TAXPAYERS will lose out after council chiefs decided to write off £5.5 million of debt owed under the long-running statutory repairs scandal.
The decision leaves a huge hole in already cash-strapped City Chambers accounts and means around a quarter of the £22m owed to the council by tenants who had compulsory work carried out on their homes will now be lost.
Most of the cancelled debts are the result of disputed works with some property owners refusing to pay for repairs they consider over-engineered or unnecessary.
The council has already paid auditors Deloitte more than £3m to investigate the scandal and untangle the mess of unpaid statutory notices work.
A progress report indicates that 351 out of 446 outstanding cases have now been reviewed and completed. Around 61 projects still to be reviewed have a collective value of £10m.
Last year, finance chiefs set aside £9m to offset cash written off through statutory repairs claiming it was prudent financial practice.
The statutory repairs system was suspended amid allegations that staff were bribed by some contractors in exchange for lucrative repair projects but replaced in April last year.
Today, Gordon Murdie, a former chairman of the Royal Institute of Chartered Surveyors East Area who represents more than 200 clients affected by the controversy, said the write-off may be just the “first instalment” in what could be a £200m bill.
He said: “This figure, in isolation, suggests Edinburgh council concede they were confidently poised to overbill owners by 25 per cent – and now they won’t.
“A more informative figure would include what has already been overcharged over the last decades and the provision for refunding that amount. Add in the millions paid out to external consultants and I still believe the true cost to Edinburgh could end up nearer to £200m – that, thousands of affected citizens and a damaged reputation.”
Finance chiefs will pore over the statutory repairs report when they meet next Thursday at City Chambers.
Tory finance spokesman Iain Whyte said there were question marks over whether the £9m set aside to cover write-offs would be sufficient to cover the total revenue lost.
He said: “£5.5m is a lot of money. If that’s the figure that’s being estimated already and there’s only £9m set aside there are doubts whether that is going to be enough in the longer term.”
Finance convener Cllr Alasdair Rankin said: “While we are making every effort to fairly recover any money due to the council, this does not include billing for works that should not have been carried out in the first place. The council has already made provision for the non-recovery of debts.”
SERVICE ‘COULD NOT WASH ITS FACE’
THE News has previously told how statutory notice charges will have to more than double if the service is to pay its way.
The controversial scheme, shelved in 2011 following an investigation into fraud and corruption, is set to be reintroduced to prevent Edinburgh’s housing stock from crumbling. Under the system, the council paid up front for repairs to tenement buildings and later recovered cash from owners.
A 15 per cent administration charge was levied by the council to keep the service running, but is understood to have been haemorrhaging money, prompting claims it “could not wash its face”.
But city officials have issued a warning that fees must soar to 35 per cent to make the scheme self-sufficient. This means repair work worth £20,000 would cost an extra £7000 if introduced at City Chambers.