August 30, 2019
Common Good values
It’s fair to say that a certain lack of clarity surrounds the nature of Scotland’s Common Good in terms of the rules that determine how this particular class of asset should be recorded, valued and managed. Some have argued that the Common Good should be treated as community assets rather than council assets and at the very least should be reported on separately and with greater transparency. The investigative journalists at the Ferret have recently uncovered some worrying evidence of mismanagement with the value of these assets falling significantly over a sustained period of time.
Academics and politicians have raised concerns that councils are failing to manage common good funds properly, after an investigation by The Ferret revealed many are worth significantly less now than they were ten years ago.
The figures have prompted critics to call for new rules to improve the management of common good funds and ensure that they are not “frittered away.”
Generating at least £20 million for good causes each year, common good funds are unique to Scotland. Derived from ancient burgh property, the funds are held on behalf of local residents by Scottish local councils. The funds can hold both fixed assets, such as property or land, and “moveable” assets, such as cash, shares or paintings.
Not all councils, or all towns, benefit from common good funds, and some councils are unclear what assets they hold. Where common good assets have been identified they are supposed to be managed separately from normal council resources and used, according to a law first passed in 1491 and still in force today “for the common good of the town.”
Ten years ago new accounting guidance was introduced, in an effort to bring greater transparency to the way councils manage these assets.
One decade on, The Ferret has looked at how the value of common good funds has changed over this time.
Although the total value of all council common good assets has risen since the new guidance was introduced, our investigation has found that many councils funds are worth less, in real terms, than they were ten years ago.
In total, 21 councils could provide comparable data on their common good funds over ten years. After adjusting for inflation, 11 had seen the value of their funds decrease.
Some 27 councils could provide comparable date on their common good funds dating back five years. After adjusting these figures for inflation, 16 had seen the total value of their funds decrease.
Highland Council, which has one of the country’s largest common good funds, has seen it value decline by £2.5m over ten years. Records show that it has used its fund to subsidise extensive civic hospitality costs, including private car hire for the Provost, flights for council staff, and purchases on the online music application, iTunes.
A Highland Council spokesperson said: “In recent years considerable investment has been spent on refurbishmen of two Inverness common good Fund owned properties. The highly successful restoration of the historic grade A listed Inverness Town House has been commended in the UK Natural Stone Awards, 2018 and also 1-5 Church Street in the city centre.”
Aberdeenshire Council’s common good fund was worth £9.5m in 2012-13, but in 2017-18 the fund was worth just £2.8m – a drop of 275 per cent after adjusting for inflation.
At Inverclyde, the local common good funds were worth £2.1m in 2007-08, but in its most recent accounts, the fund is now worth just half of that, after taking into account inflation.
Other councils which have seen significant declines in the values of their common good funds include Stirling, South Lanarkshire, Falkirk, Midlothian and Dundee councils.
Professor Richard Kerley, an expert in public services management at Queen Margaret University said: “These figures do tend to suggest that some councils are not managing these assets effectively.
“Austerity means that councils are struggling to balance the books and there appears to be a risk that in some places these resources could simply be frittered away over time.”
Councils have a great deal of leeway over how common good funds are spent. Often they are used to provide small grants to local community groups and good causes.
But an analysis of spending records shows that some councils charge common good funds for all sorts of services linked to the maintenance, repair and administration costs incurred for managing land and property.
For example, in Ayr, the majority of the £2.3m towns common good spending over the last three years has been spent on other council services, described as “grounds maintenance”, “responsive maintenance”, “caretaker recharge” and “central support costs”.
Similarly, many councils charge common good funds tens of thousands of pounds each year to cover the costs of running public services such as CCTV systems, or for civic hospitality, taxis and event fees.
Dundee City Council officials have already run into criticism for paying for a portrait of the Lord Provost from the local common good fund.
Andrew Ferguson, a local authority lawyer who has just published the second edition of his book on common good law, explained the rules that govern how councils can use common good funds.
He said: “The rules on what local authorities can spend common good money on are quite loose. The local government (Scotland) acts of 1973 and 1994 say that, in administering the fund, councils have to have regard to the best interests of the inhabitants of the former burghs, or in the case of Edinburgh, Glasgow, Aberdeen and Dundee, the city as a whole.
“They also need to take into account the best value provisions of more recent legislation such as the Local Government in Scotland Act 2003, and all councils’ activities are of course subject to internal and external audit.
“Beyond that, however, councils have fairly free rein.”
He said councils would also be bound by any internal policies that they had put in place to govern spending.
But then Ferguson went on to highlight a relatively recent change in the law that specifies that councils should consult local residents on any proposed change of use of common good property – including how money held in the funds is spent.
“More recently, the Community Empowerment (Scotland) Act 2015 says they need to consult on any proposed change of use of common good property, and the guidance that came out last year makes it clear that would include changing the rules about what the council was going to spend the money on.”
To date, The Ferret has been unable to identify any example of a single local authority undertaking a public consultation on how surplus cash in common good funds should be spent.
North Lanarkshire council published its first draft of possible common good assets in May.
Green MSP, Andy Wightman, told The Ferret: “Long before I entered Holyrood, I’d been calling for reform of the laws that govern how common good funds are managed in Scotland. This work seems to reinforce the case that there is more for MSPs to do in this area.
“Even now, some councils seem not to know for certain what common good assets, if any, they hold. In theory they certainly should be consulting residents directly on how surplus cash in these funds is spent.”