By NEIL RIDDELL
A STATE aid complaint has been submitted to the European Commission in the latest attempt to derail the Mareel project.
A spokeswoman for the Commission confirmed yesterday that a complaint over the proposed cinema and music venue was received on 17th July.
She said: “We can confirm that the European Commission has received the complaint and is in the process of analysing it. We cannot comment on any substance yet.”
In a strongly-worded statement released yesterday, Shetland Arts said it had received no formal notification of any complaint as yet but was confident there was no issue with state aid and hit back at those who it said remained determined to stop the project going ahead using all means necessary.
“We will not be distracted at this late stage by a handful of detractors who are now turning to Europe to try and stop Mareel. Most disappointing of all is that a state aid investigation may lead to delays and extra costs for Shetland regardless of whether the complaint is upheld or not,” it said.
“Our organisation will continue to seek external funding and a worthy contractor to put in place another building of which Shetland can be proud. We will answer any questions arising from an investigation.”
The SIC last month reaffirmed its £5.3m commitment to Mareel after a casting vote by SIC convener Sandy Cluness and the council’s development committee will take a decision on whether to approve a further £1m in funding for the project on 21st August.
It has been clear since the vote that some elected members who opposed the project have not given up the fight to stop Mareel, with some voicing their anger at the manner in which the council’s backing was approved in the absence of four councillors. Others, including Lerwick North member Allan Wishart, have said the democratic decision reached in June is one which should be respected.
The economic development unit is now seeking guidance from the Scottish government’s state aid unit as it prepares a report to put before councillors at the development committee.
Last month’s report to councillors stated: “Initial indications suggest that the current proposals do not need to be considered in terms of state aid, because the music hall and cinema venue can be deemed to be a service provided by the local authority.”
But head of business development Douglas Irvine told The Shetland Times this week that his department had requested further information from the Scottish government.
He said: “At this stage we are awaiting a full assessment from them, which is the normal procedure for where there might be an issue. We have decided to seek further advice, just to make sure we don’t have a bigger issue once it’s built. We need to get these matters sorted in the development phase before we start digging holes.”
According to the business plan for Mareel, 44 per cent of its total revenue will be derived from across the bar at the cafe and several different sources have suggested that an official complaint was lodged by someone within the local licensed trade, but it is not clear at this stage who was responsible.
Philip Manson, proprietor of the Lounge Bar and president of the Shetland Licensed Trade Association, said he was not aware of any complaint.
Iain Johnston of JW Gray, which two years ago was involved in attempts to stop the venture going ahead, also said he had no knowledge of such a protest being lodged. “It certainly wasn’t ourselves,” he said.
Shetland Arts’ statement claimed that the venue would be a boost to other outlets in the town. It continued: “Shetland Arts believes, backed up by a recent economic impact study, that Mareel will generate activity and vitality into the night-time economy of Lerwick, to the benefit of all including the local hoteliers, publicans and restaurants.
“Shetland Arts is confident that any state aid complaint should not be upheld given the thousands of similar venues across Europe that have been built using similar funds over the past ten years.”
The Scottish government has not yet been made aware of the complaint but a spokesman said it would continue to provide state aid advice to the SIC on a range of matters, as it has done in the past.
Lerwick South councillor Jonathan Wills, who is opposed to the project because he feels the council’s finances make it unaffordable, said that the complaint means the SIC should not be committing money to Mareel until it has received clarification over whether the council is allowed to fund such a facility.
“I’ve warned all along that this may breach state aid rules,” he said. “It may not breach rules, but until we are clear one way or another we should not have voted money for it.”
The council is already responsible for funding a number of other cafe outlets in Lerwick, including at Clickimin, Bonhoga Gallery in Weisdale and the Museum and Archives.
Dr Wills said: “It would open up a can of worms, and that’s a worry, though the cafe at the museum and cafes at other places, funded by trusts set up by the council, they are not seeking to fund their main business by drinks sales.”
Mr Cluness said this week he was “perfectly satisfied” that the council’s investment in Mareel was legitimate. “All local authorities have the right to build sports centres and theatres if they so wish,” he said. “All these restaurants [within existing publicly-funded facilities], I don’t think they’ve made any difference to the licensed trade at all.”
He said it was probably the case that certain members were looking for any possible means of throwing further obstacles in the path of Mareel. “If they want to go down that route they’ll have to,” he said. “But my feeling is most councillors now accept that a democratic decision has been taken and they’re looking forward to getting on with it.”
The second half of August will be another critical period for the project, with verdicts due on a range of funding applications to external bodies as well as the decision of the development committee, while Shetland Arts will also receive back tenders for the building contract on 19th August and are due to appoint a contractor in six weeks’ time.
Shetland Arts director Gwilym Gibbons said he was “on tenterhooks” ahead of the critical 10-day period as he waits to see whether the tenders to build the venue, estimated to cost £9.3m, are affordable.
Meanwhile, Dr Wills said he was growing ever more concerned about the state of council and charitable trust finances after the most serious decline in the stock market since Black Wednesday in 1992. He has written to the convener asking for councillors to be kept informed about the balance sheets on a weekly basis.
He said: “Very few of us have any prospect of delivering new projects, our challenge is to keep what we’ve got. Perhaps the public are more realistic than some of my colleagues. We’re going to have to take very unpleasant decisions and there will be a lot of angry people, but we have a duty to look after public money whether we’re popular or not.
“Irrespective [of whether Mareel breaches state aid rules] the question now arises whether any of this can be afforded. I will continue to advocate [that it cannot], whether I am popular with the council leadership or not.”
Mr Cluness said he continued to take a long-term view of the reserve and charitable trust funds. “Of course it is [concerning], but we look at the stock market over periods of many years, it goes up as well as down, but I do think that’s an argument for possibly investing locally rather than on the stock market.”
• The council’s European spokesman Gussie Angus is in Glasgow this week for discussions with the Scottish government’s state aid unit but he said on Tuesday that Mareel was not on the agenda for the talks.
The SIC has sensed a change in climate, triggered by the crisis in the fishing industry due to spiralling fuel prices, and he is pressing the case that some form of derogation could be made.
“What we’re looking for is, on the back of that, whether there could be some derogation to help sustain indigenous industry,” he said.
Of the council’s ongoing appeal to the European Commission over payments made to 78 first-time fishermen over the past decade, Mr Angus said: “We will continue vigorously to defend the actions because we believe, and we have reasonable expectation to believe, that what we were doing was in accordance with the rules. We were surprised, dismayed, and [had] absolutely no option but to appeal against it. We cannot understand why they’ve chosen to pursue us so aggressively on this.”