Spending cuts threaten Orkney jobs

By Dominic Laurie
Business reporter, BBC News, in Orkney

Image caption,
Calm seas at Stromness belie its role as a centre for research into wave and tidal energy

Viewed from the airport bus to Kirkwall, Orkney looks every bit a place with a history of near on full employment.

Local farmers proudly insist Orkney has the best grass in the UK, and fat, healthy sheep and cows populate the lush fields that slide into sea.

Many houses seem to have had their lofts done. The empty roads are pristine.

But once in town, a different, less rosy picture soon emerges.

In the kitchen of the West End Hotel, a charming period building on the edge of the capital, co-owner Giffie Leslie is cheerfully grilling kippers for his guests.

Business was good not so long ago, he says, but now times are harder.

"If the recession across the UK has been a wave, then that wave is only hitting Orkney now," Mr Leslie says.

That is not to say everything has been rosy up to now.

Last winter was ruined for Mr Leslie, first by snow, then by ash clouds. One week, not a single room had a booking.

And during the previous winter, Kirkwall lost an iconic shop.

"Woolworth's was a central part of Kirkwall," Mr Leslie says.

"It was a massive store for us. When it closed it was a huge loss for us. It was the first sign that things were to change in the future."

Lower prices

Image caption,
Orkney Cheese relies on sales to the mainland

Food production and agriculture is one of the industries Orkney has relied on to keep its island economy afloat.

Some 10% of Orcadians rely on farming for their income, much of it coming from the sale of Orkney salmon, Orkney beef or Orkney oatcakes, which have traditionally fetched premium prices across the UK.

As has produce from the farmers' cooperative Orkney Cheese. Its pint-sized factory nestles next to a bay. There are ocean views from the car park.

Its manager, Tim Deakin, says the Orkney brand name conjures up a "clean and green island mystique".

Inside, yellow blocks of cheese get bound up with tape, put onto pallets, ready for the journey down south to supermarkets across Scotland and beyond.

The company can only produce as much cheese as the cows on Orkney can produce milk, so expanding to improve economies of scale is not an option.

Moreover, its remote location means high shipping costs, so to make money Orkney Cheese has to justify a premium price tag.

Recently, that has been hard as shoppers in the rest of the UK have changed their buying habits, Mr Deakin says.

"We've had to go into more promotional lines simply to sell the volume that we produce," he says.

"That has reduced our average selling price, so consequently we have reduced the milk price back to the farmers".

Spending cuts loom

Image caption,
In the past, many of the young here became fishermen or farmers

Travel between the 20 inhabited islands here, as well as to and from Orkney, is complicated and often slow.

But at least it is not all that expensive. That is because cost of travel by ferry or plane is subsidies, thus helping make life affordable here on the edge of the United Kingdom.

Orkney has one of the highest levels of state spending in the UK.

Some of it goes towards helping remote schools with few pupils stay open, or highly developed social care services for the elderly.

But it also assists the Orkney tourism industry.

This has helped keep unemployment very low, but what happens when the biggest employer of them all, the state, begins to wield the axe - as part of large-scale public spending cuts decided in Westminster?

"I am very concerned," says deputy council leader, James Stockan, deputy leader, Orkney Islands Council. "The future looks very bleak."

The council directly employs about one in 10 of the 20,000 islanders. It expects it will have to cut up to £18m out of its budget over the next three years.

Take into account all the other state jobs on the island that are propped up by spending by those who work for the state, and the upcoming Westminster and Edinburgh spending cuts are viewed with fear.

"Money circulates within the economy, so every pound that comes in goes from pocket to pocket from purse to purse," says Mr Stockan.

When jobs go, islanders often leave, he points out.

"There is no new source of money, so when someone is made unemployed, there are few opportunities."

Creating waves

Image caption,
Mr Stockan fears public sector spending cuts will be painful for Orcadians

But in Stromness, Orkney's second town some 10 miles from the capital Kirkwall, one project offers great hope that could actually prevent youngsters from having to go to the mainland to find work.

In the past, many young people would have become fishermen or farmers when leaving the town's own secondary school.

Or they would have, as they put it, "gone south" to find a new life.

Now another exciting opportunity might await them.

Stromness, a town of 2,000 people, has become a European centre for research into wave and tidal energy.

Half a dozen firms are already here.

Stromness Academy student Sinclair Bain hopes there will be something in it for him.

"I was hoping to get into the renewable side of mechanical and electrical engineering," he says.

"I was thinking to go south to get a qualification, and come back to work here in what I hope will be a booming industry."

Technology investment

Neil Kermode has already travelled hundreds of miles to work here.

Image caption,
Eileen Linklater says marine investment has bolstered the local economy

He is in charge of the European Marine Energy Centre, which tests prototypes such as the world's largest underwater energy-generating propeller.

"I gave up my job in the South of England and moved up here in order to be part of this," Mr Kermode says.

"This is where it's happening."

His locally born colleague Eileen Linklater says that despite all these projects still being just at the test phase, the Orkney economy's already benefiting.

One client, she says, estimates they have worked with about 27 local companies and invested well in excess of £1m in the local economy.

Selling up?

None of this does much to help Mr Leslie at the West end hotel though.

These days, he says, too many guests are ditching the starter and having just the main course, or they swap a double whisky for a shot of tea.

"It's going to be a hard, hard pull this winter, and possibly for the next few years," he says, eager to avoid the fate of seven other hotels in Kirkwall that have recently been put up for sale.

"I'd be sad to see it go," he says.

"But the pound is the pound and it does rule the heart, unfortunately."

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