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New way to fund capital projects New public funding plan unveiled
(1 day later)
The building of Scotland's schools, hospitals and other large public sector projects will be funded under a new system to be unveiled by ministers. A new system to fund the building of schools, hospitals and other public sector projects has been outlined by Scottish ministers.
The government will also report progress on the setting up a Scottish Futures Trust where a not-for-profit body will fund capital projects. The Scottish Futures Trust would release up to £150m each year and cost less than PPP/PFI tie-ups with private companies, the government has claimed.
Ministers insist it will be less costly than the tie-up with the private sector, known as PFI or PPP. The scheme would initially be created in partnership with councils.
But sceptics have said they will want to study the details closely. The Tories said the new system would still see private cash put into public infrastructure projects.
The Scottish Conservative Party's Derek Brownlee said there was a "desperate need" for more information on the structure of the trust. The cost of PFI contracts - such as Edinburgh Royal Infirmary and East Kilbride's Hairmyres Hospital - has caused concern in some areas, including a recent warning from medical chiefs that some schemes were hitting care.
'Best value' Ministers' plans would see the trust split into public and private sections, the latter of which is likely to be a joint venture between public and private investors.
He added: "There is real uncertainty about the direction in which the Scottish Government is heading. However it is dressed up, the key principle of PFI/PPP is maintained Derek BrownleeScottish Tory finance spokesman
"Scotland needs to invest in infrastructure, from our roads and bridges to public buildings like schools and hospitals. Finance Secretary John Swinney said the SNP's non-profit method - such as the one being used to fund the new Edinburgh-Borders rail link - would be more cost-effective.
"What should guide the government is getting the best value for taxpayers' money, while delivering infrastructure improvements as quickly as possible." He added: "The Scottish Futures Trust company will support public bodies in delivering more cost-effective infrastructure for taxpayers.
The planned trust would pull together various capital schemes from local councils across Scotland. "It means we will get more for our money - more bang for the people's bucks.
It is claimed the new set-up would offer financial expertise and be big enough to drive down the cost of borrowing. "With an infrastructure investment programme of some £35bn over the next 10 years, SFT will be central to this government's purpose of increasing sustainable economic growth."
It could attract private investment through issuing municipal bonds. A "Scottish bond" would also be issued as part of the trust, with councils working in partnership across the country to issue local authority bonds.
But the plan has come under attack, with some warning it could muddy the market without saving money. Labour dismissed the new move as "PPP with a lick of cheap paint".
It is possible ministers will initially create the trust as a public sector body. Public services spokesman, Andy Kerr, said: "We have had 12 months of a financial fantasy whilst our school children and our communities need new facilities.
"The Nationalists said that they would match Labour's school building programme brick-for-brick. This proposal will not deliver - it is full of wishful thinking and no extra cash and to describe it as half-baked would be a compliment."
'PFI-lite'
Tory finance spokesman, Derek Brownlee, said: "The Scottish Futures Trust will advise on PPP projects, and a private futures trust will be established to provide private investment.
"However, it is dressed up, the key principle of PFI/PPP is maintained - leveraging in private investment into public infrastructure."
The Liberal Democrats claimed the announcement amounted to an admission that what had been promised in the SNP's manifesto was not possible.
Finance spokesman, Liam McArthur, said: "The only thing about the Scottish Futures Trust which they haven't changed is the name.
"One year on from the election and the first recommendation is for a further review."
Public sector union Unison voiced concerns that SFT would continue with private sector funding and running of public services in the same way as PFI.
Scottish secretary Matt Smith said: "It is merely 'PFI-lite'.
"No amount of spin can change the fact that the private sector will continue to build, design and run public services under this plan, and they will continue to take a profit out of our essential services."
The futures trust scheme is expected to be fully up and running by 2009.