‘No new projects until 2016’ as city faces £42m shortfall

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No new projects will be funded by the city council during the entire term of the next administration, with the authority facing a £42.6 million “black hole” in its capital budget over the next four years.

A gloomy new report by council chiefs has warned that there will be no new money available until 2016 to fund projects for whichever political party wins this year’s elections.

It has emerged that the cost for “capital projects” identified between 2012 and 2016 is £42.56m above the funding that is expected to be available.

Officials have now warned that any incoming administration will have to borrow more money if it wants to fund any new projects and there are already concerns about the council’s £1.5 billion debt bill.

The “over-programming” of projects, which has increased from £37.7m a year ago, could also mean some schemes need to be scaled back or scrapped.

Councillor Andrew Burns, leader of the Labour group on the council, said: “In terms of capital projects, it will be difficult because not only have we got that £1.5bn of debt, but we’ve also got very steeply declining capital support from central government.”

Projects that are scheduled to take place in the coming years include the replacement Boroughmuir High School, for which the council has earmarked £7.2m in 2015-16, a new James Gillespie’s High, costing £20.2m by 2016, another £37m towards the extension of the EICC and £54.6m of road and pavement improvements over the next four years.

Any of the projects could be delayed or scaled back, although officials hope that natural changes to contracts and delays to other projects will avoid the shortfall affecting them.

In the new report on the capital programme, Alastair Maclean, the council’s director of corporate governance, said: “Given the overall resource position, there is no scope for funding new projects within the roll forward 2012-16 capital investment programme from the core capital budget.

“As indications point to the general economic climate worsening, there is a risk that the overall shortfall in capital receipts will increase.”

However, Cllr Phil Wheeler, the city’s finance leader, insisted an incoming administration will be able to find ways to spend money on projects. He said: “We have had a tough financial situation and we have weathered it and still delivered things like the Drumbrae hub.

“The council will always have the scope to borrow from the Public Works Loans Board, and that is far cheaper than borrowing from a bank.”