Supermarkets And Public Land (Scotland)

Michael McCann Excerpts

Tuesday 28th February 2012 Commons Chamber

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

Thank you, Mr Speaker.

Competition among supermarkets in our country is at times a cut-throat business. A desire for dominance and market share has meant that in different parts of the UK competing supermarket chains are knocking seven bells out of each other to secure new stores. That is all perfectly legitimate if no laws are being broken. However, if we add to the mix the ingredient of public land, we change the dynamic completely. Tactics felt to be legitimate in private sector supermarket wars cannot necessarily be used when the deal, or part of the deal, involves our public assets. My Adjournment debate is about a veritable supermarket car crash in my constituency involving public land, where it would appear that perspective and common sense were replaced by avarice and intransigence. The net result is a situation where an agency of Government charged with creating economic wealth became so detached and consumed by a flawed land sale that it prevented jobs from being created in my constituency.

In this debate I seek to draw attention to the unacceptable behaviour of Dawn Developments and Scottish Enterprise in a land deal in the heart of my constituency, the unacceptable behaviour of a senior Scottish Enterprise executive and the failures of the civil service to investigate my evidenced complaints. I have advised the Minister of the contents of my speech, and, as you mentioned, Mr Speaker, I have sought and taken advice from the Table Office and your office on what I intend to say to ensure that I remain inside the rules of parliamentary privilege.

Let me deal first with the nature of the deal constructed between Dawn Developments and Scottish Enterprise. The story begins in 2004. Scottish Enterprise—or, more precisely, the public—owns land in an industrial estate in East Kilbride in my constituency. The site was marketed and five bids were received, ranging in value from £2.5 million to £15 million. A bid from Dawn Developments was accepted which, to reach the agreed price, would have required the local authority to re-zone the land from industrial to retail use and grant permission for a supermarket development. The Dawn Developments bid was £15 million and it, in turn, expected to sell the land to Asda for a minimum of £22 million, with a cool £7 million profit.

Scottish Enterprise and Dawn Developments had no discussions with South Lanarkshire council on the viability of that proposal, nor did they submit a request for the site to be re-zoned for retail use through the established local plan process. Missives were concluded on 25 October 2007. Around that same time Alan MacDonald, the chairman of the Dawn Group, met South Lanarkshire council officials and was told that the site was not suitable for a supermarket development. Undeterred, Dawn Developments submitted a planning application in October 2008 for the creation of a class 1 retail food superstore. The application was processed and South Lanarkshire council’s planning department produced a recommendation that the application be refused, and those documents are a matter of public record.

With the prospect of a refusal in the offing, Dawn Developments decided to withdraw its application before the planning meeting took place. That presented Scottish Enterprise with an opportunity to withdraw from the deal, as the conditions stipulated that parties were released from their obligations once the planning process concluded. Despite this natural break, Scottish Enterprise inexplicably entered into a new deal with Dawn Developments on precisely the same terms.

In mid-2009, South Lanarkshire council received a planning application for a supermarket on a different site from a different consortium. A short time later, Dawn Developments resubmitted a planning application for the Scottish Enterprise site. The new application was identical to the application that had been processed and recommended for refusal. That marked the start of the supermarket war. The council approved the new, rival application and Dawn Developments withdrew its planning application from the local authority on the grounds of non-determination and then sent it to the Scottish Government.

The application was independently assessed by a Scottish Government reporter and again rejected. Simultaneously, Dawn Developments also legally challenged the rival supermarket proposals that had been cleared, accusing the local authority of behaving improperly. Scottish Enterprise, by dint of its relationship with Dawn Developments, was party to that legal move. The case was taken to the Court of Session in Scotland and lost.

These tactics would be immaterial to the public interest if they involved two private companies slugging it out for the right to build a supermarket in my constituency, but that is not the case when one side is partnered with Scotland’s economic development agency. Myriad questions arise. If this was such a good deal, why was the application not promoted by Scottish Enterprise to maximise the return for the taxpayer? Why did Scottish Enterprise not carry out an independent assessment of whether the site was suitable for a supermarket? Did Dawn Developments inform Scottish Enterprise that in private discussions with South Lanarkshire council it was told that the site was not suitable for a supermarket development? Why did Scottish Enterprise re-sign a deal that had already been through the planning process and recommended for rejection? Did Scottish Enterprise agree to a strategy which saw its partner, Dawn Developments, challenge the integrity of the well-respected local council and take the Scottish Government to court? All those questions remain unanswered.

