Shetland Charitable Trust has finally agreed to reform its make-up, relinquishing SIC councillors’ majority control over £200 million of community funds in favour of a 15-strong body of eight independent trustees and seven councillor-trustees.
Two trustees – council convener Sandy Cluness and councillor Jonathan Wills – resigned from the trust in the immediate aftermath of this morning’s historic decision. The two, often foes in the council chamber, are both deeply unhappy at the loss of democratic control over the trust.
Following a two-hour debate in Lerwick Town Hall, those present voted 9-6 to back the recommendation of the trust’s governance review group. That is to appoint the eight non councillor-trustees via an independent selection panel, rather than directly electing them as Dr Wills had proposed.
Charities regulator OSCR has implored the trust for the past three years to change its constitution to comply with charity law and to put clear blue water between itself and the council. The number of councillors will shrink from 22 to seven, possibly one from each electoral ward.
Mr Cluness, who has invested much energy in preventing efforts to reform the trust because he feels it has served the community well for 35 years, abstained from all three votes and tabled his resignation minutes after the meeting.
His idea of consulting the public in a referendum on trust reform was given short shrift by OSCR last month. Mr Cluness repeated his belief that because the trust so closely complements the public services provided by the council, there needs to be “a degree of co-ordination” between the two.
The long-serving councillor did say he would like to have tested OSCR’s resolve following its threat to take the trust to the Court of Session. Mr Cluness believed Shetland was now “being brought to heel” by mainland authorities, what had been created in the 1970s was “going to be destroyed” and he could not stomach voting for either proposal on the table.
Even more furious at the outcome was Dr Wills, who was joined by Gary Robinson in walking out of the meeting in protest just before its close. Dr Wills returned shortly after to hand his resignation to trust chairman Bill Manson.
The changes will not take effect until well after next May’s council elections. The trust has to submit its proposal by 22nd December, after which it will take several weeks for OSCR to accept and then carry out its own consultation. After that it has six months to decide whether to approve the reform.
Mr Manson welcomed the belated acceptance of the trust’s governance review group, which had exhaustively considered the options and held over 20 meetings. He said afterwards: “I’m just pleased that the hard work of the governance review group has now been upheld by the trustee body, and we will proceed to provide OSCR with the necessary timetable.”
Tenders to help recruit independent candidates are likely to be sought from companies such as Munro Consulting. The chosen specialist firm will advertise for people interested in being a trustee, then sift through the applications and come up with a shortlist.
Provided the regulator gives its blessing, an independent chair with a “proven track record in a relevant field” will be joined by two trustees on an interviewing panel. At least one of the trustees would be either AHS head teacher Valerie Nicolson or lord lieutenant Bobby Hunter.
Mr Manson said no-one was disputing that the trust was well-run, but it simply no longer complied with charities legislation. He is confident it will not be “run any worse by a new or revamped body”.
Mr Cluness has always insisted members of the public are well aware that by electing councillors, they are also choosing 22 of the 24 trustees. But Mr Manson suggested there was a “great deal of confusion” on that point.
Asked whether he felt the loss of direct democratic control would be acceptable to the Shetland public, Mr Manson responded: “There is democratic representation in the form of seven councillors, and I’m quite sure if they feel the trust is not being administered in the best interests of the people of Shetland they’ll make those concerns known loudly and clearly.
“Bear in mind that what we’re doing here is we’re running a charity, we’re not running a local authority. You’ve got a population of 22,000 with two bodies regarding themselves as having a democratic mandate. In the long run it’s a difficult recipe to make gel all the time.”
The spectre of the potential Viking Energy investment has hovered over the trust reform episode, and during the debate Dr Wills suggested direct elections were opposed by some because they feared windfarm opponents being elected to the trust.
Asked if that was the real reason he favoured appointing rather than electing trustees, Mr Manson responded: “There are around the trust table people who are at least questioning of the windfarm anyway, and it’ll surprise me if there aren’t people who are either against, or at least suspicious of, the windfarm that appear in the revamped trust body.”
He said he was disappointed that the trust would lose Dr Wills’ “trenchant views” and hoped it was “not a decision taken in haste”.
