Plenary, 06 Jul 2000

Meeting date: Thursday, July 6, 2000

Official Report 762KB pdf

---

Government Resources and Accounts Bill

The next item of business is a debate on motion S1M-1072, in the name of Mr Jack McConnell, on the Government Resources and Accounts Bill—UK legislation. This will be a short debate—it will last for just over 15 minutes. I intend to call opening speakers from the Executive and the main parties and a closing speaker from the Executive. Unfortunately, time constraints will not allow any other members to speak.

I welcome this debate, which follows the discussion that took place at the Finance Committee on Tuesday. It is a year since we made significant changes to the private finance initiative in Scotland and embarked on a radical programme to rebuild the infrastructure of many public services in Scotland through public-private partnerships. Central to that development is the need for high-quality advice and information on best practice and the need to reduce duplication and concentrate resources on the best possible schemes in terms of finance and contract management.

Partnerships UK will be a vital tool in that effort. It will be a UK-wide body that will achieve essential economies of scale and expertise. It will build on the work of the Treasury task force, which has been of significant assistance to public-private partnerships in Scotland. Partnerships UK will be a genuine public-private partnership. The public sector will have a 49 per cent stakeholding and the private sector will have a 51 per cent stakeholding. No one in Scotland will be under any obligation to use Partnerships UK or its expertise, but they will use it when it represents value for money to do so and when that expertise can be helpful.

I believe that Partnerships UK will make a genuine difference and that it will be a healthier and more useful organisation for us if we take a stake in it. The schools programme that Partnerships UK will assist in Scotland is worth a total of £160 million. The project for primary schools in Glasgow is worth more than £100 million and the projects for schools in East Lothian and Midlothian are each worth more than £30 million. If even 1 per cent of that cost is saved by the expertise on which we are able to call at Partnerships UK and by the influence that we will acquire by taking a stake, that saving will pay for the initial stake. The stake is small in comparison to the prize.

Today we are debating a power rather than a payment. I want the Executive to have the power to take a stake in this important new national body. The Scottish Executive is working across Scotland to rebuild the infrastructure that has been so damaged over the past 20 years. We are building new hospitals, schools and sewage works and we are developing new transport systems. Those are all vital projects that are being developed in the most cost-effective manner. The availability of a national resource of consultancy advice, support and contract management in financial deals will take that work much further forward.

As this is a short debate, I will make a short point. In arguing the case for bringing together a critical mass of expertise to support projects, did the minister consider whether that expertise existed in the Scottish financial and business services community and whether a self-standing venture that would have given priority and a greater return on investment to the Scottish Executive would have been more appropriate than our involvement in Partnerships UK?

I have no doubt that such a venture would have been more expensive. The economies of scale that can be gained by using Scottish skills and expertise and skills from elsewhere across the whole UK—particularly as the organisation will have only 20 or so members of staff—mean that Partnerships UK represents a better way forward.

The opposition of Mr Swinney and his colleagues to this proposal, which we expect to hear in the debate, is not based on Partnerships UK, on the power of the Parliament to take a stake in that organisation, or on the principles of that development of public services; it is an ideological obsession with opposition to public-private partnerships. That opposition would damage public sector infrastructure across Scotland.

The schools that I have mentioned in Glasgow, East Lothian and Midlothian are only part of the equation. There will be new hospitals in Edinburgh, Wishaw and East Kilbride.

Five schools are due to be opened in Falkirk in August. Twenty-nine new schools in Glasgow are a prize that many have only dreamed of over the years. There will be new sewage works for Glasgow and Edinburgh and there will be a rapid transport scheme for Edinburgh.

Those are prizes that we can secure with best value for money through not just Partnerships UK, but the policies of this Executive. That would not happen if the nationalists were running Scotland, which would be a tragedy. I hope that members will vote for the motion, confident that we are using national resources well.

