Business Archives - Page 16 of 21

Tax Is Lax

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.

Have your say in the comments box below. Note – All comments will be moderated.

Union Terrace Gardens – The Big Picture

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

Apr 062012

If you are of the opinion that the City Garden Project controversy was all about what flavour of city centre park Aberdeen should have – think again. There seems to have been a much bigger picture involved here, and the politics are murky. Mike Shepherd writes.

The power of the print media in shaping opinion

The public referendum has been held, and the City Garden Project won by the smallest of margins: 52-48%. Feelings are still poisonous in the city, as it is clear that a marginal result was swung by dubious means.

On the City Garden Project side, unregistered groups spent a disproportionately large sum of money on campaign material, whereas the officially registered groups were restricted to spending about £8,000 only.

Some of the claims made by supporters of the City Garden Project were outrageous and substantially misleading. One newspaper advert is now being investigated by the Advertising Standards Authority.

Even Aberdeen Council were responsible for punting a justification for the City Garden Project with the questionable claim that a new park could create 6,500 new jobs in the city.

The local papers showed a bias in favour of Sir Ian Wood’s project and framed their reports to show one side in a much better light than the other (“Yes, vote for change” or “No, don’t vote for change”). Ludicrous claims were accepted uncritically – such as oil companies leaving Aberdeen if the scheme did not go ahead.

I had been advised by an expert that:

“Newspapers are very powerful at shaping public opinion”

and:

“You will need the support of a PR company during the campaign.”

It was very good advice, but in practice not something that a campaign group of limited influence and funds could realistically put in place. Yet, it was clear from canvassing in the street that the combined effort of relentless advertising, the glossy brochures and the press bias was having an effect.
Whereas many would stop and give me a considered analysis of how they would vote, a large minority were reflecting City Garden propaganda back at me, phrases recognizable from glossy brochures or Evening Express headlines.

Our society today is witnessing a battle between democracy and political lobbyists / PR companies. Out of this, democracy is not doing that well. It’s a shock to see this writ large in Aberdeen, but at least the Gardens Referendum result has made this crystal clear to any thinking person in the city.

Local politics

After two years of campaigning to keep the Gardens, I have been able to observe how local politics works. It is clear that the current council administration is very business friendly and they will tend to make decisions that primarily favour business interests. At just about every council meeting you will hear the phrase “Aberdeen is open for business.”

Local democracy commonly involves a conflict between what business wants and what is in the interests of the general public. For example, if Aberdeen Airport is allowed to land flights at night, Dyce residents will get woken up by the noise. The conflict between business and public interests came to the fore after the consultation on Sir Ian Wood’s scheme two years ago. Over 50 local businessmen wrote to the council asking for the result to be ignored:

‘due to misunderstanding of the project among the public’

and an ‘inability’ to appreciate its impact. The council – to their shame – did this. The current Council administration (an SNP / Lib Dem coalition) appears to favour business almost every time.

There are a number of reasons why business gets its own way with the council. Many councillors are instinctively business friendly and will tend to support projects that are favoured by local commercial interests. This is certainly true of the Conservatives on the council and of many councillors from the other parties too.

There is also a powerful business lobby. Businessmen make up two thirds of the Aberdeen City and Shire Economic Forum (ACSEF), a “public-private partnership that drives economic development in the region”. Funded by both Aberdeen City and Aberdeenshire Councils, ACSEF is a non-elected body that have been given a significant degree of control over local economic policy. There is no doubt that ACSEF exerts power and influence over the activities of both councils.

advanced societies work by a system of checks and balances between moneyed interests and the public regard

ACSEF were involved with the City Garden Project in the early days and described it as one of their flagship projects. Two of the board members, including the Chairman Tom Smith, are directors of the Aberdeen City Garden Trust, the group that organised the architectural competition and who hope to take the project forward to completion.

