Home   News   Article

Roads and schools hang in the balance as Highland Council sets out full risk to capital programme

By Nicola Sinclair, Local Democracy Reporter

Register for free to read more of the latest local news. It's easy and will only take a moment.

Click here to sign up to our free newsletters!
Highland Council has already admitted that its current capital plan is unaffordable.
Highland Council has already admitted that its current capital plan is unaffordable.

A report into Highland Council’s capital programme shows the full extent of its investment worries.

It reveals that many projects may need to be cancelled, scaled back or delayed.

And if the current financial climate doesn’t improve, council finance bosses say there will be “significant reductions” to the capital plan.

Highland Council has assessed all its capital projects in terms of the risk to costs, timing and scope. Every item is rated ‘red’ for costs. This means they may not be deliverable.

Worryingly, all capital spend on roads, active travel, lighting and ICT are rated red for all three measures.

At the same time, eight new Highland school builds are listed as ‘to be confirmed’ while the council awaits a funding decision from the Scottish Government.

There’s a paradox at the heart of the council’s investment problems.

The council has already admitted that its current capital plan is unaffordable. Senior councillors and officials have been working behind the scenes to see what can be saved.

But at the same time, both the main capital budget and the separate housing revenue account is actually underspent.

By the end of this financial year, the general fund is forecast to have spent just under £119 million – a £38.5 million underspend.

The housing revenue account looks set to come in £5.6 million under budget too.

Highland Council says the significant underspends are down to the limited availability of contractors, consultants and building materials.

It’s now taking as long as two years for new fleet to be delivered, and tenders for housing jobs are often not returning any bids at all. The bids that are coming in, are sky high.

The council says these are global supply chain issues, but they’ve caused big delays with many capital investments.

Highland Council has provided a RAG (red amber green) risk assessment alongside its capital monitoring report.

Costs are in the red across the board. However, roads structural capital works, road surface dressing, bridges, wells and culverts, active travel investment and lighting are all rated at risk for costs, timescales and scope. The council’s ICT transformation is also rated red on all fronts.

Several of these may need to be scaled back or cut completely from the capital plan.

New school projects also look uncertain. Highland Council was counting on funding from the Scottish Government’s Learning Estate Investment Plan (LEIP) but hasn’t had any news. The council had expected to have funding confirmed by the end of last year. Without clarity over LEIP funding, the council says it’s impossible to set its capital programme.

It has already had to cancel its February 1 budget meeting and now says members will get an update in March.

However, all the LEIP funded schools now look shaky. Nairn Academy, Culloden Academy and Charleston Academy alongside Beauly, Broadford, Dunvegan and Park primary schools and St Clement’s school are all marked red for costs and ‘to be confirmed’ in every other risk category.

Like all councils, Highland needs to borrow money to invest. In addition to much-needed new schools, it has the longest road network in the country and a commitment to deliver 490 new council houses in the next year.

But borrowing is now sitting at over £1.1 billion, with loans accounting for 69 per cent of its capital funds. Council finance boss Ed Foster has highlighted that the council will have to pay back that sum for more than 60 years. And with interest rates on the rise, it’s a significant risk to financial sustainability.

When they meet next month, Highland councillors will have to try to find the balance between investing in growth, and keeping costs manageable.

In the meantime, members of the corporate resources committee meet on Wednesday to consider this latest financial update.

Do you want to respond to this article? If so, click here to submit your thoughts and they may be published in print.

This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies - Learn More