I move,

That the Parliament endorses the principle of the creation of Partnerships UK; agrees that the Scottish Ministers should have the power to take a financial interest in that body to ensure that Scottish interests are safeguarded, and agrees that the relevant provisions in the Government Resources and Accounts Bill should be considered by the UK Parliament.

I have been waiting. I thought the minister was going to give way.

He was not giving way, Mr Sheridan.

I too welcome the opportunity to give this matter due parliamentary consideration, which it would not have had without today's debate.

Jack McConnell announced the Executive's intentions on 13 June, when he said in reply to a parliamentary question planted by Duncan McNeil:

"I am pleased to be able to announce that the Executive will take a financial interest in Partnerships UK".—[Official Report, Written Answers, 13 June 2000; Vol 7, p 78.]

Today, the Executive is finally coming to the Parliament for approval of an announcement that it made a month ago.

To correct Mr McConnell, who seems to see conflict wherever he goes, we believe that the principle of pooling projects to secure management improvements is sound. At the election, we called for such a model to be used to fund project management so that some of the PFI waste that has clearly happened under the Executive—the admission of which is in implicit in the setting up of the Partnerships UK project—could be locked down.

We see no value in obstructing the Executive's intentions at this stage. We believe that such a model should be given consideration for wider opportunities such as financing public projects much more cheaply than is possible through PFI. We believe that it is far more important for the Executive to focus on what can be done in the Scottish context and to sign up to the principle of devolution rather than piggyback on every London announcement—even London Cabinet crackdowns, as we have seen in the past week.

At the Finance Committee, the key questions that we wanted answered were not answered by the Minister for Finance, who seemed at best unprepared and at worst positively distracted by events elsewhere. Where is the cash to pay for this project coming from? The minister would not or could not tell us. Is it coming from existing budgets, underspend or contingency reserves? It is coming from the health budget perhaps? Where is it coming from? How much is involved? When will we know?

Will the member confirm that the only person who was not prepared at the Finance Committee on Tuesday was him, when he got his sums wrong, describing 10 per cent of 49 per cent as 10 per cent rather than as 4.9 per cent? Will he also confirm that what we are debating today is the power to make the payment, not the payment itself? The Parliament retains control over the Scottish Executive's budget and it will make decisions on payments. Today we decide the power, not the payment.

The minister is asking us to sign up to that power in a vacuum. If the power is going to be used, it is important for us to see exactly where the funding will come from. The questions that we have asked are serious and reasonable and we raise them at a reasonable time. It is the job of the Opposition to be reasonable and constructive and to probe the Executive's plans.

For the first time, the minister has told us that the organisation will have 20 staff and a budget of £20 million for what is essentially a people-based service. Is that £1 million a head for staff? How is the budget assigned? Where is the money going? We are buying project management skills, yet there are only 20 members of staff. That strikes me as somewhat questionable.

On Executive representation, we understand that we will be on the advisory council. How many people will be on the advisory council? Who are they and who will put them there? We will be a major stakeholder. Will we get a seat on the board? No, we will be consulted on who is on the board. How and when will we be consulted, and what form will that consultation take? Do we have a choice? Can we make nominations? Do we have a veto? All those questions remain unanswered, yet the Executive wants us to vote on the motion today.

My colleague, John Swinney, raised another question in committee. The Executive clearly has, and admits to having, a vested interest in the success of the organisation, yet we have heard absolutely nothing about whether the Executive will encourage or, indeed, demand that public sector departments, agencies and local government use the organisation.

We deserve answers to those big and reasonable questions, rather than having the motion railroaded through on the last day of term.

We support the motion. We are aware that Partnerships UK will support school projects for East Lothian, Midlothian and Edinburgh, the refurbishment of primary schools in Glasgow and an e-commerce project for the Scottish Tourist Board, all of which are worthy projects.

It is appropriate that the Scottish ministers have a financial stake in PUK. To secure that, an amendment to the Government Resources and Accounts Bill will be necessary. The agreement of Parliament to that amendment is being sought and we think it appropriate that it should be given.

