School could be financed by council


The £49 million needed to build the new Anderson High School could be taken from the SIC’s own reserves, Shetland Charitable Trust chairman Bill Manson said yesterday.

The plundering of the nest egg below its £250m red line set by the council is his preferred alternative to persuading the charit­able trust to take on the burden of the school or for a giant private loan to be sourced from outside Shetland.

His view was aired during yet another debate about how the council’s biggest-ever project is going to be financed without paralysing spending on other schemes for years to come. So far the only decision made is for the council to pay for the building work while seeking for the school to be bought and leased back to it, probably by the charitable trust or its property arm Slap. The costs and pros and cons of such an arrangement are currently being assessed and will be considered by the trustees before any firm proposal comes before councillors in May. It appears neither the council’s external auditors or the Scottish government has a problem with such an arrangement.

Another less likely option is to seek private backing through the public private partnership (PPP) or private finance initiative (PFI) schemes which other local authorities and organisations which lack the SIC’s financial reserves have to rely on.

Mr Manson dismissed the notion that the £250m floor placed on council reserves years ago was a rule set in stone, arguing that it would make little difference if it had been set perhaps £25m higher or lower. He warned that even if the trust or another body does agree to buy and lease the school the council will still have to pay perhaps £4m a year in interest alone, which would hit spending in other areas. Instead the council could bankroll the whole project itself, he said. “I think the council should look first at financing this building from within our own resources.”

In the meantime, £15m is needed to pay the bills for the new school works during the 2009/10 financial year with construction perhaps getting under way in the summer. Yesterday the services committee agreed to sanction the release of £15m from council reserves for the year. The financial year about to end has seen about £1.5m spent on the school plans.

There was opposition to the release of the £15m from councillors Gary Robinson and Jonathan Wills. Mr Robinson accused the council of again “putting the cart before the horse”, risking a repeat of the Viking Energy fiasco which has seen the council and Shetland Charitable Trust in unseemly disarray over which should pay for the project. He did not want the funds released until the charitable trust indicates if it is prepared to take on the school. Otherwise continuing to plunder the reserves to pay for it would “permanently impinge” on Shetland’s oil savings.

Convener Sandy Cluness was having none of it. He moved that the £15m be released, saying every council in Scotland faced problems funding big projects and the final decisions on arrangements could be made later. In a vote he outgunned Messrs Robinson and Wills 17-2.


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