Business Planning: The Assynt Experience

John MacKenzie

Introduction

History

The Business Plan

Financial Projections

Achievements

Conclusion

Introduction

I think that it can reasonably be claimed that, although there has been a desire for generations for reform of the system of land tenure in Scotland, it was the success of the campaign by the Assynt crofters to purchase the land on which they and their forefathers lived and worked that has catapulted this issue to the forefront of current political debate. Certainly this is acknowledged in a discussion document recently issued by the Scottish Office. In 1977 the then Highlands and Islands Development Board, under the chairmanship of Professor Kenneth Alexander, produced a well-researched document which compared our system of land ownership and management with some of our European partners and made a case for change but this was largely ignored by the Labour government of the day. Subsequent Conservative Governments saw no role for our development agencies in land acquisition and this attitude remained in place right up to the point of our campaign. The Chief Executive of Highlands and Islands Enterprise (HIE) resisted our initial approach for help, and it was only when Sir Hector Munro, then Minister of State at the Scottish Office, made a public statement in support of the entrepreneurial aspirations of the crofters of Assynt that this attitude began to change. Crucial in engaging the attention of HIE at that time was the preparation of a well-presented Feasibility Study and Business Plan and I want to tell you a little about that document, how it was created and how it has compared with our actual performance as a business.

History

Firstly, however, let me tell you something about the history of Assynt because in my opinion it is a history of the Highlands in miniature and is a model for other communities which might want to follow our example. Inevitably, Assynt was a focus for the inter-clan struggles that followed the end of Viking domination after the battle of Largs. Ultimately the territory became the possession of the MacKenzies of Seaforth and the last of that family to have control was Kenneth, who died in poverty in Lewis in the mid-eighteenth century. The estate had been sequestrated and Assynt remained without a legal owner for some 20 years until sold by judicial roup in July 1757. Lady Strathnaver was the highest bidder and thus Assynt passed into the hands of the house of Sutherland. I am sure none of you need to be reminded of the part played by a subsequent Duke in the eviction of some 15,000 of the peasant people of Sutherland to make way for sheep between 1811 and 1823. A century later in 1913, as the result of financial difficulties, the Duke offered for sale the 60,000 acres comprising Assynt and Eddrachillis. The purchaser was Major-General William Stewart, who bought his native territory. He had left Assynt as the penniless son of a destitute crofter from the village of Nedd and had made a fortune in Canada as a railroad engineer. The outbreak of the great war, however, largely frustrated the philanthropic intentions of Stewart towards his own people. In 1935 the Estate was again sold and on this occasion there were two bidders, the Vestey family and the Duke of Westminster who wanted Assynt as a wedding gift for his prospective son-in-law, Mr W Filmer-Sankey. Westminster was the victor but soon after Title to Assynt had passed into the hands of Filmer-Sankey, he re-sold most of it to the Vesteys with the exception of a small area around Loch Assynt ⁽¹⁾ . In 1989 Edmund H Vestey renamed the coastal crofting strip comprising 13 townships and a total area of 21,300 acres (9,000 hectares) as North Lochinver Estate and sold it for £1,080,000 to a Swedish land speculator. In none of these transactions were the interests of the people who lived and worked on the land considered to be relevant.

Three short years later, in 1992, Scandinavian Property Services Ltd. went into liquidation with a Swedish bank as the main creditor. A London-based Liquidator was appointed and the selling agents who had been employed by the Vestey family to conduct the original sale were re-appointed. The estate which had been sold to Scandinavian Property Services in three lots was now to be broken up into seven lots, no concern being shown for the impact of this process on the crofting activity of the inhabitants. The then office-bearers of the Assynt Branch of the Scottish Crofters’ Union (SCU) called emergency meetings to inform members of what was happening and were ultimately given overwhelming support for their proposals to seek to raise the necessary funds to purchase the Estate ourselves. The rest is well-documented history. Two events stand out in this period, however. The first was when the third open meeting was called to inaugurate the public appeal and, in the presence of reporters and television cameras, Assynt Crofters Trust was launched, with an emotional pledge of support from our Member of Parliament. The second was the occasion when a select group from the steering committee went to our accountant’s office in Inverness to meet with the Liquidator and his assistant. That meeting was reminiscent of Hollywood drama and brought home to the City of London accountant the resolve and determination of his opposition. One suspects he was not a little shaken by the experience.

The agreed purchase price for the total asset was £300,000, of which almost half was raised by the crofters and their supporters throughout Britain; indeed donations came from abroad, from some of those who traced their ancestry to Highlanders who sought a new life in the colonies during the dark days of the Clearances. The remainder of the purchase price came from public agencies as well as Sutherland District Council and Highland Regional Council in the form of grant and loan. Today the estate is in the possession of the crofters, free of debt and administered by a Board of Directors elected by democratic vote by each of the 13 townships making up the estate.

Membership of the trust is open to tenants and registered sub-tenants of crofts, and owner-occupiers with shares in the common grazings. There are currently 126 members out of a possible total of just under 140. On the estate there live about 400 people, of whom about 25 per cent are permanent non-crofting residents, who are part of the larger community of Assynt which numbers over 1,300, the great majority of whom live in or close to Lochinver. On the estate there are approximately 300 houses, of which 76 are holiday homes.

