TROUBLE IN PARADISE
Gigha’s community buyout was meant to make islanders masters of their own destiny. But after 17 years of struggle, they’re £1.3m in debt... and warning others NOT to follow in their footsteps
THE Vikings called it God’s Island – and on the surface at least, there seems every reason to conclude that the people of Gigha have the most blessed existence of any islanders in Scotland.
Such a view is not formed purely by the distinctly un-Hebridean climate, which nurtures the palm trees growing by the post office, or the gently spinning arms of the Dancing Ladies, the pocket-sized wind farm helping to power the island and its economy.
Just a short hop from where the ferry docks after the three-mile, 20-minute crossing from the village of Tayinloan on the Kintyre Peninsula stand stylish new houses which have sprung up in the past few years, allowing a near 50 per cent surge in the population.
Unemployment here is as low as the crime rate. Unlike some such miniature communities, almost all the 150 or so residents rub along in relative harmony. For many who live here, the sweetest thing of all was the fact the islanders have become masters of their own destiny.
Indeed, they were widely held to have made the best job of any Scottish community buyout since they took the property off previous owner Derek Holt’s hands for £4million in 2002.
It was to the Gigha example that defenders of land reform would point to illustrate the success of the controversial legislation which, at its most extreme, can force landlords to turn their properties over to the community at a price not of the owner’s choosing. Yet, despite having £7million of taxpayers’ cash lavished on its 3,500 acres, including well over £1million on bringing up to scratch the dozens of homes successive lairds allowed to fall into disrepair, Gigha’s dream has turned into a financial nightmare.
Islanders may now be able to buy plots of land to build new houses, and housing association Fyne Homes has built 18 dwellings for residents wishing to rent. Yet even with the new homes and new businesses – notably Gigha Halibut, the awardwinning Wee Isle Dairy and the acclaimed Boathouse restaurant – springing up, Gigha is in serious financial trouble.
The latest accounts, for the year ending March 2018, lay bare the desperate plight of the Isle of Gigha Heritage Trust, the body set up to run the island. Saddled with debts of £1.3million, it is struggling to keep up loan repayments and cannot even afford to fix the housing stock’s leaky roofs. Once the pin-up for right-tobuy legislation, the trust teeters on the brink of insolvency.
MATTERS have reached such a low point that even the trust’s current chairman now believes the original decision to vote for a buyout – a move he backed at the time – was a costly mistake. Furthermore, said Ian Wilson, Gigha should serve as a warning to other communities tempted down the same path.
He said this week: ‘Has the £7million been a good use of public money? If you asked me for a straight answer, I would say no. It is possible [for a community trust] to go bust and, to be perfectly honest, last autumn we were in intensive care. I’m not sure what would have happened next, it’s not happened before.’
Mr Wilson, who was appointed last May, added: ‘I supported the community buyout to start with, but my view now is that it is not sustainable and should be an avenue of last resort for other areas. I remember a news bulletin about plans to take over a 2,000-acre estate and one guy said, “The landlord used to just do what he wanted; now nothing will happen unless we all decide”. And the chances of them all deciding? What will happen is that nothing will happen.
‘I describe the trust as the worst landlord we have ever had and that is me being the chairman too. But a good landlord is the best thing you can have and it doesn’t have to be a community buyout.’
Such a statement might normally be expected from a departing landowner rather than a leading voice in the newly-empowered community, and the quietly-spoken Mr Wilson concedes that speaking out will not endear him to his fellow trust directors, let alone the rest of the island.
Many recall the experience of past private owners, which left Gigha described as ‘a shuttlecock for financial speculators’. All that was meant to end when islanders bought out leisure park magnate Mr Holt for £4million, taking control of four farms, a hotel, a quarry and 47 cottages.
But Mr Wilson, who arrived on the island in 1995 to take on a tenanted farm, believes fresh responsibilities brought fresh problems for people unused to running a business. He said: ‘The thought processes that some had suggests they didn’t understand well the concept of a community buyout. They didn’t see why they should pay rent because they own the island or pay for a drink in the pub because they own the pub.’
He explained part of the buyout agreement was to pay back £1million within two years, which was mainly achieved by the sale of Achamore House, known locally as the Big House, the laird’s traditional seat, and some other parcels of land.
Mr Wilson said: ‘And the amount of people who still shout, “We want our £1million back”. That can’t happen – and they’ve been told that can’t happen.’
The 58-year-old grandfather of two, who works full-time for ferry operator CalMac, said many of the presentday problems can be traced back to historic deals struck with banks which proved to be disastrous.
In 2016, key lender Nationwide issued a reservation of rights letter, giving notice its £698,000 loan might be recalled at any time after revaluing the housing stock on which it was based. Mr Wilson said the valuations were based on the rents, which had been set too low, below even those of Fyne Homes. Houses that were meant to be assets were ‘more like liabilities’.