Extensive networking appears to go on amongst the “great and the good”. Politicians, local businessmen, council officials and senior figures in local organisations turn up and meet at parties, functions, charity events and business meetings. One Freedom of Information request gives an indication of how much hospitality is provided to council officials for instance:
http://www.whatdotheyknow.com/request/76531/response/199821

To the worldly wise, this will not come as a surprise. However, advanced societies work by a system of checks and balances between moneyed interests and the public regard. This does not appear to be working too well in Aberdeen.

The SNP and the City Garden Project

The SNP have been intimately involved with the City Garden Project since its inception. Alex Salmond was present at the project launch in 2008.
http://www.eveningexpress.co.uk/Article.aspx/933616

But only recently have both Alex Salmond and Callum McCaig, the SNP leader in the council, explicitly endorsed the City Garden Project.

Yet, the majority of SNP councillors have supported it throughout (the notable exception being Clr. Muriel Jaffray). This is clear from the voting records every time the project has come up for debate in the Council. The SNP support has been instrumental for the progress of the City Garden Project through successive council votes.

Major businessmen such as David Murray, Brian Souter, Jim McColl and Martin Gilbert have now endorsed the SNP.

The SNP have a reputation for populist politics and it may seem surprising that they have embraced such a controversial project for the city. I believe that there is a much bigger picture here, and one that takes precedent over local politics. The SNP are essentially a single-issue party; they want independence for Scotland. The realpolitik of the SNP is that much of what they do is focussed towards this end.

A key aim for the SNP has been to secure the support of major business figures in Scotland. This is partly financial; the party has no natural source of funds apart from membership fees, but they are also trying to secure influence leading up to and beyond any independence date. Major businessmen such as David Murray, Brian Souter, Jim McColl and Martin Gilbert have now endorsed the SNP.

Sir Brian Souter, founder of the bus company Stagecoach, caused controversy when he donated £500,000 to the SNP in 2007. Shortly afterwards, the SNP dropped an election commitment to bus re-regulation, although they denied that there was any connection to Sir Brian Souter’s donation.

Sir Ian Wood has not given open support to the SNP, yet the SNP continue to court the billionaire’s favour. Not only has Alex Salmond given his own backing to the City Garden Project, the machinery of Government has also been used to bankroll the scheme.

Scottish Enterprise funded the public consultation two years ago and also allowed grant money to be used for the technical feasibility study. Although the public rejected Sir Ian Wood’s project in the consultation, it didn’t stop Scottish Enterprise from giving Aberdeen City Garden Trust £375,000 of public money from its available funds for major infrastructure projects.

Another niggly problem has been the concerns of Audit Scotland

The Scottish Government are keen to provide investment money for the project through TIF funding. Yet it has been established that the initial proposal did not rank very highly by comparison to other investment and infrastructure projects elsewhere in Scotland.

The Scottish Futures Trust, who carried out the ranking, has refused to make their calculations public in spite of Freedom of Information requests to do so. Another niggly problem has been the concerns of Audit Scotland, who have questioned the long term capability of the indebted Aberdeen Council to pay back a risky loan for the project.

The proposed use of valuable investment and infrastructure funds for something as trivial as building a new park is shocking. The business case is dubious and the council can’t afford the risk. Political considerations seem to have taken precedence to a strict business evaluation on the Aberdeen TIF case.

Sir Ian Wood discussed independence recently and gave an indication of what he wants from the Scottish Government:

“The Wood Group will not endorse a Yes or No vote on independence. But Sir Ian added: “What’s key is the extent to which our clients, and to some extent ourselves, anticipate that a Scottish Government would continue with a similar oil and gas policy to the UK.

“The suggestion right now, from the discussions I’ve heard, is that there’s a lot of overlap between the present Scottish Government’s thinking on the development of the oil and gas industry and the UK government’s thinking.”

He went on:

“What’s important – and I think the First Minister realises this – is that they must provide as much clarity as possible over the next two years towards the vote in 2014, so that we minimise the uncertainty.”
http://www.scotsman.com/captains-of-industry-and-finance-join-clamour-for-clarity

I have no doubt that this will happen.

