HOME OWNERS and businesses have been overcharged a total of £13.5 million in one of the largest corruption cases in council history in Scotland, it has been claimed.

The number of people allegedly defrauded after being overcharged for work carried out by Edinburgh City Council's Property Conservation Department has risen to more than 700 and is soon expected to top 1000.

Complaints are arriving at an average of more than one a day.

Two investigations – one by Lothian and Borders Police and another by independent accountants – have already been launched into claims of spiralling bills and unnecessary work being done.

It will take more than two years to investigate the first 500 complaints received by the council, and for the level of overcharging to be confirmed, but provisional totals are now being considered behind closed doors, according to a senior council source.

The first "working estimate" is of an overcharge of £13.5m, based on a figure of 10% of the value of building repairs contracts since 2005.

Labour councillor Ewan Aitken says unfair costs passed on to residents would be revealed as "many millions".

He said: "It goes back more than five years and I have always recognised the financial and legal costs are potentially enormous."

The allegations stem from the fact the property conservation department often issues statutory notices for buildings that need work done to make them safe, arranges the job through contrac-tors, then recoups the cash from owners, often in tenement blocks.

The council charges homeowners 15% on top of the repair bill to cover surveys and administrative expenses.

But one Leith homeowner complained after a £300,000 estimate for his 15-flat block rose to more than £1m, with the dispute over why it was so high still going on.

In another case a New Town resident had a bill of £300,000 reduced to £40,000 after complaining about it.

The council has said it is to employ independent surveyors to assess works carried out through the department.

The £13.5m figure is based on an average of the £16m value of contracts each year between 2005 and 2009 inclusive, and a £30m total in 2010. It also includes 10% of the £25m in bills still to be paid from the end of 2010.

The source said: "The 10% provision is a working estimate just now and it is the starting point, but there is a basis for these figures."

A spokesman for the council said it "does not recognise the working estimate of 10%". But he could not categorically say it was not under consideration.

Mark Turley, the director of community services, who has to overhaul the devastated department, admitted that more complaints were expected.

He said: "The reputational damage which the service has suffered will encourage many owners to seek a review of their projects, so the overall number is likely to continue to grow."

In October, five of the 18 staff suspended from the department were sacked and more disciplinary measures are expected, as well as criminal charges.