Even worse was to come with plans to add a fourth wind turbine following the success of the Dancing Ladies, which were paid for and generating profits. A deal with the Co-operative Bank backfired after electricity prices slumped and the trust could not achieve the £40 per megawatt price it had promised.
The bank called in its £462,000 loan to the island’s renewable energy company and the legal bill to extricate the trust from the agreement and refinance with a new lender has cost more than £100,000.
‘Our accounts for next year will look horrendous because of the fact those legal costs were so high,’ said Mr Wilson. ‘Refinancing has meant we do have a better interest rate and the turbine is now profitable, but
the original deal has cost us a year’s profits.’
He admitted it has been difficult to put the trust on a proper business footing, not least because ‘you are dealing with friends and neighbours’ – but insists a hard-nosed approach is vital for survival.
NOW the trust is working with Highlands and Islands Enterprise on a ten-year strategy and the lenders have agreed to back off while the plan beds in.
Mr Wilson said: ‘If we were a normal business, we would have been away years ago. We have never made a profit. There is still a mass of liabilities on the island. We still have eight houses to renovate as part of the house renovations project, which created the debt in the first place.’
The trust paid off debts of £170,000 after selling one property into private ownership and more sales will follow until the majority of the debt has been paid.
It is now in discussions with Fyne Homes about taking over the dayto-day running of its remaining tenanted properties, dealing with repairs and setting rents. The Gigha Hotel is now leased and making money.
Mr Wilson said: ‘We need to get rid of the debt – we cannot be giving the bankers £100,000 a year. We are trying to move away from the trust controlling everything, which is at the root of our problems – the overwhelming need for control among directors, some of whom maybe haven’t even run their own household before.’
Not all buyouts have been a disaster, he is quick to point out, citing two positive examples on the neighbouring Kintyre Peninsula. ‘I’ve visited the community buyout at the [former RAF] Machrihanish base, which I think has worked tremendously well. They have two boards but the main one is the commercial board and they are all made up of farming and businesstype people in Kintyre, running it very much as a business.
‘They made money in their first year, which was not even projected, and their plan is to make it the industrial heartland of Argyll.
‘The first community buyout that I was aware of when I first came to Gigha in 1995 was the small filling station at Clachan village just before the ferry at Tayinloan. The garage and shop was shutting and nobody would buy it. They leased it out to a local family for five years, with the option of them buying it after that and it was a great success. And 25 years later it’s still a thriving shop. So community buyouts can be really good.’
Mr Wilson admits he became trust chairman by default after his elderly predecessor left due to ill health. ‘I was finance director and had no desire to step up but I agreed because we started something so we have to see it through.’
Part of his frustration is due to an awareness that Gigha is a thriving community with a raft of successful private businesses. ‘We have two fish farms, but unfortunately, they are nothing to do with the trust. Holt Leisure kept the two farms when it sold the island. It has since sold the salmon farm but has a 75 per cent share in the very successful halibut farm.’
He said the next year will be critical, with a plan to reduce borrowing by £500,000 and capitalise on new money-making opportunities. There are plans for a solar energy project to supply the halibut farm, a big energy user, and a campsite to be leased.
Mr Wilson said: ‘We already have a tremendous income from the Dancing Ladies. But there is much to be done – we are very much in a transitional period now.’
Doubtless, it will all be a source of embarrassment to the Scottish Government, which has championed right-to-buy legislation.
A spokesman refuted Mr Wilson’s criticisms, saying: ‘The advantages of community ownership can be seen on Gigha, where they have achieved a reversal in population decline, an increase in the school roll and the creation of new business opportunities.’
WILLIE McSporran, 82, who chaired the trust at the time of the 2002 buyout, views the latest developments with sadness but has no regrets.
He said: ‘The buyout was a success and people were all for it. The place was in decline, there were only six pupils in the school, the population was below 100. You couldn’t even get permission to run a B&B and there was no housing available. When my brother stopped running the local shop he had to leave Gigha, he couldn’t get a house on the island.’
Mr McSporran said the house refurbishment programme and land sale provided employment and opportunities that would not otherwise have existed.
‘It created a good opportunity for a lot of people to move back to the island. We had manageable debt, we worked hard and were all united. We went into open discussion and the members decided things. It doesn’t seem to be like that now.
‘We bought Gigha in good faith, we did everything right. Whatever has happened in between I don’t know.’
Mr Wilson said: ‘One advantage of a landlord is that it unites everyone against him. Gigha is just like a very small country. We were a monarchy, we are now a republic. Usually, when countries become republics, there is a period of discontentment before they prosper. We are nearly 17 and it’s time we grew up.’