Podcast script 
Caithness Heat and Power
I’m here with Douglas Sinclair, the new chair of the Accounts Commission, to talk about a report on the Caithness Heat and Power project.
Douglas, can you tell me what this report is about?
Yes, this project started more than a decade ago as a community venture providing wood-fuelled heat and power to homes in Wick. Highland Council set up what’s called an arm’s length organisation – that’s to say an organisation outwith the direct control of the council – to manage it, but it soon hit problems. Risks were not properly identified, warnings went unheeded and checks and controls on spending were frankly inadequate.
The Commission looked at all of this in detail in 2010 and again in 2011. But we also wanted an update on the final estimated costs and that’s what today’s report is about. 
So what did it find?
We found that the final cost to Highland Council - and ultimately to Highland Council’s tax payers - is 11.5 million pounds. To be fair, that’s almost 4 million pounds less than was estimated in February 2011.  So there is some good news.  And we do want to recognise the council’s efforts to sort out the legacy of this project and to reduce overall costs. 
It’s also fair to say that the equipment and assets were sold to a private company which now provides services to more than 160 homes. 
But, when you look back at the project as a whole, this has been a significant loss of public money – 11.5 million pounds is significant in anyone’s language.
So what do you want to see happen next?
Highland Council has learned a lesson, an expensive lesson, and has reviewed its approach to arm’s length organisations.
But clearly there are lessons for all councils to learn from this project.  Arm’s length organisations can be an option for delivering council services but only if the necessary safeguards are built in from the start.
And by that I mean a proper risk assessment, a proper option appraisal, and making sure you have the necessary skills to deliver the project.
Caithness Heat and Power was an example of how not to do this.  Councils are making increasing use of arm’s length organisations and the Commission has produced guidance for councils on how to make sure that the same mistakes are not repeated.
Douglas, thank you very much.