Scotland's Infrastructure (Investment)
The next item of business is a debate on motion S3M-2057, in the name of John Swinney, on investment in Scottish infrastructure. I remind members that all contributions should be made through the chair, which means that members should refer to other members by their name or preferred title.
Today's debate follows my appearance last Tuesday before the Finance Committee and my parliamentary statement last Wednesday about infrastructure investment and the role of the Scottish futures trust. Nevertheless, I welcome a third opportunity to air these issues, because we have £14 billion-worth of good news on infrastructure investment to debate in Parliament today and a Scottish futures trust that will allow this Government to deliver more infrastructure bang for the Scottish people's buck. I also welcome today's debate because it gives the Government a third opportunity to highlight not only the excessive profits that the previous Administration allowed to develop from hospital and other capital projects but the fact that the people of Scotland have been left to pay the price.
Much of the research on which the cabinet secretary relies with regard to these so-called excessive profits comes from an academic called Allyson Pollock, who said in an article entitled "A new name can't save a poor policy" that the Scottish futures trust model is
"not so much an alternative"
as a hybrid of the private finance initiative. Does the cabinet secretary agree that her criticism of the previous PFI model, which the cabinet secretary agrees with, applies to his own model?
I am determined to deliver a model that guarantees the Scottish public value for money in the infrastructure projects that are brought forward and ensures that we get the required infrastructure improvements in a way that does not deliver the excessive profits that were delivered by the previous Administration.
Our decision to commit to record infrastructure investment is an important part of our ambition to build a more successful country with higher levels of sustainable economic growth. It is also a central part of our social democratic contract with the people of Scotland, in which growing wealth will be matched by the provision of the kind of 21st century public services that the people of this country have the right to expect.
Because we recognise the critical contribution that infrastructure investment makes to economic growth, we have raised public funding for direct public sector investment over the spending review 2007 period to its highest ever level. Under our plans, there will be investment of £14 billion over the next three years, and of a projected £35 billion over the next 10 years. We have done all that despite the fact that, at a time when record revenues are flowing into the United Kingdom exchequer from off Scotland's shores, the Labour Party has chosen to give Scotland the smallest increase in our budget since devolution.
Our infrastructure plan sets out the physical assets that we believe are needed to grow the economy and to support high-quality public services. We will work with the public and private sectors to deliver this ambitious programme for the people of Scotland.
The First Minister has stated that East Renfrewshire Council, which is as experienced as anyone at managing these financial models, has indicated its willingness to act as a pilot for any new scheme. On Monday, my colleague Murdo Fraser and I visited Eastwood high school and met the headmaster and a senior council official, who appear ready and willing. Is the cabinet secretary prepared to consider the replacement of that school, which is an urgent matter, as a suitable scheme for an SFT pilot and to meet those concerned?
As Mr Carlaw will know, in its submission to the Government's consultation on the Scottish futures trust, East Renfrewshire Council expressed an aspiration to be very much involved in developing the model and to be part of a pilot project. I am happy to consider that proposal and to discuss the issue with East Renfrewshire Council—and, indeed, Mr Carlaw—in our preparations for setting up the Scottish futures trust.
The cabinet secretary referred to the need to get the best possible return on the Government's investment and the best possible infrastructure for Scotland. At the moment, a tram system is being constructed in Edinburgh that I suggest is for the benefit not merely of that city but of Scotland. The traders who have been affected by those works are actually experiencing a double squeeze: the expected one and an unexpected one caused by the credit crunch and the state of the British economy. Given the scheme's importance, is the cabinet secretary amenable to funding additional compensation for those traders who can demonstrate particular levels of hardship, using as a comparator the results of the City of Edinburgh Council's baseline research into the effects of the credit crunch—
That intervention is long enough. I am sure that the cabinet secretary gets the point.
I certainly do, Presiding Officer. As I said either last week or the week before in response to an oral parliamentary question from Malcolm Chisholm, if the City of Edinburgh Council determines that individual traders are suffering hardship because of certain circumstances, the Government has an obligation to support 75 per cent of additional business rates relief. I have confirmed that on the record and will be happy to honour that commitment.
I gently point out to my dear colleague Margo MacDonald that the Government did not jump at the opportunity to support the trams project, so others in the Parliament should perhaps have broad enough shoulders to accept the financial implications for traders in the city.
The Scottish futures trust is central to our plans, because at its core is the ability that it will give us to deliver more for our money. It will allow us to proceed with an ambitious capital programme; to maximise the opportunity to deliver greater value and greater impact; to bring the public sector together to produce excellent infrastructure that meets the needs of our people; to put a new focus on sustainability, through the provision of new and energy-efficient buildings; and to provide wider benefits for the Scottish economy.
As the infrastructure investment plan makes clear, over the next three years there are numerous opportunities for new investment, including opportunities for new private investment in buildings and road projects amounting to more than £3 billion.
Will the minister take an intervention?
I had better make a bit more progress, but I will give way later.
The Government has brought forward a strong pipeline of projects to invest in the infrastructure of Scotland, the progress of which will be accelerated and enhanced by the introduction of the Scottish futures trust. The Government has made it clear that we view the SFT as the correct model to succeed the private finance initiative.
The use of the PFI model on a project-by-project basis does not provide best value for the taxpayer. Excessive profits have been made as a result of huge returns on small investments when the significant risk that projects supposedly carried has not materialised. Over the next three years, the unitary charge payment for such profits will rise from £500 million to nearly £800 million a year, which represents an increase of 60 per cent, while our budget will increase by an average of 1.4 per cent a year in real terms.
Will the minister give way on that point?
Out of courtesy, I had better give way to Marilyn Livingstone, as I said that I would.
I tried to intervene when the cabinet secretary was talking about capital programmes. My question will not surprise him. Will the new Forth crossing be built using the SFT?
The Government has made it clear that we will set out the procurement and financing options for the Forth replacement crossing later this year. We took the early decisions that were required to provide certainty that the crossing would be constructed and, as we promised Parliament that we would, we will set out the financing and procurement options in an orderly fashion in the course of 2008.
