Economic - Aberdeen Voice

Is Government Reporting Any Good?

Aberdeen City, Featured, Opinion 3 Responses »

Nov 062012

The Iraq war was rubber-stamped despite the wishes of protesting millions; the justification that then Prime Minister Tony Blair used was a report. This report had been notoriously ‘sexed up’ to the extent that the Americans refused to endorse it. Blair aide, the foul-mouthed Alistair Campbell, was one of the main editors of this ‘dodgy dossier’. Blair stood by its robustness. We all know better now. Suzanne Kelly examines the quality standards of the reports on which life-changing decisions are taken.

Closer to home, what kinds of reporting standards are we seeing? Very poor ones, I’m afraid.

A report prepared for Aberdeen FC’s stadium plans for Loirston included a lengthy commentary from MSP Brian Adam, who favoured the project.

Labour MSP Richard Baker’s comments against the stadium were excluded from this report, leaving it unbalanced. At the time, Kate Dean first insisted that Baker missed the deadline, but Baker proved otherwise. Dean later apologised, but by then, the hearing was long finished, and planning permission was granted.

PriceWaterhouse Cooper were hired as consultants for the City Gardens Project. They were paid out of public funds and Scottish Enterprise was involved in the invoicing arrangements.

PwC used a very small sample of business people in its research, yet somehow came to the conclusion that 6500 permanent new jobs would be created by the Granite Web and £122m would flow into Aberdeen every year until 2023, this also due to the Web. These figures were seized on by Vote for the City Gardens Project during the referendum and printed as if they were factual in VftCGP literature.

PwC did quite handsomely from the consultation (£41100 in March 2010, for example), and might well have gained further work from SE, the Aberdeen City Gardens Trust or other involved party, had the Web gone ahead.

When questioned as to the appropriateness of their projections being used in an advertising campaign during the referendum, PwC declined to comment, saying the work had been done for ‘a private client’ – despite the taxpayer picking up the bill.

Had the reports using these figures to justify the Web included further background on the statistics used, and details of the money already paid to PwC? For purposes of transparency and accuracy, one would hope so.
See: PwC Invoices To Aberdeen Council

The report sealing the fate of Tullos Hill’s roe deer and many of its other former flora and fauna, was created by the City Council’s Peter Leonard, a senior civil servant in Housing, and by CJ Piper & Associates, an entity related to one Chris Piper, the man who stood to gain tens of thousands of pounds if Phase 2 of the Tree for Every Citizen scheme went ahead.

The report is riddled with bias, not least of which is the assertion that objections to the cull came from a ‘small but vociferous minority’. In reality, 2,500 people signed a petition handed to Aileen Malone, and three community councils representing tens of thousands of citizens, and animal charities including Animal Concern Advice Line and Scottish SPCA condemned the cull.

Piper made some £44000 from the tree scheme. Should the report have noted his obvious financial interest? Definitely.
See: Piper Report re. Tullos Hill: Page 48

It would be bad enough if this kind of bias was an isolated event; it is not. We recently saw a report concluding that elected councillors were treating the city’s administration in a ‘bullying’ manner. The report also claims that councillors don’t fully understand what the administration does.

It is wholly one-sided, despite its assertions to the contrary. If it had been thorough, it surely would have picked up on the many failings of the unelected senior administration, such as the dubious reports going out from their departments.

Councillors on committees will all tell you that they have to make their votes based on the reports before them – reports that are almost all prepared by the administration. Most of these reports are required to adhere to values which have all but lost their meaning. Reports have to relate to ‘vibrant and dynamic’ aspirations, have to prove the programme in question will deliver ‘value for money’, and so on.

From national ‘sexed up’ reports to those on local issues, information given to those who have to vote on their contents must become more accurate and details of any consultants employed and those involved in preparation must be included in the contents.

At present, Aberdeen’s reporting system relies on a formula which is far from perfect.

There is always an opening section which requires the writer to say whether or not the proposal fits with ‘vibrant/dynamic’ and other archaic criteria. The report writer is supposed to indicate whether or not there are financial implications. In many cases, the financial implications are overlooked.

For instance, we were promised that the Tree for Every Citizen scheme was ‘cost neutral’. Even when the primary report’s author Pete Leonard surely realised the scheme was not cost neutral (ie when the £43800 refund was demanded for the failure of Phase I and when no sponsors came forward to pay for Phase 2 and its deer cull), no correction was publicly issued or sent to councillors on the Housing Committee.

The failures are mounting up.

Perhaps it is time for report writers to pay less heed to the existing report framework’s demands for rhetoric about ‘vibrancy’ and the like, and be required to ensure that all future reports include a form along these lines:

Preparers

Internal Preparers

Author(s)
Editor(s) (if any changes made to original author’s report)

External Preparers

Name
Company
Company type: (sole trader, limited company, PLC)
Company registration no

Conflict of Interest Issues

Financial
Fee paid for assistance, consultancy, preparation of this report to date
Any additional fee to be paid specific to this report
Is there any likelihood the external preparer will be hired for further assistance if this report and/or its recommendations is accepted?
Estimate of the extent of further earnings the preparer could earn from acceptance of this report and/or its recommendations

Other

Does this report contain any statement or input from a political party or politicians?
If so, have other parties been offered an opportunity to give their input?
Does the author, editor or preparer have any personal interest in the issues contained in the report?

Exclusions

Has the editor deleted any substantial part or parts of the original report? (if so, these must be listed)
Does this report cover all of the known, relevant factors pertaining to the issues?

Until we can rely on the information in the reports going to our elected officials, and the impartiality of those involved in preparing them, we will continue to have a flawed system subject to abuse. It’s time for a ‘vibrant and dynamic’ overhaul of our city’s reporting standards – if not the country’s.

Comments enabled – see comments box below. Note, all comments will be moderated.

