Lighthouse Caledonia - the post-mortem

The sad closure of the Lighthouse Caledonia salmon processing factory comes as no surprise to anyone who has been looking at the problem objectively. With two exceptions.

The real story has eventually come out, as I knew it would, and I have been sitting on some papers that put the lie to the public story. I didn't want to release them until now, in case I was blamed for the company pulling out by those who sought to throw accuse others.

The original story – remember that? – was that the factory needed a major upgrade to meet health & hygiene requirements to the customers satisfaction, and that major investment was (unexpectedly) required to fund this, but that Marybank was not (now) a suitable site for this to happen on.

That had the stink of unmitigated bollocks; but it hooked the naive who didn't question management or the rational of the supposed 'problem', and went off on a wild goose chase, raising expectations of public money, new factories and a 'rescue'

The internal papers I found all showed that hygiene was not an issue at the Lewis factory, indeed the talk was all about the success of the factory. Some of the other recent finance papers are here and here, and tell the same tale.

Now, the reason for closure is supposedly that the company needed to make cuts to generate cash, save money and meet its banking covenants. The need to urgently generate £12m in cash is supposedly the driver for the closure, but how closing a profitable factory will generate that amount of cash in a few months is unclear, especially since the factory does not appear to be for sale.

They are still peddling misinformation.

The whole philosophy has been to cut costs by centralising the value added packing of the salmon in Argyll. We are left with the low value jobs and Jim Mather MSP gets the high-value jobs in his constituency.

Does this explain why Enterprise Minister Jim Mather has been conspicuous by his absence? And why our MP and MSP have had no substantive response to the letters they claim to have written?

It has been said before on this blog by others, and I will say it again, it looks like MacNeil and Allan were told by Jim Mather that they factory wouldn't be saved, so not to bother rocking the boat too much.

The prospect of new tenants for Marybank or a new factory in Arnish (to compete with Scalpay??) is as implausible as it is impractical, and what we have seen is another key industry sector pulled from under us.

All of which takes me to my next post.

VAT cuts

Are retailers actually going to implement the cuts in VAT?

If my highly subjective survey of businesses is anything to go by, then probably not completely.

Have you got your works Christmas menu yet? Do you think the menu prices will drop by 2.13% (from £117.50 to £115.00)?

If you work in a shop, are you going to reprice your entire stock before Monday?

If your costs (petrol etc. etc.) have all gone up and been absorbed by you, are you going to take the extra profit and cut some of your losses, or give a discount that no-one notices?

Some items are going to be cut, but don't expect everything to change.

The Budget - a considered response

I've read the report of the Budget in a quality newspaper ("The Telegraph" - more of which anon) and finally managed to download some of the supporting detail required to understand just what is going on.

OK make that, some of the supporting detail required to make you think you understand just what is going on.

It is all utterly Political - yes a capital "P" - and superficial and the tax impacts are minimal for the average family. Just how the 'average' family will be encouraged to spend by a tiny, little, increase in weekly income when they are drowning in debt is beyond me.

The impact of the fiscal framework decisions - the macro-economic decisions behind the micro-economic farting about - meets with the approval of the financial markets, only because the policy is to release as much money into the economy as quickly as possible, meaning that some firms will be kept afloat by the inevitable flow of money (however irresponsible) into failing enterprises. Of course, the long-term prognosis is bad, as the decrease in the rating of the UK debt shows - it has become more expensive for the UK Government to borrow in the markets.

As a Labour Party tool it has been very effective, and heightens the probability of there being a May election from 'possible' to 'highly likely, all other things being equal'.

So how does this play with the winners and losers?

Earning £150,000 plus per annum will cost the taxpayer about £1,200 per annum in additional taxes from 2010. According to The Telegraph, this will be enough to persuade a high-earning young couple to give up their jobs and move to New Zealand. Bollocks.

The top 1% of earners will not walk away because of tax changes - they might if the underlying economy is knackered - because they cannot find jobs that are quite as well paid anywhere else.

The direct tax changes are largely symbolic, and not enough for the largest earners to create new tax avoidance schemes, so they should give a yield around the figures forecast, and A Good Thing too.

However, petrol duty has gone up to compensate for the temporary decrease in VAT, meaning that apart from the impact on motorists, the fishermen and bus operators will have new rates of duty applied, meaning that they will be out of pocket for more, for longer.

