Interview: Lesley Watt
1 Mar 10
Protecting Scotland’s heritage means facing up to the challenges of the future. That’s the message from Lesley Watt, FD at the the National Trust for Scotland
by Robert Outram
The National Trust for Scotland (NTS) was founded in 1931, with the aim of conserving some of the country’s prime natural and cultural assets. In recent years, however, the preservation of the Trust itself has been the subject of fierce debate.
If a move from the private sector to become finance director of a major charity looks like a soft option, CA Lesley Watt could tell you otherwise. Formerly FD of Scottish & Newcastle’s wines and spirits division, as FD of the NTS since 2005 Lesley has found the job a high profile and controversial one.
As she puts it: “When I started, I identified pretty quickly that unless we took action, our reserves would run out in three years.”
Implementing radical change at an institution dear to the hearts of many people has not been easy. Watt says: “Everyone has a view [about the Trust] even if it’s not always the most informed view! For example, the way we have to present our accounts can make it look as if we have reserves of £130m, but actually, only £4m of that is working capital. The rest is tied up and we can’t touch it.”
As with many charities, the Trust’s accounts are complicated because many of its assets come with strings attached and cannot be used for general purposes.
In terms of finance, Watt argues: “This is one of the most complicated organisations I’ve ever worked at, not because any one element is difficult in its own right, but if you put it all together, and you cannot afford to invest in specialist systems to manage say, catering operations, shops or investments, it’s complex.
“For example, if people give us money they expect to be able to trace what we have done with that money, so we have a ‘unit trust’ style system that we administer ourselves. Most fund management houses will have million-pound IT systems to help them do it, but we are running the whole thing on spreadsheets.”
NTS membership has been rising, but the heritage industry in general has been in decline. Increasingly, visitors are looking not just for a historic house or garden to visit, but also for an experience that tells them something about the people who lived there and the context in which it existed.
An example of this is the Trust’s new visitor centre at the Culloden battlefield site. Bringing history to life, however, is more expensive than simply maintaining and conserving. One of Watt’s first strategies for bringing costs back under control was to tackle procurement. She says: “It’s very much about doing things more efficiently, professionally and businesslike. The aim is not to turn the Trust into a business, but it allows us to generate more money to put back into conservation.
“There’s been a perception that because we are a charity, people will be good to us, and give us a good deal. In reality, it’s often been quite the opposite.”
Watt also says a basic philosophy of cost control has already helped to save £1.5m annually.
Staffing represents half the Trust’s costs and this is where the most difficult and painful decisions had to be made. More than 60 members of staff were laid off.
Watt says: “Unlike a normal business, the Trust has never had to face up to these things before. But I hope we have done enough at the moment, to get us through the next few years.”
Another controversial decision has been to relocate from Wemyss House, actually a row of town houses on Edinburgh’s Charlotte Square, in the city’s Georgian New Town.
A group of campaigners has questioned the move, not just on the grounds that the Trust should continue to use a heritage building as its headquarters, but because selling at a low point in the market represents poor value.
The NTS bought Wemyss House in 1996, at a time when many occupiers were moving out of Charlotte Square – formerly Edinburgh’s financial heartland – to newer buildings.
Whether the sale of Wemyss House represents a good deal for the Trust depends on how one interprets the figures. The action group, “In Trust for Scotland” fears the Trust has incurred an unnecessary loss. In fact, Watt argues, the apparent loss relates not to the timing of the sale but to sunk costs when Wemyss House was refurbished in the 1990s.
The Trust bought the property in 1996 for £5m, but spent a further £7.6m on an extensive refurbishment, prioritising the restoration of period features in the Georgian building. According to an independent valuation in 2001, the property was only worth £8.7m, which, says Watt “is what we sold it for”.
Also, the move to modern premises in Edinburgh’s Hermiston Quay, by the Union Canal, will save the Trust an estimated £6m over the next five-to-10 years.
As Watt explains: “We’ve got three core purposes which are conservation, access and education. There is an inherent dichotomy in the first two, because conservation is all about preserving things, and allowing access can inherently conflict with that.
“Everyone knows us for our castles, great houses and gardens, but do they know that we own one in six Munros [mountain peaks over 3,000 feet], that we look after more seabirds than anyone in Europe, that we have the only world dual heritage site, cultural and natural, which is St Kilda, 65 miles off the west coast of Scotland?
“We look after a huge amount of Scotland’s wonderful natural wilderness.”
This year will see the conclusion of the Trust’s Strategic Review, headed by former MP and MSP George Reid (see box, below).
Watt admits the Trust’s governance at present is “unwieldy”. There is someone in a governance role for every two members of staff, and while day-to-day management is the responsibility of a board with executive and non-executive members, ultimate decision making is in the hands of a council of nearly 100 people.
It seems likely that Reid’s report will call for a streamlined and more businesslike structure.
The Trust is not alone in the charity sector in the challenges it faces. Some argue that bringing in managers from the private sector is not the best use of limited resources. Watt disagrees: “To attract the right calibre of people is important, and to do that, you have to pay them.
“All of us who came here took substantial pay cuts to work at this organisation because we believe in what it is trying to do and we believe we can make a difference.
“I am passionate about conservation and about what we do, and that’s why I am here!”
A future for Scotland’s past
The Council of the National Trust for Scotland last year appointed the Rt Hon George Reid to lead a "robust and independent" review of the charity. Reid is a former MP, MSP and presiding officer of the Scottish Parliament. He also has a long track record in the “third sector”, including as director of public affairs of the International Red Cross and Red Crescent.
Reid has been asked to concentrate on issues of long-term finance and governance and will make recommendations to ensure a "sustainable and secure" future for the Trust.
He aims to produce recommendations by June 2010 and says the key drivers of the Trust review are: “Transparency, independence, robustness and recommendations which are evidence-led, so that they are sustainable.”
He adds: “Previous studies have largely been about governance and organisation. This review asks how ‘fit for purpose’ the Trust is in the 21st century. There is general recognition that the Trust has to change and that financial sustainability, governance reform, joined up working and core conservation are the way forward.”
Reid has already gone public with what are, in draft, the five key headings of the review:
• Need for a stable period of transition
• Finances in balance with a limited number of key objectives
• A Governance structure which is transparent, accountable and efficient
• Co-operation within Scottish heritage sector
• Excellence of conservation driving everything.