Highland Activist

Councillor Ben Thompson, Caol & Mallaig Ward, Highland Council.

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Arms trade and defence industry

Recent Common Weal FOI requests have revealed that the pension funds of many public bodies including Highland Council have invested in the defence industry. Many rightly question the ethics of such investments. The phrase "defence industry" is not the one used by objectors - the phrase commonly used is "the arms trade" which hints at what the basis for objection actually is. To be clear, objections usually stem from three viewpoints: firstly, (one I share) that supplying weapons to murderous regimes should be stopped; secondly, that profiting from the sale of weapons is unethical; and thirdly, that the production of weapons per se is simply wrong. In my time as an investment manager I had clients with each of those viewpoints. I'd say that the vast majority had the first viewpoint, a select few held the second, and perhaps one fund objected entirely to weapons manufacturing. Another way of putting it is that nearly all pension fund clients are happy to invest in companies that supply NATO and it's allies and the police of those countries. That meant nearly all clients were content to allow investments in the defence industry - as long as we could show we were activist shareholders who could actually take company management to task should their weapons end up in the wrong hands. The very few clients who wanted nothing to do with the defence industry at all could not and cannot exclude themselves from weapons production entirely. It is not possible to work out where the steel comes from, who ultimately makes the silicon chips for the IT infrastructure, who supplies the extra contract engineers needed on demand. The language those few clients therefore used then was to restrict investment in companies "substantially involved" in the defence industry. It doesn't take a genius to work out what would happen if that "substantially involved" restriction became commonly used by all pension funds. The first outcome would be that the share prices of the defence companies would suffer. Those companies would then become more attractive acquisition targets for more diversified industrial conglomerates - meaning those not "substantially involved" in the defence industry. The end result would be pension funds entirely free to invest in the defence industry once again, but with far less transparency. General Electric, manufacturer of wind turbines, medical devices and jet engines aming many, many things is a good example of what would become widespread - it has many $ billions of defence sales, yet those billions make up only ca. 3% of its total business. It is not "substantially involved" in defence. How then do we best address investments in the arms trade? Calls to divest entirely from the arms trade will not work - in the short or long run. The best solution is to shine a bright light on the activities of defence companies and make them justify their actions to governments and shareholders. Driving defence manufacturing into the arms of industrial conglomerates like GE simply makes that much more difficult and isn't in anyone's interest. My own view is that shareholders, such as the Highland Council, need to be far more activist with their own shareholdings. Councils need to be making the point more forcefully as shareholders that they do not accept unethical behaviour, such as selling arms to objectionable regimes. For that we should thank Common Weal for the timely reminder of this important issue.

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Independents in administration

I have never sat at Wimbledon and watched a full-bloodied tennis match. Yesterday at Council came pretty close, watching the SNP and Lib Dems (sitting on our left and right respectively) trade shots - with the player on serve often just aiming straight for his opponent. Few would call it edifying.

The source of this ‘entertainment’ was a Lib Dem motion:

The Highland Council recommits itself to actively campaigning for fair funding for NHS Highland in line with the agreed national formula

Pretty uncontentious stuff you would think. No one across the chamber disagrees that NHS Highland has been too far below the ‘fair funding’ level compared to other regions. No one disagrees that it is now within spitting distance of the national ‘fair’ level. No one disagrees that parity would be fairest result.

The national formula recognises that exact parity is impossible to achieve. It also recognises that heading towards it rapidly is damaging: increasing one region’s pot simply decreases the pot of another, so rapid realignments cause severe management problems - what may be good for one region is not good for Scotland. So ‘fair funding’ is considered to be +/- 1% of parity to allow for smooth funding transitions. Where are we now? At -1.2% (after being adrift by many times that). 

The brickbats started flying because some would consider the motion to be politically motivated - grandstanding with the 2016 Holyrood election in mind and a stick to beat the SNP government with.

What did we try to do as independents now running the Council? We put forward an apolitical compromise. It accepted the Lib Dem motion but added acceptance of the fact that many milllions had already been spent to get NHS Highland to within spitting distance of ‘fair funding’ and encouraged NHS Highland management to get on with the job of negotiating closer to parity.  Our compromise was turned down. 

The next year or two will no doubt continue in the same vein - intensely political motions and arguments from our party-affiliated colleagues, with the group of independents trying to stay above the fray or promote a compromise. 

Given the austerity budget hole we were presented with yesterday it is imperative that the Council gets on with huge task ahead, and in a more collaborative spirit than we witnessed yesterday. I am still hopeful we can achieve that, as outside the chamber you can see the same councillors who moments before were at each others throats over NHS funding, then sharing a joke over a coffee.

