Spending guidelines may delay new schools and hospitals

CONSTRUCTION of new schools and hospitals may be delayed following fresh Government accounting guidelines for projects built in partnership with private firms.

The new guidelines mean any Public Private Partnership in which the State bears a substantial risk will have to be fully accounted for on the Government’s balance sheet.

This means the inclusion of major projects may flout Brussels borrowing guidelines.

Officials say the State bears a bigger risk with the construction of schools and hospitals, while projects such as roads funded through toll charges will not have to be fully accounted for.

Finance Minister, Charlie McCreevy issued the guidelines to Government departments in recent weeks in a bid to clear up confusion over the PPP issue.

The Cork School of Music, billed as a flagship development for the city’s year of European City of Culture in 2005, is one of the biggest projects to have suffered over confusion on the PPP issue.

However, Mr McCreevy’s memo makes it clear funding for projects such as the School of Music emains to be resolved.

An interdepartmental group, including officials from the Department of Finance, Central Statistics Office, National Development Finance Agency, Department of Transport and Department of Education, is studying the issue. However, the Government will ultimately be reliant on a decision by the EU’s statistical office, Eurostat, before deciding what projects can be included on it’s balance sheet.

The Eurostat decision is not expected for at least a year but the interdepartmental group is expected to issue recommendations on the subject within weeks.

Taoiseach Bertie Ahern will come under pressure to give the go-ahead to the Cork School of Music when he meets with Health Minister Mícheál Martin and a group of Cork TDs next week.

Students have been forced to study in private accommodation for the last 18 months, while they wait for the construction of a new building.

Senior staff in the Cork Institute of Technology, of which the School of Music is a constituent college, told an Oireachtas Committee this week that the school was at crisis point and teaching programmes would suffer if the new building did not get the green light.