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Plea for change in Scottish funding

The Scottish Futures Trust has called for the country’s government to implement alternative investment and cost reduction measures to deal with impending budget cuts.

The body, which is supporting a £5.5 billion portfolio of public sector projects north of the border, suggested the Scottish Executive use tax increment financing as well as design standardisation.

It submitted its proposals to the Scottish Government’s Independent Budget Review panel, set up to advise how best to tackle the looming reduction in the country’s budget.

The first of the SFT’s recommendations was for the Scottish Government to undertake a shift in what it calls “needs identification” and make value judgements based on practicality.

For example, the submission suggested the government should build five fit-for-purpose £20m schools rather than four “iconic” £25m schools.

The submission said: “In the future, we will have to accept elements of design standardisation and appropriate space allocations to stretch budgets.We can learn from the North Sea oil platform experience of ‘design one, build many’.”

It added that these alterations to the design approach could also help meet sustainability and zero carbon targets.

The submission said the government would need to alter its “on budget” mindset to focus on how costs could be reduced.

SFT chief executive Barry White said: “The first priority is to do the things that have the biggest impact. If you have a smaller cake to divide up, it is better focusing on the projects that have the better impact on economic growth.

“Firstly there is needs identification - that in itself could help economically - and secondly we need to decide how much we should invest and want to invest.”

The SFT’s submission to the review also proposed a number of alternative funding methods.

It recommended an increased programme of user-charging to fund infrastructure investment, including tolling on roads and bridges as well as congestion charges similar to the central London scheme.

Private sector developers were also identified as a source of funding. The SFT recommended a public sector bridging finance structure, which would unlock private investment at a significant multiplier to the public funds invested.

The SFT backed the use of tax increment financing - using future gains in taxes to finance current improvements. It is working on several TIF pilot schemes with the Scottish Government and said that if they were successful then the use of the mechanism could be more widespread.

The trust had a number of suggestions to improve the efficiency of private finance. These included widespread use of a Network Rail-style regulated financing structure.