Following my announcement last month, we are developing our plans to set up the Scottish futures trust. That work is progressing well and the trust will be established over the summer. It will then begin work with our local authority partners on their key areas of need. As I have told members on previous occasions, by learning lessons from previous PFI contracts, the SFT will reduce the cost of funding and deliver more effective investment in planning, procurement and delivery. There will be no repeat of horror stories such as that which surrounded the equity return at Hairmyres.
As one funding option, the SFT will enable us to offer a Scotland-wide municipal bond to fund infrastructure projects. We will develop that proposal with our local authority partners. As a centre of expertise for infrastructure investment in Scotland, the SFT will, as the business case demonstrates, have the ability to release between £100 million and £150 million each year for increased investment in infrastructure through greater partnership, improved management and better-value finance.
The SFT is different from, and better than, PFI in three ways. First, it will have at its core the non-profit-distributing model of finance. Secondly, it will be Scotland's centre of excellence for infrastructure delivery and will provide a level of expertise in developing projects and negotiating contracts that is not currently available to many smaller public bodies and local authorities. Thirdly, the pooling of projects will result in efficiencies in delivery, risk and finance that, together, will result in savings.
As part of the SFT's early activities, we will maximise value for the public sector by establishing the key strengths to deliver better-quality and more consistent infrastructure investment. We will deliver new health facilities in our communities through the hub pathfinders and, as part of the infrastructure investment programme, we will improve the delivery and funding of schools, housing, waste facilities and flood defences. The Government is determined to ensure that the aggregation of projects will allow us to bring together expertise on clusters of projects, which will allow us to deliver more value and greater impact for the people of Scotland.
The Scottish futures trust is part of an ambitious programme of capital investment from the Government. We have set out in our infrastructure investment plan the largest capital programme ever. The projects in that plan are being delivered today. More are planned and more are in the pipeline. The Government is putting in place the foundation of a significant capital programme and it wants to work with the public and private sectors to ensure that programme's success.
The Scottish futures trust is central to the ambition to make Scotland a more successful country. [Interruption.] Instead of muttering on the sidelines, Lord Foulkes might come to endorse that ambition one day. The development of projects is under way in every part of our country.
I move,
That the Parliament notes the publication of Taking Forward the Scottish Futures Trust and the £14 billion of infrastructure investment set out in the Scottish Government's Infrastructure Investment Plan; believes that it is important to ensure maximum value for the public purse from infrastructure investment and welcomes efforts to deliver better value, and further notes that 14 possible options for work to be carried out under the umbrella of the Scottish Futures Trust (SFT) were identified and will be the subject of further development before being brought back to the Parliament.
Hemingway used to tell would-be writers to start by writing one true sentence, so here is one true sentence from the cabinet secretary's statement on infrastructure investment last week:
"My priority as Scotland's finance minister is to get best value and the best deal for Scottish taxpayers … whether the investment comes from private or public sources."—[Official Report, 28 May 2008; c 9005.]
Surely that is true, but that was also true of all of Mr Swinney's predecessor finance ministers.
When previous Executives undertook eight major hospital projects, four were built with traditional public sector finance and four were built by public-private partnerships, because delivering the service was always more important than any dogmatic adherence to a financial model. That is why, in my constituency of East Lothian, six high schools were refurbished under public-private partnership but two brand-new primary schools were delivered through traditional finance. That is how a new or refurbished school was delivered every week between 2003 and 2007. The best deal was obtained, whether the investment came from public or private sources.
Mr Swinney's statement places him squarely in the same infrastructure procurement camp as all his predecessors, no matter how he tries to pretend otherwise. The Scottish futures trust's purpose is to allow him to pretend otherwise. The Scottish National Party told us that it would end PPP and that it would build schools and hospitals with public, not private, money. The SNP said that no one should make any profit from vital infrastructure for health and education services. Now, that means only no excessive profits and obtaining the best deal, wherever the investment comes from.
Mr Swinney tells us that the non-profit-distributing model is at the core of the Scottish futures trust, but that is simply a version of PPP, which Argyll and Bute Council used first to build schools and which was agreed to, facilitated and launched by Mr Peacock. Last week, the cabinet secretary told the Finance Committee:
"NPD models are part of the family of public-private partnerships".—[Official Report, Finance Committee, 27 May 2008; c 578.]
He tried to say that PPP is a generic term that covers PFI, which is bad, and NPD, which is good, but that is rubbish. The Bank of Scotland has said:
"the projects, on which this assertion is based, are those … amongst the first PFI projects … when the market was embryonic … The current PPP market is significantly different. It … has attracted … numerous bidders and investors who, in order to remain competitive in bidding projects, reduced their return target levels".
PPP schemes were a vast improvement on PFI projects and NPD is a version of PPP that builds in the profit at the start. If it looks like a duck, walks like a duck and quacks like a duck, it is a duck.
However, the NPD model might be an ugly duckling. As far back as 2003, the Institute for Public Policy Research said that the NPD model would generate more profit, not less, because banks and subcontractors would charge more for assuming risks that the special purpose vehicle would handle in other models.
As recently as this year, the Bank of Scotland said:
"it is less clear … whether this model will attract sufficient numbers of potential"
bidders
"to ensure that there will be competition".
That situation is happening now. Mr Swinney has used NHS Tayside's mental health developments project as an example of his NPD model in action, but he has not mentioned that one bidder for that project has withdrawn. In evidence to the Finance Committee, Canmore Partnership Ltd stated:
"Not only do we regard the Government's position as unfair, it is also inconsistent".
It also stated that the Government's NPD model would
"limit bidders' appetite for such projects."
It pointed out that the project now has only two interested parties and drew a comparison with a similar scheme in East Sussex that had far less attractive project fundamentals but 11 bidders.
The member makes a point about the availability of bidders for the NPD model. Will he reflect on the fact that the tendering process for the Highland schools PFI project ended up with one bidder? What does that say about the model to which he is so attached?
It says that there may be a shared problem, which is not surprising, because the cabinet secretary's model is a PPP model. We must make projects more attractive to attract more bidders.