The Business Plan

Not surprisingly, our feasibility study had to be put together with great speed. The first emergency meeting of SCU members was called in mid-June 1992; publicity for our public appeal appeared in the national press on 1 July; and the Business Plan is dated August of that year. It was prepared by Steve Westbrook and Graeme Scott who stated in their introduction:

"The economic principle for purchasing the land is to ensure that the income and wealth which it is capable of generating stays within the local community. Much of the potential benefits will only be realised in the long term, however, and the crofters are as much interested in providing the next generation with a sounder base, as in improving their current economic welfare."

The economic and social benefits were classified in the report as follows:

The terms of one of the final paragraphs from the section of the report from which I have quoted is worth noting:

"Specific development opportunities could be taken up by Assynt Crofters Trust, by individual crofters, or by groups of crofters. Particular initiatives are already open to crofters, individually or co-operatively but incentives will be much stronger if the land is in their ownership, the more so if a development officer post, possibly part-time, could be funded for a period after the purchase of the Estate to stimulate activity"

In the event, one of the conditions which HIE attached to the award of grant assistance was that there would be no financial help forthcoming for the provision of a development officer or in respect of administrative costs.

In the time available, a remarkably detailed analysis of the current economic situation affecting the community, as well as of the potential for improvement, was incorporated into the study. This included a survey of crofting which showed that only 19 per cent of crofters in Assynt had a sheep flock size of more than 100 animals compared with 27 per cent of crofters in the North West Area generally; that no crofter surveyed kept more than 10 cattle; and that only 7 per cent of respondents grew winter keep (compared with 20 per cent in the North West Area). The report concluded that crofters in Assynt were relatively disadvantaged.

According to the report, the best prospects of job creation were in forestry, housing, tourism and estate management. It was felt that 10 full-time equivalent jobs could be created in these areas, all on a part-time basis. It was also recognised that promoting tourism would generate indirect employment benefits by increasing the occupancy rates of accommodation providers in the area.

Financial Projections

The financial projections indicated that the trust would have to be run on a shoestring. Revenue was essentially made up of croft rents and income from sporting and fishings amounting to an estimated annual income of £5,400. It was anticipated that there would be expenses in running the sportings of around £1,900 and that general administrative overheads, including the salary of a part-time development officer, would amount to £10,500. The authors of the report based their case on the assumption that in the first two years there would be a contribution from public funds to help with the initial administrative costs, but in this they were mistaken as I have already indicated. In the event the total administrative burden was carried by volunteer labour for the best part of four years and it was only in June 1997 that a paid part-time administrative assistant was appointed to relieve me of some of my work.

We have been very fortunate in the way things have gone in the first five years in that we have been able to generate income in unexpected ways and we have produced strong accounts to date, but this has been almost entirely due to the availability of willing, fairly able, volunteer help. For the purpose of this exercise I am using the 1996 accounts, as those for last year have not yet been finalised.

Total income was £13,312 made up as follows:-

Overhead expenses were £8,585 leaving a net profit carried to the balance sheet of £4,727. There were other project activities which contributed a net surplus to the balance sheet of £1,388 in addition to the trading profit, and I can give you detailed information on some of these project activities if desired.

Achievements

In terms of job creation we currently employ a part-time administrator and we also have on a short-term contract basis a project officer working on a Crofter Tourism initiative which is funded by Caithness and Sutherland Enterprise (CASE), LEADER and the Highland Council. The same project officer is also working on a woodlands study which is funded by Millennium Forest, LEADER and CASE. We now have an annual project which involves the bringing into the community, for a number of days annually, of a group of American senior citizens who are taken on guided nature and local history tours. This creates a number of income-generating opportunities for crofters and accommodation providers and contributes a surplus to the trust balance sheet. Two large crofter forestry projects are complete and a third is in course of being fenced at present. Most other townships have projects in the planning stage. Seasonal job opportunities, and more importantly the means of learning new skills, have been created for around 10 local people. This has resulted in some of our people being contracted to undertake forestry work elsewhere and one has successfully applied for grant assistance to get a new woodland business under way. Each of these projects attracts stock exclusion and maintenance payments for a period of 15 years and as they are progressively completed there is the prospect of a least one full-time job being created.

I have personally been struggling to bring a renewable energy project to completion and this is now at a critical point. Originally the intention had been to raise the level of one of the larger lochs on the Estate to provide additional water storage and to release water through a pipeline to a turbine. The project succeeded in winning a contract under the first Stage of the Scottish Renewable Options (SRO I) but has not yet got under way, principally due to the fact that SNH has intimated that it is obliged by statute to object to the granting of planning consent owing to the presence on the loch of a pair of Schedule 1 birds. Attempts were made to address this problem by re-focusing our attention on other lochs higher up the river system, but this has resulted in further capital costs and we are currently in negotiation with another concern who are interested in operating the asset on a turnkey basis. Having had to adjust the nature of the project in this way has resulted in a significant potential loss in revenue in the earlier years of the project. We had expected that there would have been generated annual revenue to the trust of around £15-20,000, which would have been used as seedcorn capital for other job-creating projects.

