The Task and Finish Group considered three bids, and recommended the one from Ecotricity. Not all the members of the group agreed with the decision, and you can read their reasoning here. In the interests of keeping this brief, we’ll just consider the leading two contenders.
The report criss-crosses a lot of ground, but has a central theme: if the council awards the bid to the Stroud Trust, they could be legally exposed, whereas awarding it to Ecotricity would be safe.
Meeting legal requirements
The key argument in the recommendation appears to be this:
the Committee must be satisfied that the disposal will be in the economic and/or social interests of the district…. given the concerns about the financial robustness of [the Stroud Trust bid], the Task and Finish is not satisfied that such a requirement can be met.
In contrast, the report states the Ecotricity bid:
would present the lowest financial risk of all bids to Stroud District Council, … [and would bring] sufficient social and economic benefits to the area to justify disposal at undervalue.
Financial risk is mentioned a number of times in the report. The implication’s that high financial risk may mean failure to deliver economic or social interests. However, relative risks and benefits of the two approaches relating to economic or social benefit are never addressed directly.
1. What are the financial risks and benefits?
The report identifies two main financial risks in the Stroud Trust bid: first, there is no detailed justification of projected income, and second, some of the identified capital costs are not funded in the proposal.
These are valid concerns, which should be addressed. However, the risk assessment is very one-sided.
The problem is that the Ecotricity bid provides no detailed information, so it’s impossible to compare risks. The Stroud Trust bid is more than 60 pages long, including a detailed business plan, risk register, project timeline, financial model and so on. By contrast, the Ecotricity bid is a single document of five pages.
In fact, the report itself makes the same point:
the [Ecotricity] bid does not provide detailed cash-flow forecast or details of the operating model that would be followed. Therefore, it is not possible to provide any analysis of the financial risk posed by the bid.
Although they don’t attempt to assess financial risks of the Ecotricity bid, the authors are happy to try to find financial benefits, such as:
- Ecotricity is well-established
- “The company has experience of running conference / catering and public facilities at Forest Green Rovers in Nailsworth”
- “The operating model outlined in the bid does indicate that the public use of Subscription Rooms would be more limited … and could be viewed as a reduced financial risk”
(The last benefit is not from the Ecotriciy bid – the authors have come up with that themselves.)
Yet it’s quite easy to think of possible risks in the Ecotricity bid. For example, in no particular order:
- Limiting the public use of the Sub Rooms could just as well increase financial risk, by reducing the opportunities for ticket sales
- The operation currently runs at a loss. How long will Ecotricity continue to subsidise it if this continues?
- Ecotricity has indeed run a football club – at a loss. Is this relevant to running a large cultural venue with no losses? Would Ecotricity be competent at this? (The fact that the Stroud Trust team have experience of running large cultural venues is described in the report as “encouraging”, but with reservations)
- There has been talk of a staff canteen. If this happened, how would this affect the local cafe economy around Stroud?
- If Ecotricity keeps all the staff, they will presumably be shared across the entire business, as (for example) they would no longer need Tourist Information staff. Would this run the risk of increased staff turnover and the loss of expertise?
The point isn’t that all (or even any) of these factors are significant risks. It’s just that there’s no evidence the group made a serious attempt to assess risks in the Ecotricity bid.
Perhaps the real assumption behind this report is that Dale Vince has already shown a willingness to invest in local loss-making projects that benefit the community, and he has deep pockets. This may well be true. But the assumption is both unstated, and unexamined.
2. What are the economic and social risks and benefits?
Although there is a partial assessment of financial risk, the report contains no assessment of the relative social and economic benefits of each bid. Instead, it presents them as equally appealing.
Making a side-by-side comparison is an impossible task, because the Ecotricity bid is vague. We do know that Ecotricity would manage the Sub Rooms as a part time venue, with public access permitted at the discretion of the business (which, based on public statements from Dale Vince, might be fairly broad — but what are the details?)
In contrast, the Stroud Trust would manage the venue as a full time arts and community centre. The Trust has a clearly stated strategic vision and continuous public access would be central to this.
All other things being equal, it seems at least possible that a period of successful Trust ownership would give better economic and social outcomes than a period of successul Ecotricity ownership. If the Trust bid is at greater risk of failure, might this be balanced out by a grander vision of social and economic benefit? This question should have been asked by the group, but there’s no evidence it was.
Enforcing public access… again…
The report is confident that “it will be possible to ensure public access to arts and cultural facilities within this prominent building, continues for the foreseeable future”, whatever the outcome. We’re not as confident as the authors about that. The Ecotricity bid explicitly states that their offer is subject to “no unreasonable or restrictive covenants or obligations.” And we’ve already described our other concerns about the limitations of legal covenants. If used at all, convenants should be watertight and decided in advance of accepting a bid, not evolved during a negotiation process with a bidder who’s already been selected.
Some questions for the council
There’s a “public information day” tomorrow (18 November) at the Sub Rooms, between 9.30am and 1.00pm. Go and let your concerns be heard. Even better, write to your councillor here. Some questions you might want to ask:
- How will they ensure public access? What legal advice have they be given about this? Will they consider offering a freehold, rather than a leasehold?
- Will they define the restrictions on the building’s use before starting negotiations with the preferred bidder? If not, why not?
- What risks do they foresee in the Ecotricity bid? How could these be addressed?
- Will they attempt to negotiate with both bidders for a better possible outcome?
- Will they support making the decision at full council, rather than in a committee?