Dumfries and Galloway Council had a lucky escape, thanks to the previous Labour administration’s consistent rejections of Tory, SNP and Independent Councillors calls to externalise the Council’s Sport and Leisure facilities, art galleries and museums, according to South Scotland MSP Colin Smyth.

Opposition councillors consistently proposed that a so-called Arm’s Length External Organisation (ALEO) take control of the facilities from the council, because it would make them exempt from paying business rates.

The proposals were rejected by Labour who opposed the loss of local democratic control and warned opposition parties that the Scottish Government were reviewing the tax exemption and could scrap the rates relief.

Now the Government’s review published Tuesday 22 August, headed up by former RBS chairman Ken Barclay has reported back and recommended that ALEOS should now be brought fully under the business rates system.

If adopted by the Scottish Government, it will cost ALEOs across Scotland around £45m extra in business rates, which will ultimately have to come from local councils.

South Scotland MSP Colin Smyth said:

“It’s clear that by rejecting the numerous calls by SNP, Tory and Independent Councillors to externalise the council’s culture and sport and Leisure facilities, Dumfries and Galloway Council may well have had a lucky escape. Had an ALEO been created and the recommendations of the Barclay review are adopted by the Government, it would have meant the savings the council thought they had made by not paying rates wouldn’t be available in the future so further cuts would have to be found to balance the books”.

Former Council leader Ronnie Nicholson said:

“This review vindicates our decision not to pursue an ALEO at the time it was proposed by SNP, Tory and Independent councillors. I consistently warned them that the Government were conducting a review into business rates and there was a strong possibility that it would result in what is frankly a tax dodge being closed off. Despite these warnings they kept pursuing the issue and wouldn’t listen. Had we gone down that route we would have spent an absolute fortune setting up these ALEOS including taking on new staff such as a Chief Executive only to discover that we made no savings in rates at all in a couple of years. I simply don’t know why opposition councillors didn’t want wait to hear the outcome of the rates review and whether the Government will implement it. In my view ALEOS are a bad idea. Not only do you lose local democratic control but staff are often transferred away from being employed by the council and that more often than not leads to poorer terms and conditions which we saw when Annandale and Eskdale Sports Trust was set up. The only so-called advantage of an ALEO is the fact they dodge paying rates but it now looks as if that tax loophole could be closed”.

Details of the Barclay review and its recommendations can be found here: https://news.gov.scot/news/issued-on-behalf-of-the-barclay-review-group