Viewpoint / Invasive predators?
In this ViewPoint contribution, former parliamentary candidates, former councillor and trustee of Shetland Charitable Trust, journalist and book author Dr Jonathan Wills, offers a lesson in recent local history and in dealing with large energy corporations
THERE’S a sign at the NorthLink ferry terminal in Lerwick saying ‘Protect our islands from invasive non-native predators’.
It’s about biosecurity, not wind farm companies, but that’s exactly how the Shetland Charitable Trust’s former business partner and some of its fellow corporations are now regarded.
Sir John Scott’s excellent letter (We need to speak up, Shetland News, 15 September) has brought back instructive memories of the early 1970s, when oil and gas companies invaded Shetland, and also of the first decade of this century, when our council and the trust promoted the first big wind farm, Viking. In both cases the council acted promptly and robustly, aiming to secure for local public funds a fair portion of the very large profits to be made. The first attempt succeeded; the second failed.
I was involved on the margins of both attempts, in 1972-74 as a parliamentary candidate and from 2008 to 2017 as a councillor/trustee. At the risk of being seen as a ‘disjasket’ old codger adrift in his memories, I think it may be useful to recall what happened – and why – as we try to resolve Shetland’s latest ‘energy crisis’. The parallels are interesting.
In 1972 a small group of councillors, some Labour, some closet Liberals, some genuine independents, decided to be bold. Ably guided by the then County Clerk and General Manager, the late Ian R. Clark, they promoted a private bill in Parliament. It was eventually passed by the 1974 Labour Government after Liberal MP Jo Grimond had made such an eloquent case for his constituents. Tory MPs tried to obstruct it, as did Labour’s Tam Dalyell. Energy minister Tony Benn wasn’t a fan, either.
The Zetland County Council Act made the council the port authority for Sullom Voe, with powers to earn revenue and keep it “for the benefit of the inhabitants of the Shetland Islands”, as the wording of the ZCC Act says. That’s the legal basis of the SIC’s Reserve Fund, which subsidises some council spending to this day.
Furious debate
Shetland wasn’t at all united in that battle for oil and gas revenues. There was furious debate in the columns of the local press and at public meetings from Baltasound to Sandwick. Some of those far-sighted councillors lost their seats at the next local election. The late Edward Thomason was one of the political casualties but was later returned as Convener of the council. Some people, notably local Tory councillors like the late Rev. Clem Robb, thought the council had no business getting involved: building and operating the Sullom Voe tanker port and terminal should be left to the companies who knew how to do these things; they deserved their profits. The council would get the business rates.
The idea of the council having extended compulsory purchase powers over development land was anathema, and not only to Tories. But when the petroleum industry’s hangers-on turned out to be invasive predators, with merchant bankers (for example, the much-praised Ian Noble) using local entrepreneurs (such as Ian Caldwell) as front men for speculation in land, publicity about their clandestine financial manoeuvrings turned the tide of local public opinion. The council purchased the terminal site at Calback Ness (at a price!) and leased it to the oil companies’ consortium, headed by BP, which by then had seen which way the wind was blowing.
Disturbance payments
Like other councils, the ZCC (which became the SIC in 1975) already had the power to set up a charitable trust. It did so in 1976 when the oil companies made the first ‘disturbance payments’. The payments, quite separate from the council’s earnings from running the tanker port, would total some £82m over 25 years. Invested by the trust, this sum grew to equal and in some years exceed the value of the SIC Reserve Fund. Crucially, because the cash was held by councillors as trustees for the people of Shetland, the Westminster Government agreed not to ‘claw back’ this money by reducing the council’s annual subsidy from the Scottish Office. The trust used its income solely for charitable purposes, such as social care, sports facilities, environmental works and the arts.
No conflict of interest
That money is still our money but these days it’s controlled by unelected trustees. Although well-meaning and public-spirited, the trust’s membership is now self-selecting and self-perpetuating. Following a bizarre ruling by the Scottish Charity Regulator, at the behest of Sustainable Shetland supporters, there are no democratically elected trustees. Elected councillors can suggest how the annual revenue from the trust’s investments is spent but they have no powers over our money. This extraordinary, undemocratic situation came about because objectors to the Viking windfarm alleged there was a “conflict of interest” between the council and the trust. In fact there was always a confluence of interest, never a conflict, because both bodies were acting in the public interest, not on behalf of private interests.
As with Sullom Voe, elected councillors were trying to acquire significant revenue for public purposes from a major industrial undertaking. The Viking windfarm was originally an SIC project. Councillors wanted to ensure that as much as possible of the cash it generated stayed in Shetland rather than being siphoned “oot da Sooth Mooth” to central government funds, pound for pound. That’s why the SIC sold its 45% share to the Shetland Charitable Trust, a ready-made vehicle to hold local public funds that otherwise risked clawback by St Andrews House.
The public interest share was 45% because a project of this size obviously needed expert partners with the technical ability and financial clout to make a go of it – in this case 5% held by an experienced local wind farm operator (Burradale) and 50% by Scottish & Southern Energy (as the formerly publicly-owned North of Scotland Hydro Electricity Board had become after Margaret Thatcher’s reset of our national public property). As with the Sullom Voe Association, where the council and the oil companies held equal shares, Viking Energy’s decisions had to be taken by consensus on the board.
