Council’s revised capital programme could inject £50m into local economy

The SIC could conceivably spend somewhere approaching £50 million in a single year on construction projects as part of a colossal injection of money into the local economy in the first half of the next decade.

Councillors this week approved the first year of a proposed five-year capital programme plan which, when housing and the new Anderson High School are factored in, indicates a projected spend of around £47 million in 2010/11. In total, the ambitious plan is for somewhere in the region of £160 million to be spent on new buildings and maintenance in the next five years.

While the status of the AHS project means most of the £15 million allocated to it next year is unlikely to be spent, chief executive David Clark said that in principle he did not see any insurmountable obstacles to spending up to £50 million in a single financial year in the future.

He is also confident that the council can get better value for money from construction firms. During Wednesday’s Full Council meeting in Lerwick Town Hall, Mr Clark said he believed making savings of 10 per cent on procurement “would be not a particularly challenging approach to take”.

He sees the potential for large-scale savings by seeking longer term solutions for building work and firms’ accommodation and travel arrangements – though he insists that local services will be used “where they can be”.

“I think mainland constructors have been taking advantage of the situation,” he said. “I think it’s fair to say that we have a lot of scope for making big savings in the way we procure. I really don’t want to get into criticising what’s gone on in the past, but with a dedicated, focused look there are big savings to be had and we should look at it as a positive going forwards.”

Earlier this year councillors were distraught at the shambolic state of the process for prioritising capital projects and very early in his tenure Mr Clark identified it as requiring urgent attention.

Under previous chief executive Morgan Goodlad the SIC had managed to build up a list of aspirations with a total price tag which is £120 million over and above what they can afford. The concern is that the SIC keeps raising expectations in communities but then cannot deliver what has been promised.

Mr Clark’s experience of capital projects is understood to have been the clinching factor in councillors deciding to give him the job and success in sorting out the capital programme will be imperative as he seeks to put the events of recent weeks behind him.

He told The Shetland Times yesterday: “I’m planning to work with the executive in ensuring that we spend the next two or three months calming the troubled waters and focusing on moving forward with the various initiatives so that by early spring we can demonstrate genuine progress across a variety of fronts.

“You look at the capital programme, housing, broadband, internet and communications, the AHS – there really is a raft of things where we actually have made progress but want to get some quantifiable achievements to demonstrate that, and focus on the delivery of service rather than the diversions that have arisen over the last few weeks.”

A working group is in the process of drawing up the five-year, £100 million programme which should be agreed in full by spring 2010. That sum does not include the new AHS – expected to cost in the region of £40 million – or plans for £20 million-worth of house-building schemes.

Mr Clark stressed that the new plan would create more flexibility in that the intention will no longer be to spend a strict £20 million each year, preventing slippage from the programme and allowing a “more realistic” approach to managing projects.

“If figures and programmes do change, that’s not necessarily a bad thing,” he said. “It’s an indication that we’re operating in the real world rather than letting events drive us.”

Councillors also this week approved a new “gateway” process for managing capital projects. Essentially, it picks out several key stages in projects and, once councillors have satisfied themselves that the previous stage is correct, they can move forward.

It is hoped that tighter control of how projects are managed will prevent the type of chaos which has seen attempts to build a new Anderson High School flounder for almost two decades. Contractors were days away from beginning work at the Knab earlier this summer before councillors opted for a rethink. Mr Clark said all the options for any given project ought to be examined carefully at a much earlier stage.

“The gateway is a way of ensuring we only go forward with projects that are viable and remain viable,” he said. “I think it will be invaluable for smaller projects but completely invaluable for larger projects – at a very early stage the key decisions can be taken. The types of AHS situation would not happen again.”

Councillors were supportive of the proposals, including his main critic Jonathan Wills who said he had “always supported” Mr Clark’s attempts to “bring the capital programme under control”.

Some questioned whether such high levels of spending would be “physically possible”. Mr Clark said it would be important to ensure projects were properly phased to avoid overheating the economy and to make sure resources were not being overstretched.

For 2010/11, among the biggest items of expenditure are: £4 million on the new ferry terminal in Whalsay; £3.35 million on the new Mid Yell junior high school; £1.8 million on replacements and extensions of various care homes around the isles; £1.5 million on cinema and music venue Mareel; £1.4 million on the Walls Pier; £400,000 on feasibility studies into new projects; £395,000 on IT equipment for schools; £374,500 on the Bixter burial ground, and £300,000 on maintaining the existing AHS buildings.

One task which is still to be addressed is deciding where expensive longer-term desires such as subsea tunnels to Bressay (given an indicative £34.4 million price tag) and underneath the Bluemull Sound between Yell and Unst (£18.8 million) fit into proceedings.