A BORDERS MSP has reported the council to a public sector watchdog, over concerns regarding the purchase of the former Lowood Estate at Tweedbank. 

Including legal fees and taxes, Scottish Borders Council has spent nearly £11 million on purchasing land to the south of the River Tweed with a view to building hundreds of houses and an industrial estate there.

The council estimates that developing the estate would cost an extra £90m on top of the price of the land but would potentially generate £150m of gross value added for the region’s economy.

However, the SNP’s Christine Grahame, who represents Midlothian South, Tweeddale and Lauderdale at Holyrood, has referred the council to Audit Scotland, which acts as an independent regulator for public sector accounts. 

Ms Grahame highlights a number of concerns regarding the purchase, including the use of tax havens to purchase the land and the fact that the council paid £9.6m for the land, which is more than the UK Government’s district valuer said the land was worth. 

Despite this, Scottish Borders Council and its 34 elected members refuse to tell the Borders general public how much more the council paid for the land, and the authority has rejected freedom of information requests for the valuation figure. 

The £9.6m of taxpayers’ money used to pay for the purchase ended up in two Cayman Islands accounts, where businesses do not pay transaction tax.

Landowner Alexander Hamilton, who sold the estate to the council, was paid via Lowood Estates Ltd and Genesis Trust & Corporate Services Ltd,  both of which are based in the British overseas territory.

On the other hand, Borders taxpayers face paying a £422,250 land and buildings transaction tax, as well as a £30,000 VAT bill, which along with other fees and charges brings the cost of the purchase up to nearly £11m.

Scottish Borders Council also confirmed that the cost of temporary borrowing for the purchase sits at £780,000, assuming the loan is paid off over a ten year period.

Ms Grahame states: “There is a very big stushie about the purchase by Scottish Borders Council of Lowood estate, partly because the purchase price appears to have been above valuation.

“Additionally, the Tory-led local authority has paid out to landowner Alexander Hamilton via Lowood Estates and Genesis Trust and Corporate Services, based in the Cayman Islands.

“So the purchase price of £9.6m for the 110 acres of land was not subject to transaction tax. 

“This means that Borders taxpayers will be forking out £422,250 in land and buildings transaction tax, plus a £30,000 VAT bill, which with other fees brings the bill to some £11m.

“There are also challenges to the housing development plans (which the council needs to recoup the money) which are seemingly light on necessary detail, raising serious questions about this Tory council’s grasp of economic reality.

“Never mind, pupils may be able to follow this saga on their £15.7m iPads.”

Ms Grahame also highlights a report from Edinburgh-based property consultants Ryden, which the council commissioned, and a report from Chicago-based property consultants James Lang LaSalle, which was commissioned by Middlemede Properties. 

Middlemede Properties is an Isle-of-Man registered company which owns the salmon fishing along the bank of the Tweed at Lowood. 

Ms Grahame continues in her column: “In the meantime, I have read through reams of material, including both the Ryden report on the purchase and a report by JLL.

“My concerns have, as a result, increased, so I have now reported Scottish Borders Council to the Accounts Commission and as it refuses to publish the district valuer’s report (which apparently valued Lowood estate below the purchase price and is key) have asked the assessor’s office for sight of that.”

A spokesperson for Scottish Borders Council said: “Elected members considered the Ryden report in full, along with a series of other information, in May 2018 and had access to all this information and more ahead of making the final decision to proceed with the purchase of Lowood Estate in December 2018.

“The acquisition of the site by Scottish Borders Council is part of a long term strategy that will enable appropriate development opportunities to be taken forward by both the private and public sector.

“Scottish Borders Council remains strongly of the view that the economic viability of the site will best be secured through a joint public and private sector approach and is pursuing that approach as agreed by council last December. 

“The consideration of economic viability must not just look at the simple cost of the purchase but also the long-term economic benefits of jobs that will be created during construction phases, through employment as part of its mixed use, and through the provision of homes for both local people and those who wish to relocate to this area.”