Highland Councillors Set to Slash The School Building Programme As Unaffordable

14th September 2023

Highland councillors look set to make a big decision to slash the building programme for the next few years. The meeting today (Thursday 14 September 2003) will see the biggest U-turn in the history of the council. Factors beyond council control such as the big rise in interest rates and costs of building which have soared make many project unaffordable in the near future.

10 Major projects look likely to be postponed.

The Capital Review Programme has some serious facts presented in the paper on the agenda today.

The review process has indicated that due to rising capital costs and inflation, the costs of delivering the then capital programme had increased from £475m at March 2023 to £566m at July 2023. This has widened the gap between the current programme and an affordable level.

This report provides for Members the output of the capital programme review process, and a new recommended capital programme covering the 5 year period 2024/25 to 2028/29. Any projects which fall beyond the 5 year duration will be reflected in ‘future years' and a future capital review would need determine priorities, phasing and affordability for 2029/30 and beyond.

Borrowing has in recent years been the most significant aspect of capital programme funding, and as capital programmes have increased over successive years, it has been borrowing which has also increased to fund that higher level of investment. While the Council has the discretion to determine its level of capital programme and borrowing required, it must be done so within the Cipfa Prudential Code which the Council has adopted, and the Council's Annual Treasury Management and Strategy Statement which is the route through which the principles of the Code are adopted and implemented.

The annual loan charges costs met from the revenue budget are a combination of (a) the main element being loan charges on historic ‘debt' plus (b) loan charges on new/future capital investment and borrowing. Affordability is therefore driven by both factors, but the legacy of a high level of historic ‘debt' to be repaid is a significant factor.

Council Leader Raymond Bremner has said that the Council will continue to face challenges in respect of capital investment but that it is necessary to agree £343m of General Fund capital investment over the 5-year period 2024/25 to 2028/29, in order to fund a number of priorities, while remaining affordable.

"The Council has needed to review the capital programme for some time due to significant inflationary costs seen in projects across the previous programme making it unaffordable. The results of the review that are being presented to council for approval, are a revision of capital works that include appropriate mitigations to make progress and ensure the safety of our pupils and staff in our schools.

"The programme, if agreed, will reaffirm the Council's commitment to projects currently being implemented as a result of previous phases of the Scottish Government's Learning Investment Programme (LEIP). The programme will also allocate funding supporting repairs and maintenance of named school projects included in the Council's bid to Phase 3 of LEIP. The Council remains totally committed to building the named schools in the paper that is coming to council but this is contingent on funding being made available from the Scottish Government.

"We will continue to progress these projects as far as the Council can to ensure that the projects are deliverable should Scottish Government funding be forthcoming. As an example, the Council has already agreed to and is now completing the purchase of the land for building St Clements School.

Read the full Capital Paper HERE

To watch the debate live today go HERE The meeting starts at 10.35 am and can be watched later if you have time. If you watch later to the recording you can jump to the different agenda items. This is likely to be a very long meeting due the Capital reviews and some other very important papers today.

The full agenda can be seen HERE