5th March 2018
The Council's proposed capital programme includes a significant investment of £346m over the next 5 years. This could amount to as much as £481m gross depending on assumptions for grant and funding.
Whilst the level of funding is impressive, the demands on capital investment are equally significant. Highland has 203 schools operational schools, and a large number of those schools have condition, suitability or capacity pressures. As the Council with the largest geographical area in Scotland, there is a hugely diverse range of buildings in terms of size, location, purpose and condition.
The proposed new capital programme is predicated on an annual affordability level of repayment and interest costs of £56.7m which equates to the current budget available for loans charges.
Budget Leader, Councillor Alister Mackinnon said: "The Council's capital programme must always balance competing demands for the resources available. As such, it is not possible to address all needs identified and proposals seek to do the best possible for communities across the Highlands.
"Some projects in the proposed capital programme have project-specific funding associated with them which can only be used for those specific projects.
"The Council must also deliver investment to support expansion in Early Learning and Childcare provision to meet Scottish Government policy. The programme as proposed addresses some of the most urgent of these pressures, where the works can be incorporated and delivered within the required timescale, but in the context of a significantly reduced capital programme, cannot meet all the needs identified.
"Capital spend must be affordable, but we have some of the largest council estate in the UK, with 203 schools as well a huge road infrastructure and other funding needs. We have developed a capital programme which seeks to make the best of the funding available and accept that this will meet only some of the very real need across our communities for school renovations and improvements.
"Our capital programme has been reduced by 50% and we fully recognise that, whatever we do, we cannot meet the demands on every wish list and we have to use recognised criteria to determine where spending should take place.
"Highland is a special case, with our huge geography and significant aging estate and assets. We will be undertaking a major lobbying campaign to bring in additional Scottish Government funding for schools and roads and I will be looking to colleagues across the chamber to support this campaign to make sure Highland gets the investment it needs and deserves."
Councillor Andrew Baxter, Chair of People Committee added:"The number of schools in top condition has risen to 33, compared to 27 in 2016, however, 86 of our schools are currently rated as “poor" condition and 44 are rated as “poor" for suitability.
“To address this, we will be looking at a review of new build techniques that are proven elsewhere for schools and a much greater scrutiny of spend, using the key determinants of Condition, Suitability and Sufficiency for capital investment. We are making a strong and ambitious bid for Scottish Schools for the Future funding for secondary and primary schools and will look at identifying and bidding for other funding sources, including Gaelic funding.
“We have proposed substantial investment in schools in Easter Ross and Inverness, with Alness Academy topping the list at £34m. This is recognising the huge investment which has just gone into schools in Lochaber and Caithness.
“Whilst the criteria and timescales for Schools for the Future funding are not known at this time, we have identified immediate priority schools for such a bid, to include a Tain 3-18 campus; the Nairn and Fortrose secondaries; the schools in Invergordon; Beauly, Broadford, Dunvegan and Tarradale primaries; and the St. Clements special school.
“We also intend to bid into the subsequent Schools for the Future funding, which will include primaries in Alness and Kiltearn.
“There are around 30 primary schools across the Highlands which are either currently, or forecast to be, over capacity over the life of the capital programme so £4.6m has been identified for funding for modular units to meet additional capacity requirements."
The Highland Council has just under £2bn of assets on its balance sheet comprising, amongst other things, 203, over 6,700km of roads and over 2,000 properties.
A key indicator used by councils to assess their borrowing position is to express their annual borrowing costs (loans charges) as a proportion of income from general revenue grants and taxation. For Highland this figure (including borrowing costs associated with PPP schools) stands at over 13%, the fifth highest in Scotland. At a time when the revenue budget is being reduced in real terms, and the Council faces a number of contractual and policy objectives that effectively ring fence a significant proportion of its budget, this situation is not sustainable in the long term.
One of the key determinants for capital investment is the current condition of our schools. The school estate is assessed using guidance from the Scottish Government, particularly in relation to three of the key “Core Facts" (Condition, Suitability and Sufficiency).
For Condition and Suitability, all schools are rated in four overall categories (“A: Good"; “B: Satisfactory"; “C: Poor”; and “D: Bad”). The Condition data can also be used to assess the state of (and to prioritise investment in) separate elements of the building fabric (such as roofs, windows, electrical and heating installations), or individual blocks or buildings within larger school campuses. There is a particular issue with the condition of ageing modular accommodation at a number of our schools.
“It should be noted that Highland has no schools rated as “D: Bad” for either Condition or Suitability and the number of schools rated as “A: Good” for Condition has risen to 33, compared to 27 in 2016. However, 86 (42%) of our schools are rated as “poor” (C category) for condition and 44 schools (89%) are rated as “poor” (C category) for suitability. With regards to Sufficiency, the school roll forecasts are analysed and updated annually to take account of any significant changes.
Leader of the Opposition, SNP Councillor Maxine Smith said,"The Council's Administration is about to cut the capital programme by half, which will severely hamper school building projects. There is no doubt that the programme needed to be changed, as it had turned into a wish list used by the Administration to placate individual group members.
With the Capital Programme now being reduced the Council can no longer look to build its infrastructure projects in the same way as it has always done, therefore it has to look atother methods of construction as per item 10.1 of the Council's capital report for the special meeting. The official Opposition has published a report, which includes an objective look at other models of construction and the reasons why we have to move to these mode's of construction which are cheaper, faster and more reliable as well as easier to maintain in the long run. We have been struggling to get the Council to take this approach seriously.
Councillor Ian Cockburn, the SNP Group's Finance Spokesperson said,"This dated thinking by the Council has to change and change quickly to enable the Council to get more for its £ and the projects it requires to be more quickly constructed, no matter if it is a school or housing. A report on this issue was commissioned for the UK Government in 2016, its title sums up the situation for the building industry, government and Council Procurement of projects, 'Modernise or Die"',
The Highland Council's Capital Programme 2018/19 to 2022/23 will discussed at a meeting of the Council on Wednesday, 7 March 2018 the agenda is online at: https://www.highland.gov.uk/download/meetings/id/73257/item_3_capital_programme_201819_to_202223