18th July 2018
Established 1872. Online since 1996.

None the wiser (Drew Ratter)

I don’t know. I have looked at the various websites and other internet resources which describe the Scottish Futures Trust, and am none the wiser.

So I still don’t know what repayment conditions apply to the money Shetland Islands Council can “get” to build the new high school.

I am, however, astonished that not one member of the entire compliment has been interested enough to ask. There have, over the years, been fulminations from all aerts about the evils of PPPs and PFIs; both also mechanisms through which local authorities could get things they could not really afford. Is it that they were evil Westminster lending mechanisms, and this is a braw Scottish one?

Further, I am astonished that not one single member of the body has asked one single official what the consequences of giving up Shetland Islands Council’s 20-odd year debt free status are.

When we used to talk about this, it was never pursued, because we were told that we would lose Scottish Executive support to the tune of our notional loan charges; some, as I recall £15 or £16 million per annum.

Were we misled, over all those years? Have things changed utterly? In any event, starting borrowing after over 20 years debt free should be worth, at least, talking about.

Drew Ratter

Gaets a Voe,

Ollaberry.

12 comments

  1. Brian Smith

    The problem is that ‘building a new Anderson High School’ has become one of those ‘iconic’ Shetland things, like ‘£250 million’ and ‘debt-free’. Things to be intoned, not discussed.

    Reply
  2. Steve Poleson

    Totally agree Mr Ratter.

    I’m surprised that our councillors nor our media have seemingly not asked what are the threats, risks and disadvantages of getting a loan from the government.

    Let’s not forget, Shetland gets around £20m more per year than Orkney from the Scottish Executive by way of the annual grant. This may be down to our debt free status. The Scottish Executive will be rubbing their hands in glee that Shetland could be taking a loan from them

    Reply
  3. A Fullerton

    Some of the above concerns were raised by Dr Wills in the Council Chamber on Wed 7th Dec.

    Reply
  4. Billy Fox

    I attended the council meeting on Wednesday for the AHS agenda item, as I too am interested in what form this financial aid could take, and what effect it could have on our debt free status. It was a question I had already asked my three councillors but with no answer.

    Most of the councillors seemed to be remarkably unconcerned on the issue but three or four did raise the question, if my notes are correct they were councillors Wills, Angus, Robinson, and Nickerson.

    Hazel Sutherland, who presumably is still our acting Director of Finance, gave a somewhat inconclusive reply – it may or may not incur financial penalty but it all depends on the package according to the Scottish Government – or words to that effect. She also put a figure on what our debt free status is worth, which is currently £13.5 million per annum. Rather worryingly her reply seemed to satisfy the meeting, however it did not make me feel too confident, I would have been happier to see a more concerned attitude from councillors to pursue this application very carefully.

    I worry, in the final rush to get the school off the ground, that the financial implications with regard to our debt free status will be overlooked, it would be the final stroke of incompetence in what has been a truly unbelievable saga over the last 20+ years. I certainly would not put any faith in half hearted assurances from the Scottish Government that there would be no penalties.

    Reply
  5. Jonathan Wills

    Drew Ratter is not the only one who’s puzzled. Some of us have been asking questions about the funding of the new Anderson High School for quite a while now (three years, in my case).

    It is indeed something of a mystery why the council does not appear to have asked for government help to build the new AHS, until Cllr. Betty Fullerton’s recent initiative. Perhaps some people wanted to kick the new school project into the long grass. But that was way back then; now that we’ve finally got unanimous agreeement on the site (after going through the obstacle course for the third time in 20 years) we will, of course, continue to ask questions about exactly what sort of government assistance may be available.

    Because of Westminster cuts imposed on the Scottish government, in order to bail out the Prime Minister’s speculative friends in the City of London, we’re unlikely to get a grant (although other, poorer authorities have recently had what amounted to grants to build new schools). It is more likely to be a subsidy to pay perhaps two thirds of the cost of a loan. Whether these costs would include capital repayments as well as interest is a question some of us have asked. We await a full and detailed answer but the delay is in part because the Scottish government (which Drew seems to want to deride, for some inscrutable reason) has not yet received a formal application from the SIC. When it does, and the project is assessed on its merits, the picture will presumably become clearer.

    What seems clear already is that the old “debt-free” rules no longer apply. When Drew was a councillor, if we borrowed to build a large project like this, the council would automatically lose some of the £13.5m a year it receives in “notional loan charges” as part of the annual government grant. This ceased to be the case some years ago when the government stopped “ring-fencing ” council budgets – in other words, telling us exactly how we should spend the money allocated to us. We have learned only recently that having reserves does not prevent us borrowing. My colleagues and I found this out by asking the questions that Drew says we didn’t ask. The most interesting unanswered question is why councillors do not appear to have been told the rules had changed. Possibly that long grass problem again…

    As for Brian Smith’s comment that the new AHS is “iconic” and something “intoned rather than discussed”, I confess I am bewildered. If he read the council papers available in the online archive he would know that the project has been exhaustively discusssed in great detail for many years. Perhaps he was just being superior.

    Cllr. Jonathan Wills

    Reply
  6. Brian Smith

    No-one in Shetland is in any doubt that Jonathan and his colleagues have been intoning about a new A.H.S. for many years. The question that people are now asking is: depending on the type of finance used, how can we afford to run the place in the current financial circumstances?

    Reply
  7. John Kryton

    Brian what current financial circumstances? you have been in total denial of there being a financial problem with the council or government.

    Reply
  8. Mark Counter

    Brian what financial circumstances? you have been in total denial that there is a financial problem with either the council or the government.

    Reply
  9. Brian Smith

    Boys, there is an important distinction to be made between (a) acknowledging there is a problem, and (b) deciding that there is only one way of dealing with it. Robert Williamson’s aphorism in this week’s Shetland Times about cutting off your leg because you have cramp is timely.

    Reply
  10. Jonathan Wills

    Brian Smith’s question is a good one. The answer is that the new Anderson High School should be considerably cheaper to run than the existing haphazard collection of buildings at Lovers’ Loan: it will have the most modern environmental controls, making it much cheaper to heat, light and ventilate; the layout will make far more efficient use of space and therefore of teachers’ and pupils’ time; it will cost less to maintain than the existing site; and if it shares some facilities with the Clickimin Complex there should be big savings possible there also.

    The cost of borrowing or otherwise financing construction of the new school will certainly be large (although at present interest rates this is a good time to do it), but that is why councils can apply for government assistance to fund such expensive but essential projects, and also why we can get their help with designing the new building to make it as cost-effective as possible.

    Cllr. Jonathan Wills

    Reply
  11. Christopher Ritch

    Perhaps Jonathan might take some time out from dreaming about the optimal temperatures for students in Lerwick to consider some more mundane issues.

    For example, the Uyeasound School has now been closed (with obscene haste) but why is the council refusing to provide shelter for the bairns waiting to catch their buses to Baltasound?

    Surely the “savings” gained from closing Shetland’s best performing school will not be wiped out by the cost of erecting a couple of bus shelters?

    Reply
  12. Brian Smith

    Christopher Ritch’s question is a good one. Why on earth is the Council unwilling to work out priorities?

    Reply

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