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June 28, 2022

What’s happening to the Common Good

The Common Good Funds held by local councils on our behalf are the oldest form of what today would be more commonly referred to as community assets. Although the 2015 Community Empowerment Act requires all local authorities to publish a separate register of what common good assets they hold, it appears that not all do and indeed their methods of valuation and recording of disposals also seem to vary widely. The investigative news source, The Ferret, has been digging into the facts and figures and appears to have unearthed some worrying inconsistencies across the board.

Ally Tibbitt, Jamie Mann, The Ferret

Full article

HALF of Scotland’s councils have been accused of mismanaging Common Good Funds created to benefit local communities after their value collectively plummeted by nearly £8 million in four years.

Common Good Funds are unique to Scotland and collectively worth an estimated £860m. They are supposed to be managed separately from normal council resources and – according to a 1491 law still in force – used “for the common good of the town”.

However, the Scottish Community Alliance claimed some local authorities are mismanaging “a very significant” community asset. 

It said Common Good Funds were “in desperate need of reform and renewal” and claimed they had “sat in the shadows of our public finances for long enough”.

Common Good assets include town halls, churches, statues, schools, hospitals, green spaces, libraries, water bodies, golf courses, public toilets, museums, allotments and art, such as paintings.

They include notable sites, such as the Inverness Caledonian Thistle football ground; Calton Hill and Princes Street Gardens in Edinburgh; Glasgow’s George Square, Kelvingrove Park and Glasgow Green; the Midsteeple building in Dumfries; Carnegie Hall in Dunfermline; and Gourock Pool in Inverclyde.

While some assets cost money to be maintained, others – such as car parks, farms or harbours – generate revenue and increase the value of common good funds. 

However, investigative journalism co-operative The Ferret found that Common Good assets were sometimes used by councils in ways that suggest they are being undervalued and 

used to subsidise other council services or used to buy things of little community benefit – such as limited edition £170 bottles of whisky or portraits of council officials. 

Two councils have failed to publish a register of common good properties, seven years after since it was made a requirement by law.

Common Good assets are derived from ancient burgh property such as land, buildings and investments and held on behalf of local people by councils.

In conjunction with The Herald, The Ferret looked at how the net value of each council’s Common Good Fund changed in recent years. 

It found the value of 16 funds collectively fell by nearly £8m between 2017-18 and 2020-21, when the 2017 value is adjusted for inflation.

Just 14 councils increased the value of their funds, by nearly £40m in total. Shetland and Western Isles councils are the only local authorities without Common Good Funds.

South Ayrshire’s fund fell by £2.6m – the biggest drop in value of any council. A spokesman said the fall was due to “the revaluation of assets” that occurs every five years. 

The council did not respond to a freedom of information request that sought details of the assets held in the local Common Good Fund and spending records.

It was followed by West Dunbartonshire and Moray, which saw drops of more than £1m each. East Ayrshire and Perth and Kinross saw falls of £869,000 and £763,000, respectively.

Detailed spending records from West Dunbartonshire Council show more than £1m had been spent from the fund over the last three years, including costs for fireworks displays, Christmas lights and funding for local Citizens Advice Bureau branches and museums.

The council also took at least £25,000 each year from its Common Good Fund for “central support” and “estates management” fees. 

A council spokesman said that while no assets were purchased or sold between 2017-18 and 2020-21, its assets had been revalued – an action councils are required to take every five years.

Moray Council did not respond to a freedom of information request seeking detailed spending records for its Common Good Fund.

A spokesman said that, while the council reinvests a proportion of funds annually, lower interest rates in recent years and transferring ownership of assets to community groups had impacted its growth.

East Ayrshire Council attributed its fund’s reduction to “the depreciation and revaluation” of assets. 

Lease information from the fund obtained by a freedom of information request shows that key assets on the East Ayrshire register, such as Darvel Town Hall, the Palace Theatre and Newmilns Library, are leased to the East Ayrshire Leisure Trust (EALT) for just £1 per year.

The council said these and other properties were leased to the EALT at this price for 

£1 each when the trust was founded. 

“To have set a larger charge would only have meant East Ayrshire Council would have to fund EALT to pay a larger rent, which would not make budgetary sense,” a council spokesman said.

Perth and Kinross Council said 68 per cent of its assets’ net value related to land or buildings, which were “revalued annually to reflect market conditions – therefore no adjustment is required for [inflation].”

Its reduction had actually been £282,000 “predominantly due to the revaluation 

of Common Good land and buildings”, a spokesman said.

The Angus fund grew the most, by £12.3m, followed by Aberdeenshire’s, which increased by £5.6m, and Aberdeen’s, which rose by £5m. East Lothian’s fund was up by £3.6m, Glasgow by £3.5m and both Renfrewshire and the Scottish Borders by £2m each.