Bus contracts

The Comhairle bus contacts and the operation of the bus DSO has always been a major source of controversy over the losses incurred (p48), and the management of the service.

This week the DSO has been handed the contracts that it currently holds, without competitive tendering, whilst all the other routes have gone out for competitive tendering on the 'normal' basis.

At least 'normal' as I use the word. It appears to have a different meaning for other people.

The authority to avoid the tendering process was apparently approved directly by the Chief Executive, who believes that these particular tenders do not need to go out for competitive bids.

One bus operator* has told me that he was informed by an officer in the Comhairle that this course of action had been approved by Audit Scotland. As any fule kno, Audit Scotland review decisions after the event, and not in advance, so this would appear to be a strange (one might suggest 'dissembling') response.

But more than that, the Councillors were advised of the matter only after the event, and without any possibility of discussing the matter. Let me make that clear - as far as I know the vast majority of Councillors knew nothing until after the event. Can any Councillor confirm just exactly who took the decisions and approved this course of action?

Regardless of the rights and wrongs of the decision, and if someone can send me the papers to allow me to understand the rights and wrongs - the Comhairle have nothing to hide, do they? - the perception is that the routes have been cherry-picked using the information from previous operators and public subsidy from HiTrans to stifle private enterprise.

One look at the 2007 Key Tasks of the Comhairle can only cause bus operators to choke "Re-tender all bus contracts within appropriate timescale".

"Appropriate" adj. not when inappropriate
"Timescale" n. never

* Clients of the firm run bus services, but (afaik) none are affected by this decision.

The 2305 to Point departs from the Crit.

The Budget

I am hearing bits and pieces of the Budget as I drive between meetings with clients, although the substance of the announcements seem to have been comprehensively leaked to all and sundry over the weekend.

All week I have been telling people to ignore the headlines and seek the hidden elements before coming to a conclusion bout the Budget being good, bad or indifferent.

I am not taking my own advice, and I am making my (initial) judgements based on the headlines.

Reaction 1: As a country, just how deep in the shit are we that we need an emergency Budget rather than a pre-Budget Report?

Reaction 2: Given how bad it is, why are so many of the decisions having delayed implementation until 2010, 2011 or later? (Answer: party politics)

Reaction 3: The entire Budget is a series of political sops, with the 45% band for the highest paid being a supposed socialist, redistributionist policy as a flag to the Old Labour supporters and as a way of trying to trap the Tories.

Reaction 4: The option of cutting and running in May 2009 is being left wide, wide open, before the shit hits the fan and then the tax increases can be approved by the electorate.

Reaction 5: The headline policies are all waffle and insubstantial - the real substance is hidden in the detail. I need to read tomorrows papers and the full detail before coming to any conclusion.

Summary: Typical Brown micro-managing of the economy by proxy (starring A Darling as the fall-guy) with lots of tiny, complex and contradictory changes that will do wonders for the accountancy profession and almost nothing for the taxpayers.

BNP Membership list

I finally found the document that the blogsphere is laughing at, and did a search of what is claimed to be the membership list, to find our local Nazis supporters of an extreme right-wing party with a tendency to physically assault opponents; and whose main obsession is with race and religion, seemingly regardless of any rational or logical thought processes, which they seem to lack:

Mr
Paul
Johnson
13 Melbost
Borve
Isle of Lewis
HS2 0RR
(deleted)@houseofjohnson.co.uk
IT specialist. Keen to help with leaflet design/websites etc.

Mr
Colin
Campbell
30 Cnoc-Na-Faire
Port Ellen
Isle of Islay
Argyll
PA42 7BU
01496 302xxx

Mr
Johnathan
Bowker
30 Borve
Portree
Isle of Skye
IV51 9PE
07766 795xxx
(deleted)@borve.plus.com
Change of address 07/03/06

Mr
Samuel
Smith
28 Liveras Park
Broadford
Isle of Skye
IV49 9AW
04718 226xx

Mr
Kevin
Mulligan
8 Liveras Park
Broadford
Isle of Skye
IV49 9AW
01471 820xxx
(deleted)_metal@yahoo.co.uk
Activist. Change of address 5/2/07

and an ex-pat Rudhach

Mr
Kenneth A.
Smith
2 Wilson's Building
260 Main Street
Stenhousemuir
Falkirk
FK5 3JY
01324 555xxx
07077 820xxx
scotland@bnp.org.uk
Activist. Change of address 17/1/07 & 23/5/07

(Updated 20/11: Textual changes to clarify the status of the list and some of the protestations of those who claim to be named in it.)

