Glasgow Council criticised after £3/4 million bailout of troubled ‘Purcell Firm’


By a Newsnet reporter
Labour run Glasgow Council has come under fire after it emerged an arms-length organisation (ALEOs) set up by disgraced former leader Steven Purcell is to receive £750,000 of public cash after recording its fourth successive annual loss.
According to the Glasgow Evening Times, City Parking is to be given the cash in order to help it pay the costs of laying off its own staff.

The firm has made a loss in every year since it was set up by Labour in 2007 with a loan of £50 million; total losses now stand at £4 million.  The latest injection of cash comes on top of a council plan to loan the firm £1.25 million

Earlier this month the Labour head of the local authority, Gordon Matheson, announced free parking for motorists during the festive season.  The plan effectively provided a £105,000 cash boost for the troubled outfit.

The plan was promoted as a way to attract shoppers into the city in order to help retailers.

However Labour’s opponents questioned the initiative, the SNP claimed that some retailers would have preferred to have the scheme in operation during the lean months of January and February rather than during the Christmas rush.

It has also been claimed that City Parking will receive the full fee whether all car parking spaces are filled or not.

Interest payments

Last month it emerged that the council were considering merging City Parking with another ALEO City Property, raising fears it would be seen as a default on banking loans that would result in interest payments increasing.

City Parking has cash flow problems but cannot seek funding from any other bank without having the existing loan interest renegotiated upwards by Lloyds.

The council is reported to be facing the prospect of losses totalling tens of millions of pounds as a result of a planned overhaul of its Arms Length External Organisations.

SNP group leader Alison Hunter claimed that Labour had created the complex network of organisations without thinking through the long term impact and were now dealing with consequences of their mismanagement.

ALEOs were the brainchild of disgraced former council leader Steven Purcell.  The organisations administered the same public services as before, but crucially the arms-length nature allowed them to compete for contracts outwith the local authority.

However suspicions grew that they were being used as a form of political patronage with councillors able to augment their salary by up to £17,000 for simply attending board meetings.  Glasgow council was the only local authority in Scotland to operate such a scheme.

City Building

It also emerged that many lucrative corporate positions within one ALEO, City Building, had gone to people with links to the Labour party.

Last month the Scottish Sunday Express reported that Willie Docherty, head of the cash-strapped firm, is apparently in line to receive a staggering £615,000 when he steps down next year.

According to the paper, Mr Docherty, who is the husband of Glasgow Labour councillor Sadie Docherty, is also rumoured to be in line for a 40 year service bonus despite having only having 30 years’ service.

Set up in 2006, the firm was the subject of a police investigation last year after concerns were raised over its links to the Labour party and possible inappropriate use of taxpayers’ cash.

The firm paid £4,000 for tables at Labour Party fundraising events that entertained senior Labour figures, including Labour’s former Holyrood leader Iain Gray and his wife.

Three of the four councillors on the board of City Building were appointed by Labour and in 2008 a former general secretary of Scottish Labour, Lesley Quinn, was made a senior manager.

The firm is also reported to have lavished money on leasing luxury cars and spent almost £20,000 in 2008/09 on dinners, many of which were attended by Labour councillors.  According to official documents no councillors from any other parties have ever been entertained by City Building.

City Building also awarded a £600,000 contract to Labour donor Andrew Smillie’s scaffolding firm, and gave out £100 vouchers for a restaurant owned by Labour supporter James Mortimer.

City Building also spent over £50,000 on exhibition space at Labour conferences.

In April 2010 the wages bill for the Arms-Length bodies was calculated at over £400,000 – more than would have been the case had they remained ‘in house’, under direct council control.

In June this year the SNP Government introduced legislation that effectively ended the controversial system of payments to councillors who sat on ALEOs boards.