Many councils are still discovering “new” Common Good assets that should be on their registers. Angus Council said the recent transfer of council assets to its fund had led to an increase in value. Highland Council said it had added a number of bowling clubs to its asset register.

Aberdeenshire Council attributed its fund’s rise to the revaluation of assets. 

Aberdeen City Council said its fund’s increase was due to its annual budget “growing cash investments and supporting future income streams”. 

Growth was also due to the sale of land and the increase in value of other assets.

West Lothian’s Common Good Fund is only worth £23,000, while Midlothian Council has the smallest fund, worth just £9,369 in 2022. Yet, 13 years ago, Midlothian’s fund was valued at £72,000. All other local funds are worth at least £1m.

Midlothian Council said it inherited two funds from the former burghs of Dalkeith and Penicuik.

“These are historic funds, and their value reflects the sums and assets vested in them, and decisions taken over a number of decades, on how they should be used for the benefit of residents,” a spokesman said.

West Lothian Council said it held a community consultation in 2021 to assess what assets should be included in its Common Good register. It was now working to “assess a number of properties” and expected its asset list “to change in the coming months”.

Some council Common Good Funds show a long-term decline. Both the North Lanarkshire and North Ayrshire Common Good Funds are worth less now than they were 13 years ago.

Professor Richard Kerley, an expert in public services management at Queen Margaret University and a director of the Centre For Scottish Public Policy, said it can be tough for councils to accurately value Common Good assets.

As some assets are seen to have historical importance or be key to local leisure, such as statues or parks, their true value is almost “incalculable”. He said some changes in the value of funds will be due to different assessments given by various surveyors and auditors.

The Scottish Community Alliance (SCA) said the investigation demonstrated that Common Good Funds were “in desperate need of reform and renewal”.

“The fact the key piece of legislation that regulates these funds is over 500 years old tells its own story,” said Angus Hardie, the SCA’s director.

“The discrepancies in the performance of the funds in different local authorities suggests very different approaches are being adopted – many of which appear to be to the detriment of what is in effect a very significant class of community asset,” he added.

“As the Scottish Government is now talking in earnest about community wealth building, with legislation on the horizon, we need to have a major rethink about how we treat this particular aspect of community wealth in the future.

“The Common Good has sat in the shadows of our public finances for long enough.”

Some councils faced accusations of mismanaging their funds in 2019 after The Ferret revealed spending patterns that critics argued did not benefit the common good.

Aberdeen City Council spent £38,280 of its fund on “civic drinks” for events, while Highland Council paid £4,439 for “civic hospitality” drinks. 

Dundee City Council used £5,500 of its fund to pay for a portrait of the city’s Lord Provost in 2018, while Highland and Aberdeen councils splashed out £2,000 and £1,350, respectively, on flights.

Despite this criticism, councils with large Common Good Funds continue to use them to subsidise similar costs. 

In 2019-20 Aberdeen City Council, which has by far the largest Common Good Fund, spent£10,000 on a portrait of the Lord Provost.

It also spent £13,193 between 2018-19 and 2021-22 on the Lord Provost’s travel expenses. 

Similarly, in 2018-19, Highland Council continued to spend thousands of pounds each year on hospitality, catering and travel, including £1,708 on 10 bottles of specially labelled single malt whisky.

A Highland Council spokesman said: “The Inverness Common Good Fund grant sub-committee meets quarterly to make decisions on how funds are spent for the benefit of communities and to assess applications made to the Common Good Fund.

“Minutes of the sub-group committee meetings are included in the city of Inverness area committee meeting papers for the scrutiny [of] Inverness councillors.” 

Common Good-funded “civic duties” in Inverness were agreed by city councillors, in 

which “expenses are accrued – such as hospitality,” the spokesman added.

Neither South nor East Ayrshire Council have published a register of Common Good properties, seven years after it was made a requirement by law.

Professor Kerley said that it was “pretty inexcusable to have not produced a register”, as most Common Good asset holdings “are not extensive” compared to that of general council assets. “Transparency is essential” he added.

Joseph McLachlan, head of finance for East Ayrshire Council, said its approach to accounting for Common Good assets was agreed with auditor, Audit Scotland, whereby it was agreed “all of the costs in maintaining the assets would be met from the council’s budget rather than from the respective Common Good Fund”.

He added: “As a consequence of this approach, any income from the Common Good assets would also be retained by the council but it is important to highlight that the cost of maintaining the assets far outweighs any income that is generated.” 

A South Ayrshire Council spokesman said: “Finalising the list is a substantial piece of work that involves a time-consuming process to ensure all information is correct. However, the process will continue to be progressed.”