The SNP are hoping to secure a majority at the council elections on May 3rd. This is possible, but as a one-issue party they tend to do better in national elections than local elections. They are also heavily identified with the Union Terrace Gardens issue and this appeared to have cost them votes in the Scottish elections last year.
https://aberdeenvoice.com/2011/05/the-election-the-utg-effect/

If they do not get a majority, this raises the intriguing possibility of an administration run by a Labour-SNP coalition. The Lib-Dems are likely to see their vote collapse outside the West End of the city. The Labour group are vehemently opposed to the City Garden Project and it could be that a condition for agreeing to form a coalition is that the scheme is dropped.

The “Union” in Union Terrace Gardens refers to the union of the United Kingdom and Ireland in 1800. Perhaps it is ironic that the park has ostensibly become a pawn in the big game of Scottish independence. It would be immensely sad if this was the case. Aberdeen’s heritage could end up sacrificed for the sake of political wheeling and dealing.

This would not bode well for a future Scotland. As Paul Scofield, playing Thomas More, said in A Man For All Seasons:

“I think that when statesmen forsake their own private conscience for the sake of their public duties, they lead their country by a short route to chaos.”

FoUTG Chair Addesses Council Re. Referendum Report

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

Apr 062012

A report on the UTG referendum was discussed at a meeting of full council on Wednesday with a view to it being approved before being sent to the Scottish Government. Friends of Union Terrace Gardens chairman Mike Shepherd was permitted to give a deputation. Aberden voice presents Mike’s deputation in full.

“I was allowed to give a deputation here in January when I said that the FoUTG would agree to take part in a referendum if it was fair.

We agreed to the referendum in spite of the shameful behaviour of this council in ignoring the result of the public consultation two years ago. We agreed for two reasons.

First, we saw the CGP as a juggernaut pushed through relentlessly by business and a friendly council. There were only two options to stop this; either through the referendum or legal action. We chose the referendum.

Secondly, we chose this route through public spirit. We were only too aware of the poisonous attitudes building on both sides of the issue. Aberdeen was at war with itself. A fair referendum was the only way of killing this beast.

I also told the council that the referendum would have to be fair because implicit in taking part was that we accepted the final result, whatever it was. This was said in good faith.

THIS WAS NOT A FAIR REFERENDUM!

We do not accept the result. The process was flawed. Internet and phone voting should not have been allowed as without signatures, this was open to fraud. The Green party have also asked me to complain about their shortened message in the information pack that was sent out.

The City Garden Project supporters were allowed to spend tens of thousands of pounds on PR, newspapers, leaflets and radio ads. This money spent on advertising bought a marginal result for the referendum.

The ads were often misleading and in some instances blatantly so. We were told of a bogus £182M investment, consisting of a bogus £15M of private investment and a bogus £20M Art Gallery grant which didn’t exist. One misleading ad is under investigation by the Advertising Standards Authority.

This council also misled the public. The claim that a new park could create 6,500 jobs was utterly ludicrous. They did not explain the risks of borrowing through TIF properly, even when Audit Scotland expressed their concerns about the long term implications for the Council’s finances.

You are £618M in debt, you cannot afford the risk on further borrowing.

The council were partial to one side of the referendum. The ACGT were allowed to show a video in the Art Gallery, council property, yet we were excluded until after several days of complaint on the matter.

This was a dishonest referendum. The public were misled right up the City Garden path. The council should vote to ignore the result. Furthermore, this report should not be passed onto the Scottish Government as suggested. The proposal to spend valuable investment and infrastructure money on something as trivial as a new park is a disgrace.

We do not accept the result of the referendum and we intend to carry on campaigning to save Union Terrace Gardens. Thank you.”

Evening Express report here. http://www.eveningexpress.co.uk/Article.aspx

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