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Kicking the can down the road pt II

Highland Council must triple its maintenance spend to keep Highland roads in their current condition. That was the grim message at a recent briefing to councillors.

I have covered this issue on this blog previously. The briefing confirmed the numbers previously estimated and added a few more. The new presentation was based on a project that assessed all Scottish councils road conditions and current expenditure.

The seven big rural councils spent on average £3717 per km last year. Highland was second lowest at £2406 per km. That low spend has been a feature (not just of Highland) for twenty years. The result has been a steady deterioration in our roads. The problem though is that the deterioration to ‘red’ status (featuring potholes, cracks etc) is set to accelerate from here. 

If we do nothing - that is, continue to spend the same amount (which with a fixed budget, is sadly the likely outcome) - the ‘red’ portion with increase by approximately 3 x. Imagine your local roads, but with the 3 x the number of potholes, cracks, collapsing edges. That is where we will be in twenty years time.

If you thought that was bearable, none of this includes necessary increases in expenditure on white-lining, bridges (currently replaced at a rate of about 1 every 700 years), safety barriers and drainage.

Maintaining our roads in their current poor condition is vital for Highland industries like timber, fish farming and tourism. It saves maintenance on all our vehicles. The investment required could be a significant boost for rural jobs.

We cannot afford to let this underinvestment continue.

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Tomdoun Hotel

How do we protect lifeline facilities in our most remote and fragile communities? 

The issue came to a fore in yesterday’s planning committee decision on the Tomdoun Hotel. The committee - reluctantly - granted permission to convert it to private residential use. The hotel had been recently purchased and permission was therefore sought to convert it to residential use. The objections from the local community stemmed from the fact that it was a lifeline facility in the sense it was the only convivial public gathering place in the glen. It also provided employment and attracted visitors to the area. There had been more than one offer to purchase it for hotel use.

Also key to the argument to refuse permission is the likelihood of ‘market forces’ ever replacing the now-lost hotel. Hotels need a prime site and architectural attractiveness to thrive. This building - in the centre of the community, right by the road, of classic late Victorian style - had all that. It could not be recreated for double or triple the asking price of £225,000.

The applicable policy in the Highland-wide Local Development Plan is Policy 36: Development in the Wider Countryside. Policy 36 is fairly sensible stuff, requiring acceptable siting, design, drainage etc. Does it do anything to protect remote communities? It says this: 

In considering proposals, regard will also be had to the extent to which they would help, if at all, to support communities in Fragile Areas (as defined by Highlands & Islands Enterprise) in maintaining their population and services by helping to re-populate communities and strengthen services.

The key here is “defined by Highlands & Islands Enterprise”. Click for HIE’s map. You will see on the map that few places in landward Caol & Mallaig ward are considered fragile: not upper Glengarry, not Tulloch, not Clunes nor Kinlochhourn seemingly. Thankfully Glenfinnan and Lochailort appear to be considered ‘fragile’.

Glenfinnan is a good example of the potential risk. The Glenfinnan House Hotel should well be considered the community centre that the village otherwise lacks. The Glenfinnan Community Council meets in a room behind the bar! It would make for a stunning private home if it ever went on the market - and would certainly fetch the seller more if sold as a private residence than as a hotel.

As Highlanders who value our rural landscape, we must find ways of protecting community facilities like Tomdoun Hotel - the places where our communities can meet to share the news, plan a village fete or start a fundraising drive. These are the activities that bind our communities together. Without them, our remote communities slowly turn into holiday home theme parks. The first place to start would be to take back from HIE the right to define what our fragile communities actually are.

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Highland powerhouse

Highland councillors yesterday discussed a motion ‘breaking up’ Highland Council into smaller local authorities (one spin) or more powerful local committees (another view). This councillor part-wrote and signed the motion. It made BBC headline news. Except that it wasn’t so much a debate, more a love-in (chapeau Councillor Kate Stephen). 

Across the chamber there appears to be strong appetite for a City of Inverness Council. It shouldn’t really be a surprise, given that rural members complain they are outvoted by the city members, whilst city members make the same complaint in return (I think that’s called “pandering to the prejudices of your electorate”).

City councils with devolved powers are all the rage these days. It’s probably unarguable that a city council would improve democratic accountability. But is there evidence to support their ability to create economic growth? I think it’s contentious to say that a city council could achieve something the current council could not. In many ways the size of the current council creates opportunities.

Take just one of the council’s large assets - it’s pension funds. The consultants and investment managers who look after those pots claim a fee of around one half of one percent. That doesn’t sound much as a percentage, but in cash terms it is many millions of pounds every year taken directly out of the Inverness economy.

