A £32 million splurge on city centre regeneration projects has left some questioning if Aberdeen has “found a pot at the end of the rainbow”.
Aberdeen councillors clashed over how best to slash £16m off next year’s spending plans during tense budget talks today.
But it wasn’t as frugal an event as had been feared – and threatened by top city officials – for months before.
SNP finance convener Alex McLellan unveiled millions would be spent on funding two of his party’s pre-election promises: building an urban garden in Queen Street and revamping the Castlegate.
A bus lane, linking Union Street to Justice Street, is planned to be included in the overhaul of the historic cobbled square.
There will also be new greenery, seating and lighting.
Meanwhile, a new “urban park” will be created nearby on Queen Street – with the final plans (including whether not to demolish the old police HQ yet to be decided).
How can the council afford it?
But to make the plans a reality, the local authority will have to borrow millions more and use a one-off “raid” of reserves officials had recommended be kept stashed away due to global volatility.
It included a £30m spend of service concession cash reserves, an accounting trick based on the value of the city’s 3R schools.
But Mr McLellan said it was required spending to ensure the city is in the “best place it can be”.
Why go ahead with Castlegate and Queen Street revamp?
“We have allocated capital funding for Queen Street and the Castlegate,” he confirmed.
“We have made changes, taking reserves and the concession payment to pay off debt which has created a benefit moving forward.
“There’s a reduction in the cost of borrowing.
“We have made space and invested other monies into the two city centre projects and the school estate, and that is creating additional borrowing.”
He added that his SNP and Lib Dem administration had been “realistic” in their goals, as they were only progressing with the Castlegate and Queen Street work just now.
Other plans, like a potential £12m redo of the Justice Street roundabout and work on the east end of Union Street, are on the shelf for now.
“We’re having to pick and choose the important bits and these two pieces of the jigsaw are key,” he added.
Decision came amid protest against mounting debt
Outside Aberdeen Town House on Wednesday morning, protestors banged on drums and waved banners – urging councillors to reduce Aberdeen’s tens of millions of pounds debt.
Earlier in the week, the country watched as Birmingham City Council was forced to vote through £300m cuts to balance its effectively bankrupt books.
With the budget passed also including a new Hazlehead Academy and £17m upgrade for “crumbling” Ferryhill School, Aberdeen City Council will borrow £193.4m this year.
It takes the local authority’s gross borrowing to £1.81 billion, with that bill expected to rise to £2.5bn by March 2029.
Why does finance expert advise against ‘risky’ move?
Chief finance officer Jonathan Belford, in briefing councillors through the budget setting process, had warned against using service concession cash.
He wrote in a report: “Projections emphasise the need for care when making budget decisions as the usable reserves are expected to reduce in future years.
“Lowering reserves reduces the council’s financial resilience and provides fewer
opportunities to redirect or repurpose funding to support the unknown and
unexpected financial implications of events out with council control.”
Elsewhere he recommended the service concession reserve be held back to cover a political promise of no compulsory redundancies, by funding voluntary severance and early retirement instead.
But instead, £30m of service concession cash was put towards the city centre cash splash.
Is SNP ‘putting it on the credit card’ with Castlegate revamp and Queen Street park?
Conservative group leader Ryan Houghton, raged at how Aberdeen would pay for its latest big-money projects.
He said: “Some of us make financially prudent decisions and some do not.
“This year it would seem the SNP want to put their budget on the credit card, by going against officer advice on the service concessions.
“You are raiding the reserves.”
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‘We have to be prudent’
Meanwhile, independent councillor Marie Boulton pondered whether the SNP and Lib Dems had found a “pot at the end of a rainbow”.
“But now there’s the realisation the money is coming from concessions, which is not repeatable, not sustainable.
“And quite frankly when we see what’s happening at other local authorities and their financial viability going forward, we have to be prudent and make a sustainable model.”
Oprah Winfrey gets unlikely shout out in council chamber
Mr McLellan, whose budget was passed comfortably, was also compared to US television star Oprah Winfrey for his shopping spree.
Labour councillor Lynn Thomson joked: “She went around the audience going: ‘You’ve got a car! You’ve got a car! Everybody gets a car!’
“It set me wondering where is the money actually coming from. Perhaps Mr McLellan discovered a magic money tree.”
Read more from the budget meeting here:
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