This open letter is being sent to every household and business in Newlyn, to all stakeholder organisations, and to the media, from Gilbert McCabe, Chairman of the Newlyn Pier and Harbour Commissioners.
The aim is to make clear, in the light of current rumour and misleading reports, the reason why the Newlyn Pier and Harbour Commissioners (NPHC) voted to decline grants offered by the European Fisheries Fund (EFF), European Regional Development Fund (ERDF), and offers in principle from Cornwall Council, to build the proposed new fish market.
This decision was not a popular one with the wider community, who felt that we have brought an end to the regeneration of Newlyn, and to the fishing industry. Our view is the reverse: that we have secured the future management of our own finances, and our assets, so we can deliver what is needed. All the Commissioners are committed to the future success of the fishing industry in Newlyn, which in itself is the key to the future prosperity of the town. We chose to go about the process of regeneration very differently from our predecessor Commission.
The work behind the current proposal began about 10 years ago, and was initially to replace the current fish market. Over the intervening years, ideas for improvements to the fishing industry were aligned with the wider regeneration of Newlyn as a whole. At one point potential applications for funding would have needed to be in the area of £120million. In the last four years, the proposals put forward were more modest, eventually resulting in a single building to include a fish market, offices, and some public space.
In recent years, certain proposals and grants were indeed taken up, including construction of the pontoons, new fish grading machines, and new chill space: and the Commission’s accounts went substantially into the red, to provide match funding for those improvements. This meant that there was no cash contingency with which to manage our other assets and liabilities. At the same time, external operations and financial challenges to both the fishing industry, and to the Commission, grew apace. The Commission moved to a position of minimum repair and no further investment, due to its financial health- or lack of it.
The Department for Transport determined that changes in the governance of Newlyn Pier and Harbour needed to be made in accordance with the Guide to Good Governance - Trust Ports Review which was applicable to all trust ports in the UK. Consequently, as a result of the Newlyn Harbour Revision Order (HRO) 2010, new Commissioners were appointed. They include persons having special knowledge, experience, or ability in one or more of the qualifying criteria as set out in the HRO – Constitution of the Commissioners. These appointments became effective 12 weeks ago. After ten years of discussion under the previous Commission, the new Commissioners then had until August 19th to accept or decline the grants on offer, which required matched funding. We, the Commission, had no funding available, and the best offer of such funding came from Cornwall Council, in the form of a 15-year loan, tied to our property assets - or part of them. To qualify for the matched funding, we had to demonstrate our financial health, support from the fishing sector in Newlyn, and our advances in governance. We were also aware that the EFF and ERDF grant offers had twice been deferred, and we could not have accepted them ‘in principle’ to buy ourselves more time to consider the future.
In terms of good governance, please note that, since the new Commission came into being, our meetings are now held in public, with a public participation element: we have met as a Board 8 times in 12 weeks, set up 4 committees, held two public meetings and two consultation days, all of which demonstrate our commitment to transparency and inclusion. We have a website, www.newlynharbourcommissioners.com. The previous Commission met only once in the last year, effectively to conclude their affairs.
Continuing consultation confirmed strong community support for the proposed new market, but also confirmed the lack of overall support of the fishing industry (those boats who decide to land their fish in Newlyn, and those also who sell their fish in Newlyn). Evaluating this support, and demonstrating that support to the Marine Management Organisation (MMO) in respect of the EFF grant, and to Cornwall Council in respect of their grant and loan, was a requirement of these grants. Over four days of meetings and discussions, it became clear to us that the overall support for the proposed new fish market by the users, was not there. We received very clear messages about the work needed to make the harbour fit for purpose; and we have much to do.
Parallel to this, we commissioned Winter Rule, Chartered Accountants, to independently determine our financial health to repay a loan. We provided them with a range of scenarios, including current and recent sales, to test viability.
The Winter Rule report confirmed that there were a number of scenarios in which a potential loan from Cornwall Council for 15 years could be met. There were others where it might just, or would not, be able to service such a loan. Any such loan would have required a charge over much of our property assets, thereby removing from us the opportunity to use all of our assets more creatively in the regeneration of the harbour. The Commission resolved to make its own decision about accepting the Cornwall Council loan, independently of any decision coming from the Council, so that it could show confidence in driving itself forward.
We also commissioned Vickery Holman to appraise our assets, the actual and potential return on these. The result was not good news. Many of our buildings are in poor repair; some are not serving our tenants well; none are giving the NPHC a sensible return. We know that the potential value of our property portfolio can be one of the keys to a successful regeneration programme in Newlyn.
These reviews resulted in our deciding not to take up the offers of loans and grants. Why?
Although numerous business case studies were meticulously prepared to support various proposals and scenarios, there was no business plan for the Harbour Commission itself. Nor could we satisfy ourselves overall, or Cornwall Council, that we could meet loan repayments and operate a new market from our current financial position. Neither, it transpired, did we have evidence of strong support from the fishing sector- the very sector that would make or break the new market.
The way forward now is to prepare a sound business plan looking forward 5 and 10 years, ideally by Christmas. It will concentrate on how we will strengthen our harbour, fish auction and operational position so that we will be able to make decisions for the harbour and the community's future from a position of financial strength. This plan will look at all aspects of harbour management and forward planning. It will consider the major decisions to be made within that time period and the financial implications. We acknowledge that we are not currently following best practice in all areas of our harbour operations: this will have to change.
What will not change is the determination of this Commission to be transparent, to engage with the wider community and the harbour users. The HRO requires us to take into account all stakeholders, including the community of Newlyn, through an independently-constituted Advisory Body. To this end we are in the process of convening such a body, made up of 12 persons who will have direct access to the Commission.
The HRO also requires us to deliver a specific return on our capital as defined by the UK Treasury's Green Book rules. All the evidence before us, gathered over the last 12 weeks, led us to the conclusion that our current financial position is not as strong as it should be. Had we decided to accept the grants and loans, our hands would have been quite tied, and freedom of choice in terms of contemplating options would have been quite restricted.
We acknowledge the effort and expertise put in by so many organisations and individuals, particularly the Newlyn Fish Industry Forum; we will use much of this work to help construct our business plan. Our decision not to proceed with the proposed new fish market does not mean we have decided to abandon regeneration in Newlyn. Far from it, we are fully committed to playing a full and significant part in Newlyn's regeneration. We know there are many challenges that face us, especially within a small community. I, as Chairman, am confident that as we learn to work together as effectively as possible for the best interests of both the community and the users of Newlyn harbour, we will have a strong future.
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