While financial services are about as politicially popular as STDs theses days, councillors would be well served by understanding the difference between high risk investment banking and low (or no) risk investment management. The latter is a tithe on global capital - and it can increase its ‘rent’ wherever there is economic growth in the world. It feeds the profits of that growth into the economy of the city that hosts it. Does Inverness and the Highlands want a share of the Asian economic miracle? Then start a pension fund industry.

A council as large as Highland Council has the expertise and assets to grow investment management in Inverness. For sure it would take a strong will and a lot of effort to achieve. The economic benefit though is clear and substantial. Managing our pension funds is just one aspect of what Highland Council does today that it could do even better tomorrow. That opportunity shouldn’t be lost in a rush to decentralise.

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Kicking the can down the road

At full council on Thursday, Highland councillors heard a very timely presentation about investing for the long term - 80 years in this case. Timely, because later that day the council approved the ‘envelope’ for its capital spending: a ten year programme for every piece of infrastructure the council supports. The stand out item is probably the West Link road in Inverness and the related sports facilities - but what gathered almost as much comment and certainly generated more heat was the road maintenance programme.

The council intends to set aside £4.5 million for structural maintenance in each of the next ten years. £4.5 million is only a fraction of the network’s annual depreciation of circa £16 million. The result? Highland residents should expect a substantial increase in the backlog of road repairs, currently costed at over £160 million.

A 10 year maintenance programme starting today to close the gap and eliminate the backlog could cost as much as £30 million per year - or one third of the total capital budget. If we leave it another ten years to get started what cost then? It is not inconceivable that the backlog could have doubled by 2025 and the catch-up cost to the council would then be approaching half of it’s capital budget.

Councillors on all sides are not blind to this risk. When it has been raised at committee, the response from the chair has been that it is a national problem requiring a national solution. Except that when a motion asking Highland Council to start that dialogue was put forward on Thursday, it was soundly defeated. If the conversation is happening, it’s staying firmly behind closed doors for now - and if it isn’t happening, then we’re simply playing a big game of chicken with the Scottish Government.

There is some logic to postponing large capital projects until the most economically efficient time to carry them out. Scale can bring huge savings. Bear Scotland made that very point at a recent community council meeting - it’s very inefficient to repair individual potholes to the highest standard. Road users were basically told they’d have to wait until the road deteriorated to the extent it was economically sensible to bring in the big efficient machines. 

It’s frustrating (and not to say dangerous) for roads to go unrepaired for too long, so a balance has to be struck. However no one is making the case that 2025 is the most efficient time to get started on fixing our Highland roads. Kicking the can down the road without having that national debate is creating a huge risk: that we stumble into a situation where the capital cost is truly unaffordable - and the Scottish Government refuses to bail us out. Meanwhile road users will increasingly and quite rightly ask why the answer isn’t to get started right now.

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Buses, foodbanks and council cutbacks.

The council budget setting process we've just been through included approximately 300 separate 'efficiency measures' to balance the budget. I've no doubt there are measures from that list that councillors of all hues will look back on and wish alternatives had been found - especially those measures which primarily target the poorest at a time of record inequality.

At the recent Resources Committee some fine words were spoken across the chamber about how regrettable is the rise of foodbanks in the Highlands. We know of course that there are two big drivers of demand for foodbanks - benefit changes and low income.

Lets focus on that second aspect. Low income working families, getting by on minimum wages (or worse), ought to be protected as far as is possible from budget cutbacks. To do otherwise is simply to increase the demand for foodbanks.

What are the major expenditure items for low income families? Per the ONS, housing, heating, transport and food. The council is working to alleviate the first two of that list with a renewed affordable house building program, a lot of insulation and new (and hopefully cheaper) heating systems being fitted to council houses.

But what is the council doing on transport? Very regrettably it is rowing entirely the other way. The budget included substantial cutbacks to the bus subsidy. We've already seen the impact in Fort William with a service of 6 buses around town reduced to 5. Unsurprisingly, those hurt almost exclusively by this 'efficiency' are those on low incomes, doing shift work (outside the commercially viable route times), without access to private transport - very often the exact same demographic forced to resort to foodbanks. By denying low income families a bus service that is fit for purpose, we substantially increase the cost of getting to work, or in the worst case even make it impossible.

Bus transport is one 'contract efficiency' that must be replaced in the budget cutbacks - if the fine words on ridding the Highlands of foodbanks are to have meaning.

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Second jobs

No one can justify an MP putting in a 40 hour week at his or her 'second' 9-to-5. Leaving only a few hours a week for representing your constituency simply doesn't cut it. It's disappointing that such candidates get through the selection process - but then that's the price of a party-political first-past-the-post system. The best that can be said is that at least they have less time to screw things up. 