We support the principle of resource accounting and measures in the bill that improve the authenticity, transparency and accountability of public accounts. However, support for the motion does not mean that we endorse the bill in its entirety. The UK bill is deficient because it gives the Treasury enormous powers to determine what is and what is not included in the accounts, establishes no clear principles for the accounting of income and expenditure and continues to permit the Treasury to omit large public assets and liabilities from the national balance sheet. For example, state pension liabilities appear to be excluded from the accounts and there are concerns about how to value Ministry of Defence assets correctly. Furthermore, the definition of public-private partnership effectively allows the Treasury to give funds to any project it wishes.

Some of our concerns were addressed through a few amendments to the bill, but the major concerns expressed by the principal Opposition in the Westminster Parliament have not been addressed. None the less, we support the motion as a sensible measure that will support the necessary schemes in Scotland.

We, too, support the motion to allow the Scottish Executive to take a stake in Partnerships UK, should it decide to do so. In the past, the Liberal Democrats have made clear our reservations about PFI-PPP projects. The partnership agreement and the programme for government make it clear that we support moves to improve the operation of PPP. We believe that taking a relatively small stake in PUK is one way in which to do that.

In the evidence session in the Finance Committee on Tuesday, it was clear that the ability to bundle projects and put them out to the market could lead to better value for money—the minister confirmed that. I am somewhat surprised that the SNP finance spokesman, Andrew Wilson, called for this debate today, given his somewhat publicly embarrassing experience at the Finance Committee on Tuesday. He did not seem to know the size of the stake; either he had not read the committee papers, in which case that was negligence on his part, or he could not work out that 10 per cent of 49 per cent is 4.9 per cent. Perhaps that should not come as a surprise to us in view of the recent problems the SNP has had with its own finances and figures.

Will the member give way?

No.

This debate is not essential. We had a long evidence session on Tuesday at which nearly all the questions that Mr Wilson asked were answered. Frankly, it is ridiculous for the SNP to come to the chamber and attack the Executive on PFI-PPP when its public service trust policy is far from clear. The SNP keeps telling us that that policy is a work in progress, yet no progress has been announced for more than a year.

The SNP's policy is far from clear, yet its members rail against the Executive on PPP and PFI—and, in the past, SNP councils have taken advantage of PFI-PPP for such essential projects as the new council offices for Perth and Kinross, on which the SNP chief whip embarked. We all know how important it is that Mr Crawford should work out of a much bigger office. The SNP takes advantage of PFI-PPP—it says one thing in the Parliament and does something different on the ground.

It is clear from the health service debate this morning that the SNP must learn that the duty of an Opposition is not just to oppose, but to propose. I hope that its members have sufficient rest during the summer recess to come up with a policy on what the SNP would do and from where in the health service it would get the money that it keeps demanding. Perhaps the SNP will be able to develop and clarify its alternative to PFI-PPP and at last we might get the details of the Scottish public service trust policy—the grandiose name that so far has been fleshed out with no detail whatsoever.

I want to reiterate that it was made clear in the Finance Committee on Tuesday that the membership of the board will be decided in a normal manner. As a stakeholder in the company—if we choose to take up that power—we will have a say in the membership of the board. It is very important for Scotland to have that say, given that Scottish public service bodies will use Partnerships UK for their infrastructure developments.

We will have a seat on the advisory council. Of course the full membership of the council is not yet known, as that will be established by Partnerships UK when it is established in the autumn. No Scottish public agency will be forced to use Partnerships UK, but the facility will be available not just to bunch projects, as Mr Raffan pointed out, but to receive expert consultancy advice and assistance and to use projects to learn lessons across the public sector north and south of the border.

Those facilities are important and we have an important stake in the organisation. I am disappointed that on Tuesday afternoon and again today, despite the absence of any credible alternative from the nationalists, they are using an ideological obsession against public-private partnerships to damage this proposal. I hope that the chamber will vote for the motion and allow the Scottish Executive to have a stake in an important UK-wide body. It will show that devolution can work in practice for all of us.