The Scottish futures trust is PPP. The only people who are fooling themselves about that are SNP members. It is for them that the whole charade of the past year has taken place. It is for them that Mr Swinney is still ducking and diving, trying to pretend that the Scottish futures trust is what it was meant to be when the SNP promised it in 2006. At that time, the SNP leadership was in no doubt. Nicola Sturgeon told us that finance would be raised through bond issues, which would crowd out PPP. It took Mr Swinney the best part of seven months to turn that statement into a consultation document, which, when it appeared in December, was not widely welcomed, as he has sometimes claimed, but widely laughed out of court. The Convention of Scottish Local Authorities said that the model would not work; the Society of Local Authority Chief Executives and Senior Managers said that local authorities could not afford it; the Chartered Institute of Public Finance and Accountancy said that it would cost more; Audit Scotland was worried that it broke accounting rules; and investors said that they were baffled as to why anyone would invest in it. They all said that it made no sense.
When the follow-up document "Taking forward the Scottish Futures Trust" appeared, we discovered that
"details of how investment will be raised … has not been explored in any detail"
and that bonds are just one of 14 possible ways in which finance might be raised. The SFT is not moving forward but is in full-scale retreat. That would matter little if the future of Scotland were not at stake.
Here is another true sentence from last week's statement. The cabinet secretary said:
"Infrastructure investment is vital for Scotland's economic growth and the provision of excellent public services."
Amen to that. However, we have seen the rail link to Edinburgh airport cancelled, the Aberdeen western peripheral route delayed, the Waverley line delayed and calls for investment in digital infrastructure rejected out of hand.
Last week the cabinet secretary said:
"the certainty of our investment plans is a particular strength in these times of … troubled markets."—[Official Report, 28 May 2008; c 9005, 9006.]
That is just complacency. The Bank of Scotland states:
"The current situation means … that there is, in effect, no Scottish market to speak of."
It goes on:
"current lack of clarity over infrastructure delivery in Scotland has caused a number of the major PPP players to view Scotland as a place where it will be increasingly difficult to do business. Some have already stated they will not seek to bid any more projects here".
According to The Sunday Times, "Salmond trusts plan will drive out Scottish firms".
The cabinet secretary comes before us to excuse the inexcusable. It is inexcusable that, while he thrashes about, schools, hospitals and transport infrastructure that should be built are not being built, capital investment on which economic growth depends is stuttering, and the investment and construction communities are losing patience and interest.
Nothing symbolises the Government's confusion more than the Forth bridge project. The Liberal amendment is right to draw attention to the matter, because it is an iconic project. The First Minister knew that when he promised that it would be built using patriotic bonds. We know that it will not, but we do not know how it will be built. We suspect that Mr Swinney does not know either. I am old enough to remember the days when people crossed the Forth in a small car ferry. If Scotland must wait for the Government to sort out one or other of the 14 possible ways in which it might finance the bridge, we could find ourselves taking to the Forth in boats again. Scotland's investment community will be looking to invest in small roll-on, roll-off ferries rather than the construction of a new bridge. After all, at least the ferries floated—the Scottish futures trust does not. It is not just holed below the water line—the ship has sunk, and captain Swinney and his crew are in the lifeboat PPP. They should admit that, get over it and get on with building the schools, hospitals and bridges that Scotland wants.
I move amendment S3M-2057.3, to insert at end:
"notes the comments of the Cabinet Secretary for Finance and Sustainable Growth acknowledging that his priority is to get best value and the best deal for taxpayers whether that investment comes from private or public sources and welcomes the statement on page 7 of the strategic business case which provides for guidance, structuring and compliance for ongoing non-profit distribution (NPD)/PPP programmes, firmly placing PPP at the heart of the Scottish Government's strategy, and believes that in the interests of Scotland and its people it is now time to end the confusion surrounding the SFT, admit that it is based on the same principles as those proven financial models which have delivered new schools and hospitals and that it is time to restart the building of schools, hospitals and the transport infrastructure."
In the unfortunate circumstance that we end up relying on ferries over the Forth, I hope that there is at least a free market and proper competition in the ferry market on this side of the country.
My amendment has a number of themes. We want recognition that a range of options ought to be available for capital investment, rather than there being overreliance on a single model. The choice of the most appropriate financing model must be made in the interests of taxpayers and service users rather than be based on ideology. That might be the Government's direction of travel, given that the Scottish futures trust now has 14 potential ways in which to operate.
We know that the Scottish Government rejects forms of PFI where there is potential for equity profit, and prefers instead the capped-profit route offered by the non-profit-distributing model. The Conservatives have no objection to equity profits, because the objective ought to be to deliver better value for taxpayers, not to minimise any element of profits to the private sector. If the private sector can make a profit while delivering good-value services, we should welcome it. Removing profit does not automatically lead to a saving to the public purse.
I understand what Derek Brownlee is saying, but does he agree that there could be equity profit schemes that are non-profit-distributing organisations? In fact, such organisations could reinvest those profits in other building and infrastructure projects, which is similar to the building environment that we have in the private sector. The cabinet secretary is also incorrect to say that there will be no equity profits under NPD schemes.
The cabinet secretary may be correct in some circumstances, but the broader point is that no matter what form of procurement is used, the private sector will make a profit. In conventional procurement, where costs overrun, it will probably make a bigger profit than it intended, at an extra cost to the taxpayer. In contrast, with PPP or PFI, it achieves a profit not by cost overruns or delays but by reducing costs and delivering better efficiency. Refinancing gains are shared with the taxpayer.
Ministers have trumpeted the new Southern general hospital in Glasgow. How much of that £850 million of public money will go in private profit? The architects, builders and suppliers will make a profit. Everyone involved in the project will make a profit, and that profit will be taxed, which is how we pay for hospitals in the first place. We should not be afraid of profit, because without it there would be no new hospitals or schools or anything else.
Does the member agree that the key issue is excessive profit? Even under the traditional method of the Public Works Loan Board, the people lending the money still make a profit, but they do not make an excessive profit and they provide value to the taxpayer.
It all depends on what one defines as excessive. The benchmark that I normally use is the number of appearances that Mr Neil makes on "Newsnight".
We have no ideological preference for PFI or PPP over any other mechanism. To be fair, there are some legitimate concerns about some of the older PFI contracts. In England, many of the PFI contracts in the national health service that were signed within the past decade are being called into question because of a Government-backed move away from hospital care. That just shows the dangers in some cases of signing up to long, inflexible contracts. Much can change in 25 or 30 years, although I know that some things do not. We had a discredited, failing Labour Government on the way out 30 years ago as well.
