£1.3bn headache for city's new chief

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THE new chief executive of the city council was beginning her job today and receiving the news the authority has sunk £1.3 billion into debt.

&#149 Sue Bruce will need to balance funding developments such as these visualised for Leith with efforts to cut spending by 90m

As Sue Bruce takes over from long-serving chief executive Tom Aitchison, the Evening News can reveal that national spending watchdog has warned city chiefs about their bulging borrowing.

It is the first time Audit Scotland has expressed concerns about the city council's growing debt, which currently stands at 1.24bn and is expected to rise beyond 1.3bn by the end of the current financial year. It has nearly doubled in five years and now equates to roughly 2756 for every city resident.

In a message sent to all council staff this morning, Ms Bruce - the first new city council chief executive in 16 years - said she would start work right away on tackling the "difficult financial challenges ahead", with the city also facing a funding gap of at least 90 million in the next three years.

Critics have grown increasingly concerned about the amount of money council chiefs have been borrowing and say that the debt will only put more pressure on finances in future.

Gillian Woolman, an assistant director at Audit Scotland, said: "Borrowing is now at 1.2bn. While (the council] has business cases to cover that, it is still a significant level of borrowing."

She added: "CEC does have significant assets, mainly through its housing stock. Other councils do not have that. Nevertheless, borrowing has been heading in one direction for a number of years."

The comments came in a meeting of the council's policy and strategy committee. When asked by councillors whether debt levels have to come down, Ms Woolman said: "That is an important discussion to be had."

In recent years, debt has surged as a result of the 91.3m purchase of the council's headquarters at Waverley Court and the 62m bail-out of developer EDI.

The council plans to borrow another 84m for a series of infrastructure projects to get the development of Leith Docks moving again.

It has also been suggested that prudential borrowing could be used to help plug any shortfall in council funding for the tram project.

Council finance chiefs insist that the level of borrowing should not cause concern as it is within the limits they have set themselves. But Councillor Andrew Burns, leader of the Labour group on the council, said: "Audit Scotland are never very critical of the financial situation of councils unless it is extremely serious but they went as far as they could to hint that Edinburgh's borrowing has gone as far as it should do.

"It is expected to go to 1.3bn and that is a very significant level of borrowing for a council with a 1bn revenue budget. Anything further would need a very safe business case."

Cllr Jeremy Balfour, leader of the Conservative group on the council, said: "We have to monitor it very carefully because clearly it is has been going up under the old Labour administration and now the Lib Dem/SNP administration.

"At the moment, the tram money is accounted for but we do not know what will happen in the future. We have to be careful about what projects we commit to and be sure that we do not leave future generations in a very difficult position."

Councillor Phil Wheeler, the city's finance leader, said: "The council is required to use the prudential code to manage its borrowing. The purpose of this is to ensure all borrowing is affordable in the long term. Adequate revenue has to be identified to cover repayments for the duration of the loan.

"Recent additions to borrowing such as the acquisition of Waverley Court make financial sense for the council as they make savings on ongoing revenue expenditure."

The way that the council funds its services, and which services it is able to continue, are likely to be among the first issues tackled by Ms Bruce in her 158,553-a-year role.

In her message to staff on her first day today, Ms Bruce, 55, said: "I have a very firm belief in the vital role that local government plays.

"People rely on so much of what we do to enable them to go about their daily lives. Of course, we also have an important duty to promote and develop our area and that is particularly the case here.

"I am well aware of the difficult financial challenges facing local government. Over the coming months it will be my priority to address these and to shape the council so that it is well equipped to further its journey as a high-performing and efficient local authority."

Council leader Cllr Jenny Dawe said: "I'm very pleased that Sue is now in position and able to start bringing her outstanding knowledge, experience and leadership to the role.

"I am looking forward to working with her in the interests of the city and the people of Edinburgh."


WHEN she landed the top job at Aberdeen City Council two years ago, Sue Bruce took over an organisation in crisis.

It had been publicly criticised by public spending watchdog Audit Scotland, leading to the early retirement of chief executive Douglas Paterson.

But Ms Bruce, who has led a 120 million five-year cuts programme and a management shake-up, has been credited with turning around the fortunes of the authority.

The 55-year-old, who has worked in local government for 30 years, will be faced with a similar cuts programme in her role in the Capital, with 90m of savings due to be implemented in the next three years.

Edinburgh will be the third local authority she has headed up, after progressing from the role of director of East Dunbartonshire Council's education, social work, housing and cultural services department to becoming its chief executive in 2004.

The early stage of her career was in the education sector, and her qualifications include a diploma in youth work and community service, an MPhil in Government and an LLB, or bachelor in law.

Her interests include the arts, reading and gardening and she is a Fellow of the Royal Society for the encouragement of Arts, Manufactures and Commerce.

In June 2010, she was the first public sector leader to receive the Prince's Ambassador in Scotland Award and she later received the Scottish Business Insider's award for public sector leader of the year.


John Stevenson, president of the Edinburgh branch of trade union Unison: "The primary focus for us should be how to deliver responsive services in-house and avoid the waste and huge mistake of privatisation. We would look for a bit of honesty on what the council can and cannot do."

Ron Hewitt, chief executive of Edinburgh Chamber of Commerce: "One of the largest challenges is supporting the great people who have come into the council's team to lead the economic development and planning teams. She needs to understand early on that planning is driven by the city's economic needs, and not by political machinations or nimbyism."

John Carson, former head of maintenance at Network Rail and long-term critic of the tram project: "If you take Mr Aitchison's departing statement that TIE should be looked at then I'm sure that should now fall to Sue Bruce. This is a wholly-owned council company so the chief executive of the council should look at it. Before he left, Mr Aitchison was also charged with getting mediation going. One would hope that role will be handed on to Sue Bruce."

Michael Apter, chairman of the West End Association: "The challenge is to ensure the council departments think in a joined-up manner about how people access the city centre. Making council departments work coherently and in concert to deliver that vision is one of the main priorities."

Councillor Jeremy Balfour, leader of the Conservative group on the council: "We look to her to support us to develop best quality across all our services, to pay attention to local issues and supporting us to deliver choice to our citizens."