Epic fail

Thanks to The Register for this classic tale of how technology can catch you out....

From: Niresh Regmi
Sent: Wednesday, 27 August 2008 9:35 a.m.
To: Kyle Doyle
Subject: Absence on Thursday 21st 2008

Hi Kyle,
Please provide a medical certificate stating a valid reason for your sick leave on Thursday 21st 2008.
Thank You

NIRESH REGMI
Real Time Manager, Workforce Operations

---

From: Kyle Doyle
Sent: Wednesday, 27 August 2008 9:38 a.m.
To: Niresh Regmi
Subject: RE: Absence on Thursday 21st 2008

Niresh,
1 day leave absences do not require a medical certificate as stated in my contract, provided I have stated that I am on leave for medical reasons.
Thanks
Regards,

Kyle Doyle
Resolutions Expert - Technical

---

From: Niresh Regmi
Sent: Wednesday, 27 August 2008 9:39 a.m.
To: Kyle Doyle
Subject: RE: Absence on Thursday 21st 2008

Hi Kyle,
Usually that is the case, as per your contract. However please note that leave during these occasions is only granted for genuine medical reasons. You line manager has determined that your leave was not due to medical reasons and as such we cannot grant leave on this occasion.

NIRESH REGMI

---

From: Kyle Doyle
Sent: Wednesday, 27 August 2008 9:43 a.m.
To: Niresh Regmi
Subject: RE: Absence on Thursday 21st 2008

Hi Niresh,
My leave was due to medical reasons, so you cannot deny leave based on a line manager's discretion, with no proof, please process leave as requested.
Thanks
Regards,

Kyle Doyle

---

From: Niresh Regmi
Sent: Wednesday, 27 August 2008 9:50 a.m.
To: Kyle Doyle
Subject: RE: Absence on Thursday 21st 2008

Hi Kyle,
I believe the proof that you are after is below

From: Kyle Doyle
Sent: Wednesday, 27 August 2008 9:55 a.m.
To: Niresh Regmi
Subject: RE: Absence on Thursday 21st 2008

HAHAHA LMAO epic fail
No worries man
Regards,

Kyle Doyle

It's the economy, stupid

So the decision to cut interest rates from 4.5% t0 3% was a unanimous one by the Bank of England.

The startling piece of information was that the Committee considered larger cuts, but discounted that option as it might shock the markets too much.

Frankly, I don't think the market can be shocked by anything at the moment, as the FTSE is here there and everywhere on a daily basis.

All this suggests that further - significant - cuts are imminent and that the full extent of the economic problem has not been made public (although I think we can all guess). But the Bank are only going to (try to) solve the problem slowly.

Not only is that unsatisfactory, but the driver seems to be keeping inflation within the proscribed parameters, rather than jobs, economic growth or a million and one other factors.

Indeed, interest rates will not come down as quickly and as far as they should because the Bank is concerned that inflation might fall below the lower level set by Government. We know that there is a recession coming and that it is going to be deep, but with the Government sticking to its policy to keep inflation inside a narrow range we risk have recession and rising prices; a combination which will only deepen and lengthen the impact.

The lower inflation limit needs to be removed, and removed soon (next week's pre-Budget statement?) to reduce the damage to the economy.

Children in Need

With Cllr Donald John MacSween having his beard shaved off on behalf of Children in Need, we have to ask "What have these poor children done to deserve that?"

I have obtained exclusive photos of the event -- !! Warning, the following is not suitable for small children or if you are eating.

Before: or is this Donald Manford?

During: the scary Halloween costume for frightening constituents

After: now on to Westminster,
and Tony Blair's image consultant.

A glimmer of sanity from the Labour Government as they decide to keep the Card Account contract with the Post Office.

What were they thinking about in even considering the removal of this contract as a serious proposal? It just shows how out of touch they have become.

The removal of the Card Account would have created a network of closed ex-Post Offices across the land, with card accounts being operated through faceless cash machines, in petrol stations, corner shops and pubs.