Heartache As Family Immigration Policy Bites

Community, Information 2 Responses »

Oct 182012

“On 11th June 2012, the government announced significant changes to the family migration rules in the UK. The key changes, which will largely come into force from 9 July 2012, include a new income requirement of £18,600 for people wishing to sponsor a partner to come to the UK, an extended period, of from two to five years, before spouses and partners can apply for settlement in the UK, and a review of the application of Article 8 of the European Convention on Human Rights to immigration cases.” - Migrants Rights Network 2012

Dear Citizen.

As you may be aware, the UK government has recently changed its policy on family immigration. The changes, in my opinion, are regressive, sexist, classist and racist and must be challenged.

The reforms will disproportionally affect those on lower incomes.

According to the Migration Observatory, this policy will prevent 47% of the UK’s working population from sponsoring a foreign partner to settle in Britain(Migration Observatory, 2012).

That figure increases if the sponsor happens to live in an area outside SE England where incomes are lower, for example, Scotland(48%) or Wales(51%). The changes will also disproportionally affect women, who are still paid less than men, ethnic minorities, who often earn lower wages and younger couples, who tend to be paid less.

The European Convention on Human Rights Article 8 grants the ‘Right to Family Life’ to all citizens but this legislation would appear to undermine that Right and remove access to it for a large number of citizens. Migrants’ groups, such as the Migrants Rights Network, have also expressed ‘real concern’ at governmental plans to provide strict guidelines to UK Border Agency caseworkers.

There are also concerns about advice given to courts on how rights to private and family life should be weighed up against the wider public interest in immigration cases. In a Family Migration briefing from earlier this year, the Migrants’ Rights Network stated,

“There are real concerns about the implications of Parliament setting specific guidelines on this matter, particularly where they are directly aimed at reducing the numbers of successful Article 8 cases in the courts. We are concerned that this change could result in rule-making which undermines the right to family life in favour of political, rather than public, interest.”

On a more emotive level, it concerns and saddens me that Conservative ideology and its intrinsic prejudice, when translated into immigration policy, can ruthlessly tear apart relationships and families. It is of extra-special concern to me that these policies which target the poorest in our society would go virtually unchallenged by other political parties in the UK Parliament.

I write to you today not only to bring this issue to your attention, but also to ask for help and advice on this matter as I am directly affected by this most regressive of policies. I earn well below the £18,600 threshold to be a sponsor and I feel that my only option to remain with my long term, non-EU, partner is to leave the UK and attempt to settle in a country with a more progressive approach to immigration.

Thank you,

Sad Lover, Aberdeen

Photo by Jeff Latimer/Flickr (Creative Commons)
http://a.scpr.org/i/2ca7d7f93992575afdcddf61d9e66681/42947-six.jpg

Comments enabled – see comments box below. Note, all comments will be moderated.

Swish Into Spring With Fab New Fashion Event

Aberdeen City, Articles, Community, Environment, Information, News No Responses »

Mar 092012

With thanks to Mark Beresford.

Canny fashionistas will be in their element on 15 March at Aberdeen Forward with a chance to trade unwanted and unworn garments for something fresh and new.
This free event is open to anyone with clothes to swap and fashion professionals will offer advice on nails, jewellery and makeup to help complete your new outfit.

The Swishing event will run from 6-8pm on Thursday 15 March at 2 Poynernook Road. All guests will receive a free glass of bubbly on arrival.

Aberdeen Forward is an environmental charity and social enterprise supporting local waste minimization and sustainability projects.

Its Volunteer Manager, Gillian Marr, said,

“This is a great fun way to refresh your wardrobe and get some top tips on how to accessorise your new look. We’re running the event as part of our Zero Waste Club and it’s a really great example of how we can encourage people to reduce waste whilst having fun and saving money.”

The event is supported by The Body Shop and Saffron Settings who will have a presence at the event. Zero Waste Scotland, which works with businesses, communities, individuals and local authorities to reduce waste and use resources sustainably, is funding the evening. www.zerowastescotland.org.uk

Anyone interested in coming along can call Aberdeen Forward on 01224 560360 or e-mail admin@abzforward.plus.com and should bring along at least one item of clothing no longer wanted but in good condition.

Swishing events are gaining popularity across the country and are best described as clothes-swapping parties for women. More information about swishing and other events around the country can be found at http://www.swishingparties.com/

Image credit: © Jordan Tan | Dreamstime.com

02.03.12 – A Black Day For Aberdeen

Aberdeen City, Articles, Community, Featured, History, Information, Opinion No Responses »

Mar 092012

The black calendar of Aberdeen’s civic history has a new entry: 2nd March 2012, the day that its citizens, evident sufferers of apathy and myopia, handed both its natural heritage and its economic future to a cabal of businessmen. Arthur Taylor writes.

The fight to retain and improve Union Terrace Gardens hit the buffers on that day when the public – or rather 27.5% of them – voted to support the plans to destroy this unique piece of the city’s heritage and replace it with a concrete monstrosity – presumably confused by the smoke and mirrors of the PR campaign which branded it “The Granite Web”.

Whether the battle turns into a war, protracting the debate, and driving further wedges between parties already badly divided, remains to be seen, but it is hard to see a rapid healing of the wounds that this process has created.

It is also difficult to stop the passion that fuelled the Retain campaign from dissipating, before all avenues of challenge are exhausted against a process labelled as democratic – but which in reality has been anything but that.

What is clear is that events from 2008 to now should be reviewed and recorded for posterity, so that future generations when looking back can seek to understand a number of things:

why we allowed our heritage to be given away to a clique of egoists and nepotists, who deluded the public and maybe even themselves into believing that they were altruists and philanthropists

why the local authority whose primary function is to act in the citizenry’s best interest handed control to an unelected quango, immune from public scrutiny

and why we allowed the city’s future to be mortgaged on the most questionable of business cases, flagged up as high risk by Audit Scotland in the final days of the campaign – when most votes were already cast.

Not that this was a revelation: Friends of Union Terrace Gardens had identified the risk months before, but their claims were played down in the media.

The last two months have seen a referendum conducted by a returning officer who sought to have the campaigns run to a fair set of rules.

