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Half a century to pay off school PPP debts

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By Fiona Reid
Dumfries and West
Half a century to pay off school PPP debts

IT will take around half a century to pay off school construction debts in Dumfries and Galloway as the council looks to delay repayments for a second time.

This time last year the local authority took advantage of a Scottish Government offer to repay school construction debts of £101m over a 40-year period instead of 25 years.

Council chiefs had previously entered into a 30-year public private partnership (PPP) contract for the construction, maintenance and operation of ten schools over eight sites.

However, the reshuffling of debt over a longer period freed up more than £20m at a time when the skint council badly needed the cash.

Now another offer is on the table to delay the debt repayment by another decade, which will free up an additional £6.5m of finance.

With the council facing an £11.8m funding shortfall this year from the Scottish Government, it is looking likely that extending the debt repayment contract will be approved.

Councillors sitting on the finance, procurement and transformation committee last week agreed for this option to be put forward in the budget setting process for the year ahead.

Annandale South Councillor George Jamieson asked if a contract extension would affect the maintenance of the school buildings.

Karen Donaldson, the council’s treasury and capital manager, said: “In applying this change, it’s only changing the period in which we pay the debt repayment charge.

“It doesn’t change the contract whatsoever, so the schools will still be maintained as they are now as part of the contract through to 2039/40 when the initial PPP contract finishes, and 2042/43 for the Dalbeattie contract.

“At that point, a maintenance requirement will then fall to the council. But it’s important to note that, as part of both contracts, there will be an assessment done at handover to make sure that those schools are in the condition outlined in the contract.”

She added: “When the maintenance is handed over to the council, obviously we’ve got significant budgets to pay for these contracts at the moment. That funding would then be available to support the council taking forward the maintenance of those buildings.”

A report for the committee reads: “It has become apparent that most councils have used an asset life in excess of 40 years.

“It is therefore recommended that, based on the advice reflected in this paper, members consider spreading the debt repayment charges to the council’s revenue account for the Schools PPP and Dalbeattie Campus DBFM projects over 50 years (rather than the previously agreed 40 years).”

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