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Financial reckoning sees Highland Council fall £233 million short on infrastructure spending

By Scott Maclennan

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Highland Council HQ. Picture: James Mackenzie.
Highland Council HQ. Picture: James Mackenzie.

The full meeting of Highland Council this week was a day of financial reckoning the like of which has rarely been seen in its 27 year history.

The capital budget came up for decision on the back of a review due to the local authority's ongoing cost crisis, surge in inflation and rising interest rates – and the results were not good.

Councillors debated the issue for a full three hours with some even moved to tears during the discussion.

Council leader Raymond Bremner admitted the outcome for schools was “bitterly regrettable” while leader of the opposition Alasdair Christie said it was “one of the saddest and most depressing reports I have seen.”

What is the capital budget?

The capital budget is basically infrastructure investment. The core budget provides cash for essential maintenance, roads, landfill, harbours and the like, including a sort of rainy day fund for unexpected emergencies.

A second part of the budget is for new projects including things like new school buildings or road junctions like the Inshes roundabout. This is one of the most bitterly contested elements of the capital programme.

The impacts on longed for school projects have been well documented this week but the figures tell their own story and it is one that raises a number of questions and did not go unchallenged as some councillors sought more time for consideration.


Amid the complicated analysis is one simple equation. The investment wanted for capital projects as it stood would cost £566 million and the council says it can afford a maximum of £343 million; that means it is £223 million short of what is needed.

Presenting his case to members the council’s head of corporate finance, Brian Porter, told them: “I need to ensure the capital programme is affordable, prudent and sustainable. You have heard from me and seen quite clearly within the report that the capital programme was not affordable. You heard that same message from my predecessor.”

According to the council's figures, though there are many factors at work, the bottom line is that more than 39 per cent of the budget was considered far beyond what Mr Porter believed was "affordable, prudent and sustainable."

Was the council set to run at almost 53 per cent more than it could afford?

The capital programme as at March 2023 was estimated to cost £475 million, which is the equivalent of spending £95 million a year. But when the updated costs were factored in that rose to £566 million, or £113 million a year.

The actual amount the council assumes – from projections and estimates based on current cost pressures, liabilities and obligations – is that £300 million is affordable – about £60 million a year. That is nearly half the amount that was contained in the original estimate for the cost of infrastructure investment – which will now largely go on unavoidable investments like bridge maintenance and other essential areas.

What now?

The council insists that no schools projects have been removed from the capital programme but what progress, if any, can be made on them remains, for now, entirely up in the air.

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