The dominance of the local print media in forming and steering public opinion, and its incestuous relationship with local business, is deeply concerning.

While it appears that the retain groups stayed within their £8000 budgets, the pro groups – aided and abetted by the collaborators in the local media – spent an estimated £1,000,000 to buy the votes of the people of Aberdeen. Their cynical campaign saw radio adverts dressed as public information broadcasts, and a drip-fed daily editorial in the local press, with each day’s evening paper offering more extravagant promises than the last, as part of a fawning hysterical clamour.

That the retain groups, variously composed primarily of grey-haired men, beardies, tree-huggers and an enthusiastic schoolboy, ran the referendum right to the wire, losing by such a slender margin, is testament to their energy, enthusiasm and resourcefulness. That they did this against a campaign co-ordinated by the BIG Partnership, Scotland’s largest PR agency, is little short of a miracle.

The dominance of the local print media in forming and steering public opinion, and its incestuous relationship with local business, is deeply concerning.

The public need a source of true facts rather than propaganda dressed as objective reporting.

That said, there have been two positives to emerge from the press coverage of the campaign: the amusement derived from watching the Evening Express contorting itself like an India-rubber prostitute in a bid to champion the development, while not entirely abandoning its habitual council-baiting; and the emergence of the STV Local site as a place where all parties can present their voice without editorial bias.

It is hard not to see the future of local journalism as lying in hyper-local online spaces, as counterpoint to the shrinking of print to the point of complete insignificance.

the dead-eyed, gape-mouthed novelty-seekers who lurch zombie-like through the malls

Returning to the proposed development itself, it should be remembered that Union Terrace Gardens is the only part of the city where one can see the original topography of the land on which the city is built.

Sadly the local authority in the last century has allowed almost all traces of the city’s history to be erased like some embarrassing legacy instead of retaining and celebrating its character. Compare this with Edinburgh’s old town or York’s centre.

We are now confronted by the effacement of the final part of our history in order to satisfy the dead-eyed, gape-mouthed novelty-seekers who lurch zombie-like through the malls that have brought about the systematic homogenisation of the city centre and obliterated all individuality and character.

If we do not continue to challenge this proposed act of civic vandalism, by:

opposing the planning application,
challenging the use of Common Good land,
exposing the business case as one which will leave the city bankrupt (as it was last in1817) when the TIF scheme plays out as feared,

then we should at least ensure that we record for posterity the names of the businessmen who proposed this vanity project; note the politicians and faceless unelected quango-ists who eased its path to realisation; and ponder the many, many idiotic consumers who swallowed the hype, without challenge or analysis.

If we do nothing else, we should record those names on the black calendar’s page for 2nd March 2012.

Workfare? Unfair, Says Aberdeen Against Austerity

Aberdeen City, Articles, Community, Information, News No Responses »

Mar 012012

Aberdeen Against Austerity informs Voice of its intention to take to the city’s streets this Saturday (3rd March).

This action is part of a national day of protest against the UK Government’s Workfare Scheme under which multi-national companies, whose profits run into billions of pounds, receive countless hours of free man/womanpower courtesy of taxpayers.

At least thirty other cities around the UK will host similar demonstrations.

How does the Workfare Scheme operate?

The jobseeker labours for perhaps eight hours daily, receives no wages from the company, creates wealth for the bosses and shareholders and in return receives only his/her Job Seeker’s Allowance (JSA). As a result, participants in the programme receive well below £2 per hour for time they have been forced to give to multi-billionaire companies.

Many fear that these phenomenally low wages are being used by bosses to drive down existing staff wages under threat of replacement by Workfare participants. Commentators have used the term ‘slave labour’ to describe this Tory policy, with some even challenging the legality of the Scheme under Human Rights Law.

Not looking hard enough for work

Conservative ministers and right-wing journalists have tried to justify the Scheme in recent weeks using the same tired old argument that JSA claimants are responsible for their own misery because they are ‘workshy’, ‘lazy’ and ‘lacking in drive’.

“These ‘lazy’ individuals just aren’t looking hard enough for work,” cries the right.

Figures show these ludicrous opinions to be baseless whilst revealing the underlying structural problems of our economic system. We have 2.67m unemployed, although the Trades Union Congress (TUC) has reported that the true figure might be 6.3m, and only 476,000 job vacancies. That means 5.6 people are applying for every job, or 13.2 people if the TUC figures are used.

Joblessness is a very real and serious issue woven into the fabric of our economy and it cannot simply be blamed on the ‘feckless unemployed’.

The proponents of Workfare claim that the most effective way to get ‘workshy’ claimants back to work is by threat of the loss of their JSA. This is very misguided. The Government’s own review, commissioned by the Department of Work and Pensions in 2008, concluded:

”There is little evidence that Workfare increases the likelihood of finding work. It can even reduce employment chances by limiting the time available for job search and by failing to provide the skills and experience valued by employers.”

Political and ideological

It’s clear. Workfare is a political programme, designed and carried out by a government of millionaires with a strong ideological undercurrent, through which they seek to:

Undermine the legal minimum wage.
Continue the demonisation of those out of work to justify the increasing wealth gap between the rich and poor.
Strengthen the very close ties between big business and government.
Ensure that the most vulnerable in society pay for the economic crisis rather than those who caused or played a major role in it.
Continue to apply downward pressure to existing workers’ pay and terms and conditions

Aberdeen Against Austerity and many other groups will be raising awareness nationwide by naming and shaming Workfare providers this Saturday (3rd March) in Aberdeen city centre. We’ll meet in the Castlegate at 12 noon.

See you on the streets.

WhaT IF?

Aberdeen City, Articles, Community, Environment, Information, Opinion No Responses »

Feb 222012

Aberdeen is a city on a downward slide. That makes for uncomfortable reading, doesn’t it? Our gut instinct, being the proud city we are, is to reject this notion out of hand, though deep down we all know it is true, says Graeme Campbell.