There is a lack of clarity on the final shape of the Scottish futures trust, and we want to hear more about it from ministers after the summer recess, and until decisions are made on its final shape. We also want the Government to consider the concerns that have been raised about some of the refinancing provisions in the current NPD models, and in particular the way in which the independent directors could exercise the discretion to refinance. It ought to be possible to deal with the legitimate concerns without prejudicing the broader aims of NPD projects. We ask the Government to think carefully about that.
Finally, we want the Government to produce a framework to enable objective comparisons to be made of different funding models. For example, Audit Scotland has criticised some aspects of the current public sector comparator. Beyond that, there is a broader issue, because at present it is extremely difficult, if not impossible, to monitor all relevant costs on a whole-life basis across all construction and procurement methods. That should change.
We have long said that the new Forth crossing ought to be put in place soon. On the Liberal Democrat amendment, we have to ask whether the delay of six months, at most, between the promised statement to Parliament on the funding method for the Forth bridge and the timetable that the Liberal Democrats propose would lead to a delay in the date of the new bridge's opening. Given the long delays that have already occurred in relation to the Forth bridge, we do not think that there is any evidence that that is likely.
The Liberal Democrat amendment also mentions bonds. Many of the people who have criticised the role of bonds have pointed out that, where they are successful, such as in the United States of America, they are tax free, whereas in Scotland they would not be. However, the Government has today confirmed that it has the power to reduce the council tax of bond holders by an amount equivalent to the income tax that they would pay on their interest. That would allow the Scottish Government to make local government bonds more attractive. However, the Government could not do that under the local income tax proposals, because there would be no tax and interest generally. My advice in that regard is simple: to save the Scottish futures trust, all that the Government needs to do is ditch the local income tax.
I move amendment S3M-2057.1, to insert at end:
"believes that a broad range of public and private options should be available for capital investment by public bodies and that the public sector should seek appropriate provisions in the best interests of taxpayers; calls on ministers to report to the Parliament on progress after the summer recess and regularly thereafter until the final range of options and shape of the SFT has been confirmed; calls on the Scottish Government to finalise the details of the SFT as soon as possible and, as part of its work on the SFT, to review how refinancing provisions in non-profit distributing models might be amended to ensure that they achieve intended aims without discouraging investment, and calls on the Scottish Government to develop and publish a robust investment option-appraisal framework capable of producing comparable information on whole-life costs for future projects regardless of which method of procurement or operation is used."
Liberal Democrats welcome the debate, having consistently argued for ministers to be held to account by Parliament on the Government's Scottish futures trust proposals. Last week's statement from the cabinet secretary was unsatisfactory—a re-heating of fare that had already been served up to a noticeably underwhelmed audience at Heriot-Watt University the week before.
However, today, yet again, the cabinet secretary has failed to answer the many and fundamental questions that beset his ill-fated Scottish futures trust. There remains more than a suspicion that, as HBOS has said, ministers are more concerned with political dogma than with the efficient delivery of a major public investment programme that involves schools, hospitals and transport projects.
At least we have heard a grudging acceptance by the cabinet secretary that achieving the Government's stated objectives will require significant levels of private investment. Perhaps, in time, we will even get an acknowledgement that the private sector should expect to receive a return on such investment, or, in other words, that there will be—some of Mr Swinney's back-bench colleagues might wish to cover their ears at this point—private profit. Of course, the cabinet secretary knows that there will be private profit. In fairness, he probably has done for some time. However, for the sake of party unity, it remains the concept that hardly dare speak its name.
Progress has been made, nonetheless. In recent months, members of the Finance Committee have been treated to vintage Alex Neil as he has fulminated against PPP/PFI. In committee, he has not yet roused himself to the same lather of indignation that saw him denounce PPP/PFI to the Sunday Herald as "morally criminal", but he has left no one in any doubt about his desire to see PPP/PFI scrapped completely.
Sadly for Mr Neil, his script has been rewritten for him. Last week, Mr Swinney told an interested Finance Committee—and a presumably flabbergasted Mr Neil—that the preferred non-profit-distributing model was
"part of the family of public-private partnerships".—[Official Report, Finance Committee, 27 May 2008; c578.]
Interestingly, in his statements last week and today, Mr Swinney erased all mention of PPP. However, he is right—regardless of the doubts that Mr Neil might still harbour. NPD is part of what the Finance Committee has been told repeatedly in evidence-taking sessions is the evolution of PPP/PFI.
The witnesses who gave that evidence have been equally clear that PPP/PFI continues to have an important role to play. NPD, for all its undeniable benefits, will not be suitable in every case, notably where risks are high. The Government's decision to rule out PPP/PFI has already created disquiet and uncertainty in the private sector. Importantly, the decision also prevents the Government from securing best value for the taxpayer where the PPP/PFI model best fits the needs of the project.
Nowhere is that uncertainty more obvious or potentially damaging than in respect of the new Forth bridge. After more than a year in government, ministers appear to have absolutely no idea how they will fund the single largest and most iconic infrastructure project in Scotland. Alex Salmond's much vaunted—by him, at least—patriotic bond has been ruled out as illegal, which he must have known it would be when he made that promise. Further, as the Finance Committee has been told consistently, the NPD model is better suited to less risky projects. It is self-evidently not appropriate for the largest and most risky civil engineering project in Scotland for decades. Meanwhile, the cabinet secretary has failed to convince anyone that his idea of municipal bonds will swell to fill the void. That includes COSLA, which has described the futures trust proposals as "a joke".
Serious questions are now being asked about how the Government proposes to fund the new crossing. With a price tag of £4 billion, there is growing suspicion that ministers will be forced down the route of tolling to make up the shortfall. At the weekend, the cabinet secretary told "The Politics Show":
"we've said we're not taking forward a proposal based on tolling".
When that is added to his earlier statement in the chamber that
"The Government is against tolling",—[Official Report, 19 December 2007; c 4553.]
it is difficult to avoid the conclusion that Mr Swinney is softening us up for a U-turn. He says that he is against tolls and that his final proposals may not be based on tolls. However, he has so far conspicuously failed to rule out the use of tolls at all.
In the light of Nick Clegg's announcement that the Liberal Democrats want to introduce road charging, can Mr McArthur tell us which roads in Scotland would be tolled if the Lib Dems were in power?
