Yesterday Highlands and Islands Enterprise announced (see here) that CairnGorm Mountain Ltd had gone into administration. This was the company they had set up to replace the Cairngorm Chairlift Company and later sold off on the cheap in 2014 to company owned by a hedge fund manager, David Michael Gorton. After four years of shocking mismanagement by “Natural Retreats”, this will be a relief to everyone who cares about Cairn Gorm.
Charlotte Wright, Chief Executive of HIE, claims in the News Release they are “well prepared”. This is the first statement from HIE about Cairn Gorm for some time that should probably be taken at face value. On 26th November Burness Paull, on behalf of HIE, registered a new company, Cairngorm Mountain (Scotland) Ltd. Its address is HIE’s HQ. It has two Directors. Nicholas Bryan Kenton, now holds 16 Directorships for HIE, and appears their “professional” company director. Douglas Alexander Cowan may possibly be the person HIE has selected to negotiate with the Adminstrator and sort out the mess. Whatever the case, the new company, whose assets consist of £100 in shares but is bankrolled by HIE, is likely to have already commenced discussions with the adminstrator about taking over the business. Given the disaster that is Cairngorm Mountain Ltd, it is unlikely there will be any other takers.
There is therefore probably little need for those staff still employed by CairnGorm Mountain Ltd to be too concerned about their jobs. This is not just because HIE is responsible for the whole disastrous outsourcing process, another Carillion, and risks losing its reputation in the Highlands. Its also because their Chief Executive, Charlotte Wright, was the Project Manager who oversaw the procurement process and subsequent sale to Natural Retreats. Her career would appear to depend on sorting out the mess she has created. Its reasonable to anticipate therefore that HIE will now spare no efforts in preventing any further redundancies, particularly in the politically sensitive period leading up to Xmas.
The position of trade and other creditors is less certain.
Even before the income from the funicular dried up in September, Cairngorm Mountain Ltd owed large amounts of money. Its accounts show it was dependent on guarantees from its ultimate owner, David Michael Gorton, to keep going. The latest guarantees were a further year from September when its most recent accounts were lodged. They became worthless with the funicular breakdown because Mr Gorton could legitimately claim the situation had changed. The amount owed to local trade and other trade creditors may now be significantly higher than those recorded for last December.
That puts HIE in a double bind. It has a moral obligation to local creditors, having allowed CML to accumulate mountains of debt. And those creditors will also likely have a claim on whatever remains of CairnGorm Mountain Ltd’s assets. These appear to consist mostly of equipment essential to run the downhill skiing operation, everything from computers to skis and piste bashers. Whether it wants to or not, HIE may have to pay off creditors just to enable the hill operation to continue to function.
Then there are all the people who have paid for season tickets at Cairngorm and have been asking what would happen to their money since the funicular broke down but with no response. Has HIE been “well prepared” enough to stop that?
On top of this, there are likely to be other financial holes, the pension fund for example.
The cost to the public purse of HIE’s mistake is likely to be considerable. That is before any consideration is given to the cost of new ski uplift infrastructure or the cost of repairing the funicular. Its hard to see how HIE’s extravagant and ill thought out plans for mountain roller coasters and zip wires announced just a few weeks ago can survive this.
The immediate priority for HIE is to pick up the pieces caused by CML going into administration. How they do this and the cost must be made transparent. Meantime the other pieces caused by the funicular breakdown still need to be picked up. HIE does not have the skills to do this which is why the Scottish Government Minister, Fergus Ewing, needs to set up a new joint management structure immediately. This should include the Aviemore and Glenmore Community Trust, who should be asked to assemble the necessary expertise to make the most of Cairn Gorm this winter, and Forestry Commission Scotland.
Once the dust has settled on this whole fiasco and the business has been stabilised then we might hope that the Scottish Government will recognise that HIE, far from being the saviour of the CairnGorm business, are actually the cause of its demise. Their long term strategic decision making, blinded by an obsession with getting ‘bums on seats’ on the Funicular, has led to the present disastrous situation. All of the baggage that is associated with HIE can be left behind by transferring the CairnGorm Estate to Forestry Commission Scotland [which itself will come under direct government control next year] FCS will also have far more experience/expertise than HIE of managing an upland business that involves the use of heavy machinery. It’ll be well worth going down that route because leaving HIE in control will just lead to the same mistakes being made, yet again.