The cause of the rot is not easy to identify. Opinions will differ and any debate would most likely be fierce. It is perhaps best to say the gradual slip in the condition of our once grand and glorious city can be pigeon-holed to two vague categories – poor planning and the slow decline of the energy sector.
Or perhaps over-dependence on it? Two and a half pigeon holes then.

So, avoiding any unhelpful debate surrounding the way we arrived at this point, we must as a city look forward to the best possible route to a future of prosperity. We must look for a plan to return grandeur and pride to the Granite City.

Our carefully-selected councillors, together with possibly our most successful loon, Sir Ian Wood and the private partnership Aberdeen City and Shire Economic Futures (ACSEF) think the solution to the gradual slip is a new garden. Not exclusively a garden you understand, but a garden with conferencing facilities and a café. To give all credit due, the plans certainly are impressive and whilst perhaps not so impressive in keeping with the architectural fabric of the city, we are, of course, a city not afraid of change.

In the most recent release posted through all city letterboxes, Aberdonians are directed by a host of interested parties to the key point, “You deserve it!” Well yes, most likely. But oddly, relegated to fifth, is what will be the key point for most Aberdonians. Once again we don’t want to admit this but we’re all thinking it, “We can afford it”.

Will Aberdeen City be pushed to the very brink of bankruptcy by this plan, as happened when the city took the bold decision, so long ago, to construct our now famous Union Street granite mile? Probably not. Of course, Sir Ian’s mammoth oil wealth will go some way to meeting the cost of development on the site – and only on this site, he has been quite clear on that point – the further estimated £100m will come from business rates, council tax – of course – and the heinously-complex Scottish Governmental TIF funding mechanism.

Now nobody wishes to be bored to tears by the inane workings of a TIF, so let’s not worry about that. Instead, let’s find out what other places are using TIF to create.

North Lanarkshire plans to spend £73m to transform the former Ravenscraig steel site, an area of quite unrivalled deprivation, to the benefit of the many people who live in the area.
Argyll and Bute is to extend the North Pier at Oban for £20m, further securing the town’s position as Gateway to the Islands, a major boon to the tourist industry no doubt.
Falkirk plans to use its TIF in a far less grand manner, by bringing about strategic road developments and improving the flood defences. Clearly a sound decision.

But the plans which should be of most interest to any outward-looking Aberdonian comfortably seated in Europe’s oil capital, come from Fife. The council there is to spend its modest £17m TIF improving vehicle and marine access to the already-thriving Energy Park Fife, where renewables are already being constructed. I know, that’s not oil, but it is very real, so let’s not sneer. Not content with this, Fife has also begun construction of the Levenmouth Low Carbon Investment Park which is set to become ‘Scotland’s foremost energy park’.

Whilst in Aberdeen we plan to spend £150m on a garden and café.

Is anyone else embarrassed? Our great city, the economic powerhouse of Scotland, is being distracted by plants and trees whilst other towns are going green in a wholly more financially-sound way. This city has the engineering and science skills, brought by the oil industry and our two modern and diverse universities, to become a world leader in the renewables field.

You don’t need to do the math to know a research and development centre, alongside a manufacturing park would be of significantly greater financial gain to the city than the redevelopment of a garden.

This brings us to the question – has the Council considered this? Understandably, Sir Ian may not be keen, but this is about so much more than the oil empires held by the few; this is about the continuing prosperity of the many.

So, as the ballot papers find their way to you, look around the city. Look for the signs of the rot brought about by poor management by those who, for too long, have only looked inwards – decision makers enjoying the security of the formerly-booming local oil industry.

Consider what the world, given the current environmental and economic climate, would look to Aberdeen for. Horticultural tips? A show in our new 5000-seat outdoor amphitheatre? Or will they look to Europe’s ENERGY Capital to lead the way to a bright new future of renewable energy? And then, as our city leads the world in technological advancement in the renewables field we will look forward to investment, to jobs and to success.

When the ballot paper lands on your doormat, consider what Aberdonians truly deserve and ensure your vote lets our council know just what you want for your future.

TIF – A Message From America

Aberdeen City, Articles, Information, News, Opinion No Responses »

Feb 192012

TIF – doesn’t this American innovation in borrowing just sound fantastic? You get to ‘unlock’ money, re-develop an area, and money comes flooding in. What could be wrong with that? Karin Flavill looks across the pond to the home of the junk bond and bad mortgages, and doesn’t like what she sees.

While arguments rage over the future of Union Terrace Gardens, there’s consensus about one thing. Tax Increment Funding is a somewhat difficult concept to get to grips with. Not because the basic definition is complex.

TIF funds development by borrowing against future business tax gains arising as a consequence of that development. New developments mean new business rates. The local authority keeps a portion of those business rates (from businesses that wouldn’t have moved into the area but for the development) to repay the loan.

The complexity arises in assessing how this mechanism can be applied in a manner that avoids various potential pitfalls. TIF is still very much in the experimental stages in the UK, so we lack a domestic reference point to understand how well the process is likely to work from start to finish.

When business is attracted from one area to another by a TIF funded development, it may be at the expense of another area. This is known as “displacement”. The area benefiting from TIF is pleased to lure business away with its spanking new TIF-funded development. The region losing out wants some protection against financial detriment.

The TIF scheme provides that tax increment coming at the expense of another region can’t be retained by the local authority to make TIF repayments. Like other NDRs, those increments must be sent to Central Government who will pool them with other funds then redistribute the funds equitably among regions.

Rather than being a tool to give cities a competitive edge and win City of Culture status for celebrated developments (the vision currently being promoted in CGP supporters’ referendum campaigns), TIF was first developed in the US as a means of helping regions to improve their most blighted areas. Gradual shifts away from this philosophy, and increasingly creative ways of arguing blight, have led to many states in the US tightening up legislation to prevent TIF from being awarded except where genuine blight is demonstrated.

Chicago is often cited as example of the TIF scheme being misused to benefit the areas that least need it. In August last year, a report was released outlining areas for improvement in the operation of TIF in that city. The report highlighted problems regarding the monitoring of TIF expenditure.