It is interesting that Mr FitzPatrick seems to have overlooked the fact that his party is in government. What is going to happen to infrastructure projects in Scotland is a question for the Government to answer.
Even if Mr Swinney were to rule out tolls during the course of the debate, many questions would remain unanswered. The Minister for Transport, Infrastructure and Climate Change promised a decision on how the new Forth bridge would be funded by autumn 2007—a full eight months ago. Mr Swinney then kicked the decision into the autumn of this year so that
"early progress on the replacement crossing"—[Official Report, Transport, Infrastructure and Climate Change Committee, 2 October 2007; c 167.]
could be made. That deadline has now slipped to the end of the year—hence the problem that I have with Derek Brownlee's problem with our amendment. Given what has happened to the comprehensive energy strategy, no-one will be surprised if the Government soon proposes spring 2009 as decision day.
In opposition, the SNP promised urgency and new funding models; in government, its promises lie in tatters. I am reminded of the words of the formerly ubiquitous Fergus Ewing, who talked of Government being
"haunted by indecision and ineptitude"
and
"forced into a corner on the big decisions facing Scotland."
In the interests of Scottish business and Fife residents—and, indeed, to give Mr Ewing peace of mind—I ask the cabinet secretary to recognise the need to bring urgent clarity to the Government's intentions in relation to the Forth bridge.
That need for urgent clarity is also why I have difficulty accepting the Tory amendment. It makes a number of reasonable points, as did Derek Brownlee, but it appears to amount to a resolute demand for the Government to "see how things go—but keep us posted, will you?" Mr Brownlee's willingness these days to offer a comforting embrace to Mr Swinney in his increasingly frequent hours of need is remarkable. In fact, the only thing I await with as much anticipation as the details of how the Government intends to fund the new Forth bridge is finding out whether Mr Brownlee has yet done enough to pip Alex Neil to the keys of the next available ministerial Mondeo. That is one to watch—mark my words.
Liberal Democrats make no apologies for focusing on the issue of the Forth bridge in today's debate. As Hamish McDonnell put it recently:
"Ministers are slowly starting to find out the difference between the superficial and the easy … and the deeper, detailed and complicated policies which make a long term difference".
Clarity is needed.
I have pleasure in moving amendment S3M-2057.2, to insert at end:
"but notes that the Cabinet Secretary for Finance and Sustainable Growth promised the Parliament that a decision on the method of financing for the new Forth crossing would be made in Autumn 2007; is concerned that eight months later no decision has been taken; further notes that the First Minister's preferred method of issuing "patriotic bonds" has been dismissed as illegal and the non-profit distribution model is considered inappropriate for high risk projects, and therefore calls on the Scottish Government to make a statement to the Parliament setting out method of funding, management arrangements and timetable for procurement of the new Forth crossing before the summer recess."
I find it strange that Mr McArthur puts so much stress on the Forth road bridge. When his colleague Tavish Scott was Minister for Transport—and Mr McArthur was a special adviser—in the previous Administration, we got no commitment to any Forth crossing during eight years. The Liberal Democrats should look in the mirror.
Will the member give way?
I will in a wee minute—I will give you time to recover.
I remind Mr Neil about the rules on addressing members through the chair.
Absolutely—I apologise. I should address Mr McArthur through you, Presiding Officer. I will give him time to recover.
I will start on a consensual point, as usual. We all agree that major investment in Scotland's infrastructure is a prerequisite to achieving our key objective of boosting economic growth, and to ensuring that we have a smart, successful Scotland and that we are a competitor in tomorrow's world. We recognise that 10 per cent of the Scottish Government's budget for the next four years is already allocated to capital investment. That 10 per cent, however, is not enough in itself. We need funding above and beyond that, and the question in this debate is how best to fund additional capital investment above and beyond that which has been committed from the Government's revenue.
Iain Gray's speech highlighted the intellectual vacuum at the heart of new Labour. I will consider the various models for borrowing money for capital projects in the public sector, starting with the model that has been around the longest: the Public Works Loans Board.
The Public Works Loans Board borrows private money on behalf of the Government to fund capital projects. It has done that for more than 200 years and will no doubt continue to do it for another 200 years. Nobody in the Scottish National Party—or, I suspect, in any other party—has any objection to the fact that the board goes to the market to raise the money. The important point is that it raises that money on the basis of value for money for the taxpayer, paying the minimum amount, not the kind of return that has been paid on the Edinburgh royal infirmary project, for example, in which private equity of £500,000 produced a return of £168 million for the equity holders. That cannot be called value for money for the taxpayer; it is simply profiteering at the taxpayer's expense.
Will Alex Neil give way?
I always take people in turn, so I must let Mr McArthur in first.
Does Alex Neil accept that an announcement that states that a bridge will be built but which contains no detail about how that will be achieved, funded or managed is not so much ambitious as fantastic? We need clarity on that, and we need it soon.
We have clarity and will get clarity. More important, we will get a bridge. We would never have had a bridge had we waited for the Lib-Lab pact to deliver it.
If Scotland and the Scottish Parliament had Scotland's share of Scotland's oil, we would be able to build as many bridges as we liked over the Forth. That is why are having the debate. Members might have seen a programme on the BBC last night that highlighted the fact that £230 billion-worth of revenue from North Sea oil has gone into the United Kingdom Treasury in the past 30 years. Even under the Liberal Democrat policy of sharing that revenue across the UK for investment in capital projects—a good Liberal Democrat policy—we in Scotland would have been far better off today than we are. We would not have needed to entertain PFI, PPP or anything else because we would have been able to fund our infrastructure almost entirely from oil revenues.
One minute, Mr Neil.
The great tragedy for Scotland is that we have to borrow money through PFI, but we would not need to do so if we had control over our own resources.
I had much more to say but, unfortunately, I have run out of time. [Applause.] Well, I have time enough to say that the difference between the Scottish futures trust and the Lib-Lab PFI or PPP—or any other name that we want to give it—is that, with the Scottish futures trust, we will deliver infrastructure projects that are value for money. That is why the Tories can support us today. We are not in favour of excess profits; we are in favour reasonable profits in return for a good job well done.
