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Council chief says current building programme is "not affordable"

Perth and Kinross Council's flagship projects such as Perth High School and replacing Perth Leisure Pool are in doubt.

The council's chief executive has warned councillors PKC currently cannot afford its bumper six-year £683 million capital programme.

He told a council committee this week rising costs meant the council had recently "agreed £77 million of additional costs for nothing".

The stark news came in an update to Perth and Kinross Council's Finance and Resources Committee on the 2022-28 Composite Capital Budget.

A report written by senior accountant John Jennings told councillors "the delivery of all the approved projects and programmes within the current six-year capital budget is no longer expected to be affordable under the current funding strategy due to the impact of contract inflation alone."

Councillors this year approved a further £33.2 million for the Cross Tay Link Road and another £18.7 million for the replacement Perth High School - just two of many capital projects.

In September 2022 councillors were told PKC faced an estimated £30 million funding gap between its forecast expenditure in 2023/24 and its funding.

At Wednesday's meeting Blairgowrie and Glens councillor Tom McEwan questioned when work would start on Blairgowrie Recreation Centre.

Planning permission for Scotland's first Passivhaus swimming pool was granted in August 2022
Planning permission for Scotland's first Passivhaus swimming pool was granted in August 2022

The SNP councillor said: "Why are we where we are with Blairgowrie Recreation Centre and what other options have been explored to solve the issue of just building the damn thing?"

PKC's head of Business and Resources Greg Boland said they were "very close now to reaching financial close on the project" with plans to bring the the full business case before Perth and Kinross Council on December 21.

But chief executive Thomas Glen brought a sobering reality check to the gathered councillors on the affordability of all the council's flagship projects.

He said: "We have just agreed £77 million of additional costs for nothing. £77 million and we get no additionality, no added value.

"Right now, our overall programme is not affordable. So council does have a question that it needs to consider not at this point in time but over the coming months when it looks at its capital programme about whether or not to continue with all of the key areas of investment including the suggested investment in key projects at Blairgowrie, Perth High School, PH20 moving forward.

"Because the levels of significant investment we have in existing approved projects before we introduce anything else cannot be afforded based on our current financial model.

"So I think there is a fundamental question that has to be considered by council in terms of the affordability of some of its flagship projects and the wider programmes of investment that we have right across Perth and Kinross."

Cllr Peter Barrett suggested increasing council tax.

The Liberal Democrat councillor said: "I do think as part of the budget review process we need to have a council tax strategy that may facilitate more of the capital programme than we can currently afford."

The full business cases and cost updates for Perth High School and Blairgowrie Recreation Centre projects will shortly be brought before councillors.

Artist's impression of how Perth High School will look

Independent councillor Colin Stewart asked why councillors were being asked to "decouple consideration of significant capital projects to the December meeting from the actual capital budget process just a couple of months later".

The council chief told Cllr Stewart they were acting under instruction from councillors.

Mr Glen said: "Clearly as officers we're looking to deliver on what councillors mandated us to do and that's to bring forward the final business cases as early as we can. But yes the principle of making decisions on capital investment and on your major asset projects I would support that principle in terms of that being made on March 1."

Convener Stewart Donaldson said the SNP administration remained committed to delivering the projects.

The SNP Strathearn councillor said: "Whilst we do remain committed to the delivery of the capital budget, it's inevitable that we are going to face tough choices in the coming months between now and March 1. What we cannot lose sight of is the scale of our ambition for the capital programme - ambition that will see some £683 million invested in schools, in our roads, on our bridges, our buildings and other infrastructure costs across the whole of Perth and Kinross. Investment that will be welcomed by citizens, businesses and visitors alike."

SNP council leader Grant Laing gave his commitment to progressing with Blairgowrie Rec.

The Strathtay councillor said: "I think we have got some really hard decisions to make over the capital projects in the next few months.

" Blairgowire Recreation Centre has been promised to the people of East Perthshire for many years and that will have to fit in - it will certainly be part of and forming my view."

Blairgowrie and Glens Conservative councillor Caroline Shiers said: "We will do everything we can to support you to get Blairgowrie Rec built. But also for the pupils - present and future - for Perth High School it's really important that project is delivered."

Provost Xander McDade (Independent) said: "I think given the long-term commitment given to Blairgowrie, we will need to ensure we keep that commitment to them and the people of Eastern Perthshire but I do think we need to look at our capital programme seriously at how we might do things differently and at how we might make things affordable."

Deputy council leader Eric Drysdale said: "You can be assured we will do everything we can to deliver on our manifesto commitments.