Saturday, 14 September 2013

A Scandal of a different sort. Conspiracy, Cock up and Crichel Down

I want to start by saying that I do not agree with the approach taken by the Labour Front Bench to the scandal whereby land acquired for the Glasgow Airport Rail Link (GARL) in 2008 for £840,000 was sold back to the original seller for £50,000 after the Rail Link was cancelled.

Santiago Carillo, the first post Falangist leader of the Spanish Communist Party, famously wrote, in Euro-communism and the State, that while with the benefit of hindsight it is clear that the Anarchists were not secretly allied with Franco during the Spanish Civil War, it was understandable at the time that many people concluded that this was the only logical explanation for their behaviour.

I fear this is the trap that Johann has fallen into over the GARL scandal. Such is the degree of ineptitude and gross incompetence involved, it was difficult to imagine this was done innocently, but in the end that has to be the conclusion. The alternative would involve a conspiracy so vast, not only within the Governing Party but within the permanent institutions of Government that it would surely be beyond the talents of Even Alex Salmond to organise.

And, in any event, even I, as one of the First Minister's fiercest critics, do not believe him to be financially corrupt. There's far too much of this nonsense on all sides in the Parliament. I've written before about back-benchers having to be found something to do and one of these somethings seems to  investigating each others expenses in forensic detail. It was ludicrous that the late David McLetchie lost the leadership of the Tories over allegations, at their highest, that he had charged taxis to the wrong account. And it was equally ludicrous that Wendy was brought down over a matter as trivial as failing to check that a named donor to an unnecessary leadership campaign was actually on the UK Election Register.

"Every error has to be corruption!" Well, no it doesn't. Sometimes it can just be incompetence. Or in the case of the GARL deal gross incompetence.

The responsible Minister made an incredibly stupid decision and Mr McGlynn, successful businessman that he is, saw the chance to make a killing. On one view hats off to the latter. Shows a spirit of enterprise all to often lacking in Scotland.

But in the aftermath of the scandal being exposed something very interesting happened. Despite their assertions to this effect being completely untrue, the Nationalists tried to suggest that this was all the fault of the Westminster Government. They claimed that they were bound to act in accordance with "Treasury Rules". No they weren't. There were indeed rules and they acted within them, although not as required by them, but these were ENTIRELY DEVOLVED SCOTTISH GOVERNMENT RULES. That had nothing at all to do with Westminster except that we had, ENTIRELY VOLUNTARILY adopted them. I'll come on to their detail.

Now here it is time for a wee history lesson. For whatever reason the compulsory acquisition of land by the state, although it goes back several centuries, has always been a controversial matter, even although, since time immemorial, it has involved compensation being paid based on an independent valuation of the value of the land. There is a certain mindset, at least among those who have ever owned land, that no matter in what dodgy way it might have originally been acquired, that "your" land shouldn't be taken off you against your wishes. And that, although you've been paid for the land by the State, once the State no longer requires it "you" should be entitled to get it back, albeit at a price. For the avoidance of doubt this is a mindset that applies to land only. No matter what one thinks of the privatisation of coal, steel and the railways, nobody suggested that the original owners should be given first refusal when they were sold back into the private sector.

But land is different, for whatever irrational reason, perhaps because it is the last redoubt of the........landed.....classes.

In the run up to the Second World War, the State, for understandable military reasons, acquired a great quantity of land. And one of the pieces of land involved 75 Acres attached to country estate, Crichel Down, in Dorset. The land was to be used for bombing practice. The owners were given good money for it but they were also promised they'd be given the chance to buy it back once it was no longer required.

After the war, that didn't happen. Instead, the land was developed for agriculture and leased out. And the owners threw a wobbly. By the time they were eventually offered "their" land back it had been improved to an extent that it was valued beyond their pocket. So they threw an even bigger wobbly.

But the owners were "well connected" so, eventually, there was a public inquiry and the Civil Servants involved were much criticised.

Now this matter had a long tail and left two very major scars on the Civil Service. Firstly, it established that civil servants acting in good faith could nonetheless be open to criticism. Some credit it with the ultimate creation of the Parliamentary Ombudsman. Secondly, the Minister responsible resigned, on the basis that although he had no personal involvement (indeed much of what had happened had happened under a previous, Labour, administration) he felt he had to take the fall for his Department. The senior ranks of the Service decided that this left a stain on their own character for having let an innocent man down.

