Market slump is another blow for plans to unite common good funds

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A PROPOSAL to pool the capital reserves of the region’s common good funds and around 250 smaller trusts and invest the cash to maximise returns appears to be dead in the water, writes Andrew Keddie.

Although Scottish Borders Council (SBC), whose 34 members are trustees of all eight common good funds, is not due to make a decision until the end of next month, Selkirk this week joined Hawick as a major player that wants no truck with the so-called single investment strategy.

Selkirk community council had delayed its response to the proposal, which has been out to consultation, until its meeting this week, to ensure its views carried local opinion in the town.

In the event, there was no dissent from the public benches to a stinging rebuttal of the strategy which is being drawn up by an Edinburgh law firm on behalf of SBC.

Last week, we reported that all six SBC representatives for Hawick, whose common good fund is considered cash rich but asset poor, were opposed to the pooling capital resources, a view shared by about 1,900 townspeople who signed a petition to that effect.

That stance was endorsed at Monday’s meeting in Selkirk, with a consensus that Hawick’s capital funds, combined in a single account worth about £1.4million with Roxburgh neighbours Jedburgh and Kelso, would not be best served if they were lumped in with others.

“Although Selkirk is in very different situation, with just £49,000 in our capital account but with assets, including farms, worth a great deal more, we can also see no benefit from this strategy,” said community council vice-chairman Dr Lindsay Neil.

His view, supported by his council, is that the town’s limited reserves should not be pooled but invested in low-risk gilts with easy access to funds and with control retained in the Borders.

Dr Neil took SBC, which assumed responsibility for the funds in 1996, to task for not ensuring that the town’s capital fund was kept at a higher level, thus generating more interest for revenue projects, including the maintenance of its farms and buildings.

And he described as “outrageous” the revelation that SBC received £68,000 from the sale of a housing site in the town at Rosebank Quarry in 2005, that had still not been transferred to the Common Good even although the latter’s ownership of the land had been conceded by both parties in March.

In its official response to SBC, the community council states: “We accept that elected SBC councillors cannot be expected to have adequate financial expertise to manage large funds, but they have clear duties as trustees and must receive training in trusteeship. That must now be given detailed consideration.

“We question the appropriateness and wisdom of commissioning an external law firm to contribute to an expensive report [the briefing note on the single investment strategy which went out to public consultation] much of which is self-evident.

“We feel SBC officers should have been able to provide a similar report at no cost to council tax payers. If such expertise was hitherto lacking, then this highlights a serious omission on the part of SBC.”

Solicitor Kirstin Scott, who has been advising Selkirk Community Council on common good matters, said the costs and benefits of the strategy to each common good had yet to be quantified.

“There is almost a presumption that better rates on investments can be had on the market, but this week we have seen markets crash and burn. I assume this will be taken into account before any decisions are made.”