We regard renewable energy as one of the more attractive ways of generating income to the estate and, under the auspices of an EU-funded project, we are looking at the energy needs of a small rural community, the prospects for conservation and the opportunities for energy generation from all forms of renewables. Our partners in this project are WWF, Stirling University and Energy Unlimited, a consultancy principally involved in the field of renewables. In this connection we have registered an interest under SRO III in a possible wind project. We have also been approached by a Dutch company investigating the possibilities for rural communities to feed ‘green’ electricity into the national grid.

We have leased certain sporting assets to a local family comprising a father who is a former gamekeeper and his son who is in his early twenties. The son has obtained assistance from CASE and the Prince of Wales Youth Trust for the setting up of Assynt Sporting Ltd. They have entered into an arrangement with one of the local guesthouses to provide accommodation for visitors whom they take out for fishing and shooting. The original five-year lease is now almost due for renewal, and we are currently negotiating a new lease with the son which will allow him to double the number of stags his clients can shoot.

We have also embarked on developing the sportings ourselves and have just bought a second-hand Argocat. We hope that the work involved in estate management together with the maintenance of forest projects will create a full-time job.

We are administering the fishings on the Estate ourselves and from a baseline of no income at year 1 we have achieved an annual income of almost £6,000 from permits to fish at £5 a day. The Trust either owns or has the use of 10 boats placed strategically throughout the estate. We believe that this asset offers substantial prospects for improvement and one of our Board members, who has some expertise in these matters, is in liaison with specialist advisors in an effort to improve the quality of the fishings. Working in conjunction with the North West Sutherland Fisheries Trust, we have set up a research project on migratory fish, especially sea-trout, and recently bought 50,000 sea-trout fry of west coast provenance to stock several lochs at a cost of about £3,000 including transport and distribution costs.

In association with Scottish Homes a Housing Needs survey has been carried out by a specialist in this field and in the light of information which this has provided we are looking at ways of making land available to meet the need.

Conclusion

That is a brief account of what the crofters of Assynt have been up to in the last five years. We have succeeded in making a small financial surplus on the management of the estate, even though the major flows of revenue anticipated in the business plan have not materialised. Fortunately other revenues, some of which we had not anticipated, particularly from the development of the fishings, have allowed us to meet the costs we incur in managing the estate. However we still operate a shoe-string budget. Our financial surplus does not go far in supporting projects which will develop the economic potential of our assets, funding for which we must seek elsewhere.

There are several reasons why the projections of the business plan have not been fulfilled. These are not the result of any failings in the business plan which was of impressive quality despite the speed with which it was put together. Rather they are connected with the fact that we and the consultants were engaged on a new undertaking - were doing something that had never been done before, and our assumptions reflected the optimism we felt about the venture.

We assumed that it made sense to determine the future use of the land and then to start land-based projects - some of these such as the woodland projects have been carried out, and some such as affordable housing we are working on at present. However the experience of the last five years suggests that it is at least as important to look at projects which are not directly related to land use, or at least to non-agricultural production, as the revenue from the fishings has brought home to us, and to look at the possibility of maximising revenues from developments aimed at the luxury or holiday market.

Have we then accomplished anything which will substantially advance the reform of the system of land tenure in Scotland and the empowerment of fragile rural communities? It is true that the time-scale during which we have had possession of the land is minute in comparison to the centuries of landlordism that have preceded us, but I am disappointed that I cannot claim that we have made a more dramatic impact on the economic well-being of our community. Our attempts to develop a local economic base which will provide jobs in the area have been handicapped not only by the limited nature of our assets but also by the dearth of development assistance, in the form of grant aid, technical support or expertise, and training provision, suited to the needs of disadvantaged rural communities. Our efforts have also been hampered by the lack of integration of conservation and economic development. There is a need for a sustainable rural development strategy which balances environment and development and insists on the amendment of planning and legal frameworks to ensure that this balance is achieved.

I have been in contact with the Scottish Office and the Community Land Support Unit in an effort to give them at first hand a sense of the frustrations and difficulties which we face but the response has thus far been less than impressive: it took the Scottish Office three months to respond to my letter. There is now a great sense of enthusiasm for the concept of community land trusts, but if this is to have any lasting impact then we must be able to prove that there are some tangible economic benefits arising from this approach. We were faced with prospect of the break-up of the estate with all of the attendant implications for the crofting way of life of our people and so we had no option but to take dramatic action. One has to ask, however, whether community land purchases made possible by financial support from the public sector are the most productive way of making our communities more economically vibrant and self sufficient. Such buy-outs place a serious burden on volunteer energy available in small rural communities if they are not supported in developing their new assets by special financial assistance or by such development mechanisms as a land bank, and when funding is not available for local people to be paid to take on such roles as that of development officer.

Note (1):

At the request of Ms Patricia Filmer-Sankey and with the permission of Mr John Mackenzie, CCSD has agreed to publish the following note: