Council proposes Water of Leith funding solution

Water of LeithEdinburgh Council has recently agreed arrangements to meet the funding shortfall to complete the latest phase of the Water of Leith flood prevention scheme.

The Council is planning to transfer money from elsewhere within its budgets to plug a £4.7m shortfall to complete phase 2 of the scheme.

Phase 1 was recently completed at a cost of around £29m but funding restraints meant that the second phase had to be significantly scaled back.  This has led to a drop in the estimated cost of phase 2 from over £35m to approximately £25m.

With funding agreed, procurement for phase 2 will begin shortly with work planned for an Autumn 2015 start.

In a letter to me the Scottish Government has criticised the Council for failing to accept what Ministers deemed a ‘favourable tender’ for the whole project in 2009. However, to characterise the situation in this way completely ignores the uncertainty created around the project by the Scottish Government’s own decision to change the funding mechanism.

Prior to 2009 funding for flooding was based on actual eligible costs but was replaced by a scheme based on estimates. Shortly after the change , a review of the estimated scheme costs  at the Water of Leith revealed that the original projections on which funding had been based were underestimated.

Throughout the progress of the project, it has been beset by factors beyond the Council’s control – a public local inquiry led to a modified scheme which required a further round of planning applications with substantial costs.

By 2009, the cost of the project was estimated at £55m and while the lowest tender did represent good value, the Council had insufficient funds to be able to commit to the construction contract.  At this time, the Council was in regular contact with the Scottish Government to seek clarification over future funding arrangements but no commitment was given.  As a result of this uncertainty, the Council had no option but to abort the procurement process and progress on a phased basis.  This decision has again added further expense to the project.

I have repeatedly raised the issue of flood funding with the Scottish Government, particularly around the impact of a change to their funding mechanism in 2009.  Before the change the Scottish Government would pay 80% of the costs leaving local authorities to stump up the remaining 20%.  I have been repeatedly told that the flood prevention scheme is not eligible for any further funding but I believe the circumstances surrounding the scheme merit further consideration.

Hopefully the latest decision by the Council will see progress on phase 2 of the scheme finally move forward.  However, with phase 3 mothballed, I will be continuing to press the Scottish Government for support to ensure that the entire scheme can be completed to protect residents and businesses from the impact of flooding.