Taxpayers had not been afforded easy access to information that would help them understand the TIF process or to evaluate the performance of the investment. This reduced transparency of the process.

although the initial cost proposed was $224.3 million, ultimately the park cost $482.4 million

The harder it is for the ordinary citizen to understand the TIF process and to evaluate the success of the development it funds, the greater the potential for corruption and abuse of the process by those who do understand it, and who can make it work to their own advantage.

That some will seek and gain an advantage through cronyism is an unfortunate element of life from which no city is immune.

In the 1990s, Chicago Mayor Daley (no relation to Arthur) developed a strong attachment to a project that would come to be known as Millennium Park. A 16-acre landscape situated over an underground parking structure, it was built on top of Railroad tracks in an existing park called Grant Park. The architect involved was Frank Gehry who had won international acclaim for the Guggenheim Museum in Bilbao. The Chicago Tribune enthused that:

“The most celebrated architect in the world may soon have a chance to bring Chicago into the 21st Century”.

The park has certainly won many admirers worldwide and is, in many ways, an excellent model for what the City Garden supporters are hoping that project will become. Properties in the immediate surrounds have become very fashionable and have increased significantly in value.

For others there has been a hefty price tag. For example, although the initial cost proposed was $224.3 million, ultimately the park cost $482.4 million. The park has come at a very high price to Chicago residents in terms of cuts to funding of public services and job cuts that were necessitated by the cost of the park. Salt is rubbed into the wound, on occasion, when the park is closed to the public so that corporate functions may be held there.

During and after the building of the park, Mayor Daley was frequently criticised for alleged cronyism in the awarding of contracts. Other areas of the city continued to deteriorate, while their inhabitants observed the increasing wealth and prosperity of those parts of the city that benefited from TIF funded schemes.
Areas that never suffered from true blight in the first place, but which were a focus of interest for developers, politicians, owners of business premises and others who could make the TIF scheme work for them.

In some ways it’s puzzling that we, supposedly a far more socialist nation than the US, are applying a model of TIF so similar to that model which states in the US have been increasingly trying to move away from by drafting legislation that aims to help TIF function in accordance with its original aims.

There has always been a tendency for conservatives to condemn the poor for their reliance on state sponsored welfare, but in recent years have people started questioning more vigorously the exploitation of taxpayer financed schemes by the some of the biggest players in business (players who have traditionally, but not always accurately, been lauded for their self-sufficiency).

TIF deserves close attention for its potential to increase this problem. Failure to know, or care about, the original philosophy of TIF leaves us less alert to its potential for misuse that could worsen existing inequalities in our society.

The UK version of TIF springs from recommendations in a 2008 report by PWC and Core Group Cities for an alternative method of funding developments in core group cities (the 8 largest regional cities in England). The report is here.

It begins with commentary on the economic successes of the core group cities, and highlights continuing problems relating to unemployment and deprivation in some neighbourhoods. It states an aim to “rejuvenate communities, provide new employment opportunities and stimulate further economic growth.”

Promoters of the CGP dismiss the possibility of serious overspending as scaremongering

The report then discusses the increasing political emphasis on a devolved approach to economic development . A defining aspect of TIF is that it permits local authorities greater autonomy in the matter of funding developments once they have been granted the TIF loan.

For this to happen, they must submit a detailed business plan to the SFT who make recommendations to central government regarding feasibility.

PWC, having been involved in the UK version of TIF from its conception, is ideally positioned to assist local authorities with the preparation and submission of their business plans. Finance and Resources Committee meeting minutes from September 2010 discuss PWC’s remit in preparing a TIF business plan for approval by the SFT. The minutes refer to several important city projects the Council would wish to progress, whether or not the City Garden project went ahead.
See: https://docs.google.com …committees.aberdeencity …pwc+tif+business+plan

“The terms of PWC’s assignment make it clear that they are required to produce a business case that ensures zero financial risk for the Council.”

The Council states that it will make no financial contribution to the City Garden Project. The development must be funded wholly by private contributions and by the TIF loan and completed within the budget.

Promoters of the CGP dismiss the possibility of serious overspending as scaremongering. Chicago’s Millennium Park experience demonstrates, however, how this can and does happen. As a response to such concerns, Sir Ian Wood has pledged an extra £35 million. It’s not clear what will happen if the cost exceeds this.

Despite ACC’s insistence that PWC present a business case involving zero risk to the Council, the draft business case completed in January of this year contains no such promise. It focuses on minimising risk and balancing the risks involved in carrying out the project against the risks involved in doing nothing.

Outlining the need to attract investment and talented professionals to Aberdeen to assure future prosperity, the plan refers particularly to the energy industry. Due to the oil and gas industry being regarded as the primary targets for investment in Aberdeen, and Aberdeen’s existing status as the main centre in Scotland for this industry, PWC anticipate displacement being low (10%). A low anticipated displacement figure is essential for arguing the likely success of a business plan.

PWC appears to anticipate investment by that industry increasing in Aberdeen, alongside the increasing depletion of oil and gas reserves

Work is expected to be completed over a 5 year period beginning this year, with TIF borrowing being carried out in stages (the first draw down taking place in 2014). The proposed development is expected to create approximately 2 million square feet of commercial space and to speed up the development of a further 1.4 million square feet of commercial space.

The CCRS (City Centre Regeneration Scheme) predicts 6,500 new jobs resulting from the development. It should be noted, though, that that figure is a “by 2039” prediction.

The business plan states:

“Oil and gas reserves will run out over time, perhaps 30 years, and Aberdeen is looking ahead. It knows it needs to adapt its industrial base and re-examine how it creates wealth and prosperity. Aberdeen is confident it can do so.”

This project is to be completed in 2017, and its success relies significantly on a very low displacement figure of 10%. In presenting this figure PWC relies on the oil and gas industry, already present in Aberdeen (and therefore not being taken from other areas) being the main sources of increased investment in Aberdeen. Confusingly, PWC appears to anticipate investment by that industry increasing in Aberdeen, alongside the increasing depletion of oil and gas reserves in the North Sea.