So rules were introduced to ensure such a thing could never happen again. Not rules, one might have thought, setting out when it was legitimate for the State to retain land compulsorily acquired but rather rules requiring that land so acquired and then no longer needed for its original purpose should be offered back to its original owner or sold on the open market as soon as possible. Perhaps not a surprising way forward for a 1950s Tory Government but......

Now just in case you are wondering what any of this Wessexian rural whimsy from the Nineteen Forties and Fifties has got to do with 21st Century Scotland I will eventually give you the link to the Scottish Government Finance Manual. and in particular the section entitled "Disposal of Property, Plant and Equipment". Click on the link within that document to the Annex and then look at point 3 of paragraph 2. For, in disposing of Land acquired compulsorily or under threat of compulsion, it remains the rule, but crucially not the law, that one of the first steps to be taken is "To check the application of the Crichel Down Rules"!

Now, reader, you and I might think that in this day and age the owners of property who have already been compensated for its loss, particularly property of no conceivable sentimental value, should have no particular preference if our Government decides to sell that land on. But it is worse than that. When the land is originally acquired, the valuation includes an element to reflect the benefit it will gain from the development to be built upon it. When however the land is offered back, it is offered at a value reflecting the fact that this development will not now take place. Thus, inevitably, almost certainly at a significantly lower value.

Now, you and I might again be wondering why such a situation favouring land owners at the expense of taxpayers is in place. The only answer is that these are "The Rules". And, I repeat, they are not Westminster's Rules, they are entirely Scottish Rules, adopted voluntarily by the Scottish Government.

Beyond even that however, why, if the former owner doesn't want the land back at an independently fixed price,  do the rules suggest the land be sold as quickly as possible, irrespective of market conditions? For that was what happened with the GARL land? Answers on a postcard to St Andrew's House.

Anyway, did these Rules even require (rather than suggest) that the GARL land had to be offered back to anybody? No they didn't. Look at Rule 3.

3. Holdings of property, plant and equipment should be kept under constant review with a view to disposing of surplus assets as quickly as possible. Surplus land and buildings should usually be disposed of within 3 years of being identified as surplus, and surplus residential properties should usually be sold within 6 months of becoming vacant. (my emphasis)

Point one, was this land surplus? GARL was cancelled by the SNP Government for financial reasons. They were never opposed for reason of principle. It remained and remains a favoured policy of the principal opposition Party who, resources allowing would go ahead if returned to power. Indeed, if we take the SNP at their word and that "after Independence" we'll have so much money we won't now how to spend it, who is to say the SNP themselves won't revisit the idea in the future? Surely it would make sense to retain this land against either eventually, rather than have buy it back again?

Point two, "usually". For, it is important to emphasise, yet again, that these are self imposed rules made by Ministers, not required by law.  It is thus open to the Minister, at any time, to decide to disregard or change the rules. We know that Sarah Boyack, as Minister for Transport, did just that when it was suggested to her that land acquired for the second Forth crossing should be disposed of when that project was abandoned by the 1999-2003 Lab/Lib administration.

And that leads me to my most important point? Why anyway are these the rules? Why is the Scottish Government subject to "rules" that inevitably favour, at best, the former owners of land, and, at worst, at the bottom of the market, property speculators who can acquire property in a market where no private seller would ever sell? This is entirely devolved, so why are the rules exactly the same as those applying to England? Is there a political consensus across the UK that the Government should be expected to sell land at a significant loss to the taxpayer?  I very much doubt it.

I acknowledge, in concluding, that this as much a criticism of our eight years as the six that have followed but why have all of our politicians been so unaware or unwilling to use the existing powers of the Parliament and the devolved administration?

That's the real scandal about GARL. A scandal of gross ministerial incompetence and more general political cowardice. That should have been more than enough for Johann to get her teeth into last Thursday.


  1. Good, balanced and informative piece.

    Assuming the auction process was as stated and there were no takers in the market place at £40/50k, perhaps this begs questions regarding the valuation on the initial purchase.

    Even assuming the land was worth £100k at that time without the GARL factor, would the purchase for GARL purposes have really increased its value more than eight-fold to £840,000?

    From a lay perspective the gap ostensibly caused by the land's requirement for the GARL project just doesn't ring true, a bit like this recent case in St Andrews:

    Of course, all the focus has been on the LOW sale price, but perhaps it's the high purchase price that's really the questionable figure?

    Anyway, nice work if you can get it!

