Monday, 25 August 2014

£6 million black hole in council's rail bill?

Research findings from an investigation into Scottish Borders Council's proposals for meeting its £8.75 million share of the £353 million reinstatement of the railway from Edinburgh to Tweedbank suggest the local authority could face a £6.2 million deficit when it comes time to pay the piper.

It probably won't concern those in charge of Borders local government right now as they're unlikely to be in office by 2038 when the account is due to be finally settled. But future generations of local taxpayers will undoubtedly be saddled with any huge outstanding debt. The project's Business Plan makes that abundantly clear.

Back in 2004 when SBC's Executive members endorsed the railway proposals they decided to rely on house builders to contribute £1,000 towards the cost of the Waverley Line from each new dwelling constructed in the Central Borders and North Ettrick & Lauderdale.

They estimated 7,500 new homes would go up in the area between 2004 and 2038 which would cover the original £7.4 million SBC would have to find. When their share of the cost escalated to £8.75 million there was ample wriggle room to increase each developer contribution to £1,500.

Unfortunately the formula appears to have fallen drastically behind schedule from the outset with much lower volumes of construction than expected. And although the levy per house has soared to £1,734 with another review due in April next year only £743,127 had been collected in the ten years from 2004 to June 2014. The mathematicians among you will be able to conclude that another £8 million needs to find its way into SBC's coffers before the Scottish Government calls in the debt.

One of the most worrying aspects of the investigation's conclusions must be the fact that developer contributions have only brought in about £48,000 in the last three years. If the current level of progress is maintained then the "rail fund" will stand at £2.5 million rather than £8.75 million by 2038.

So clearly there is an issue in need of urgent attention. But will the council face up to the fact that its chosen strategy is in deep trouble or will the administration bury their collective heads in the sand and store up the grief and financial problems for their successors while praying for the costs to be written off by a benevolent Scottish Treasury?

It could get even messier. The joint contribution from SBC, Midlothian and Edinburgh councils is currently capped at £30 million at 2012 prices. But if the original 85:15 cost share of the project between national and local government was to be fully implemented at some point in the future then the Borders share could shoot up to £15.35 million. A fairly frightening prospect.

But then again, at the end of the 2012/13 financial year Scottish Borders Council's total debt on General Fund services stood at £193.114 million, equivalent to £1,698 per head of its population. Another £6.2 million wouldn't make much difference, would it?

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