What do Edinburgh Leisure (which does not guarantee a real living wage for staff) the Edinburgh International Conference Centre (which has hosted conferences for weapons manufacturers and has in the past paid “huge” bonuses to its CEO), and Lothian Buses and Edinburgh Trams (which are currently advertising airlines during a climate emergency) have in common?
They are arms-length external organisations (ALEOs). It’s a dry-sounding acronym for a very important business arrangement that many residents in Edinburgh – and around Scotland – may be unaware of.
ALEOs became more popular in the 1990s as an alternative way to provide services at a time of council budget restrictions. These businesses are one step removed from the council, but not fully removed: ALEOs are partly council-funded, the council has a majority stake, and the ALEO board often includes an elected councillor.
This year, in the wake of a string of scandals, The City of Edinburgh Council has been undergoing a process to shake up how it governs ALEOs. In March, the council agreed on a new framework to do just that. The Greens even managed to ensure that ALEOs would sign a service-level agreement that included abiding by council policies on subjects such as paying a real living wage, ensuring ethical sponsorship and advertising, tackling nature loss and climate change, addressing various pay gaps and improving accessibility.
Although the new framework would take time to bed in, Green councillor Ben Parker told me back in April it would be a “big win”.
Time to wave goodbye to Air Canada and Emirates adverts on buses and trams, which run counter to the council’s recent ban on fossil fuel adverts – a ban that is now imposed across seven cities in the UK. Goodbye to workers barely getting by on £12.21 an hour. Goodbye to recently departed Edinburgh International Conference Centre boss Marshall Dallas receiving bonuses of £146,000 over the last three years – while the council raised tax on residents by 8%.
A new, stricter governance framework was badly needed, because it seemed that council-funded businesses could not always be trusted to implement the highest standards themselves.
April, May, June and July came and went. In late August, after consultation with ALEO bosses, workers and trade unions, there was quite a turnaround from the Labour administration. Instead of the original governance framework with the Greens’ amendment, there was alternative wording. ALEO boards should only “consider” compliance and, at a minimum, “reference” the Council’s policies.
At the council meeting in August, SNP councillor Kate Campbell said that she was “very disappointed”. She added: “Option 2 basically waters down the position that we took previously […].”
SNP councillor Danny Aston also accused his Conservative and Labour colleagues of reducing ethical imperatives to “nice to haves”.
He added that “many citizens believe Edinburgh Leisure [and other ALEOs] to be an integral part of the council” and may be unaware that ALEOs were not obliged to abide by council policy.
Some of the most surprising comebacks came from Conservative Councillor Iain Whyte, who did not like Option 1 or Option 2. He insisted that any rules on pay gaps and advertising and so on would “get in the way of how [ALEOs] operate” and that they “should not be fettered by what we’re doing”. He mentioned ALEOs should be able to take “risks” that the council wouldn’t.
When things go wrong
Yet we know what happens with risks, and who bails out these businesses when things go wrong. For example, the public has already paid well over £1 billion to build the tram, at least £2 million to defend the council at the Edinburgh Tram Inquiry initiated by The Scottish Government, and £13 million of taxpayers’ money to cover the costly public enquiry itself. Edinburgh Trams leases its vehicles and infrastructure from the council. How “unfettered” do we want the tram network to be, and for whose benefit?
In the council meeting, Cllr Whyte wanted to make another rebuttal. On the issue of Edinburgh Leisure not paying staff a living wage, he declared it a “moot point”, as the company was legally obliged to pay at least the national minimum wage. Yet the difference – of 41 pence an hour – “a very little difference”, as it was described – adds up to £3.12 for an eight-hour shift. That’s more than £800 per year.
I wonder how Edinburgh Leisure staff would react to that “moot point” given Cllr Whyte owns a Porsche?
Asked about the matter, an Edinburgh Leisure spokesperson said: “We’re committed to paying the real living wage.” That is of course no guarantee and the ALEO no longer has a Real Living Wage accreditation, and was only able to pay the rate in 2024-25 as a result of additional monies from the council.
Labour councillor Lezley Marion Cameron insisted that it was “really important that workers’ voices are heard”. Yet the original plan from March guaranteed workers a real living wage and for their CEOs to not be paid huge bonuses.
For me, this raises questions as to whose interests are these councillors serving when they wear two hats – one for the “public”, and one for “business”?
For example, both Cllr Iain Whyte and Cllr Lezley Marion Cameron sit on the board of the EICC. Councillors sitting on ALEO boards is common practice. The Greens had requested for elected councillors to be removed from ALEO boards – this was watered down in the final version. Now, councillors should not be the chair of a board, but they can make up as much as 33% of directors.
Labour Councillor Mandy Watt ended the meeting by saying that the council does expect compliance with council policy, but ALEO management should be able to come to the relevant executive committee and discuss a problem, rather than the council “threatening” to pull their funding.
As to whether that approach could lead to inconsistencies across committees and ALEOs, only time will tell. Over the next few months, we will find out more about how this framework will be implemented, and the timeline.
What did Cllr Ben Parker think of the final version? He emailed me: “What is most shocking is how quickly the Labour Party has rolled back their support for crucial policies at the first sign of pushback from corporate interests. As councillors our job is to try and improve services for people in the city, and this includes standing up for what’s right in the face of criticism – especially when there are vested interests at play.”
In what appears to be pandering to the demands of a small group of CEOs, political parties – and not just Labour – are showing their true colours. After all, 34 people in the council meeting voted for the new version. They had an opportunity to make progressive change that would benefit the residents of this city, and they bolted.
All down to a difference of just 10 votes.
Depute Council Leader Mandy Watt responded to this article on behalf of The City of Edinburgh Council. She said: “We’re continuing this important work on ALEO governance and a report on implementation will be considered by the Policy and Sustainability Committee next month.
“The ALEO Governance Framework is to ensure robust controls on governance and assurance are consistent across all ALEOs, whilst taking into account and responding to the recommendations from recent inquiries, reviews, and audits.”
