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Cairngorm funicular: Financial challenges and uncertainties over multi-million pound repair costs

The funicular railway runs for two kilometers through the Cairngorm ski area.
The funicular railway runs for two kilometers through the Cairngorm ski area.

Highlands and Islands Enterprise (HIE) faces “significant financial challenges and uncertainties” managing the multi-million pound costs of repairing the Cairngorm funicular railway and other major projects amid the Covid-19 crisis, Scotland’s public spending watchdog has warned.

And Audit Scotland (AS) urged the publicly-funded development agency to be more transparent about how its spending decisions are made after it fell short on a pledge to improve.

The AS comments were made in its annual audit of HIE for the 2019/20 financial year, published this week.

Yesterday the agency said it had received increased Scottish Government funding and made “significant progress” in improving openness and transparency since the report was completed.

Cairngorm funicular: MSP calls for public inquiry into ‘failures’ over troubled railway

In the document, the independent watchdog said: “HIE is updating its 2020/21 budget to reflect the impact of Covid-19. It expects to continue supporting the Scottish Government’s long term recovery plans but the implications on its funding are not yet known. HIE continues to face significant financial challenges and uncertainties, not least related to funding of activities on Cairngorm Mountain and the reinstatement of the funicular.”

Last October HIE, which owns the Cairngorm estate and ski centre, pledged £10.35m of the £16m cost of repairing the funicular, which has been out action on safety grounds since 2018. Among other expensive projects highlighted in the audit were the planned £17.3m spaceport in Sutherland, for which the agency has earmarked £9.8m, and £8.3 funding for a quay extension at Nigg Energy Park.

The report continued: “HIE acknowledges that it will be challenging to manage these financial pressures alongside the uncertainty caused by Covid-19.”

The auditors’ comments on openness and transparency related to HIE’s publication of minutes of meetings of its board and risk assurance committee (RAC). Last year HIE said it would start to publish them on its website within 10 working days of their approval, after AS reported “significant delays” in the process.

The report said: “As part of out interim audit, we reviewed HIE’s website in April 2020 and concluded that more work was required to ensure that board and RAC minutes are published within the target timescale. Our review of HIE’s website in September 2020 noted that no board or RAC meetings had been added since our review in April 2020.”

Yesterday, an HIE spokesman said: “Clearly, the whole country is facing unprecedented economic challenges. We’ve played a key role in supporting businesses and communities affected by Covid, both at our own hand and through additional funding from Scottish Government.

HIE will ‘move heaven and earth’ to get Cairn Gorm funicular running

“Since the Audit Scotland report was issued, Scottish Government has approved funding for our Cairngorm business case and increased HIE’s budget. Meanwhile, we have also made significant progress in improving openness and transparency through the timely publication of board minutes, as recommended by Audit Scotland.”

An AS spokesman said: “The impact of Covid-19 on HIE’s budget and work will be more apparent in our 2020/21 HIE annual audit report. Matters highlighted in the 2019/20 audit will be considered as part of our ongoing audit work on the agency.”

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