Gigha dream turns sour? Community ownership in Scotland

The Sunday Herald carried a story today headed “A tale of two islands as Gigha dream turns sour” [subscription needed]. It makes for challenging reading for advocates of community ownership in Scotland, especially when Gigha has often been presented as a successful example of a community taking the reins, together with places like Eigg and Assynt.

I have visited the Isle of Gigha twice. My first visit was an unofficial fact-finding trip, undertaken when I was an undergraduate law student keen to set foot on community owned land and who wanted to speak to those who had facilitated the transfer of Gigha from lairds to locals (those locals being embodied by the Isle of Gigha Heritage Trust). There are other examples of community ownership available. (One I know particularly well, thanks to my annual visits to Point on the Isle of Lewis. Point, Stornoway and other areas comprising some 70,000 acres of Lewis have been owned by the community since Lord Leverhulme donated the land to its inhabitants in the 1920s, per this earlier blog.) Gigha’s recent path to community ownership gave me a tempting chance to engage with living scholarship, so I hopped on the ferry at Tayinloan for a (literal) field trip.

My wanderings took me from Leim in the south, past the lordly plaything Achamore Gardens and Ardminish Bay on my journey north, terminating at a rather abrupt roadend at the northern tip of the island. Away from my perambulations, I chatted to locals in the Gigha Hotel and somehow wangled my way into a late night drinking session at another establish. In these days shortly after the acquisition, the optimism on the island was almost tangible. One inhabitant told me it was great that every penny spent on the island would now stay on the island, rather than leave on the ferry. (A slight economic simplification, but an attractive proposition.) I bought him and I another dram to celebrate that fact.

I visited Gigha again a couple of years ago. I found the skyscape slightly altered by three wind turbines. New homes had been built. I bought some trinkets in the island shop. There was no particular indication that anything was awry.

Gigha turbines

Now, it seems there are issues. To oversimplify matters, two key pieces of evidence are presented to back up the tenor of Judith Duffy’s report: the £2.7 million debt; and a botched landlord and tenant arrangement (between the Trust as landlord and a dairy farmer). Some thoughts on these matters follow.

The botched lease

This gets filed into the “more information needed” camp. One disgruntled tenant doth not a horrible and/or foolish landlord make, but it is not a good sign. Both sides of the bargain provide a comment in the Sunday Herald article, with the Trust stressing it “is committed to letting the farm to a go-ahead, enthusiastic farmer who will fit in with the island community.” I cannot add anything meaningful to that.

Debt

Acquisition of houses and land (and indeed many other things) with some form of debt financing is not exactly controversial. The problem comes when that debt hamstrings you. With Gigha, an obvious problem is that the most valuable asset of the landowning Trust is the land itself, which cannot realistically be sold without undermining the community and/or the Trust’s purposes. So what happens? It seems cost cutting is the order of the day, with the community owned hotel being closed five nights a week. If that is not enough to balance the books, the logical consequence is an insolvency event.

What now?

Is this a sign community ownership does not work? That would be too strong a conclusion. One business failing does not signal the end for capitalism.

There is a classic land reform problem here: when land rights are given to those who have not had such rights (and opportunities) before, it is naïve to expect the incoming land users to be automatically proficient. Perhaps more time and/or support and/or advice is required.

Another thing to note is the Gigha buyout actually happened outwith the legislative framework of the Land Reform (Scotland) Act 2003, meaning it would be a simplification to vent against reform legislation. That said, this particular experience might need to be looked at carefully by the Scottish Parliament when considering the Land Reform Review Group’s recommendations. Community ownership can be part of the answer to Scotland’s land question, but it is not the only answer. Maybe this is a timely reminder of that point.

Now would be a great time for me to conclude this blog with a crescendo and propose something practical. Alas, I am not going to do that, because it is complicated. Today’s story from Gigha is proof of that, but I still remain of the mindset that widening participation amongst stakeholders can be a good thing in a whole manner of circumstances (for example, fan ownership of sports clubs).

Whilst Gigha might be in a difficult situation just now, at least people are able to talk about it and community members still have a chance to shape things, in a manner that they could not twenty years ago. That, and the increased population of Gigha, is still a success story, of sorts. As any writer will tell you, writing a story is not easy. Maybe the community of Gigha is at the “difficult second novel” stage of the story writing process.

UPDATE: The Trust has released a Press Release (PDF) on its website. It might be summarised thus:

Gigha has improved under community ownership, as follows: Population increase from 96 to 170; New and refurbished homes and other buildings; New petrol pumps.

The lease arrangement of one farm did not quite come to pass, despite a three month rent-free period being offered by the Trust to this prospective tenant. The Trust is still committed to letting the farm in question.

The value of the island is £7 million (i.e. whether the financial position is “precarious” needs to be considered in light of that loan to value ratio).

Advertisements

About basedrones

Bachelor of Laws. Scots lawyer working at the University of Aberdeen. English law qualified. Took far too long to write this bio. Blogs on legal issues, with occasional veering into other purportedly intellectual stuff from time to time. Tweets about legal issues, education, law clinics, fitba, music, rogue cell division and not at all about politics at @MalcolmCombe.
This entry was posted in Land Reform and tagged , . Bookmark the permalink.

2 Responses to Gigha dream turns sour? Community ownership in Scotland

  1. neilking says:

    Gigha is the RBS of community ownership – too big to fail!

    It would be bailed out (if it comes to that and for all we know its financial situation may not be nearly as fragile as the Herald article implies) but in that event it would be useful to have an enquiry to see what lessons could be learned to try and prevent a similar thing happening again.

    Another point that occurred to me is that I’m sure it was Jim Hunter who said, and I think he was referring to Gigha as well, that community ownership of an *estate* is just a step along a road and the next steps include the breaking up of the estate such that the residents begin to benefit from owner occupation. So perhaps IGHT needs to get back on that track: instead of renting it, why not sell the farm?

    Back with legal nitty-gritty, I’m struggling a bit with what was being proposed in the farm lease regards improvements. Reading between the lines, I’m guessing IGHT was OK with its statutory obligation to put the farm into a thorough state of repair at the start of the lease (because there’s mention of doing up the farmhouse for Mr Jackson to move into) but realised they might not be able to afford to pay him statutory compensation at termination of the lease for any improvements he might have carried out during its term. So they tried to get him to sign up on the basis that any improvements would be regarded as “tenant’s fixtures” – i.e. in effect giving IGHT an *option* to pay compensation for them and, if they didn’t, Mr Jackson’s recourse being to remove the item concerned and sell it. Quite apart from the practical difficulty that not all agricultural improvements are easily detachable and sellable, I’m not sure it’s legally permissable under the Ag Holdings legislation to contract out of the right to compensation on that basis. And I can’t help wondering if what soured things between IGHT and Mr J was that his lawyer pointed all this out to him? (Bloody lawyers, eh? Nothing but trouble!)

  2. gypsy_librarian says:

    Reblogged this on An Turas and commented:
    Scottish land reform is fascinating. Concepts of ownership were utterly incomprehensible to me when I was there (aspiring to council housing – what the devil?) and the notion there were still absentee landlords or any form of landlord – horrifying! Yet watching the community buyouts I get the impression some are happy to with the status quo. Inconceivable! Throw off the shackles! But then, these are folk ‘aspiring’ to council housing. Have so much respect for people taking the lead in community ownership – they seem to receive a lot of vitriol from all quarters.

    Hope Gigha works out. In fact I’m sure it will. Reform like this takes generations.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s