Council’s finance boss Derek Louden says ‘I think it is right that I personally apologise’
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Councillor Derek Louden has “personally apologised” to communities after Highland Council confirmed that it would not proceed with 10 school projects because they were “simply unaffordable.”
The capital budget was approved but with the loss of around £223 million of investment that put 10 new school buildings far beyond the reach of the local authority.
As chairman of the corporate resources committee he is the de facto budget leader as the body oversees council budgets throughout the year – so for him to apologise is no small matter.
He said: “Whatever the causes of the circumstances that we find ourselves in, I think it is right that I personally apologise to the communities because there was an expectation, there was an expectation that we could do this.”
I think it is right that I personally apologise to the communities
A number of parents across the region who tuned into the webcast of the debate welcomed his dignified approach as it contrasted so sharply with a number of his colleagues’ stances.
Two SNP members tried to blame the media for “misrepresentation” and a third argued that St Clement’s Special School had missed its chance.
Despite the apology and his personal regret Cllr Louden argued that the new capital programme must “set aside” the schools because the financial risk were too great.
“This report is the most depressing I have seen in the six years I have been here, I wouldn’t hold back on that,” he said. “I will concentrate on just one page in that report.
“Whatever the causes of the circumstances that we find ourselves in, I think it is right that I personally apologise to the communities because there was an expectation. There was an expectation that we could do this.
“What I have to explain, what I have to try to explain is what has changed in a relatively short period of time to make what we intended doing impossible and unattainable.”
He asked members to look at the table in the report showing the increases in Bank of England base interest rates over the past year (pictured below).
He continued: “What you’ll see there is that we had intended to borrow money to build the schools but the cost of that now is £500 million but we are not borrowing it at half a per cent, which is the interest rate at the top of the table.
“We would have to borrow it at more than five percent, which is the figure at the bottom of the table. You multiply that by the cost of the schools and you come to some stark figures.
“We hoped to be able to build those schools with an interest charge element of £2.5 million but the interest rate is 10 times that now. That would be a £25 million pressure on the revenue budget. That is why we are not able to do it.”
He added: “The schools are simply unaffordable at the present time. We can look at this again, if these interest rates do peak and come back down, we can look at it again but at the moment we cannot go ahead with it, it is simply unaffordable and I bitterly regret that it is.”
