Public Audit Committee
Major Capital Projects Update September 2021
Letter to Convener from Alyson Stafford, Director-General Scottish Exchequer, Scottish Government, 3 December 2021
Dear Mr Leonard
Infrastructure Investment – Major Capital Projects Progress Update
This suite of material provides the Public Audit Committee with the latest report on the progress of Major Capital Projects for the six months ending September 2021. This update comprises information relating to the reporting of the new five-year Infrastructure Investment Plan (IIP) published in February 2021 including the IIP Project Pipeline update (Annex A), the IIP Major Capital Projects Progress update (Annex B) and the IIP Programme Pipeline update (Annex C).
The new IIP includes a pipeline of major projects and national programmes that will be taken forward over the next five years. This pipeline of activity as well as the ongoing projects and programmes from the previous update will be reported on going forward.
Presentational changes
The Committee should note that, in order to increase transparency and to provide a broader perspective of infrastructure delivery, the capital value threshold for project reporting is now £5 million or more (previous reporting threshold was £20 million). For programme reporting, it is now £20 million or more (previous reporting threshold was £50 million). As per the previous report, the IIP Project Pipeline (Annex A) includes those projects where an Outline Business Case (or equivalent) has not yet been approved whilst the IIP Major Capital Projects Progress update (Annex B) includes those projects where an Outline Business Case (or equivalent) has been approved. The IIP Major Capital Projects Progress update now also includes an accompanying note (Annex B1) on each associated project’s contribution to climate change targets, strategic outcomes and to local economic development (the latter was previously included within the main update). As we go forward, we will continue to enhance the consistency of the material presented in this accompanying note. Any feedback the Committee might wish to provide would be gratefully received.
Impact of COVID-19 and Supply Chain issues on infrastructure delivery
The Committee will see that around a quarter of the ongoing projects captured within the progress update (Annex A & B) show adjustments. These mainly relate to delays primarily associated with the impact of COVID-19 and the issues around supply chains and the availability of construction materials. Further analysis shows that since the March 2021 update, 40% of projects previously included within Annex A & B have reported ‘negative’ cost and/or time variances. Of those projects not previously included within Annex A & B, 21% of projects have reported ‘negative’ cost and/or time variances since Outline Business Case / Full Business Case.
These variances reflect the way in which COVID-19 and Brexit has impacted on investments at different stages of development as well as supply chains and the associated ongoing restrictions and working practices which have been adapted to allow delivery to continue. The response to COVID-19 is still ongoing and the cost and time estimates provided in this update are of course based on best available information. Projects will however continue to be subject to the impact of the ongoing COVID-19 situation and wider supply chain impacts of Brexit, and may be subject to further revision.
A note for the Committee on the supply chain issues affecting general infrastructure delivery has been included with this covering letter.
Wider infrastructure developments
Our Programme for Government 2021-22 was published in September 2021, which set out the actions we will take in the coming year and beyond. In relation to infrastructure:
- Invest £10 billion over the next decade to replace and refurbish Scotland’s health facilities, including £400 million in a new network of National Treatment Centres to increase elective care capacity.
- Invest at least £1.8 billion over this Parliament in decarbonising homes and buildings – with the aim of converting at least 1 million homes and the equivalent of 50,000 non‑domestic buildings to low or zero‑emission heating by 2030.
- Invest £500 million in our natural economy, including the expansion of the Nature Restoration Fund, creating local nature networks and increased forestry and peatland
- Invest over £33 billion over the course of this Parliament in our National Infrastructure Mission, which includes £1 billion in the Scottish National Investment Bank, to create new jobs and markets and provide benefits across Scottish supply chains.
- In the coming year, commence work to consider the options for the creation of a new national infrastructure company, to manage and develop public assets for the public good.
- Set out the recommendations for future transport infrastructure investment by publishing the second Strategic Transport Projects Review by the end of this year
- Deliver 110,000 affordable homes across Scotland by 2032, with at least 70% in the social rented sector and 10% in our remote, rural and island communities supported by a Remote, Rural & Islands Action Plan.
- Revitalise local communities through development of 20-minute neighbourhoods, investment in town centres and a new focus on place – improving local services and infrastructure, and aiding our ambition to ‘live well locally’ and achieve a 20% reduction in car kilometres driven by 2030. We will also roll out 20 mph speed limits on appropriate roads in built‑up areas by 2025.
- Start rolling out the £325 million Place Based Investment Programme, supporting community led regeneration, complemented by delivery of our new £50 million low carbon Vacant & Derelict Land Investment Programme.
As per previous reports, the latest information relating to the diverse pipeline of projects within the Scotland-wide hub programme can be found on the Scottish Futures Trust’s website by way of the following link: https://www.scottishfuturestrust.org.uk/page/hub
I thank the Committee for their interest and hope that members finds this update helpful. I am copying the update to the Clerk of the Economy and Fair Work Committee, the Clerk of the Finance and Public Administration Committee and the Auditor General for Scotland for their information.
Yours sincerely
ALYSON STAFFORD
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