Good morning.
This section 23 report was published in June 2020, and is the last performance audit that Caroline Gardner published as Auditor General. I am delighted to be with the committee to support its consideration of the report.
Cairngorm Mountain is a vital asset to the local economy of Badenoch and Strathspey and to the wider winter sports industry in Scotland, as it provides jobs and supports many local businesses. However, the commercial success of Cairngorm Mountain is dependent on good weather conditions for winter sports. Turnover varies from season to season, and previous operators have all suffered financial losses.
On top of those difficult operating conditions, Cairngorm Mountain’s commercial performance has been hindered by the closure of the funicular railway due to structural issues. In 2014, Highlands and Islands Enterprise sold the operating company, Cairngorm Mountain Ltd, to Natural Assets Investments Ltd. CML went into administration soon after the closure of the funicular in 2018, leaving HIE to step in and rescue the business for the second time in a decade.
One of my predecessors reported in 2009 on the funicular and HIE’s management of Cairngorm Mountain. The new report focuses on events since then and provides an independent assessment of HIE’s decision to transfer CML to NAIL and how HIE managed the contract with the operator. It also looks at how HIE reacted to the closure of the funicular and CML going into administration in 2018, and at how HIE is planning for Cairngorm Mountain’s future.
Overall, we found that HIE acted appropriately throughout but that there are lessons to be learned and areas for improvement. The tendering process to find a new operator in 2014 was comprehensive. HIE identified risks that came with appointing NAIL and took steps to mitigate those risks. However, HIE should have monitored NAIL’s financial situation more closely. There was also disagreement on aspects of the obligations and responsibilities of HIE and the operator in relation to repairs and maintenance at the resort. That issue forms part of on-going legal action involving HIE and NAIL, which could mean that we are unable to answer all the committee’s questions with regard to that this morning.
We also found that HIE acted quickly to protect the business and jobs at Cairngorm Mountain when CML went into administration in 2018. HIE set up a new subsidiary as operator, and progress was made in addressing some of the immediate issues at the resort.
HIE and the Scottish Government now face difficult decisions on the future of Cairngorm Mountain, including how they fund reinvestment of the funicular railway and secure long-term financial sustainability. It is crucial that the full range of options is considered and that the views of stakeholders and communities are taken into account. Decisions need to be taken in the context of the Scottish Government’s thinking on the future of winter sports and its wider economic priorities.
As ever, my colleagues and I will do our best this morning to support the committee’s consideration of the report.