When a sparsely populated area’s local economy is primarily based on agriculture and forestry, the loss of 450 high-paying jobs hits very hard.
But with innovative thinking and a push to tap into a new sector, both Scottish Enterprise Dumfries & Galloway and the private sector are hoping to lessen the impact of last year’s closure of Chapelcross nuclear power station, while creating hundreds of jobs.
Workers at Chapelcross earned around £500 per week, compared with the average weekly wage for the area of £360-£380, so its closure was a real blow to the local economy.
A joint venture between Scottish Enterprise, developer bloc Kilmartin and Bank of Scotland gave birth to Katalyst in April this year with the aim of building industrial, office, residential and retail units around Gretna, Lockerbie and Annan.
Edinburgh-based bloc Kilmartin and Bank of Scotland will together have a 75% stake, with SEDG taking the remaining 25% in the programme of regeneration projects.
The agreement, which will initially see SEDG invest £8m and the private partnership £50m, is set to be formally signed off in the next two weeks.
The reason why SEDG has only opted for a 25% stake is to make sure Katalyst is not perceived as an urban regeneration company.
As John Plant, director at SEDG, says: “We looked at URCs where the partnership is 50:50 joint venture between public and private bodies. With this set up, you tend to get hung up — certainly with the public sector — in red tape.
“There are also various issues that you have to be bound to if it is an equal partnership, but the private sector is not bound up so much, so we should be able to do things more quickly and cheaply.”
He adds that money is always an issue for public bodies, which tend to get a bad press if projects are delayed. “Hold-ups tend to cost the public sector more, but Katalyst is a commercial vehicle, where the profits will be ploughed back into other projects,” says Plant.
Pushing through the red tape can only be good news for development. Specific plans will be outlined in the next few weeks, but it is known the regeneration scheme will contain a mixture of commercial and residential developments. And there will be some projects that will not generate a profit.
“Developers make their money from residential and offices, but we didn’t want them cherry-picking,” says Plant. “This is a basket of projects that will give the developers the returns they are looking for overall.”
Kilmartin, which has a £1.5bn development programme and an investment portfolio of £100m, is more than happy with this arrangement. Chief executive Iain Wotherspoon says that, as his company specialises in regeneration, it is used to “taking the rough with the smooth”.
He calls the Katalyst initiative “a good Scottish opportunity right on our doorstep”, and adds that Kilmartin will build some of the office developments speculatively.
Getting tenants for these developments is where SEGD’s innovative plan comes into play. Plant says SEDG is planning to tap into the decommissioning sector.
The decommissioning of Chapelcross will be spread over the next 20-25 years, and will provide up to 300 jobs. “It is a whole generation of work,” says Plant.
But this alone is not enough to stimulate the number of jobs needed for the regeneration of the area. So SEGD is going to capitalise on the work at Chapelcross, and market the region to companies worldwide as the place with expertise in decommissioning.
On this basis, it is going to try and encourage international decommissioning companies to base themselves in Dumfries & Galloway. These companies’ staff will become the occupiers of the offices and homes, and use the shops and amenities that Katalyst is developing.
“We want to target the decommissioning industry,” says Plant. “It is a growing industry, not only for the decommissioning of sites locally, such as Chapelcross,but also nationally. And there is also lot of work in the decommissioning of ships. It is one of the biggest emerging industries.”
Plant sees the decommissioning of Sellafield, west Cumbria, as a possible source of further work. The complex comprises four sites –Calder Hall, the Drigg waste repository, Windscale and Sellafield itself– will need to be cleaned up over the next 50 years.
“Rather than look at Sellafield, which is quite close to us, as a potential nuclear threat, we look at it as an opportunity. We aim get US companies, for example, to base themselves here and then, depending on who wins the contracts, they can do the work from here.”
The decommissioning industry is not the only sector being targeted by Katalyst. Plant says he would be “happy to ramp up our people to get more inward investment” into the region as a whole.
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June 2004: Chapelcross closes |
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July, 2005: Scottish Enterprise Dumfries & Galloway posts notice for development partner |
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April: Scottish Enterprise select bloc Kilmartin to help form Katalyst |
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June/July: Agreement to formalise the joint venture with Scottish Enterprise, Kilmartin and Bank of Scotland set to be signed off |
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Work is either underway or is scheduled at several nuclear facilities |
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Source: Nuclear Decommissioning Authority |
