sparky
Administrator
Portfolio Holder admits IoS Link scheme is “unsustainable”
[FONT="]17/3/11
At yesterday’s meeting of the Cornwall Council Cabinet and in response to a question from the public the Council’s Portfolio Holder for Transport admitted that with the extra borrowing necessary the business case for the Council’s scheme was “unsustainable”.
By this he meant that the income from the charter fee paid to the Council by the preferred operator of the service would not be large enough to establish a vessel replacement fund, and indeed might not even be sufficient to pay off the Council loan taken out to buy the vessel. Providing for a vessel replacement fund has from the very beginning been a key element of the scheme, and it allowed the Council to boast that they were creating a sustainable Isles of Scilly Link.
The calculations underlying the creation of such a fund were always shaky but now they are shot to pieces! Most important, it will now take much longer to repay the loan (the Council say 21-25 years instead of 12), and this will mean repayments continuing into a period where the Council have no control over the charter fee (the first contract is for just 12 years). The Council admits that if it is not possible to recover the loan repayments out of the charter fee income, then the shortfall will have to be made good from other Council funds, and that can mean only one or both of two things: increased council tax and cuts to services.
[/FONT][FONT="]John Maggs
Friends of Penzance Harbour
[/FONT] 07966 322379
www.friendsofpzharbour.org
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[FONT="]17/3/11
At yesterday’s meeting of the Cornwall Council Cabinet and in response to a question from the public the Council’s Portfolio Holder for Transport admitted that with the extra borrowing necessary the business case for the Council’s scheme was “unsustainable”.
By this he meant that the income from the charter fee paid to the Council by the preferred operator of the service would not be large enough to establish a vessel replacement fund, and indeed might not even be sufficient to pay off the Council loan taken out to buy the vessel. Providing for a vessel replacement fund has from the very beginning been a key element of the scheme, and it allowed the Council to boast that they were creating a sustainable Isles of Scilly Link.
The calculations underlying the creation of such a fund were always shaky but now they are shot to pieces! Most important, it will now take much longer to repay the loan (the Council say 21-25 years instead of 12), and this will mean repayments continuing into a period where the Council have no control over the charter fee (the first contract is for just 12 years). The Council admits that if it is not possible to recover the loan repayments out of the charter fee income, then the shortfall will have to be made good from other Council funds, and that can mean only one or both of two things: increased council tax and cuts to services.
[/FONT][FONT="]John Maggs
Friends of Penzance Harbour
[/FONT] 07966 322379
www.friendsofpzharbour.org
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