Over the weekend The Herald provided a balanced and encouraging report on Gigha’s finances.
David Ross Highland Correspondent, The Herald Blog
The Highland Line: Gigha’s financial difficulties are not as bad as they seem
Friday 28th November 2014
News that the community trust which has owned the island of Gigha for the past 12 years, faces some financial difficulties was widely reported this week.
A strategic review of the Isle of Gigha Heritage Trust found the trust was “ in a precarious financial position, with total third-party debts of £2.7m. The overall debt structure is unsustainable based on current revenues.”
It seems however that with an assets portfolio recently valued at around £7.5m, the position may not be so pressing as it once appeared. Indeed there are many in the land who would be delighted to think their house was worth almost three times the outstanding mortgage on it.
Talking of houses when the community was buying the island, a housing conditions survey highlighted the scale of the task ahead. It found that of the 42 houses that came with the estate, 75% were classed as “below tolerable standard” and should not be inhabited, while 23% classed were “in serious disrepair”.
“If we put in a nail or a hinge, or put a slate on a roof, we will have done a bloody sight more than has been done for decades under our landlords,” Willie McSporran who was to become the trust chairman said at the time.
Meanwhile it also revealed a high level of hidden homelessness, parents or siblings providing homes for adults.
Now well over 30 of the properties have been renovated. Around £160,000 has been spent on each of the houses, with 60% coming in the form of grants and the rest raised one way or another by the community.
In 2011 the community’s efforts were recognised by the Chartered Institute of Housing in Scotland, with its prestigious Excellence in Regeneration Award.
These houses alone must be worth over £4.5m.
Money was also spent adding a fourth wind community turbine to the island’s “Three Dancing Ladies” which were already earning over £100,000 a year.
So Gigha has been a story about investment, albeit one which could have been written with different chapters on borrowing. It is a story of an island stemming generations of depopulation.
But the possibility of one of Scotland’s headline community buyouts becoming financially troubled has always been a possibility, just as any privately owned business or estate can get into difficulty. But supporters of the community land movement have long been concerned about the likely response from some self-appointed guardians of the public purse.
It was something addressed by historian Jim Hunter in his study of community ownership in the Highlands and Islands
The Carnegie UK Trust commissioned Professor Hunter to write the story of community buyouts over the past 20 years, and “ From The Low Tide of the Sea to the Highest Mountain Tops” was published in 2012.
In the conclusion he wrote that maintaining the necessary commitment to such projects by local residents was a constant challenge, and continued:
“ That is why it is by no means impossible that, sooner or later, one – or more than one – of the local land trusts operating in the Highlands and Islands will get into financial difficulty, maybe even go under. If or when this happens critics and opponents of community ownership will insist that the community ownership concept has thereby been invalidated. They will be wrong. The bankruptcy of a conventionally structured company – something which happens every day – does not of itself indicate that other companies are bound to meet the same fate. Nor will the failure of a community ownership trust in any way signal that other such trusts are necessarily heading for the rocks. After all, if the record of private landownership in the Highlands an Islands was the be judged by the number of landlords who have gone spectacularly bust, often with very bad consequences for their tenants and dependants, then time would have been called on such ownership very many years ago.”
And for those who questioned whether public money should be spent on the buyouts, Professor Hunter had some comparisons.
The £30m total from public and lottery sources which helped take half-a-million acres of land into community control over two decades, was equivalent to the bill for only 600 yards of Edinburgh’s tramlines.
In fact it amounted to less than 7% of the cost of the five-mile M74 completion stretch of motorway in Glasgow and matched the subsidy farmers and landowners receive in Britain every three or four days.
Money well spent or what?
The Herald Editorial
Good luck to Gigha in balancing the books
Saturday 29th November 2014
No one said community ownership of land would be easy.
When the people of Gigha completed their £4 million buyout in 2002, they were able to wave goodbye or should that be good riddance? to private landlords, but took on what was in effect a major business. All businesses face challenging periods and have to balance the imperatives of investing in the future with keeping debt levels sustainable, so it is not altogether surprising that after making much needed improvements, the Isle of Gigha Heritage Trust has debts of £2.7m. Importantly, it also has ssets of £7.5m.
There would have been little point to community ownership unless housing stock renovations were carried out. A report prior to the buyout found three quarters of the estate’s 42 houses should not be lived in, while nearly all of the rest were “in serious disrepair”. Housing renovation does not come cheap, but the trust has also invested in income generating technology, installing four wind turbines that trust chairwoman Margaret McSporran says have already earned the island more than £800,000. The harbour has also been redeveloped.
So Gigha’s debt was accrued making the island a much more attractive place to live; indeed, its population has gone up from 96 to 170 since the buyout. The strong backing given to Ms McSporran this week by islanders suggests that the community appreciates the scale of the task and the work the trust has done. That is not to say the debt is not significant. It is understandably a worry to many islanders and must be tackled. A strategic review of the organisation has warned it is unsustainable, based on current revenues and that immediate action is required to turn things around. It is to the trust’s credit that it is wasting no time. Ms McSporran has already announced reforms of the trust’s governance and management of debt, and its intention to attract more people to the island, which is seen as important for its economy. Other planned measures include doing more to bring in tourists, including by seeking experienced hotel managers to lease the hotel.
Good luck to the trust in these endeavours. Gigha’s problems have come to light just as the new First Minister has announced she wishes to ensure Scotland’s land is an “asset that benefits the many, not the few”. She plans to end business rates exemptions for shooting and deerstalking estates in order to more than treble the Scottish Land Fund, allowing for much more community ownership.
Putting more land under community control is a noble aim and one that has strong public backing. Gigha’s recent experience, while highlighting the challenges community trusts face in managing such complex enterprises, certainly does not undermine the validity of the model. After all, private companies go bust without it prompting a reevaluation of capitalism.
The Isle of Gigha Heritage Trust has a major task ahead to get back to financial health, but it has a proud record on which to build.