School rebuilding to be put on hold

Published on Saturday 4 September 2010 12:27

VITAL new projects to rebuild crumbling schools in Scotland could be cancelled until the middle of the next decade, council leaders have warned.

Local government experts believe about 400 million will be cut from council capital budgets, the money ring-fenced for infrastructure projects such as schools and roads, over the next four years.

As a result, they fear that most councils will have to cut capital spending back to such an extent that there will be money only for repairs and maintenance, not rebuilding.

A report into the effects of the likely cutbacks has been prepared by officials at Cosla, the local government umbrella organisation. It warns of "a significant gap in local authorities' ability to fund infrastructure projects into the future".

It adds: "The forecasts for the next spending review period, and in all likelihood the one beyond that, mean that there is a real risk that, due to competing demand for resources, local government will not be able to afford to provide the infrastructure needed for effective service delivery."

Since devolution in 1999, between 20 and 30 schools have been rebuilt or completely refurbished every year. But council leaders now warn that this programme will come to a virtual standstill from about 2013 onwards and there will be very little money for new road projects either, even in the worst of accident black spots.

Some indication of the scale of the problem emerged last year when a Cosla report identified that one in five of the country's 2,000 primaries needed to be rebuilt. A Scotland on Sunday investigation found that at least 10,000 pupils are being taught in crumbling and condemned classrooms and that about 70 state schools are beyond repair. The Scottish Government has insisted it will stand by the building projects already planned but the effects of the squeeze will really kick in after the current round comes to an end, in about two years' time.

Councils have two sources of funding: revenue, which goes on day-to-day spending such as salaries and running costs, and capital, which is used for infrastructure. Early forecasts suggest revenue budgets could shrink by 15-20 per cent over the next four years.

Council leaders expect even bigger cuts to their capital budgets, which could have a more dramatic impact on council services than the revenue reductions. Councils spend about 2 billion a year on capital projects. About 850m of that comes from the Scottish Government with the remainder borrowed on the money markets.

Councillor Iain McKenzie, Cosla's finance spokesman, said he expected that 850m to fall to about 450m by 2014-15. But he stressed that councils would probably not be able to borrow to make up the shortfall because the scope for borrowing will also be cut.

Councils expect the UK Government to cap council borrowing.McKenzie said: "A lot of people take for granted what is delivered by local government but there are going to be real challenges for investing in infrastructure in the future."

Councils would have to cut back to basic maintenance and the lack of proper infrastructure investment would affect jobs. "For every 1m we invest, we secure between ten and 30 jobs," he said. McKenzie said one of the other constraints on building new schools was the Scottish Government's opposition to public private partnerships (PPPs). The SNP administration moved against the PPP as a method of funding capital projects soon after taking office. Instead it introduced the Scottish Futures Trust (SFT).

McKenzie said: "While we have been working with the Scottish Futures Trust, we have our reservations about what it has delivered."

The SFT was supposed to act as a central body to co-ordinate the development of not-for-profit trusts in place of PPP projects. Instead, it has turned more into an advisory body.

Brian Law, chairman of Construction Industry Council Scotland, the umbrella body for the construction industry, said the effects of any major cutback in capital spending would be severe.

He said: "This will have a huge knock-on effect. The construction industry is already suffering at all levels and this is not just the parts that people see on the streets, there is a lot going on behind: architects, engineers, surveyors - they will all suffer."

A spokesman for the Scottish Government said major infrastructure projects, like the new Forth Bridge, the Southern Glasgow Hospitals and the school building programme for the next year or so, would go ahead as planned.

But he conceded that big cuts were expected in capital budgets and these would have an impact in years to come.

He said: "These cuts highlight the need for Scotland to secure economic and financial powers to grow the economy and boost revenues to invest in our public services. Once we know the outcome of October's UK Comprehensive Spending Review, we will set a Scottish budget focused on protecting frontline services and economic recovery."