Perhaps in anticipation of confusion about this assertion, much is made of the possibilities relating to renewable energy – an industry Aberdeen must embrace and develop expertise in, regardless of Donald Trump’s views. The question is whether developments in other areas area will not only compensate for the steadily diminishing presence of the oil industry, but expand to the point where the business plan can work as anticipated.

Regarding the City Garden proposed as a replacement for UTG, the report comments…

“While there is no direct benefit the fact that the City Gardens Project becomes a reality and underpins the CCRS will benefit Aberdeen’s wider population and business community.”

During a recent BBC Scotland debate, campaigner Mike Shepherd (a geologist with years of experience in, and expert knowledge of, the energy sector) was shouted down and jeered at by pro CGP hecklers. The latter have tended to define opponents of the City Garden Project as tree-huggers and luddites who will be crushed by the wheels of change. UTG has also been described, throughout the debate, as a dangerous area…despite police reports indicating far lower crime levels in UTG than in surrounding street level areas.

The debate has often been an acrimonious one, featuring conflicts of various kinds. Already the TIF pilot scheme in the UK form originally advocated by PWC has brought deep divisions to Aberdeen. It seems set to be promoting a cheerfully unapologetic attitude, amongst some in our community, with regard to social exclusion.

A popularly cited reason for getting rid of UTG is that this will also rid the city centre of people with drug and alcohol related problems. Presumably, relegating them to more blighted areas that would, were TIF being applied in a manner consistent with its original aims, be the areas actually benefiting from this scheme.

Think Of A Number

Aberdeen City, Aberdeenshire, Articles, Featured, Information, News, Opinion No Responses »

Jan 272012

The business case for TIF and the City Garden Project by Mike Shepherd

The Technical Feasibility Study for the City Square Project was published in 2009. A key problem area was identified early on:

“The difficulty in quantifying the economic gain is considerable. To describe the benefits in cultural and civic terms and to focus on the future raison d’être of the City of Aberdeen will become the means of explaining the benefits. However it is very difficult to make these benefits seem tangible. Yet this is precisely what will have to be done for a proposal to succeed.”

Three years later, and with the scheme rebranded as the City Garden Project, they are still struggling to give any clear explanation for the economic benefit.

The business case for Tax Incremental Financing (TIF) was presented to Council on Wednesday. TIF is a mechanism whereby a local authority borrows money from central government funds to finance a development project. Any new business rates created by the project are used to pay off the loan and interest. It is intended to act as a self-financing mechanism.

The City Garden Project has a nominal cost of £140m, of which the promised private sector contribution is £70m. Aberdeen City Council is being asked to underwrite a £70m loan through a TIF scheme. This is part of a larger plan to redevelop the city centre which includes knocking down St Nicholas House, the Denburn car park and health centre area.

The TIF business case presented to councillors is, however, seriously flawed.

http://committees.aberdeencity.gov.uk/mgConvert2PDF.aspx?ID=18350

An Attractive Aberdeen

The main justification for the City Garden Project is that it would apparently create a high quality city centre to make Aberdeen more attractive. This is supposed to act to retain and draw in energy and other professionals, together with an increased number of visitors.

“Research shows that talented people choose place rather than job when making location decisions. As an Energy City, Aberdeen competes for skilled people with….areas like Abu Dhabi, Kuala Lumpur, Houston and Perth (Australia).”

Yet, a survey published two months ago makes this claim somewhat questionable.

“ABERDEEN has been rated one of the world’s top cities to live in for the second year in a row, a survey published today reveals. Quality of life in the Granite City is ranked above that of Hong Kong, Los Angeles, Houston and Dubai in the study, which is used by governments and multinational firms to help decide where to send staff.”

http://www.pressandjournal.co.uk/Article.aspx/2536835

Jobs Creation

Most controversial is the claim that regeneration of the city centre could create 6,500 jobs.

The report sets out how his figure was derived. A questionnaire was sent out by the Council to companies and a small number of interested parties in Aberdeen with the intention of assessing the economic impact of the city centre redevelopment. One of the target groups comprised key developers, land owners and agents. Of the 35 parties in this group, only one replied to the questionnaire. They then contacted all remaining 34 developers by phone. Even then, when directly approached, only six of the 34 were prepared to speak to them.

Unfortunately this question did not garner any responses

The developers were asked ‘to identify the extent to which the delivery of each of the five development schemes would result in uplift in development potential for housing, retail outlets, office space, business units, hotels, tourism and leisure in the City Centre’.

However:

“No respondents identified the project as having any impacts on the development potential for business/industrial units in the City Centre”.

Then:

“The next question in the survey requested developers to provide an indication (in quantifiable terms such as the number of units, square footage etc) of the extent to which the identified benefits would impact upon their organisation’s investment plans and/or objectives. Unfortunately this question did not garner any responses as consultees felt it was too soon and/or complex to attribute impacts in these terms.”

That questionnaire wasn’t that much help then.

“Additionally it was apparent that individual developers and other respondents identified potential uplifts in activity and recognised that the timing of investments would be brought forward as a result of TIF. However, many of these developers still had expectations that, irrespective of future economic conditions or City Centre Regeneration Scheme (CCRS) , their specific sites will be taken forward. It was apparent that individual developers and other respondents identified potential uplifts in activity and recognised that the timing of investments would be brought forward as a result of TIF. However, many of these developers still had expectations that, irrespective of future economic conditions or CCRS, their specific sites will be taken forward.” (HA!)

SO WHAT DID THEY DO NEXT ?

“In balancing these different responses (i.e. CCRS will act as a stimulus to market uplift in general versus developers views that each individual site is likely to be taken forward anyway) the Council, ACGT Enterprises and their advisors have initially assumed a profile of development under the no CCRS scenario whereby:

“None of the cultural, leisure or retail elements of the CCRS projects will be taken forward;

“At least one major site totalling 0.720 million square feet will be taken forward in the anticipated timescales projected by developers regardless of CCRS; and,

“On the remaining sites identified, 1.369 million square feet will go forward without TIF over the 25 year period considered, but such developments will lag, on average, three years behind the profile assumed with CCRS.

