Cambs guided bus claim could last to 2015

PUBLISHED: 14:00 14 February 2012 | UPDATED: 19:33 14 February 2012

Guided busway

Guided busway


SETTLEMENT of the dispute between Cambridgeshire County Council and contractor BAM Nuttall over who should pay for the £60million cost overrun on the Cambridgeshire guided busway now looks unlikely to happen before 2014/15, potentially taking the council’s interest bill to £9.5m.

Liberal Democrat leader Councillor Kilian Bourke said yesterday (Tuesday) that officers had confirmed that the previous assumption of settlement on 2013/14 had been changed to the following year.

The council has issued proceedings in the High Court seeking the return of £52.5m it says it has overpaid the contractor for the longest guided busway in the world, which opened more than two years late last August.

Cllr Bourke acknowledges that the Conservative-controlled authority hopes to recover its claim in full, along with the additional interest, but says that in the meantime the interest burden on Council Tax payers continues to mount.

“The delay means that the total cost of interest payments on borrowing money to meet the overspend on the project will rise from £7.9m to £9.5m – an increase of over £1.5m,” he said. “To date the interest stands at £3.7m.

“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.”

Cllr Bourke said that, if the council lost its High Court claim, the cost of paying off the interest on the prudential borrowing would come to £21m.

Cllr Ian Bates, the cabinet member responsible for the project, added: “The judicial wheels continue in motion, and there’s no change to the legal process. But as part of our prudent budgeting we have made financial allowance until this issue is resolved.”

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