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Scottish Futures Trust seeks £750m saving by 2019

The Scottish Futures Trust has made investment in energy efficiency projects a priority for the next five years as it seeks to deliver up to £750m in savings for taxpayers on infrastructure projects.

Speaking to Construction News, SFT chief executive Barry White said he was confident investors would continue to back infrastructure north of the border having seen “phenomenal” recent interest in investment opportunities.

The organisation’s 2014-19 corporate plan has been released and shows healthy appetite for investing in Scottish infrastructure, despite fears that the uncertainty caused by the independence referendum could have slowed down projects.

The arm’s-length body, set up to provide value to the public purse for infrastructure, wants to make savings of between £500m and £750m over the next five years.

Mr White said: “Interest levels have stayed high regardless of the referendum and we have seen major international investment over the past year.

“We have a very strong pipeline of projects over the next five years, with major investment split between the public and private sector.

“The £1bn of additional NPD funding in April has helped to encourage interest in infrastructure projects and we will see a number of major projects being announced in the coming months.”

More projects are expected to progress after uncertainty was lifted following the referendum result, and Mr White said the SFT was “very receptive” to new investment and ways to improve efficiency in Scottish construction.

Construction News reported last month that TIAA Henderson (TH Real Estate) would press ahead with tendering £400m of construction contracts on its £850m St James project in Edinburgh following the ‘No’ vote.

Mr White said: “The pipeline of projects we have makes Scotland an excellent place to invest – and it represents a huge opportunity for the construction industry.”

The SFT’s corporate plan highlights several priority areas for infrastructure investment over the next four years.

Investment in major green and low-carbon projects is part of the SFT’s five-year plan, with street lighting, non-domestic energy efficiency and district heating highlighted as priority areas for investment.

It also intends to work with the Green Investment Bank to help secure funding and investment.

Mr White said the SFT’s “quicker, more efficient” process for the installation of greener street lighting had particularly encouraged investment in this sector.

SFT highlights since it started operating in 2009:

  • £700m of Non Profit Distributing projects under construction, with that figure set to more than double by the end of the financial year.
  • Contracts signed to build 1,300 affordable-rent homes through the NHT programme.
  • Establishing the Tax Increment Financing programme, which will see around £350m of public investment unlock a further £1.3bn of private sector investment.
  • Implementing its asset management programme expected to deliver cost savings of over £500m.

Housing has been a key sector for the SFT over the past five years, with the organisation supporting the building 1,300 affordable-rent homes through the National Housing Trust programme - including investment of over £200m in the sector.

Over the next five years, the SFT highlights that developing new affordable housing opportunities, including new financing models in partnership with the public and private sectors, will continue to be a major part of its investment model.

There will also be continued investment in schools. The SFT said it had helped to build 67 schools within the budget for 55 as part of the £1.25bn Scotland’s Schools for the Future programme.

Ongoing investment in major projects, such as the Aberdeen Western Peripheral Route, will continue to be supported as part of the plan.

Mr White highlighted this project as an example of how public investment in infrastructure can encourage major private sector investment and job creation.

SFT chairman, Sir Angus Grossart said: “SFT’s ability to deliver in these new areas of work is based on a clear focus on driving innovative infrastructure investment programmes across Scotland.

“As an example, working with its partners, SFT was instrumental in developing and deploying the unique Regeneration Accelerator Model in record time for The City of Edinburgh Council to use for the redevelopment of the St James Quarter.

“This is helping the council move quickly to invest £61m into this vital area of the city and is unlocking further investment, with it recently being announced that the St James Centre owners TH Real Estate, aim to tender £400m of construction contracts.”  

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