Perth and Kinross Council’s finance chief has warned the local authority’s borrowing could increase to over £1 billion in the next four years.
Councillors were told the eye-watering sum – a rise of £400 million on the current debt – may be required to fund its capital budget.
This includes projects such as the £150M Cross Tay Link Road and £80M replacement Perth High School.
Officials say the figure will depend on what elected members decide when they meet to set the council’s budget later this month.
Head of finance Stewart MacKenzie told the finance and resources committee the current borrowing position is £623 million – and that this could rise to over £1 billion by March 2028.
The bulk of the existing debt – £575M – is to the Public Works Loan Board (PWLB).
This is run by the UK Debt Management Office on behalf of HM Treasury, and interest is charged at a lower rate than the average.
However, Mr MacKenzie warned future borrowing may prove more costly.
He said: “The modelling that we will be bringing to elected members around the affordability of the capital budget factors in a significant increase in the short-term over the rates we’ve seen of around 2.6% over the last 10 years.”
He added: “The challenge we have going forward is that the cost of new borrowing is going to be higher – perhaps significantly higher.”
Perth and Kinross Council budget assigned to major projects
Perth and Kinross Council’s capital budget includes a range of multimillion projects.
Standouts include the £36M Blairgowrie Recreation Centre, £80M Perth High School and £150M Cross Tay Link Road.
Its capital programme also includes the £5M Harris Academy extension for Invergowrie pupils, £24M for the new primary school at Bertha Park, the completed £20M Riverside Primary in Perth and the £28M Comrie Flood Protection Scheme.
The £33M Perth Eco-Innovation Park is currently unprogrammed and cannot progress due to a funding shortfall.
A fully-costed plan for the PH2O sports centre – now planned to replace Perth’s Bells Sports Centre, Dewars Ice Rink and Perth Leisure Pool – will be brought before councillors in August 2024.
Mr MacKenzie said the total borrowing included projects dating back to when Perth and Kinross Council was first formed as a local authority.
He said: “The increase of £1 billion is the overall resourcing requirement of the capital budget both current, future – in terms of the next six years – and historic because we have debt incurred due to expenditure 20/30 years ago.”