New-build city schools facing £17m crunch time

Published on Monday 20 October 2008 10:12

THE future of a major school modernisation programme is facing fresh doubts after it emerged more than half the money earmarked by the city council to fund the project is in jeopardy as a result of the credit crunch.

Council bosses have admitted that "a degree of risk" surrounds 17 million of the 33m that it has committed to rebuilding or replacing five crumbling schools in the city.

The council has already said that modernising the "wave three" schools could take up to 14 years if it had to fund the project without additional financial help from the Scottish Government.

This latest setback throws into question whether even this timescale is achievable.

Meanwhile, an anticipated saving of 1.4m through refinancing the contract for the city's PPP1 schools has also been put on ice, as the banks involved have pulled out of the deal.

The latest blow to the wave-three schools – Boroughmuir, James Gillespie's and Portobello high schools, St Crispin's Special School and St John's Primary School – comes amid mounting frustration amongst parents.

A report on the refurbishment of the schools, which went before councillors this week, shows little progress has been made over the past few months.

Labour group leader Andrew Burns said the question mark over the council's financial commitment to the schools "places doubt on even achieving the 14-year timescale".

Portobello High School parent council member Willie Wilson said the news about the at-risk 17m was "disappointing".

He added: "It's worrying and it's just more uncertainty.

"We really do not know where we are going with it anymore."

The total cost of modernising the five wave-three schools is between 139.5m and 147.7m, depending on which options are chosen for Boroughmuir and St John's.

These costs are based on a seven-year timescale, but the council admitted that completing the schools within this period would require "significant levels of additional funding from the Scottish Government".

Its alternative option is to secure the money itself through a mix of funding sources, including borrowing, which would significantly delay the refurbishment programme. It would mean work to replace or refurbish the five schools would have to be done in phases.

A council spokeswoman said: "Funding for 17m of the wave-three schools project is reliant on a number of capital receipts.

"In the current economic climate, a degree of risk exists regarding the realisation of these receipts.

"This is also the case for the council's wider capital investment programme, which is partly reliant on capital receipts.

"At this stage, it is not clear when market conditions will improve and therefore the position will be kept under review.

"Members will be advised if there are longer-term consequences of the current downturn in the market."

She added that a budget report will be given to councillors at the next education, children and families committee on October 28. This will address the issues with the refinancing of the PPP1 schools.