Aberdeen Council will have to approve a deal transferring property rights to the Aberdeen City Garden Trust (or its equivalent). This deal would be likely to involve assigning a long-term lease, and the council have said that they will not sell the land.

There are major issues here, not least those arising from transferring what would be a property lease for public land, potentially worth millions, to a limited company.

Union Terrace Gardens lies on Common Good land and at some point the Council would have to apply to a Court of Session to allow development to take place. Additionally, there are contracts in place for the use of Union Terrace Gardens as a park. A legal document from 1871 states that the area of Union Terrace Gardens should on no account “be appropriated to any other use than that of a recreation ground for the public.”

The City Garden Project website mentions the following:

“The gardens will be run on a not for profit basis. All income will be put back into the running costs for ongoing upkeep and improvement of the gardens. The City Gardens will be able to generate income through activities held within the park; exhibitions, conferences and returns from coffee shops and restaurants.”
http://www.thecitygardenproject.com/faq.htm

I’m not a lawyer, but these issues look to be somewhat contentious. The January council meeting approved the allocation of up to £300,000 of council money to be spent on carrying out legal due diligence for the City Garden Project. The council lawyers must be very worried.

The new council make-up is not favourable to the City Garden Project:

The last council progressed the City Garden Project through its voting procedure with a comfortable majority on most occasions.

The new council looks to have an almost equal split between the ‘pros’ and the ‘antis’.
In addition, the Labour Party leading the new council administration has pledged to kill the City Garden Project.

There will be several votes to come, including a likely knock-out vote at the full Council meeting on August 22nd.

The City Garden Project will also need to survive the TIF business case approval, the development agreement and the planning submission.

This is an administration that will have other concerns. I’m told that central funding for Scottish councils is being cut by millions over the next three years, yet only 18% of the cuts have come through so far. The last thing any new administration will want is the divisive distraction of the City Garden Project and its potential to suck much-needed resources out of the council, for example the £300,000 on legal fees.

Council leader Barney Crockett is opposed to the City Garden Project. He has now been assigned as the Council representative on two bodies that support it: the City Garden Project management board and ACSEF. He will be a veritable cuckoo in what have previously been two cosy nests for the scheme.

The City Garden Project could itself be described as a cuckoo in the nest; its big yawning mouth crying to be fed with big gobbets of public money while other more deserving mouths lack succour. A hard landing beckons for this particular cuckoo.

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