It will take £.5 million in working capital top keep everybody employed and the operations continuing. The FC are not going to put that in, HIE are not allowed to the local Trust thing is just a joke in terms of the amounts needed.
IF HIE knew administration was coming why did they allow local suppliers to continue to give the company credit? They have lost everything. Season ticket holders will just have to pay again. Employees will get their redundancy from he taxpayer. But the £1.2 million owed to small local suppliers not a chance.
Does HIE not have some responsibility to us?
I agree, HIE should be responsible for the money owed to local traders. I have been writing to Charlotte Wright for about six months now asking what HIE doing about impending financial meltdown which preceded the funicular crisis. Her basic reply has been to the effect that its not our responsibility to investigate all the money being sucked out of Cairngorm (in admin charges) that’s a commercial matter. Local traders, ticket holders and everyone else should be very angry and demanding our politicians step in. The problem is if they won’t sort out Carillion why would they sort out HIE-Natural Retreats?
The trouble is that Forestry Commission is just another taxpayer funded ‘pot of gold’, handing over Cairngorm Mountain (Scotland) ltd will be much the same as the demise the £12 million taxpayer funded Pelamis, taken over by HIE and the Scottish Government and now called Wave Energy Scotland, their accounts show that in the last year they had £10 million funding and show £10 million spent on administrive costs!!!
The removal of trees at Glen Righe, Lochaber cost the taxpayer over £2.5 million for a return of £65000 and I am sure that HIE have promised an outlay of £30 million of taxpayer funds over the next 10 years to CMS Ltd by which time most of those at the top of HIE will have retired.
FCS is very unlikely to consider taking on Cairn Gorm if it had to deal with the financial liabilities – that’s why it pulled out of an attempt to transfer Cairngorm Mountain to it ten years ago. It realised how horrific the liabilities were and, while it has been known to waste money, it does not have the same pots of gold as HIE. If financial liabilities remained with HIE, what FCS has that HIE doesn’t is access to the sort of land management skills which Cairn Gorm needs, from installation of infrastructure to restoration of damaged ground.
Agreed, control over the whole mountain from Cairn Gorm summit to Glenmore village needs to put into the hands of the new Scottish Government organisation, Forest and Land Scotland, which takes control of all existing Forestry Commission land in April 2019. From day one this organisation should form a joint working partnership with the Aviemore and Glenmore Community Trust so that all future investment decisions on the northern slopes of Cairn Gorm are the joint responsibility of this partnership.
Meanwhile HIE can tell Audit Scotland what the total cost to public funds is likely to be over the 30 year life span of the funicular. Expert advice provided to Audit Scotland in 2008 indicated this was likely to be in the order of £90 – 110 million. By the end of this financial year, after HIE have paid for the repair cost of the funicular, the salaries of all those currently employed by CML and compensated all season ticket holders, not to mention a whole host of other creditors, we should be well on the way to £100 million.
Yes, the demise of Cairngorm Mountain Ltd. was so predictable. I find it incredible that HIE felt that they had no responsibility to investigate and audit the syphoning off of cash flow on the pretext of ‘administration charges’ from CML to the parent company . If they really didn’t have the powers to investigate – this is yet another failing in the lease contract with CML. I agree with the comments made in the blog and by the others about taking HIE out of any future control of the Mountain. I, however, remain, concerned about the Scottish Government and FCS (or its successor) and their ability to manage all the issues resulting from a few decades of mis-management by HIE.
I appreciate that in the short term there is urgent need for ensuring financial and managerial stability to ensure that some snow sports offerings are available over this winter, and at least there appears to be some positive activity on this. Also HIE need to immediately agree to underwrite payments to local creditors and all people who had paid for season passes. However, before any steps are taken on repairs to the funicular or new investment in the Mountain, care needs to be taken to try to prevent even more money being poured down the drain. My thoughts on next steps (assuming an acceptable joint working group can be set up) include:
– a full and honest lessons learnt report covering all the mistakes over the past decade or more, and in hindsight what should have been done.