Dr Wills said the people of Shetland would be “horrified” at the loss of direct democratic accountability, describing the decision as “scandalous”. Having failed to persuade his colleagues to retain some democratic control, he saw “no point in remaining on a trust where there will shortly be a majority of hand-picked, unelected trusties”.
He vowed to campaign for the restoration of a democratic trust, and said he believed that when OSCR consulted on the proposal it would discover that Shetlanders were “almost unanimously opposed to the betrayal of the trust that was agreed today”.
A compromise solution from councillor-trustees Betty Fullerton, whereby four of the independent trustees would have been elected and four selected by a panel, was voted down on Mr Manson’s casting vote after a 7-7 tie with Mr Cluness joined by Gussie Angus in abstaining.
Councillor-trustee Rick Nickerson also tried his hand, suggesting the existing 22 councillors and two independents be joined by six co-opted members from various public bodies. He lost out 8-6, Mr Cluness this time joined on the fence by Gary Robinson.
Mr Cluness, one of those derided as a “backwoodsman” by Mr Manson earlier this year for employing various tactics which had stalled efforts until yesterday, did not produce any new ideas at the meeting. He said the Financial Services Authority’s failure to rein in RBS, costing taxpayers over £40 billion, showed regulators didn’t always know best.
Possible uncertainty for care centres and the amenity, arts and recreational trusts all funded by the charitable trust was on the mind of Gussie Angus: “We have absolutely no way of predicting what a reformed trust would do,” he said. “A shift in policy could see our carefully structured support for arts, leisure [and] social care … dismantled.”
Questioned by Dr Wills, trust lawyer Simon Mackintosh confirmed there was no legal impediment to directly electing trustees. But the ability to get the right mix of skills, knowledge and experience “looms large” in OSCR’s requirements, and selection rather than election was “more likely to tick the box”.
To get around the requirement for specific skills, Dr Wills proposed up to five experts could be co-opted if trustees saw fit, while direct elections to the trust would have been held at the midpoint between local authority ballots.
He said it was for the people of Shetland to judge whether someone had sufficient common sense, general knowledge and wisdom to be a trustee. He described selection as going “backwards away from democracy and towards bureaucracy”.
Councillor-trustee Gary Robinson mocked the apparent fear that direct elections would lead to “random” results, noting that “randoms have done not bad” in building up funds worth nearly £200 million in the last three decades.
He was unclear just what the trust would be looking for in recruiting independents: “What constitutes suitably able?” he asked. “Lawyers, doctors? What are we speaking about here?”
Mr Mackintosh said the idea was to recruit individuals with relevant experience and the ability to “intelligently question”, for example, the trust’s stock market fund managers.
Councillor-trustee Laura Baisley said the governance review group had “discussed, argued and revised” for many, many hours. Going against their recommendation would have shown “great disrespect”, she said, adding: “They might as well have been playing Tiddlywinks.”
Ms Nicolson, who was part of the governance review group, said she was happy with the “backbone of continuity” provided by the eight-seven split of appointees and councillors. While she sympathised with Dr Wills’ proposal, she feared trust ballots would be seen as “second class” elections.
At the start of the meeting, trustees rejected by 11 votes to six a request that absent councillor-trustees including Caroline Miller could take part in the meeting by telephone from outwith Shetland.
Mr Robinson said the idea was “utterly scandalous” and “smacks of political expediency”, while Florence Grains said such a change required detailed consideration and should not be made “on the hoof”.
One of only two members of the public following the proceedings was Billy Fox, who has confirmed he will stand for election in May. He hit out at the trust’s decision afterwards, saying it “disenfranchised” the public. He said a quorum of only six trustees meant that as few as three people could end up taking decisions on behalf of Shetland where tens of millions of pounds were at stake.
In a roll-call vote, those who backed selecting the independent trustees were: Laura Baisley, Jim Budge, Alastair Cooper, Betty Fullerton, Jim Henry, Bill Manson, Rick Nickerson, independent Valerie Nicolson and Frank Robertson.
Those who wanted the eight independents to be elected were: Gussie Angus, Addie Doull, Florence Grains, Robert Henderson, Gary Robinson and Jonathan Wills.