Committee calls for overarching capital investment strategy

25/02/2011

The Public Audit Committee agrees with the recommendation of the Auditor General for Scotland that an overarching investment strategy that sets out clearly the long-term investment needs and constraints is needed. This would help provide the Scottish Government with key information for prioritising and planning its capital investment programme.

The Auditor General briefed the committee on his report entitled, Management of the Scottish Government’s capital investment programme (2.31MB pdf), at its meeting on 2 February. Whilst the committee welcomed the improvements in project management, it also heard that the Scottish Government is legally committed to spend at least £2.1 billion on capital projects over the next four years with another £5.4 billion possibly required for other projects. At the same time, the Scottish Government’s capital investment budget will be cut from £3.3 billion to £2.1 billion between 2010/11 and 2014/15 and could take until 2025/26 to return to 2009/10 levels.

In his statement, Committee Convener Hugh Henry MSP said:

“The committee believes that the Government will need to make tough decisions regarding its priorities for major capital investment given the increasing demands on capital budgets at a time when cuts are imminent. It is essential that any future Scottish Government should regularly review the affordability of its capital investment programme.

“The Scottish Government should assess the appropriateness of alternative forms of financing and update its Infrastructure Investment Plan in light of the recent recession. We will be recommending to our successor committee that this is an area that it may wish to revisit.”

The committee also agreed that more work should be undertaken to establish the whole life costs of projects delivered using different methods of financing. This will then enable accurate comparisons of the costs, risks and benefits of the different financing methods.

Background

The Auditor General for Scotland’s report: Management of the Scottish Government’s capital investment programme was published on 27 January 2011 and examined how well the Scottish Government is managing its capital investment and associated risk and considers the implications for the investment programme now that the outlook for public spending has changed.

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