Scottish Government defends funding and progress of infrastructure projects

Royal Hospital for Sick Children in Edinburgh.
Royal Hospital for Sick Children in Edinburgh.

The Scottish Government has insisted that infrastructure projects will be delivered on time and on budget following questions over how much private finance is being used to fund them.

A report in the Guardian this week suggested that the Scottish Government is turning to increased private sector funding to pay for a multi-billion pound spending programme after an EU ruling delayed major public projects in Scotland.

The resulting guidance means the Scottish Futures Trust (SFT) has been forced to limit the amount of public funding for capital projects such as the Aberdeen Western Peripheral Route (AWPR), the Royal Hospital for Sick Children in Edinburgh and more than a dozen secondary schools.

The guidance has also led the Office for National Statistics (ONS) to review the balance of public and private sector investment in the UK, causing further delays to many projects.

The SFT was set up to distribute private finance in a ‘non-profit’ way to replace Private Finance Initiative (PFI) schemes which were introduced under the last Labour government to keep projects ‘off the balance sheet’.

But the EU ruling means public sector involvement in these projects has been reduced to just a 20 per cent stake, with private firms making up 60 per cent and the remaining 20 per cent in the hands of private charities.

Instead of providing some of the upfront building costs, now councils, health boards and Transport Scotland will see higher debt costs.

The SFT model will now more closely resemble PFI.

Scottish Labour’s finance spokeswoman Jackie Baillie has urged Audit Scotland to investigate changes to how much private money is used in building projects financed through the SFT.

She said: “Having scrapped the old system because they claimed it handed too much to the private sector the SNP have replaced it with something that means even more money and influence is given to the private sector.”

Defending the use of private finance, Mrs Baillie added: “Of course there should be private sector involvement so we can build schools and hospitals, but with the SNP’s approach future generations will be saddled with crippling debts.”

However, the Scottish Government has insisted that Parliament has been updated with any changes to the private finance model following the ONS review.

“We fully expect these signed projects to be delivered on time and on budget, regardless of their national statistical classification,” a spokeswoman said.

She added: “At key stages in this process the deputy first minister has updated Parliament – both in the chamber and to the Finance Committee – and as soon as the ONS publish their report, the DFM will immediately update Parliament about any potential implications.”

The government also denied there has been any delay to the AWPR, one of the projects financed through the SFT which is being reviewed by ONS.

“It is simply not the case that there has been any delay to the AWPR since the contracts were signed or as a result of the ONS review of the project, nor has there been any change in the costs,” said the spokeswoman.

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