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Chamber and committees

Finance Committee, 25 Sep 2007

Meeting date: Tuesday, September 25, 2007


Contents


Methods of Funding Capital Investment Projects Inquiry

The Convener:

Item 3 is consideration of our approach to our proposed inquiry into the methods of funding capital projects. The clerks have produced a paper that sets out a proposed outline timetable, a proposed remit and a proposed approach to written and oral evidence. The Scottish Parliament information centre has produced a briefing paper, which sets out some of the issues that might be covered by the committee's inquiry. I invite comments from committee members.

Alex Neil:

I do not want to go through the approach paper section by section, but I will make a couple of suggestions. It is a good paper, which reflects pretty well our discussion at the away day, but I suggest a couple of amendments to the remit to make it clearer what we are trying to do. The remit reads:

"The Committee has decided to examine the funding of public capital investment projects. The inquiry will consider and report on the advantages and disadvantages of different models."

I suggest that we change that to read "of different actual and proposed models", because the proposed remit could be interpreted as meaning that we will consider only what happened in the past. The purpose of the inquiry is to consider the past and the future.

You have a suspicious mind.

Alex Neil:

One never knows the outside interpretation.

I suggest one other little amendment to the remit, which goes on to read:

"This can include the implications of the different models for costs".

We should add "and for revenue streams", because we have not mentioned anything about the revenue side, only the cost side and

"the management and public benefit of the projects".

We have to consider both sides of the equation.

Derek Brownlee:

I was not at the away day, so I came to the paper fresh. The inquiry is one of the most important that we could undertake and potentially of great benefit. However, two aspects struck me. First, the main emphasis should be on how capital projects can be funded under the Scottish Government's and Scottish Parliament's current remit. That would include a review of conventional funding methods, public-private partnerships and the futures trust if it emerges as robust and permissible under the Scotland Act 1998. It would seem to me, also, that if the futures trust does not emerge in the timescale of this inquiry, for whatever reason, there is still a benefit to be had from doing the first two bits. Secondly, the remit refers to "different models". That could involve international comparisons or adjustments to the Scotland Act 1998 that could create powers to do different things.

It is important to separate out the two elements, but the benefit that we could derive from the focus of the inquiry could be lost if it became a dry academic investigation into how regions and nations around the world finance capital projects. It is important to keep the focus on what is feasible under the current set-up and on the benefits and disadvantages of each set-up.

Alex Neil:

It is not my paper, but I think that that is fair enough.

As I said at the away day, the inquiry will be in two chunks. The first chunk concerns what has been happening to date and where we are at. In that regard, although it is not mentioned specifically, we should not forget the public works loans board model. The second chunk involves consideration of the Government's proposals, when we get them.

I agree.

The clerks have heard the comments that have been made. Any other comments can be made directly to the clerks.

Do we agree to the amendments to the paper that Alex Neil has suggested?

Members indicated agreement.

Do we agree to the proposed timetable and the initial remit?

Members indicated agreement.

Do we agree to the suggestion in the paper to issue a news release and general call for written evidence?

Members indicated agreement.

Do we agree to write to the Cabinet Secretary for Finance and Sustainable Growth, seeking details of the timetable and scope for development of the proposed Scottish futures trust?

We should seek clarification on whether the cabinet secretary's proposals will require legislation. We need to be absolutely clear about that.

That is a precursor. There is no point in us spending a lot of time examining that model if it cannot be put in place.

Do we agree to write to the cabinet secretary, seeking details of the timetable and scope for development of the proposed Scottish futures trust and asking for clarification with regard to legislation?

Members indicated agreement.

Alex Neil:

I am sorry to be a pain, but in relation to the suggestion that we issue a news release and general call for written evidence, I suggest that—given that submitting evidence will entail a significant amount of work for any organisation—we should write specifically to those authorities that have used public-private partnerships and other relevant models. For example, Falkirk Council got approval from the previous Executive—when Tom McCabe was providing excellent leadership to the department—to create something that we would regard as being close to the futures trust, but at local level. Argyll and Bute Council's Liberal Democrat administration has done something different but relevant. Two health boards—Lanarkshire and Lothian—have done more PPPs than anyone else. It would be sensible to draw the attention of such organisations to our call for evidence and to ask them whether, given their experience, they would like to submit evidence.

Are you suggesting that we issue a general call for written evidence, but that we also target specific organisations that could give us practical information about their experience of various models?

Yes.

It would be particularly interesting to hear from Argyll and Bute Council, as it is operating a not-for-profit model.

So is Falkirk Council.

Do we agree to Alex Neil's suggestion?

Members indicated agreement.

Because the inquiry is so specific, it is suggested that we get an adviser who has specific expertise.

Alex Neil:

I agree that we should appoint a specialist adviser. When the Enterprise and Culture Committee undertook its business growth inquiry, so many people in Scotland and the United Kingdom had axes to grind that we looked outside the UK for an adviser and got the former head of economics from the Organisation for Economic Co-operation and Development. Almost every academic whom I know has written about capital investment projects from one point of view or another, and they will all bring to the subject almost as much baggage as we do. As a result, it might be an idea to deliberately seek someone from outside the UK, who might have the added advantage of knowledge of other systems in Europe, North America or wherever.

The Convener:

We should seek widely, choose the best, and leave it to the clerks to bear in mind what Alex Neil has said in finding us the best, most unbiased advice possible. Taking that into account, do we want to appoint an adviser for this inquiry?

Members indicated agreement.

Next, do we agree to ask SPICe and any adviser to prepare a more detailed briefing paper on the different funding models?

Members indicated agreement.

The Convener:

Finally, we are asked to agree an approach to developing an oral evidence programme, and to delegate to the convener the authority to approve any claims under the witness expenses scheme arising from the inquiry—having such power over expenses might go to my head. Are we agreed?

Members indicated agreement.

The Convener:

Members have agreed to appoint an adviser, so a specification can be drawn up of the duties to be performed and the skills, knowledge and experience that are required. There are no other substantive items that need to be discussed before the October recess, so there would seem to be no need for the committee to meet next week. To get the adviser process moving, I propose that the committee delegate to me and the deputy convener the agreeing of such a specification. Do members agree?

Members indicated agreement.

The Convener:

The deputy convener and I will be doing overtime, but we do not mind.

Assuming that we get approval from the Parliamentary Bureau, SPICe will draw up a list of suitable candidates; I hope that that can be done for the committee's meeting on 23 October. The faster we get through the process, the better.