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Plans for Scots PPP alternative ‘woolly’

Scottish Building Federation says consultation is lacking in detail

Contractors’ groups in Scotland have said the plan to replace PPP with a new method of public finance has not been properly thought through.

The Scottish Futures Trust will use bond financing to help build public projects like schools and hospitals after the ruling Scottish National Party said it would stop using PPP to build and fund projects.
A consultation on the initiative is being carried out and is due to finish this March.

But Michael Levack, chief executive of the Scottish Building Federation, said: “The detail is not there in this consultation. The announcements have been a bit woolly.

“We still don’t know how this new scheme will work - we’re still talking and trying to find out what’s going on.

“The Scottish Government made a manifesto commitment to do away with PPP, but they still have to build schools and hospitals. They can’t scrap it overnight, certainly not if they want to get re-elected. And they have to get their finances to stack up.” The trust will be a private company because the Government cannot issue bonds.


Andrew Gordon, chief executive at Glasgow PPP specialist Canmore Partnership, added: “The Scottish Futures Trust consultation is a bit confusing. A lot of people aren’t sure what’s being proposed.

“The Scottish Government’s proposals are very open. To be fair to them, they could say: ‘This is a consultation, we want you to say what you think’


“I’m a bit doubtful about whether it will end up producing an alternative funding method but it may produce other things.”

Mr Gordon said the so-called ‘non-profit distributing PFI’ method currently being used by the Scottish Government, which will see profits made over and above an agreed figure returned to the public purse, could be an alternative.

He added: “It’s not as attractive as old-school PFI. It needs a little bit of work but it’s not out-and-out unacceptable. Builders will accept it because the most important thing to them is the flow of projects.”

A spokesman for the Government said: “We’re looking for people to comment on it, we’re not looking for a big bang approach. We’ll listen to everyone’s comments and we’ll take them into account.”

Indecision causing logjam in projects

One of the schemes caught up in the impasse over how to fund public projects in Scotland is the planned deal to build a replacement Forth Road Bridge at a cost of up to £4.2 billion.

Scottish Building Federation chief executive Michael Levack said: “They need to find some sort of method to fund the bridge.

“At the moment, they don’t have the Scottish Futures Trust up and running but they’ve pledged not to use PPP. If they stopped using it for schools and hospitals but brought it back for this bridge, it would make a nonsense of their policy.”

Work on the new bridge is planned to start in 2011 and finish in 2017. The current bridge may have to close to heavy goods vehicles in 2013 and all traffic seven years later.

A decision on what to do with the existing structure is due to be made by 2012.

For more information on the consultation go to ww.scotland.gov.uk/Publications/2007/12/19093017/0

or download the PDF in the resource box at the bottom of the page