The prospect of a nation of pensioners rising up in anger seems not to have crossed the minds of Ministers until too late, and whilst it is being portrayed as a positive move to save rural communities and services it is a retreat of the most satisfying and substantial size.

Request for information

Can the person who anonymously sent information to Angus about matters in Uist please get in touch with him again, and provide the offered information. Angus absolutely guarantees confidentiality.

Spurdog

No, I had no idea what a spurdog was until I saw this article in FishUpdate.com and found out that it is the Spotted Dogfish, which shoals in the Minch and is caught as a by-catch.

And then tossed overboard, as it cannot exceed 5% of the landing.

Derogations in Wales, but not in Scotland?

No common sense approach to fisheries management allowing a annual TAC computation for a fish that is present only part of the year?

Duncan MacInnes is absolutely correct:

He said that the proposals emerging from the EC were extremely worrying, but they did nothing for stock conservation. "They introduce rules to stop by-catch, and prevent landings, yet spurdog goes around in large shoals at certain times of the year for around three or four months and they don't obey strict rules. The fishermen know that they're there and so do the scientists and they will get caught and they will have to be discarded dead. That doesn't help the stock and it does nothing to help the income of fishermen who are already hard-pressed by rising fuel prices. It should be lawful to land everything for which there is a quota"

Will sanity prevail? Will the Scottish Government see sense?

(Declaration of interest: the firm acts for fishermen)

Local Income Tax - some numbers

I'm very grateful to Lewis MacAskill for asking some questions and to WhatDoTheyKnow.com for publishing the answers, so that we can make some informed comments.

Council tax currently yields £9.5m per annum (CnES annual report 2006/07 p9) and the detail is available on p35 of the report.

The Inland Revenue have apportioned tax yield by constituency (Table 3.15) for 2005/06, and estimate the income tax yield in the Western Isles is £28m per annum.

In my view, the use of different years and the errors in the estimates are negligible for the purposes I intend.

If Council Tax is abolished, and replaced by a 3% rate in the Western Isles there will be a shortfall of £8.6m per annum: £9.467m - (£28m x 3%) ≈ £8.6m.

Therefore for a Local Income Tax to be acceptable, Central Government will have to pledge to increase basic grant support by £8.6m which will have to come from cuts in other services or from other sources of income (i.e. taxation).

That doesn't necessarily make LIT A Bad Thing, but what it does emphasise is that there is a large sum to come from somewhere to bridge the gap and that abolishing Council Tax is not a painless matter.

Looking through the other data, there are some fascinating insights....
Mean (the 'average') self-employed income is £13,000 but the median (the number exactly halfway through a list sorted by value) is only £7,200. This clearly shows that the vast majority of self-employed people have very low taxable incomes, and a lot have very high taxable incomes*

This disparities in other income sources are nowhere near as large, implying that income distribution from other sources and total income is broadly the traditional 'bell-curve'.

* This can be distorted by reducing taxable income from self-employment with allowances for replacing equipment

I could point out that to replace Council Tax with LIT would require a tax rate of 33%, but that is so ridiculous that no-one would suggest that would happen. Would they?

Storas Uibhist

Let me start by saying that my informants may have particular axes to grind, and are hardly independently objective in the matter, but that being said, the stories correlate with other information that has come to my attention.

Two businesses in Uist have recently tried to expand, but found that they needed to contact Storas to discuss their plans, and get approval for the minor land issues arising. (I am being deliberately vague to avoid identifying the people concerned).

Before the matter was decided, Storas asked for business plans for the proposals and eventually announced that they would only allow the land to be used as requested if Storas could become partners in the businesses. Take it or leave it.

I am told that both businessmen have refused a 'partnership', and as a consequence two largish businesses will be ceasing activities.

I don't remember South Uist Estates or any other estate on the islands ever behaving in such a manner, and it poses the question of "Why?".

If Galson/Barvas/Pairc Estate in Lewis had ever demanded a profit share rather than a rent, the Free Press would have nailed the landlords to the wall. So why the difference here?

Job losses (continued)

With 300+ extra unemployed for Christmas, it is even more distressing to note that there are only 14 vacancies locally advertised through the job centre.

Even assuming that there are a large number NOT being advertised, the sad conclusion is plainly obvious.....