– a new credible options report (all of which would be made public) on options for the future of summer and winter activities on the Mountain. This report needs to consult, and listen to, local persons with years of experience of the issues on the Mountain. The report also needs to demonstrate what return on any future investment can be possible.
– extensive public consultation throughout Strathspey & Badenoch on future options, using the options report as the basis.
I appreciate that the Mountain is an important part of many peoples’ livelihood, however as someone involved in the the tourism industry, I am concerned about the quality of return on future investment in the Mountain – especially given the terrible track record. HIE’s ‘vision’ estimated at some £27M is a massive amount of money. I’m sure that spend on many other tourism focused projects in the area could show a much better return on investment – e.g. the Rails to Grantown project, or investing and keeping open public toilets, just to name a few. There needs to be real care to avoid rushing headlong into another ill-designed project to ‘save’ the Mountain.
We must have continuing public sector involvement in Cairn Gorm, with such a body advising the Scottish Government on how to spend the £millions of public money that need to be spent on the mountain in the next decade, alongside the Aviemore and Glenmore Community Trust. That public sector body must not be HIE. It is embedded with a culture of deviousness, arrogance and lack of integrity. Remember the funicular was built by Morrison Construction. The chairman of Morrison Construction was Fraser Morrison, who was also chairman of HIE at the time that the funicular project was first proposed and developed to planning approval stage. The Chief Executive of HIE throughout this period, including the point where the contract to build the funicular was awarded to Morrison Construction, was Iain Robertson. Soon after he left HIE to become a staff member of Morrison Construction. No politician should therefore have any confidence that HIE today can provide them with accurate, dispassionate advice about any proposed public investment on Cairn Gorm. Their future role should be entirely restricted to funding the repair and operation of the funicular and its eventual removal. Control of all future public investment decisions, including advice to ministers, must be moved to another public body as a matter of urgency. That could be the Forestry Commission, Scottish Natural Heritage, Cairngorms National Park Authority or Highland Council. The best option is the Commission and its successor body, Forest and Land Scotland. It already owns the bottom half of the mountain and used to own the top half until the upper slopes were wrenched away from its control in 1971 by the rogues in the Highlands and Islands Development Board and their successors in HIE.
Judging by the BBC reporting here (https://www.bbc.co.uk/news/uk-scotland-highlands-islands-46389488) the good news is that it’s being kept going by the administrators pending a buyer emerging. Given that the administrators are independent of HIE perhaps this is an opportunity for a local group to engage with them in the expectation of a more objective reception?
It’s also reported that “the directors of the business had been in discussions to try to find suitable solutions, including a managed transfer of the business to another party. However those negotiations did not progress” – I wonder who the “other party” was. I’m sure HIE must know.
even though most of us are glad to see the back of NR, this is a really dangerous time for Cairngorm. HIE will be desperate to offload this problem and since nobody knows who the potential buyer(s) were (are) we could be in for another nasty surprise. After all, with HIE underwriting the foreseeable future, it could be seen as a way of making a quick buck.
The Cairngorm ski business drove the development of Aviemore and Aviemore and the business sector upon which the increased population depends has driven ski development. Thankfully activists thwarted “Lurchers”. But the Funicular project was driven through on the perceived need to extend the tourist season. Is this not the time to ditch the Funicular?
Climate change mitigation should surely be our central concern.
I would suggest a 2MW wind turbine on the site of the Ciste car park. Get it working as soon as possible to generate the energy for snow making. Even more importantly get it generating cash. That cash could fund businesses that support the greening of the National Park.
It should be a matter of some shame that it`s a foreign, private businessman that`s making by far the greatest contribution to meeting the aims of the Park. Don`t we need to think about whether tourism should be absolutely, exclusively? central to the existence of the communities within the Park.
Cairngorm feels the full force of Atlantic storm. Snow is likely to be scarcer. Is it wise to throw big money at it. There has to be another path and surely that path has to be taken according to the imperatives of climate change.
If in Scotland a couple of big metal horse heads-the Kelpies- can be so admired what`s wrong with more than a symbol of regeneration on the site of the Ciste car park?
Bar nothing, climate change should be the issue. The seriousness of the situation has been compared to wartime. Isn`t it time for extraordinary action?