A row has broken out after a councillor claimed Tayside Contracts refused to pay rent to the local authority for depots in Perth and Kinross.
Peter Barrett told The Courier that the result is a £250,000 “hole” in the council’s budget.
The Liberal Democrat councillor described the situation as a “bourach” and demanded Tayside Contracts’ chief executive appear before the strategic policy and resources committee to explain the company’s reluctance to pay “fair” rents.
He said: “There is no transparency or equity about the current arrangements with Tayside Contracts.
“The existing agreement with Tayside Contracts is a bourach and the revised agreement has failed to resolve the problem.”
Under the original minute of agreement from 1996, Tayside Contracts paid loans charges for the properties it occupied. Since the loans were paid back, however, no rent has been forthcoming.
Mr Barrett said negotiations between the council and the company stalled when Tayside Contracts insisted the historic basis of charging was retained.
He added: “Times have changed. The governance of the three councils’ (Perth and Kinross, Dundee and Angus) commercial trading arm needs to be something far better than a 20-year-old, back-of-a-fag-packet arrangement.
“At the moment it looks awfully like Tayside Contracts are an organisation out of control the tail is wagging the dog.
“Why should Tayside Contracts, with an annual turnover of £66 million, be freeloading on council premises?
“The explanation we got about why Tayside Contracts are effectively enjoying state aid and a significant financial subsidy from Perth and Kinross Council is not satisfactory.”
Angus Milne, the company’s head of finance, dismissed Mr Barrett’s allegations and stressed the main contractor with Perth and Kinross Council pays all capital charges and running costs at its depots across Tayside.
“This is done in accordance with the original 1996 minute of agreement, which is currently under review,” he said.
“All these costs and charges are included in our published annual accounts.
“This is all in accordance with the minute of agreement under which Tayside Contracts was established by the three councils concerned.”
A Perth and Kinross Council spokesman explained the background, saying: “The use of council property by Tayside Contracts without rental payment, principally for the supply of services to the constituent councils in their individual areas, was agreed in 1996 in terms of a minute of agreement signed by all the parties.
“The terms of that minute of agreement have recently been reviewed and, in anticipation of a move to a situation where rentals were charged, a rental of £250,000 was suggested in respect of the Inveralmond depot, Perth.
“However, agreement was not reached to impose rental charges in the reviewed minute of agreement so that rental payment has not been pursued.
“Tayside Contracts is a successful shared service organisation and any profit it makes is returned to the constituent local authorities.”