“On the remaining sites identified, 2,029 million square feet of development (out of total development potential of 3.468 million square feet) will not go forward without the CCRS, over the proposed 25 year TIF period.”

THIS IS THE KEY BIT

“the Council, ACGT Enterprises and their advisors have initially assumed a profile of development “

AND THEN …

Took the 2,029 million square feet figure, multiplied it by ‘standard job density ratios,’ and came up with 6,500 jobs.

Assumptions?

So what happened next?

“In balancing these different responses (ie CCRS will act as a stimulus to market uplift in general versus developers views that each individual site is likely to be taken forward anyway) the Council, Aberdeen City Garden Trust Enterprises and their advisors have initially assumed a profile of development under the no CCRS scenario whereby:

…. 2,029 million square feet of development (out of total development potential of 3.468 million square feet) will not go forward without the CCRS, over the proposed 25 year TIF period.”

The footage was multiplied by standard figures which relate development area to the number of jobs likely to be created, hence 6,500 jobs.

The key word here is ‘assumed’. An exercise in speculation somehow translated into a press statement that the City Garden Project will create 6,500 jobs. This wild claim led to much scepticism. It was pointed out that the London Olympics are only predicted to create 3,000 new jobs.

The Risks

The discussion on project risks is somewhat lightweight. One concern is the possibility of massive cost over-run on the project. The report even tacitly recognises the possibility:

“It has demonstrated with the redevelopment of Marischal College that it can have a major project delivered on time and under budget. This is a rare accomplishment in such large projects.”

In June 2010, I gave a deputation to a Council meeting where I asked who would pay for any cost over-run on the City Garden Project. The then Chief Executive, Sue Bruce, decreed that the private sector would pay, not the Council. Since that meeting, there has clearly been little progress on the matter. The report mentions that:

“Before entering into any TIF arrangement, ACC will endeavour to structure an arrangement with its private sector contributors that minimises ACC’s risk exposure.”

The Council should walk away from the project unless it gets a legally-binding commitment from the private sector to cover all costs of any project over-run. The major financial problems caused in Edinburgh Council as a result of the projected £200m-plus overspend on the trams project should be foremost in councillors’ minds, one would hope.

TIF can be a risky way to borrow money. The risks are understood by the Council:

“For most TIF projects the most significant risk would be in relation to the business rates identified not materialising or being delayed. This would result in ACC having insufficient revenues available through the TIF mechanism to service and repay their borrowings.”

There is another risk. The loan will be in place for a period of 25 years, gradually being paid off, it is hoped, by new business rates. Like a mortgage, interest will accrue on the unpaid part of the loan. The business case assumes an interest rate of 5.2% over the 25 year period. Should interest rates rise by only 1%, then there will be a predicted shortfall of £20.7m left to pay after 25 years.

Careful reading of the TIF business case for the City Garden Project shows that it is based on unexplained assumptions, optimistic extrapolations and will involve financial risk for the Council. Yet the public are being told otherwise.

Tuesday’s ‘Press & Journal’ quoted a City Garden Trust director, who mentioned they had polled 50 people in Aberdeen. Those against the City Garden Project had said the city could not afford the project.

“When the funding was explained and the economic benefits outlined, ten of these people changed their minds. “

This is what I would have told them instead.

“Your house needs doing up, you are heavily in debt, you can barely find the cash for the essentials in life. Should you take out an enormous mortgage for a new patio and garden? No!”

Defying The Economic Cycle, By Bike

Articles, Community, Information, Sport No Responses »

Jan 272012

In these bleak and pessimistic economic times, it’s always heartening to hear of a thriving business looking to expand. All the better when its success is built on an alternative business model which genuinely appreciates its staff, rewards and motivates them appropriately,and involves them at the core of decision-making. Surely this can’t work in the cut-throat commercial world? Jeremy Miles, MD of the Edinburgh Bicycle Co-operative has proved it can. David Innes cruised alongside him in high gear (definitely NO Lycra though) to ask him how it works.

Expanding? In the current economic climate?

What looks like a sudden announcement of expansion is really a plan we have been quietly executing for just over ten years. For 25 years we only operated in Edinburgh where we built up a £3m store. We decided to expand in 2001 and acquired Cycling World in Aberdeen’s George Street.

By 2011, turnover increased to £12m, with stores operating in Newcastle, Leeds, Manchester and Sheffield. We were developing our online presence at the same time. Our aim was to double in size in each of the two five-year periods – every self-respecting socialist-minded business has to have a five-year plan! These are among the most challenging times traders have ever faced. Our business is no different. Customer spending on discretionary items is down, on bicycles as much as sofas and flat screen TVs. We’re seeing growth, but its hard work to keep that going, although it’s very positive in current conditions.

Our optimism and our ambitions are based of a number of factors. Cycling is enjoying a very positive momentum at present with concerns over health, transport costs, congestion and the environment all helping the industry to grow. We also feel that our co-operative structure presents an alternative to discerning customers who want to spend with a company with real values as well as a genuine focus on high levels of service delivered by owners of the business.

we work within our general vision of doubling turnover every five years.

Look how the Co-op has positioned itself against the corporate strength of the major supermarkets. The Co-op has heavily engaged with its local communities to help fund projects. It projects an image of being off the beaten track in terms of their offer.

Since we face similar challenges as our competitors become more organised and supported financially by private equity, we must also target a particular market where the growth in cycling is focused – in family leisure cycling and commuting.

Our previous expansion plans were about big stores in big cities with the right demographic spread; a fairly rigid plan which worked well for us in good times. The bike market is changing, however, with the development of some huge internet players in Wiggle and Chain Reaction Cycles. Significant retail chains like Evans and Cyclesurgery are expanding rapidly and bicycle retail is very different from even five years ago. We’re also seeing more established brands such as Specialized and Giant opening branded stores, whilst the government-driven Cycle to Work initiative has also helped change the landscape.

