Will the growing bill for the Cross Tay Link Road leave people in Perth and Kinross ‘shackled with debt’?
That was the claim when it emerged Cross Tay Link Road costs have risen to more than £150 million.
The £32.5m increase is around 28% higher than the last estimate of £118m made back in 2016.
The local authority will pay the bill for the road and bridge over the next 50 years.
Perth and Kinross Council is leading, and largely paying for, the Cross Tay Link Road project.
It’s the biggest infrastructure project in the council’s history.
That makes it different to other large roads projects – for example, A9 dualling – where the Scottish Government controls the purse strings.
Many are wondering how PKC bosses can afford to foot such a large bill and what effect if could have on spending on services in the future.
PKC has £70m in ‘uncommitted capacity’ for new road
So will the big bill lead to deeper public spending cuts in Perth and Kinross?
I checked council papers to find out more about where the money is coming from.
The new figure emerged in papers for the council’s finance and resources committee, held on Wednesday September 7.
The “worst case” spending figure, the papers revealed, would come from “uncommitted capacity” in the council’s capital budget.
The capital bit is key. Papers show there’s £70m spare in this budget (or there was before the latest CTLR bill).
The council’s capital budget is for roads, buildings and other infrastructure that sits separate to the council’s everyday spending budget.
Financial rules mean councils can borrow to invest from the capital budget in a way they cannot do, for example, to pay teachers or bin workers.
Borrowing costs rising to pay for 30-year investment plan
So should council tax bill payers in PKC rest easy about the latest £33.2m bill? (That also includes £700,000 more for the city hall renovation).
Not quite.
The money is only available thanks to a new 30-year investment plan.
And that’s been financed from money borrowed from the UK Treasury’s Public Works Loan Board.
Councillors approved this when they passed the last PKC overall budget in February 2022, agreeing to £80m in new borrowing.
These loans also pay for a host of other infrastructure projects, including the much-heralded PH20 leisure centre and the Perth High School replacement.
The loan payments for this additional borrowing could, in the future, affect a wide range of spending decisions.
While the extra £32.5m has been budgeted for, the loan payments will restrict councillors’ room to manoeuvre for decades to come.
And this comes at a time when council financial chiefs are already warning of a £24m ‘blackhole’ in its revenue, or day-to-day spending, plans.
What has PKC said on Cross Tay Link Road costs?
A spokesman said the Cross Tay Link Road should have an operational life of more than 100 years while confirming the borrowing to finance it will be repaid over 50 years.
This project is also being supported through a £40 million contribution from the Scottish Government, he added.
He said all construction projects are currently facing inflationary pressures due to global challenges in the construction industry.
“The funding strategy approved by council in February included some capacity to meet additional expenditure on new or existing capital projects,” he said.
So it remains to be seen just how closely the CTLR will “shackle” council tax payers in debt over the next 50 years.
The central argument for the project remains that it will unlock the kind of growth that will make the local authority wealthier in the long run.
But the people who move into the new homes will need schools for their kids and bins collected too.
And the other arguments in favour of the road around reducing congestion and improving air quality remain contested.
So for now, PKC residents – from Kinross to Kinloch Rannoch – should keep a wary eye on the expanding Cross Tay Link Road budget, as it has serious and long-term implications for them all.
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