Skills and infrastructure are the two most important things that a Government can provide to assist economic competitiveness, and I welcome the debate for that reason.
John Swinney needs help with infrastructure investment, but not from Alex Neil. I had quite a bit of experience in the matter before I came to the Parliament because, over the years, I have been involved in the procurement and delivery of a number of roads, transport, water, housing and schools projects. Indeed, in the six years that I was leader of Glasgow City Council, the council built around 40 schools—29 of them over two years under a public-private partnership, and the remainder over about four years through what might be called the traditional route. I have continued to take a close interest in infrastructure since I came to the Parliament.
I welcome the fact that we have something called an infrastructure investment plan, which is a start. I notice, however, that there is a big elephant sitting in the corner: the new Forth bridge, which is not in there. Like everyone else, I wonder what the option will be chosen for financing that project.
There is a range of other challenges to be faced in delivering infrastructure projects. There are of course issues around financing. However, in all my time in office in Glasgow, not one Glaswegian complained to me that their new school was built through a PPP funding method and not some other method. Presumably, people regarded the method as entirely incidental.
There are finance, procurement, project management, capacity, asset maintenance and value-for-money issues. At the level of political management, the Scottish Government does not have an infrastructure minister to deliver the infrastructure plan. It is true that Stewart Stevenson is Minister for Transport, Infrastructure and Climate Change, but he is just a part of John Swinney's vast empire, and no one is in control of all the infrastructure requirements—certainly, no one is in control of taking them all forward together. At the strategic level, Stewart Stevenson's ministry has officers and civil servants in a transport directorate, with other responsibilities being discharged by an executive agency, Transport Scotland. The structures are not necessarily joined up to start with.
Procurement can be bedevilled by more than just arguments over finance models or the byzantine European Union rules that govern them. The contracting industry might not always react to tenders in the way that we, as their clients, might anticipate. A low tender bid might be a ploy to win a contract in relation to which the contractor intends to generate claims subsequently, whereas a shortage of competing tenders might necessitate an expensive shadow tendering exercise by the client, as was recently the case with the M74 completion project.
As for project management, I say only that members should look around them.
I turn to the problem that is caused by the finite capacity of the contracting industry. That is a challenge to the delivery of the existing infrastructure plan, never mind to the delivery of a beefed-up infrastructure plan, which some of us want to see. On 29 January this year, the chief executive of the Water Industry Commission for Scotland, Alan Sutherland, told the Parliament's Transport, Infrastructure and Climate Change Committee:
"a capital programme in the low £400 millions per year is more likely to be delivered efficiently over the medium to long term than one in the low £500 millions per year."—[Official Report, Transport, Infrastructure and Climate Change Committee, 29 January 2008; c 396.]
The chief executive was expressing severe doubts about whether Scottish Water could deliver its part of the programme, as contained in the plan. That is a major worry.
I move on to asset maintenance. A major but oft-ignored benefit can come from having a PPP project—or its close relative, the NDP-financed project. Such a project will usually provide for the maintenance of the newly created asset for a period of, typically, 30 years. In contrast, traditional procurement does not address such long-term issues. When savings are sought, road and buildings maintenance are often viewed as soft options.
If, like me, members want more and better infrastructure delivered more quickly, we need to work in a more joined-up way. That means more corporate working by ministers, questioning the silo structures of civil servants and executive agencies and seeking opportunities for synchronisation at the grass roots. On that latter point, I recall the Glasgow subway upgrade, during which fibre optic cables were installed—the spare capacity is now used by the city's universities. I was reminded of that this week when I came across the example of the Dundee firm that is putting fibre optic cables in that city's sewers. Given that BT is balking at the cost of cabling the UK and that market forces might therefore fail Scotland's much-needed second generation of faster broadband infrastructure, ministers should pay close attention to the Dundee example.
Above all, the Scottish Government will be judged on the delivery of Scotland's infrastructure, and judged harshly if it fails.
I thank Charlie Gordon for acknowledging the innovation of Dundee business and industry—and some of the things that the Cabinet Secretary for Finance and Sustainable Growth is doing to deliver the Government's programme.
Today's debate illustrates perfectly that the Government is making improvements for the benefit of the people of Scotland and that the bitter Opposition is all over the place. Iain Gray says that the SFT is just PFI; Andy Gray—[Laughter.]—is on record attacking the NPD model in an interview with the finance convener of Falkirk Council; and Wendy Alexander claims that it was all Labour's idea anyway.
I speak as a former centre forward.
And a comedian.
Indeed. Talking of comedy, the SNP is always quoting the University of Edinburgh on PFI, PPP and other such things. Mark Hellowell of the University of Edinburgh said of the non-profit distributing model:
"Evidence suggests that this form of public-private partnership does not lead to lower levels of profit-making than PFI. On the Argyll and Bute grouped schools scheme, for example … the … rate of return … was … 15 per cent … which is about the norm for … PFI".
What is the difference?
The big difference is that the NPD model will end the excessive profits, of which there are many examples under the standard PFI model. The evidence from Argyll and Bute Council and from Falkirk Council shows that with NPD there were no excessive profits to be made.
The SNP Government is committed to delivering record capital investment across Scotland. As the cabinet secretary said in his opening speech, £14 billion will be invested in infrastructure over the next three years, and £35 billion will be invested within a decade. Of that record investment, £2 billion will be invested in new and improved school buildings, including Kingspark school and Barnhill school in Dundee, both of which will be funded through traditional procurement using that record capital funding as part of the historic concordat with local government.
Members of the Opposition parties might not like to hear this, but our SNP Government will deliver 250 schools in the lifetime of this parliamentary session, which will match Labour's proposals brick for brick. However, in doing so, we will ensure that we get the maximum bang for the public pound.
How many of those schools will be schools that were begun under the Labour-Liberal Democrat initiative and financed as part of PPP 2, as opposed to its successors?
The Government took the decision that the quickest way of moving a few of those schools forward was to continue with the existing system. Where possible, they were transferred to the NPD model. I am confident that, in future, we will get much better value for the public pound through the Scottish futures trust.
The previous Administration had hoped that the Scottish people would never find out about the huge profits that private companies were making at the expense of the Scottish taxpayer as a result of the PFI programme. However, after the facts became available following a freedom of information request, we saw that the evidence was shocking. The Sunday Herald summed up the situation best when it labelled it "The great PFI swindle".