Job losses

As the economic recession starts to bite, the jobs go.

Apart from the imminent 100 at Lighthouse Caledonia, a further 19 have gone at Bardon, 6 at OneTel and (it is estimated) another 25-30 at various building contractors, and with other redundancies - including at the Bank of Scotland - I estimate that an extra 300-350 people will be unemployed come Christmas.

And I don't expect it to stop there, with one major business on the islands now unilaterally changing its payments terms from "30 days" to "60 days after the end of the month in which the invoice is received", leaving local suppliers struggling to fund wages and materials until that debt is paid.

Sorry to be gloomy, but it is only going to get worse.....

Glenrothes

Forget the pyrrhic victory I wrote about yesterday, the reality has been a bloody nose for the SNP and a seriously good result for Labour.

It looks like everyone was shocked by the result, which suggests that the public might have been lying to the political parties and the pollsters. The naughty so-and-so's.

In many ways it is easier being the underdog, as Labour were.

As the incumbents at Holyrood and Fife Council the SNP seem to have found that being the target of discontent - rather than being able to grumble about Labour - is a very, very different place to be. And this will be something that Labour will target again and again.

Interest rates

3% a cut of 1.5%!?!

Just how bad are things, and why are they not letting us know just what is going on?

Some anecdotal evidence reaches me about the state of the economy with mainland businesses undertaking suicidal pricing which is having a detrimental impact on local traders. If that is heading our way, then it is much, much worse than I feared. The Bank of England minutes from today will make interesting reading.

The markets have reacted by not reacting, indicating it might not be enough of a cut. Unbelievable as that might sound.

The advice from today - cash is going to be king over the coming year, and those without cash, no matter how profitable the business is, will be in trouble.

HBOS takeover

With almost all the top jobs going to Lloyds directors; with the main HBOS directors retiring; with the name being changes to Lloyds Banking Group; any pretext of it being a 'merger' has been shed.

I'm getting more intrigued about the mysterious third party bid mainly "Does it actually exist?".

It was with some wry amusement that I noted that the AGM for Lloyds is being held in Glasgow on the 19th November and the HBOS AGM is being held in Birmingham on 12th December.

Which company is therefore the most Scottish? [As if that mattered to anyone except politicians]

With 'savings' i.e. cuts of £1.5bn now forecast for the combined group the truth of the takeover is that there will be large scale job cuts, and the Bank of Scotland locally expects the Lloyds TSB Branch in Stornoway to close and the staff to be moved into Cromwell Street, except that er... they won't need all the combined counter staff, or managers, or admin staff.

This is the legacy of the reckless lending by the wonderful bank that we are supposed to hold up as a trophy prize to be retained at all costs.

Glenrothes

Yes, that by-election is happening today.

Latest word I have puts the SNP slightly ahead, but the Labour Party not conceding defeat and determined to get the vote out. That last part might be the bit that is difficult, and may cost them the seat.

I'm not staying up tonight to wait for the result, as it is going to be an anti-climax whoever wins.

Indeed, whoever wins will have a somewhat pyrrhic victory: if it is the SNP, then the swing is much less than Glasgow East; if it is Labour, then they have seen their majority slashed.

But whoever loses is going to be fighting hard to justify their 'disastrous' performance to the media scrum looking for a story.

A new beginning

As expected, Barack Obama has been elected, by what appears to be a landslide for the Democrats.

I, for one, am delighted and I think that there is now an opportunity and desire for the US to rethink its role in the world and to consider the impact of its decisions on other countries.

True, that the election was largely policy lite, with largely irrelevant and trivial issues dominating campaigning (at least at this distance), but the desire to re-balance the economy and international relationships is very encouraging. The team around Obama appears strong and able and with cross-party backing for his Presidency there should be huge beneficial changes for the US and for the world.

(Let's not forget that many people had similar hopes for Tony Blair!)

The markets seem to like his election too, which indicates that his economic policies are expected to mitigate the worst of the credit crisis. This I am less sure about, but I'm not sure how it can get worse.

The oddest element of the transition is that he is not inaugurated until January, leaving two months where Dubya is nominally in charge but will have to consult/defer to the President Elect on all major issues. This will inevitably cause stasis, indecision and delay in moving matters forward. IIRC, this occurs as a legacy from the 19th Century, when the President Elect might need a week to get to Washington and then weeks to identify the post that need filling and then the post holders. In today's world, the Obama team is already vetted by the Secret Service and (virtually) all the posts will be filled by now, so the delay seems nonsensical.

