SUPERMARKET giant Tesco has failed in an attempt to avoid paying interest on £400,000 overdue in contributions towards schooling in Musselburgh.

The supermarket chain received a bill from East Lothian Council in July last year – four months after construction started on 140 new homes on land formerly owned by the firm.

Tesco originally insisted it was no longer liable to pay the contribution towards education as it had sold the land to a third party.

However, the council rejected the claim and an appeal to Scottish Ministers also saw Tesco remain liable.

Now Tesco has lost a bid to avoid late payment interest costs on the hefty bill by trying to change the planning condition to say the funds are only due when the housing is complete.

And it has been told that it is getting off lightly, as current contribution demands, if applied, would see it facing an inflated bill of just under £670,000.

The chain applied to East Lothian Council to change the timescale for payment of the contribution, arguing it no longer had any control over whether the houses would be completed or when.

East Lothian Council’s education service said that a new proposal for the housing was nowadays likely to demand a contribution of £669,000 towards schooling costs.

And it warned that a delay to the payment being made could “significantly impact” ongoing projects to provide a new secondary school in Wallyford and extend Musselburgh Grammar School.

Under planning legislation, local authorities can ask housing developers to pay a proportion of money towards schooling to counteract the additional number of families moving into their homes.

The contested site at Tesco’s former Olivebank store in the town was originally given planning permission for housing 15 years ago but the supermarket chain went on to build a new store on adjoining land, handing the original site to a third party.

Tesco says it built its current supermarket and petrol station at Inveravon Terrace under a separate planning permission and no longer had any involvement in the rest of the site included in the original planning permission.

Appealing against paying the contribution, it argued: “This transaction took place over a decade ago and the land of the residential development site is not owned by Tesco.”

The Scottish Government reporter ruled that Tesco’s appeal against the contribution was unlawful and backed the council’s decision.

However, Tesco’s latest application sought to move the date the payment was due and, effectively, wipe out the interest accumulated over the last 16 months.

Rejecting the application, planning officers warned that Tesco was liable for interest rates of four per cent above the Bank of Scotland rate on the outstanding payment and the longer it took to pay, the more the value of the contribution was eroded by cost increases.