The evidence revealed for the first time the huge scale of the profits that were being made by private companies at the public's expense. We were told of regular profits of 1,200 per cent for private investors. That means that for every £1 invested, they got back £1,200. To put it another way, a modest investment of £1,000 delivered a return of £1 million. That is a scandal.
In 2006, the capital value of PFI projects in the NHS was £600 million, but the debt created was £2.4 billion. Even Labour members should be able to tell that that does not add up.
The huge sums of public money that were being handed over to private companies under PFI are a disgrace. One of the main justifications for those massive profits is the claim that, as part of PFI, risk is transferred. However, another national scandal is the projects that had to be bought out at a cost to the taxpayer of tens of millions of pounds: the Skye bridge, West Lothian College and Inverness airport. It is clear that for "risk" we can read "built-in profit." When a PFI project goes badly wrong, the public purse has to bear the cost.
The examples of expensive PFI projects that have cost the taxpayer dearly could fill a whole month's debate. I urge all members to read the submissions to the Finance Committee's inquiry into methods of funding capital projects. In that written and oral evidence, we read and heard lots of opinion. Many comments were made in defence of PFI and against change, but it is important to look at where those comments came from. It is perfectly understandable that people with vested interests in the current system will oppose any change that will cap excessive profits and ensure best value for the public purse. However, as well as that opinion, the Finance Committee received lots of evidence that was based on fact. The evidence speaks for itself. A damning indictment of PFI is the fact that it will leave an £800 million noose around the neck of Scotland's public finances.
The Government has shown that we can move swiftly on infrastructure investment, which is so vital to the success of the economy and to the delivery of services. Since the Scottish National Party came into office, the Government has approved a raft of projects, many of which—including the Forth crossing—had suffered because of years of dithering on the part of the previous Administration. We will take no lessons on finance from the parties that presided over the scandalous PFI disaster that we have witnessed in recent years. Scotland's Government is determined and committed to achieving the best value for Scottish taxpayers, and that is exactly what it is delivering.
I have declared interests that are relevant to this debate.
As someone who has consistently spoken out against PFI/PPP, I am genuinely disappointed that the Scottish futures trust is not an end to that regime. Unison makes the point well in its submission, which highlights that the SFT is "essentially window dressing", as it keeps the
"same profiteering and inflexibility inherent in PFI."
Alex Neil is right that infrastructure investment is a vital issue for Scotland's economy, public services and people. The issue is in essence whether the public get their new schools and hospitals and how those are paid for, managed and maintained. Sadly, I think that debates such as this may not catch the public's attention until such time as new schools and hospitals are cancelled.
I strongly recommend that Government back benchers—in particular those who claim to be trade unionists—read and digest every word of "Taking forward the Scottish Futures Trust". For very good reasons, the proposals are not supported by the trade unions.
As previous speakers have mentioned, John Swinney has already confirmed that the SFT will have several
"key components to its work. First, it will have at its core the non-profit-distributing model of finance."
He went on to confess that
"The NPD models are part of the family of public-private partnerships".—[Official Report, Finance Committee, 27 May 2008; c 560, 578.]
However, even the term "non-profit distributing" is a misnomer. As Dave Watson of Unison stated in his evidence:
"Of course, NPD is not non-profit, because the profit is simply taken at contractor level."—[Official Report, Finance Committee, 13 May 2008; c 506.]
The problem for the Government and its back benchers is that, before last year's election, the SNP made a very clear promise to the Scottish electorate that it would end PFI/PPP and restore commonsense public financing. That was one of the SNP's most popular policies—as evidenced by a BBC poll—and I do not doubt that it helped the SNP to electoral success. The Government must now be honest by admitting to those voters that they have been deceived. The SFT is not a clear end to PFI/PPP, as it is part of the PPP family.
Given the impact of the Government's decisions on infrastructure investment, the people of Scotland should be able to expect that their elected representatives are properly informed about the Government's proposals. However, the Government's intention was announced not to Parliament but at a conference. In making such announcements outside the Parliament, the SNP seems to be running the Government via conference so let us look at that conference in a bit more detail.
The list of organisations that were invited to the conference tells the story—as does the fact that the trade unions were not included. The purpose of the conference, which was hosted by the Scottish Government, is explained in the leaflet:
"The Scottish Government welcomes the involvement of the private sector in infrastructure investment. It recognises the benefit of partnership between the public and private sectors, the value of private sector know-how and the due diligence it provides through having private capital at risk, as well as the additionality their investment brings on top of public sector investment."
The conference was supported by Partnerships UK, which boasts of
"delivering investment through public-private partnership".
The conference's sponsors were Citibank, McGrigors and PricewaterhouseCoopers. The final clue as to the Government's purpose comes from the company that managed the conference, City & Financial, which states on its website:
"Governments around the world are embracing Public Private Partnerships (PPPs) as the delivery mechanism of choice for their infrastructure investment programmes."
We are clearly talking about PPP.
On another important privatisation issue, I wonder whether the Government back benchers noticed the surreptitious, throw-away mentions of "hub", both today and in last week's statement. They must know that that means opening up primary care to the market through PFI—if they did not know, I draw their attention to that. Hub is a joint venture model that allows primary care services to be broken up into saleable commodities under a process that is known in the privatisation world as unbundling, thereby providing commercial providers with entry points and market opportunities. As Pauline Bryan pointed out in the 2005 publication "The Red Paper on Scotland", the more private finance involvement there is in the health service, the more likely it is that health services will fall within the ambit of international trade law, which will open up our health service to commercial invasion. We need to hear more about that from the cabinet secretary in his summing up.
The second key element of the SFT is that it will share expertise. How can the SFT provide impartial advice as well as being a funding provider and delivery vehicle? Will its advice be free? It will be a private body, so how will staffing work and to whom will staff be responsible?
On the final key element of SFT, even if local authorities are minded to pool projects, what guarantee does the Government have that the private sector will engage? The private sector hates multi-headed clients and thinks that they are a recipe for delay and additional costs, which are passed back via the contract.