I see that Alex Salmond has already claimed Obama as having Scots ancestry. Apparently, he is a descendant of William the Lion - but, why is no-one ever descended from third spear carrier?

A bright future and a bright hope seems to gleam in the West, but I think that the Secret Service are going to have to be ultra alert over the coming months and years to avoid it being snuffed out.

Bad hair day

So Trump gets the go ahead for the development in Aberdeen that has been rushed through the planning process.

Just how many gated housing communities for the excessively wealthy world-class golf resorts can Scotland sustain? The answer seems to be an unlimited number, with plans for another similarly grand scheme to the East of Inverness.

Of course, the hotel and holiday homes will go up first to generate cash flow, and then I suspect that the impact of the global recession will delay construction of the remainder. The golf course will happen, of course, but golfers tell me that the prospects of it ever hosting a major tournament in my lifetime are minuscule with many more long-established courses likely to be well ahead in the running for the Open.

Still, if only every planning application got the level of involvement that this one got. And if only every planning application was dealt with as promptly. And if only we stopped trying to be a low-pay service-based economy, and started making things again.

Dreams, dreams, dreams.

It seems to the public that success in dealing promptly with planning applications correlates with access to the First Minister, and proximity to his constituency, and although I am sure that this is just a coincidence, there is a need to remove this suspicion by ensuring that everyone believes that they are being treated equally.

Longevity

I'm posting a link to a fascinating resource about longevity throughout the UK.

It makes for informative - if scary - reading, and you may want to add your comments to the BBC website.

My immediate reaction is that comparative wealth is a major factor, and with the Western Isles having a per capita GDP of about 65% of the rest of the UK, that is bound to have a major impact.

But I suspect it is not that simple, and I think I will have to try and source the raw data to try and make more sense of this - unless, of course, the analysis is somewhere on the Health Board or Council computers.

Personally, I hope that the benefits of longevity continue to increase, keeping far enough ahead of my real age.

HBOS and an idiot

It is almost unbelievable that a Minister would leak details of a highly sensitive financial transaction.

That the Secretary of State for Scotland would leak details of a potential bid for HBOS which is at the very earliest stages is just beyond the pale.

The bidders were apparently sounding out the UK regulatory authorities (Gordon Brown rather than the Bank of England!) before discussing the matter with their own regulators.

If they haven't been almost scared off by this ineptitude and blatant party political manoeuvring, I will be astonished.

Either way, Jim Murphy has proved himself to be a Grade 1 tosser, and deserves every kicking that comes his way. Sacking is not going to happen, but it is exactly what he deserves.

Harris Tweed

If you read the Gazette you will have seen that our MSP interrogated Jim Mather on the plight of the weavers (at last in the view of reporter Donnie MacInnes). If you read the Official Report, you will see that it as just a very bland question tabled in response to a more incisive question by Jamie McGrigor, who showed his real understanding of the situation by asking a follow-up question to the Minister.

The sheer pathetic and mechanical nature of the question asked by Allan is the worst sort of soft-ball questioning started by the Tories fawning to Maggie, and perfected by arse-licking Labour MPs during the Blair Reich. The nature of the planted question (for that is obviously what it was) signals the end of any hope of an investment fund for Harris Tweed (as I forecast), which never even merited a question in Parliament.

But, but, but, this is a reserved matter, so where the hell is the Barra Bhoy in all of this? He should be raising questions in Parliament, discussing the matter with officials of the Dept for Work and Pensions, and generally being active on this issue. Unbelievably, Mr Allan has done us all a favour in pointing out that MacNeil is doing nothing on the matter. But then MacNeil and Allan seem to inhabit different realities for a lot of the time.

As someone pointed out to me, the £350k for an Weavers investment fund that MacNeil sees as the salvation of the industry would give 200 weavers weeks work maximum, and what happens then? No-one knows, because no-one has bothered to think it through. Weavers need about £5k income extra each or perhaps 30 tweeds for 400 weavers = £1.8m annually which shows the real size of the problem.

The Government are not even being addressed on this issue with our politicians preferring to make soothing and meaningless noises.