Pressure is growing for Shetland Islands Council to hold an inquiry into how it lost around £7m on a failed attempt to build a bridge across Lerwick harbour.

Lerwick Port Authority this week agreed to accept £4.8m in an out-of-court settlement for money it lost as a result of the council’s bridge plans.

The council has also spent around £2m on planning the short bridge across the harbour's north mouth, connecting the town of Lerwick with the isle of Bressay.

The plans caused a long-running dispute between the council and the port authority, which wanted to dredge the north mouth to accommodate larger ships. The dredging would have increased the £23m cost of the bridge.

In August 2005 council convener Sandy Cluness and former chief executive Morgan Goodlad used emergency powers to obtain a court order to stop the dredging going ahead just four days before it was due to start.

The next year, the Court of Session said the council had no right to block the contract, freeing the port to proceed with the dredging work and claim damages of £5.9m.

This week council leader Josie Simpson said that he was "very pleased" with the out of court settlement, even though it comes at a time when the council is making huge spending cuts that will remove jobs and public services.

Budget cuts

Mr Simpson stressed that money had been put aside to pay this bill and that it would not lead to any further savings. Had they gone to court over this it could have cost around £8m, he said.

He said: "Although the settlement comes at a time of severe budget pressures, I think it was in the best interests of Shetland that we resolved it now.

"This has been a difficult and long running sore between the two organisations, but the settlement agreed between us means that a line can be drawn in the sand and both can move ahead."

Local MSP Tavish Scott has joined others in calling for an internal inquiry into why so much money was spent on a bridge that was never built.

He said: "The council has spent millions and millions and nothing has been achieved, and I think that does need some kind of investigation.

"If the council chooses not to explain what happened I have no doubt the external auditors will look into it."

Current council chief executive Alistair Buchan insisted that the council was taking corporate responsibility for what happened and no one was being singled out for blame.

He said: "It’s my clear view that as a corporate body there are lessons to be learned, and to a large extent things have been put in place to minimise the risk of any recurrence of something like this."

Lerwick councillor Jonathan Wills is one of four who voted for an inquiry at a private council meeting on Monday, a motion which was defeated.

Dr Wills said: "Only a proper inquiry can tell us whether this was indeed an entirely excusable mistake by innocents who all deserved medals, promotions and pensions, or a foolish gamble, recklessly pursued by ill-advised political incompetents and amounting to misconduct in a public office."