Big, but with big compensation
The original proposal was for 150-odd turbines. In my opinion and that of many others this was much too big. The scaled down version with 103 turbines was still big but the compensation was that, on the best legal and financial advice available to trustees and councillors in 2012, it would produce at least £23 million a year for the inhabitants of the Shetland Islands. At the time the trust was spending less than half that sum.
Because of its large scale, the Viking planning application went before Scottish ministers, not Shetland councillors. Trustees insisted on the windfarm being carefully planned to minimise environmental effects, for example by trying to avoid areas with official nature conservation designations. It also kept turbines as far away as practicable from occupied houses – much, much further away than at some windfarms in Europe (for example, Dittmarschen in Germany, where I’ve seen turbines only 50 metres from houses). Despite this, there were objections. There always are. The way to ensure such objections are carefully considered in public is to hold a public inquiry.
Unfortunately, our council voted not to lodge the formal planning objection which would automatically have triggered such an inquiry. I lost that vote, so objections to the Viking application were considered in private by the same civil servants who would have examined it in public at an inquiry. The objectors then went to court, not to test their detailed arguments about supposed effects on human health and various other matters, but simply on the grounds that the project allegedly violated European wildlife protection law.
A missed chance
As we know, the Supreme Court eventually decided that Viking didn’t breach that law. By then it was too late. The wind farm had missed two chances to qualify for the Government subsidy that would have mitigated the weird British “transmission charges” which make electricity generators pay more to connect to the National Grid the further they are from London. This Stalinist intervention in the free market is actually illegal in the European Union, which is why the UK Government had to come up with the subsidy scheme in the first place.
Trustees had established, by the detailed process quaintly known as “due diligence”, that banks and finance houses were willing to lend the trust the several hundred million pounds required as our share of the capital investment to actually build the windfarm. The only security the lenders required was the trust’s 45% stake in Viking, not the trust’s capital fund. Despite allegations by various objectors, at no stage did trustees ever contemplate offering the fund as collateral. Had we done so, we would have laid ourselves open to prosecution. But the fairy story that we “hazarded the trust” is still going the rounds, all these years later.
Having missed the subsidy, because of those long delays while the objectors dragged their dreary length before the courts, the project could not continue at that stage. SSE put Viking on hold. The trust’s stake, at that time about £7m in development costs, consequently became a “stranded investment”, meaning the trust was earning no revenue from it. That, quite properly, is against HM Revenue & Customs rules for approved trustee investments. The money was not lost, however, because, many years later it began to earn dividends when SSE decided to go ahead with the Viking windfarm after all. By then the trust was no longer in the hands of an elected majority of trustees. You will have to ask our unelected successors why they did not or could not resuscitate their share of Viking. I don’t know.
What I do know is that by 2050 Shetland Charitable Trust will have lost over half a billion pounds (£500 million) that it might have earned from Viking. I also know that councillor trustees and others, such as Sir John Scott when he was Lord Lieutenant and an independent trustee, did their best to provide the people of Shetland with a large, long-term source of funds to support old people’s care, leisure and recreation, environmental improvements and the arts. We followed the same principles as the pioneers who secured the ZCC Act and set up the charitable trust half a century ago.
Invasive predators onshore and offshore
Now we see a threatened proliferation of wind farms onshore, some of them, ironically, on unsuitable sites that the Viking project rejected on environmental grounds; offshore, our fishing grounds are threatened by obstruction and closure due to wind farm installations and cable tracks, while seabird protection seems to be minimised. In contrast to the community wealth that Viking might have given us, and which would have made a single large wind farm tolerable for most people, local public income is now derisory and seems likely to remain so. Clearly, we need to stop all new wind farm developments now.
What are our council leaders doing about this, apart from wittering about how little power they have and how generous some Norwegian capitalist is, to have taken a parcel of prime coastal real estate off their hands for a trifle?
As far as I can see, there are three main ways to gain significant local public income from large projects:
- Public ownership of a sizeable slice of the action – that boat has sailed, alas;
- Capitalist partners becoming philanthropic because they have no option – aye, right;
- Governments telling capitalists to share the loot more fairly – perhaps still possible?
Council leaders keep telling us they want “more autonomy” and “fairness”:
- Have they told the Scottish Government exactly what they mean by “more autonomy” – which additional powers do they want?
- Have they asked the Scottish and UK Governments for a change in the law to enable local planning control over large electricity projects?
- Have they asked for a new law to make wind farms pay significantly more in ‘community benefit’?
- Do they make imaginative use of the powers they already have, under the ZCC Act and other local government legislation?
- …and have they ever thought of promoting another Act of Parliament, to restore majority control of the Shetland Charitable Trust to elected representatives of the people whose money it holds?
None of the above, it appears. Not yet, anyway.
In his letter, Sir John Scott decried “pathetic weaklings”. I think most of us would agree with him, whatever our personal political allegiances.
