CITY officials are budgeting to lose up to £9 million in bad debts linked to the statutory repairs scandal as critics warned that figure was simply the “tip of the iceberg”.
The council’s finance and budget committee is expected tomorrow to sign off on increasing its allowance for bad debts connected to the old property repairs scheme by £2.73m to £9.04m.
The local authority has said the move does not necessarily mean it will write-off all of the revised total, but others close to the scandal insist the final bill for bad debt could run as high as £30m.
Finance chiefs have banked on Deloitte LLP helping them recoup some of the outstanding £22m owed on projects caught up in the former property repairs scheme.
Nurse Jeremy Pascoe, 52, is still waiting for a final bill linked to a statutory notice on his Edinburgh home in a saga that started about ten years ago.
He predicted the council would end up losing as much as £1.5m in bad debts on that one project alone, saying: “Our building has had stonework issues and needed significant repair – no question. The council surveyor did a survey and came up with a figure of about £380,000 of work to be done.
“In fact, the council have done about £1.7m of work.”
Mr Pascoe added: “I’m in contact with other owners. We know there are roughly 800 cases before the council. Some of these are for much smaller amounts. We anticipate the bad debt will be about £20-30m, but it’s not just bad debt – they’re going to have to compensate people.
“I actually think it will bankrupt the council.”
Allegations that staff were bribed by some contractors in exchange for lucrative repair projects has driven the scandal.
Green finance spokesman Councillor Gavin Corbett said of the new bad debt allowance: “I fear this is simply the tip of the iceberg and the only way for bad debt is upwards.
“The council is on the horns of a dilemma. It needs to limit exposure to a potentially open-ended debt that could simply rise and rise as the backlog of old cases is dealt with. But it needs also to do the right thing by owners who have a genuine case of grievance, having seen repair bills double, treble or even quadruple, with no real benefit.”
City leaders are considering introducing a new management programme for tenements despite the ongoing financial threat left by the old scheme.
City finance convener Alasdair Rankin said: “It is simply good accounting practice to make a prudent provision for bad debts and is consistent with the treatment made across other council services. We will be making every effort to fairly recover any money due to the council as this is essential for funding frontline services to the people of Edinburgh.”