The chief executive of Scottish Enterprise, Lena Wilson, appears to be oblivious to the fact that the organisation she commands is a partner in a deal that has cost taxpayers hundreds of thousands of pounds, has prevented a legitimate application that could create hundreds of jobs in my constituency from proceeding and, going back to the original deal, has secured no capital receipt for the taxpayer.

Let me now move to the actions of Scottish Enterprise executive Mr Stephen Gallagher. On 31 March 2010 Stephen Gallagher, the managing director of Scottish Enterprise Commercial, wrote to the chief executive of South Lanarkshire council, Archie Strang, offering a share of the capital receipt for the West Mains road site if planning permission for the supermarket was granted. In plain language, Stephen Gallagher offered South Lanarkshire council money to pass a planning application.

On 14 April 2010, Archie Strang wrote to Lena Wilson, Scottish Enterprise’s chief executive, making it clear that Stephen Gallagher’s actions could be perceived as an attempt to influence the outcome of a planning application. On 16 April 2010, Archie Strang received a response to his letter from Jim McFarlane, Scottish Enterprise managing director of operations, which stated:

“Can I first of all apologise unreservedly that this letter has been received by your Council at this present time? This simply should not have happened.”

It further transpired that Stephen Gallagher had also written to the council’s planning department on two separate occasions, objecting to the rival supermarket application and asking the council to favour the Dawn Developments-Scottish Enterprise deal. That led to Archie Strang writing again on 19 April 2010 to Lena Wilson, chief executive, about the letters the council had received from Stephen Gallagher dated 6 and 8 April, both of which objected to the rival supermarket bid.

Archie Strang said in his letter:

“My main purpose in writing to you...is to express concern at the apparent attempts by Scottish Enterprise to influence the Council to resist this application, and to support SE’s own proposal, with Dawn Developments, at West Mains Road.  This concern arises from the comments made in the letter, dated 6 April, where the Council is effectively threatened with a legal challenge if it is not seen to have ‘properly addressed’ all issues associated with the Redwood Drive submission. This is wholly inappropriate as it appears to cast doubt on the Council’s ability to deal with planning applications in an impartial manner and questions the professionalism and integrity of planning officers.”

In a response dated 23 April 2010, Jim McFarlane stated:

“Until your letter of 19 April was received, I was not aware that further letters of 6 April and 8 April had been submitted to your Council. In my view these letters were ill advised and should not have been sent.”

I take the view that at best Stephen Gallagher’s behaviour should have been viewed as gross misconduct. I further take the view that the thread running through Mr Gallagher’s behaviour was consistent with a reckless attempt to allow the Dawn application to proceed, whatever the cost, but what beggars belief is that Mr Gallagher was not subjected to any disciplinary procedure by Scottish Enterprise and was allowed to leave the organisation with a taxpayer-funded severance package.

Once again Scottish Enterprise chief executive, Lena Wilson, has refused to answer any questions on the matter. For example, was Stephen Gallagher acting independently when he issued the official Scottish Enterprise letters dated 31 March, 6 April and 8 April? Did Scottish Enterprise’s management believe that Stephen Gallagher behaved in an acceptable fashion by offering cash to a local authority in return for a planning consent? If not, why was he not disciplined? What discussions took place between Stephen Gallagher and Dawn Developments on these matters? What internal investigations took place in Scottish Enterprise to determine Stephen Gallagher’s motivation for writing these letters? Why was Stephen Gallagher allowed to leave Scottish Enterprise with a substantial package funded by taxpayers?

That brings me to the final issue I want to address—the abject failure of the civil service to investigate my evidenced complaints. Having hit a communications brick wall at Scottish Enterprise I sought answers from what I concluded was the United Kingdom civil service chain of command. I first wrote to Sir Peter Housden, the permanent secretary to the Scottish Government, who, sadly, is fast building a reputation as the Scottish National party’s cheerleader in Scotland. I asked him to investigate these matters, but he refused to do so. He accepted Scottish Enterprise’s position without, it appears, carrying out even a perfunctory examination of the facts. Undeterred, I then wrote to his boss, Sir Gus O’Donnell. I assumed that the head of the civil service would not resile from his obligations to ensure that the service’s staff behave according to its code, which states that it must be accountable to the public and should meet the highest possible standards in all it does. Sadly, he did not. Instead, he merely wrote to the Scottish Government and replied to me reaffirming their original assessment of the matter. So, we have a procedure in which each complaint I have made has been rejected not on the basis of an investigation but because each part of the civil service hierarchy involved has reaffirmed their subordinate’s position. That simply is not good enough.

