Aberdeen could be forced to shelve MORE building projects to cope with £4.4m deficit

By Alastair Gossip

November 8 2022, 5:00 pm

Construction at the Torry primary school and community hub site in August. Contractors have told council bosses of soaring costs of basic materials - seen across the local authority's building projects. Image: Wullie Marr/DC Thomson.

A “doomy and gloomy” reality check has left Aberdeen councillors facing the prospect of axing or shelving more building projects.

Staff have been ordered to tighten the purse strings as Town House chiefs try to limit a forecasted multi-million-pound deficit.

This would be a second time since the May election that councillors have been forced to rethink construction plans.

It was only this summer when top brass urged a halt to work on a new primary school and council housebuilding.

But as a result, a new queue-busting dual carriageway and the multi-million-pound city centre and beach masterplan could be looked at this time.

How serious is the problem?

By the end of March, there is a risk of a £4.4m blackhole in Aberdeen’s general fund.

Council budget holders have been instructed to delay, stop or reduce spending “wherever possible”.

Supply chain volatility caused by Russia’s invasion of Ukraine and 40-year-high inflation have been blamed for the unbalanced books.

Council finance chief Jonathan Belford mentioned the market volatility caused by Liz Truss's premiership, as he spelled out the risks to council budgets. Image: Anthony Harvey/Shutterstock. — Council finance chief Jonathan Belford mentioned the market volatility caused by Liz Truss’s premiership, as he spelled out the risks to council budgets. Image: Anthony Harvey/Shutterstock.

The council’s chief finance officer Jonathan Belford also highlighted the tumult caused by Liz Truss’s premiership.

And the costs of welcoming more than 1,000 Ukrainians fleeing war has weighed heavily on the local authority – though that burden has now been eased by the Scottish Government.

Contingency cash is already expected to cover higher wage bills after national pay negotiations.

And the cost of council borrowing has, since the summer, gone up 23%, according to Mr Belford.

On top of that, building things has got more expensive too.

‘Doomy, gloomy realism’: Cost of Aberdeen’s capital projects going ‘rapidly up’

So, the financial straits could force councillors to reassess the city’s building programme once more.

Resources director Steve Whyte offered his insight on the cost of capital investment with a nervous shift in his chair.

“There’s a clear trend… up,” he said. “Rapid up is probably a fair description.”

The exchange rate being its worst “probably” in Mr Whyte’s memory has driven up costs onsite too.

Construction at the Torry primary school and community hub site in August. Contractors have told council bosses of soaring costs of basic materials – seen across the local authority’s building projects. Image: Wullie Marr/DC Thomson.

Plasterboard, for example, rose 17% in price between April and June. It went up another 20% over the following three months, the city’s top accountant claimed.

Construction is taking longer due to delays in getting supplies, so staff are being paid for more days on the job.

Mr Whyte added: “From what we can see at the moment there is no slowdown to that.

“We will again have to look at a further reprofiling of the capital programme. What projects could have some sort of positive impact to help?

“It is a pretty doomy and gloomy picture I have painted. But hopefully it is realistic about what it’s like out there: very, very difficult.”

Aberdeen’s capital programme was reviewed only three months ago

In July, councillors were urged to rethink the council’s capital projects.

Communities raged as long-promised new facilities were shelved or binned altogether.

Months of delay was added to construction of the new Tillydrone primary school as the local authority returned to the market to find a better quote.

Tools have been downed at the site of the new Tillydrone primary school while the council tries to get a better price for its building projects. Image: Kath Flannery/DC Thomson.

Council housebuilding was also put on hold, a move which could save the local authority nearly £38m by the end of the financial year.

Other projects, like new nurseries at St Joseph’s RC School and in Garthdee, as well as a Pitfodels link road were canned.

Budgets for projects including Union Terrace Gardens, Provost Skene’s House, Aberdeen Art Gallery, new primary schools at Milltimber, Countesswells and Torry, and the new mortuary were all reassessed.

So, what projects could now be in the spotlight?

During the last reprofiling scramble, there were very few strands of council work that avoided change.

Those include the Berryden Corridor improvements, the hydrogen hub – which the council recently teamed up with BP to bring to fruition – and the city centre and beach masterplan.

The long-awaited Berryden Corridor escaped any budget reprofiling over the summer, as the council reassessed its building projects. Image: Kami Thomson/DC Thomson.

Decades in the making, the Berryden dual carriageway is hoped to reduce congestion in the area. Demolition and preparation works need to begin next year or the council risks losing planning permission.

On the £150m masterplan, the council is facing calls to commit to Aberdeen FC’s vision for a new beach stadium.

Back in July, officials warned “it was easy to foresee that additional funding will be required”.

That was “in the current construction climate” – which they now say has got significantly tougher since then.