Expansion opportunities are broader and more flexible as the customer base widens. Business-to-business relationships develop through government-funded initiatives and the internet offers new ways to market and support the bricks and mortar business. We look to capitalise on these opportunities when they emerge. We don’t have plans for x stores in y years, but we work within our general vision of doubling turnover every five years.

This co-operative structure – how does that work?

Within the spectrum of employee-owned businesses we are a traditional workers’ co-operative, so as hardline as it gets!

We have around 180 employees, full-time and part-time, of whom 135 are co-operative members. Members are invited to join after 12 months service by purchasing a single £2.75 business share. Around 75% of our workforce are owners of the business.

Having secured membership, they’re entitled to receive a share of profits, free shares awarded annually, a single vote on issues put to the membership and the opportunity to be elected to the Board. They have access to communication mechanisms allowing information to move freely from top to bottom and vice versa, ensuring that opinions and ideas are fully utilised. It’s an open and consultative approach to management and operations.

Aside from the ownership model, our business structure is fairly traditional with a board of directors, including an executive management team where I am MD, a group of elected employee directors to represent the membership, and an external non-executive director to provide guidance and expertise. I manage the staff in a conventional manner via Divisional and Department Managers.

This obviously works – tell me why

We’ve always been structured this way. We started out in 1977; seven hippies fixing bikes in a small repair centre in Edinburgh. Two of these hippies are still with us today!

The central philosophy was always to have an alternative view of how a business was structured, but I don’t suppose your readership is all that interested in very deep philosophical musings about the prevailing mood of the 1970s and detailed Marxist rhetoric!

We are very much a business which values its people. We see them as the key asset of the business, so it makes sense that they control the business.

We spend 10% of our targeted profit every year on supporting grass-roots cycling projects

A prime retail challenge is delivering an all-round quality customer experience. To be effective at this, you must ensure that customer-facing staff are heavily engaged with your business. Many retailers struggle, paying minimum wage rates and providing a fairly uninteresting working environment. They turn staff over very regularly.

As a co-operative, we put owners in front of customers in most instances. This makes it much more likely that customers are speaking to someone with a deeply-vested interest in making sure the experience is positive. The fact they are almost always very passionate about the product they are selling helps too!

We see ourselves as much more than just a shop selling bikes and bits. We’re all about added value and the wider customer experience. Promoting cycling as a leisure activity and a genuine alternative mode of transport is at the heart of our vision and mission. We spend 10% of our targeted profit every year on supporting grass-roots cycling projects, from school fairs to individual charity rides through Vietnam. We support key charity-focused cycling events which also promote cycling, for example the Edinburgh to St Andrews Ride and the Great North Ride in Newcastle.

We don’t just write a cheque. We’re hands-on involved, with starting line presence, repair services en route, food stops, and finish line presentation. We’ve run a range of hugely-successful maintenance and training skills classes for customers for years, and have a real commitment to providing repairs services to a high level. Our workshops are prominent in our stores rather than tucked away in a back room.

We see our engagement with customers as a vital part of the character of our business and put huge effort into getting feedback from them. Customers contribute to the content of our catalogues with family photos, and will soon be helping with blogs and social media content.

We have a very loyal base who are genuinely interested in our values and want to be part of our success as a genuine community co-operative.

Aberdeen City Youth Council Hits Out At CGP

Aberdeen City, Articles, Breaking, Community, Environment, Featured, Information, News No Responses »

Jan 272012

Aberdeen Youth Council’s former head Sean Press resigned because of ‘a conflict of interest’, citing his involvement with ACSEF the ‘pro-business and development body [which] is fully supportive of the City Garden Project’ per the Press & Journal. Now Aberdeen City Youth Council, the official voice of young people in the city, has spoken out against the proposed development of Union Terrace Gardens, describing the plans as “unwanted” and “potentially devastating to young people”.

17 year-old office-bearer, Kenneth Watt, comments on the decision:
“It’s not normal for the Youth Council to speak out against the Council like we are doing. However, the decisions made have the potential to be devastating to our generation, and generations to come and we are genuinely worried about the prospect of the City Gardens Project going ahead.”

As a result, the group has registered to submit 300 words in the voter registration pack.

The group also criticised the City Council in its involvement of young people in the decision-making process, after they discovered that only 113 young people from just two schools were consulted with. In the Youth Council’s own consultation 98% of 14-25 year-olds were in favour of retaining the Gardens.

The financial security of the City Gardens Project (CGP) concerns the Youth Council. The Aberdeen City Youth Council (ACYC) are worried by the lack of a plan to cover the possible failure of the risky Tax Increment Funding scheme. After multiple requests for detailed financial information from councillors on the monitoring board were ignored, the group became very apprehensive over the CGP’s feasibility.

Kenneth Watt, an office-bearer in the ACYC says that:

“Young People have been hit hard by spending cuts to key services already; the prospect of facing more in the future is a risk the Council can’t afford to take.”

“Young people need to be listened to and have their questions answered. We’re the ones that will have to foot the bill when the £96million loan can’t be repaid.”

One of the main sufferers of cuts to public services is Aberdeen’s youth. Northfield has the highest rate of child poverty in the north-east of Scotland and the Council cannot commit to such a financially unstable project when they are closing key services to the youth in many areas.

“It is ridiculous for the Council to commit to a £96million loan when vital community services – such as the Mastrick Young People’s Project – are being cut left, right and centre.”

It was claimed that the CGP would reduce crime rates in the city, which young people are frequently blamed for. Both final designs for the CGP have direct access from Belmont Street and Union Street, home to many pubs and clubs. A £170million project of this nature will not cure the violence and crime that Aberdeen faces.

“Voters need to think seriously about the long-term aspect of the City Gardens Project and the financial burden it could easily leave for generations of Aberdonians to come.”

“Union Terrace Gardens is a space that is unique to our city. Our parents have loved the Gardens, we love the Gardens, and – if retained – our children will love the Gardens too.”

Older Entries