What does all this mean for my constituents? We know that the development opportunities that were available in 2004 when the land was first marketed no longer exist. The world has moved on. We also know that the decision of Scottish Enterprise to enter a joint venture in pursuit of a larger capital receipt was a blunder, and the resulting loss of perspective has dragged it into a totally inappropriate legal battle that has challenged the integrity of one of Scotland’s leading local authorities.

Mr Speaker, I sought your advice on the next matter that I wanted to raise and you agreed that the sub judice rule could be waived. I will heed your advice to be careful. I am grateful for your decision because it allows me to advise the House that Dawn Developments continues to take legal action against the Scottish Government’s decision to refuse planning permission at the publicly owned site. The madness continues but there is a train of thought that, given the collapse of every legal action thus far, the action is merely a device to put off the fateful day when Scottish Enterprise will be fully exposed on all these matters and held to account. The reputation of Scottish Enterprise has been tarnished by the actions of its partner Dawn Developments and it should apologise unreservedly for its lack of judgment on this matter and the damage it has done in my constituency, where the employment opportunities that would have been created for the many people who find themselves unemployed have not been created. I have not worked out whether what has happened is a result of conspiracy, incompetence or a combination of both, because the questions I have asked have not been answered. However, I do know that Stephen Gallagher’s behaviour was, without doubt, wholly unacceptable, and that Scottish Enterprise did nothing about it. The question I ask is, why?

In conclusion, I put the following points to the Minister. We all have a mutual interest in ensuring that each component part of the UK is economically successful, and I ask the Minister to enter into a dialogue with Scottish Ministers to ensure that steps are taken to allow a proper investigation to take place, to ensure that those responsible are held to account and to ensure that lessons are learned. Most importantly, an exit strategy should be devised for this whole sorry mess. Will the Minister also agree to engage with his ministerial colleagues in the Cabinet Office to examine new methods of working to ensure that an elected Member’s legitimate complaints are properly investigated and not simply paper-shuffled from one part of the civil service to another?

--- Later in debate ---

[David Mundell]

I am satisfied that the terms of the code are appropriate and are appropriately administered. As the hon. Gentleman knows, complaints regarding the Scottish Government and their agencies which have gone through those organisations’ own formal complaints procedure can also be raised with the Scottish public services ombudsman. It is for the public services ombudsman to deal with these matters, and it is right that the appropriate avenues are used. The Scotland Office does not have any locus in such matters and it would not be appropriate for us to take on any investigatory role in relation to these matters.

[Mr McCann]

Having served for a considerable time in my career as a full-time trade union official in the civil service, and having represented people who work in Scottish Enterprise, I know how the procedures operate. In the situation that I described, I made a formal complaint to the head of the civil service that someone, as I set out in my opening address, committed a serious disciplinary offence. No action was taken whatsoever, and he was allowed to leave the service with a handsome package paid for by the taxpayer. Those questions have never been answered. Therefore the question that I must put to the Minister is how am I to pursue such questions to a logical conclusion when all I got from the civil service was a brick wall constructed in front of me and my questions not being answered?

[David Mundell]

As I set out in my opening remarks, the hon. Gentleman has had the opportunity this evening to place all his concerns on the record. I undertake to ensure that a transcript of tonight’s proceedings is conveyed to all the relevant parties that have been discussed, including Scottish Enterprise, the Scottish Government, Sir Peter Housden, the Information Commissioner, and the current head of the civil service, Sir Bob Kerslake, so that everyone who has an interest in the matter can read the points that the hon. Gentleman has raised. However, the Scotland Office is unable to take forward further investigations. Indeed, it would be inappropriate to do so while a criminal investigation and civil court proceedings are taking place. As I have said, he has used the important opportunity of an Adjournment debate to place his concerns on the record.