Highland may sue after PPP sums don't add up

4th September 2009 at 01:00
A Scottish Council is considering suing an advisor who underestimated its first bill for 11 new PPP schools by almost pound;1 million

Highland Council has been saddled with an overspend of pound;754,000 because it budgeted too little for its PPP contract in the last financial year.

The first bill for the schools arrived in March and, because some of the buildings were completed in 2007-08, it covers more than a year.

In the future, therefore, the council expects the overspend to be considerably smaller, but nevertheless pound;356,000 more than expected. And this is an additional expense that will be incurred ever year until the PPP contract ends in 2037.

The council is now deciding whether to pursue an action for damages against the specialist advisor who underestimated the cost of the schools.

"In 2003 we were given advice so we would know when the schools opened what the rates payable were likely to be," said Ron MacKenzie, the council's head of support services for education.

"However, when the figure became known in March, it was significantly higher than we were expecting. We are not going to leave this alone and plan on examining all our options. If we have to go to court, we will."

In the current financial year, the council had expected the schools to cost pound;557,652 but, based on the March bill, it now believes the true cost will be closer to pound;1 million (pound;914,128), leaving a shortfall of pound;356,476.

"This shortfall represents an annual budget pressure for the duration of the PPP contract," according to a council report.

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