    (Was a bit back to front last night, so hadn't realised you'd blogged on the subject when replying to your tweet!)

  2. What a ridiculously simplistic assessment of the market value. This wasn't an empty disused piece of land, it was having a business run from it. That incurs all manner of relocation and compensation costs even under a compulsory purchase. Anything under £500,000 in the 2006 climate is a fantasy.

    If you look at the GARL plans, its location was absolutely key to the project. Take GARL away and it's almost worthless - contaminated, empty land in an unattractive location during a recession, illustrated by the fact that absolutely nobody bid for it at the auction. Getting even £50K for it was making the best a bad deal.

    All of which, of course, continues to conveniently ignore the fact that it wasn't the SNP or Scottish Government who agreed the price - it was a Labour-dominated body operating under a Labour council under a Labour government at Holyrood and a Labour government at Westminster, buying the land for a Labour project designed to benefit a Labour area. (And indeed, primarily Labour MPs, who fly out of Glasgow Airport more than just about anyone else in the city.)

    It's fun to imagine Labour's angle if the land HADN'T been sold off: "Incompetent Nats Hang On To Almost £1m Worth Of Useless Land For Project THEY Cancelled, Rather Than Recouping Money To Spend On Subsidising The Tory Bedroom Tax"

    It's so easy to be Labour. They're great at spending money, not so much at finding it. Jackie Baillie's embarrassing "To fund the £50m bedroom tax subsidy to the Tories I'd go back in time and un-spend money that was spent two years ago, even though it'll generate 20 times as much for Scotland, and would only have supplied one-seventh of what'd be needed for our idiotic plan anyway" is only the most obviously pitiable example.

  3. I assume your contribution is in response to my own reply?

    As I suspect none of us are in any way qualified in land valuation it's perhaps ill-advised to get into too much detail, hence I merely questioned the magnitude of the gap between the purchase and sale price on an intuitive basis, so perhaps you characterisation of that as "ridiculously simplistic" is a tad hyperbolic?

    Indeed, your own stab at valuation is vague and contradictory, since you cite £500k as a minimum, whereas of course the actual purchase price was £300k+ over that.

    Likewise, you say the land was previously "having a business run from it", but it's subsequently "contaminated, empty land in an unattractive location" - you can't have it both ways.

    Similarly, the recession is no doubt a factor, but again it surely only accounts for a small proportion of the difference between the purchase and sale prices.

    And indeed it was the fact that if the land was overpaid for then it was essentially a Labour problem that I was alluding to, but thanks for spelling that out. Indeed, as I recall it the Courier article on the Fife school I linked to was also claiming that it was Labour at fault, but I tend not to analyse such matters purely from a party political dimension.

    For what it's worth I think there are legitimate questions to be asked as regards both the purchase and sale (as outlined in Ian's blog), and that Johann Lamont was wrong to involve the businessman (many of whom can run rings round the bureaucrats, councillors and politicians involved in this kind of thing without any suggestion of wrongdoing on their part), but of course either way the real issues were always destined to get lost behind the political bunfighting.

    And at least Ian has tried to rise above the crude partisanship slightly...

  4. The original sale price and the buy back price, for me, is take our eye off the ball. The biggest sandal is that the GARL project was ever allowed to get as far as making compulsory purchases. It is a project that was never needed. It would have cost somewhere in the region of £210million upon completion, caused years of travel chaos and inconvenience to the people of Paisley and would have actually increased rail travel time to and from Glasgow Airport.

    At the moment, if you intended to get a train from Glasgow to Glasgow Airport, you need to disembark the trail and Paisley Gilmour Street station, and get a bus or taxi from the door of the station to the airport. The travel time from Gilmour Street station to the airport, is 4-5 minutes depending upon traffic. GARL would have taken slightly longer.

    So the question we should be asking, is why Labour at Holyrood, in conjunction with Glasgow City Council and Labour in Renfrewshire Council, were literally rail-roading this project through. Who stood to gain from the construction of GARL? To my mind there has always been something a bit off about GARL. No one has ever given a satisfactory answer as to why they were willing to spend so much money on a project that delivered so little gain, when it would have been much simpler, cheaper and faster, to promote rail travel to Paisley and have a dedicated and regular shuttle service to the airport.

  5. There is a perfectly good Shuttle bus service from Glasgow to the airport which runs every 10 minutes which I have used many times. I have never ever taken longer than 20 minutes to be there. WTF is wrong with you people.