But to ban MPs or any representative from having second jobs would also be hugely damaging. The preponderance of career politicians would increase, and those who do have experience of life outside the political bubble would be further discouraged from standing for office. 

Currently employees are merely entitled to 'reasonable' time off for public duties - but effectively the decision as to what is reasonable is entirely with the employer. Even if the employer does grant some time off, there is no obligation to pay. The result is a political class made up entirely of careerists, the independently wealthy and those who continue to do their 'second' job.

Banning second jobs would effectively take us back to the days of the Rotten Boroughs - represented only by career politicians and the wealthy. It would certainly not encourage broader participation in public life. There is a better solution.

Like raising a family, contributing to society through elected office should be supported by employers both financially (in cases where the elected office pays less than the 'second job') and with a right-to-return. A career break to represent a constituency benefits not only the person standing, but potentially the employer too. The electorate benefits considerably: many more candidates would come forward and those elected, knowing they always have a job to go back to, are under less pressure to tow the party line.

Of course this doesn't deal with the likes of Geoffrey Cox continuing to work full time while being an MP - but it might just make political office so much more popular, and competition for seats that much more intense, that his ilk would not make it past the selection process.

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Corran Ferry

At committee yesterday, Lochaber councillors were taken to task for being unclear about what we want for Corran Ferry and accused of failing to show leadership. The question is a fair one, but it lacks understanding of the nature of the ferry and the transparency with which the council has acted to date.

Corran, self-evidently, is a monopoly and a lifeline. The costs of switching to alternatives are high - for a Strontian or Lochaline resident, the detour is fully 65 miles of slow road.

Customers of any monopoly are rightly entitled to question the prices charged. With no market forces keeping prices competitive, why should anyone have faith that what they are paying represents 'fair' or 'best' value? 

Two things are required to give that reassurance, to replace the absent market forces: complete transparency and consistent outside pressure. 

Corran Ferry has seen it's wage bill rise at well above inflation for a decade at least. Is this justified? Perhaps. It could be there are more sailings, more highly qualified staff each year. Or it could be poor management. Can customers find information anywhere explaining this cost increase, or offering cost comparisons to other ferry operators? No.

Corran Ferry is projected to have a rising fuel bill for the next three years from 2013/14. Yet Brent Crude has halved since the end of the financial year. Are customers offered detailed cost projections based on a specific oil price? No.

And there are many more questions that need answering before peninsula residents can have faith that Corran is truly efficient and pricing is 'fair'.

Fair pricing is only the starting point however. The 'fair' we've been talking about is just reassurance that ferry customers aren't over-paying - it hasn't even started to address whether this transport service ought to be subsidised (like absolutely every other method of transport is). That's for another blog entry.

To answer the question that prompted this blog, what does this Lochaber councillor want? To start with, complete transparency. But also for his colleagues in the chamber to understand that, to ensure the ferry is run efficiently, Lochaber councillors will come to council year after year and challenge the pricing and operation of the ferry. That is the only way to replace market forces and we are morally obliged to do it.

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Budget decisions

You have 3 budget options:

1. Maintain public services

2. Increase council staff wages

3. Freeze council tax

Pick any two. The one remaining doesn’t happen.

That is the decision Highland councillors were presented with at the recent budget. Those three choices are the big ‘levers’ the council can pull to balance the budget. The ruling coalition of SNP, Labour and Lib Dem councillors opted to increase wages and freeze council tax. The result? Four years of deep cuts to services.

Residents across the Highlands will feel the impact in every aspect of council services. There will be fewer gritters out on the roads. School meals will increase in price. Bus services will suffer. Building maintenance may get delayed. Roads will not be repaired as quickly. The cost of burials and cremations will go up substantially. Car park charges will increase. Teaching hours may fall. Local volunteer groups will lose funding. I could go on and on: the budget cuts extended to nearly 400 items. The bottom line is: expect services to worsen across the board.

Was there an alternative? The largest group of independent councillors proposed a motion to increase council tax to reduce very slightly the impact of the cuts. So, no, there wasn’t a radical alternative on the table. But there is no chance of an alternative when Holyrood sets 80% of the council budget and coerces the council to freeze the remaining 20% (in effect, just as Westminster does to Holyrood).

Sadly, those who will feel the pinch the most are those least able to afford it: those reliant on regular buses, or who depend on volunteer organisations, or who live in council houses, or who struggle to afford a decent burial. That is why I - with deep reservations - supported a council tax increase: despite its many faults, it is the only big lever the council can pull that asks for the deepest pockets to contribute more.

Of course, despite the cuts the council will still do many good things. New schools and affordable housing will be built for example.

The full budget for the whole four years isn’t finalised yet. There are many millions of pounds of ‘balancing’ still to do. Please let me know which two options you would pick for that task:

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