Wednesday, 15 February 2012

Guided Bus Row Set To Drag On Costing £9.5M In Interest

Cambridgeshire County Council’s long running dispute over the guided bus project looks set to drag on for another three years costing £9.5 million in interest.*

A resolution of the case with contractor BAM Nuttall was expected to take place in 2013-14 but has now been pushed back to 2014-15.

The Conservative administration expects by this time to have won 100 per cent of the court case and received a full settlement - including the cost of these interest payments plus an additional charge on top - from BAM Nuttall.

But the delay means that the total cost of interest payments on borrowing money to meet the overspend on the project will rise from £7.9 million to £9.5 million – an increase of over £1.5 million. To date the interest stands at £3.7 million.

Liberal Democrat leader Kilian Bourke said: "These new figures confirm that the final decision on whether the council will get its money back has been pushed back even further. Unfortunately the council is paying a high price in the meantime: just paying off the interest on the borrowing is expected to cost the same amount of money over the next three years as a one per cent increase in council tax would provide.

"These figures must raise wider concerns about the £250 million of prudential borrowing the Tories are planning to spend on major projects. The abandonment of their wrong-headed austerity drive is good news, but do they have the basic competence to keep these investments on time and on budget?  The financial penalties for failing to do so could be severe.

"I hope that the Conservatives are right and they win 100 per cent of the court case otherwise local people will be picking up the tab for years to come."

*Note: If the council lost the court case outright, the cost of paying off the interest on the prudential borrowing would come to £21m.  This "100% loss" figure remains unchanged.

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