If the Government cannot deliver its promise to end PFI it should be honest and say so. However, there are alternatives to the PPP family—I do not have time to go into them all. If a superhospital can be delivered through conventional funding, other projects can be delivered in that way. We could pursue fiscal powers for the Parliament—I argue for that in "The Red Paper on Scotland". I have no time to describe Unison's sensible five-point plan, but members can read about it.
In the business case for the SFT, the SNP's stated intention is not to get rid of PFI. Not only is the SFT part of the PPP family but the Government's intention is to continue with some currently proposed PPP projects and it is not ruling out traditional PFI, whatever the profit levels. The SNP grasped an easy PFI solution, as a drowning man grasps a lifebelt. Public utilities should be publicly owned and run and the SNP should deliver what it promised to Scottish people.
How many angels can dance on the head of a pin has been a question for theological debate since medieval times. The question has become a metaphor for pointless hair-splitting, so there can be no better description of the linguistic contortions to which the SNP will go when it discusses its proposed Scottish futures trust. As I said last week, the finest of fine points of distinction are presented as matters of fundamental difference and there seems to be a remarkable unwillingness to acknowledge that the SFT is a private sector vehicle whose purpose is to lever in private finance to public infrastructure projects. As such, the SFT shares many of the characteristics of PPP schemes and their PFI forerunners.
Why do the First Minister and the cabinet secretary have to perform such verbal gymnastics? They must do so because they have built their careers—and a manifesto—on denouncing PPP and all its works and accordingly are desperate to present their wizard wheeze as somehow fundamentally different. But it is not different, and everyone knows that it is not different, as was well illustrated by Iain Gray and, from a different perspective, by Elaine Smith.
An SNP article of faith about the SFT is that somehow borrowing will necessarily be cheaper than it would be under PPP. However, in its submission to Mr Swinney's consultation, the SNP-run City of Edinburgh Council said:
"It is not entirely clear how funding would be cheaper than that possible under traditional PFI procurement methods given (i) the SFT's private sector status (and resultant inability to borrow at the lower rates available to the public sector), (ii) the proposed use of margins around commercial lending rates to meet operating costs and (iii) the suggestion that it might be set up on the premise that surpluses would be invested in subsequent projects in the first instance rather than passed back to participating public sector bodies in the form of lower charges."
I am afraid that the cabinet secretary's statement last week took us no further forward in answering those questions from a council that is run by his party.
Instead, the SNP now seems to be clinging to a variant of PPP, the so-called non-profit-distributing model. That is because the SNP apparently dislikes uncapped equity profits or, as we heard today from Mr Swinney, Mr Neil and Mr FitzPatrick, excessive profits. Of course, they do not mind accepting donations from the beneficiaries of uncapped equity profits—wealthy men who would no doubt be appalled to learn that the SNP Government believes in putting caps or ceilings on the profitability of Scottish companies.
The so-called non-profit-distributing model is not a non-profit-making model—quite the reverse. It is, in fact, a model in which the profits are guaranteed because they are built into the financing costs up front, as Elaine Smith eloquently demonstrated. Accordingly, for the SNP to claim that its futures trust will revolutionise the funding of public infrastructure projects is simply nonsense.
Conservative members have no objection to municipal bond issues, if that is what people want, or even aggregated municipal bond issues, which might turn out to offer a beneficial method of funding certain projects. Equally, I am in no doubt that PPP or PFI has in the past been the right funding model for many of the schools and hospitals that it has financed and which are now up and running throughout Scotland.
I have reminded members in previous debates about the escalating costs of the building in which we stand. At the same time that it was under construction, we delivered a major new royal infirmary for Edinburgh on time and on budget across the city at Little France. That PFI project, which started under the Conservatives, represented a far better deal for the taxpayer than this Parliament and produced a hospital fit for purpose to meet the needs of patients in the city. What I object to in the SNP proposals is not just the tortuous semantics but the unfounded assumption that its model is somehow inherently superior to others. Projects should be looked at on an individual basis.
Dithering over the Scottish futures trust is certainly hampering progress on important projects in this city. The SNP-Lib Dem council tells us that it has set aside £33 million for phase 3 of a new and upgraded schools programme, but that is only 20 per cent of the estimated cost. No one knows where the rest is coming from. The whole process of evaluation and authorisation has stalled and, as a result, children and young people in the city will have to wait longer for investment in their schools, if it comes at all. It has led to a situation in which a cabinet minister, Kenny MacAskill, has indulged in an unseemly public spat on the subject with the Liberal Democrat education spokesman on the council, which their two parties are supposed to be running in coalition. That speaks volumes about underlying tensions and uncertainties.
The motion that the SNP Government lodged for debate today is remarkable for its docile nature. It does not even ask Parliament to endorse the Scottish futures trust. Is that a failure of nerve or could it be the final dawn of reality? As the French put it so well, plus ça change, plus c'est la même chose—the more things change, the more they stay the same. In a nutshell, that sums up the Scottish futures trust.
A slightly more robust amendment from the Conservative party highlighting some of the failures of the Scottish futures trust might well have gained the support of Mr McLetchie as well as the Liberal Democrats.
The Government has identified the need for investment in Scotland, yet it is very nervous about how it will satisfy that need other than by asking us to take note of 14 options for the way forward.
The transformation of the education estate has started, as Iain Gray said, and the pace has gathered. When Audit Scotland came to the Education, Lifelong Learning and Culture Committee, it raised genuine concerns that that pace is now slowing. Despite what SNP members have stated, not one new school scheme has been commissioned and put in train since the new Government took office. It lauds the fact that it is delivering schemes that we started, yet not one new scheme has been commissioned.
It is at this point that one normally expects an intervention from a Government minister to highlight the inaccuracy of that statement. However, that has not happened. Not one new scheme has been commissioned.
Only this week, the council in the Borders, which I represent, completed its estates review for the next generation of schools and called on the Government to clarify the way in which the Scottish futures trust will support new build. In my constituency, a new high school and three new primary schools are being built. The council has no information on whether there will be support for future school building, but I guarantee that SNP minister after SNP minister will be tripping over themselves to come down to my constituency and open those new schools.
Last year, the SNP was perfectly clear. On 27 June, the Cabinet Secretary for Education and Lifelong Learning told the Education, Lifelong Learning and Culture Committee:
"We think that schools and pupils will obtain far better value from a futures-trust funded school than from a PPP-funded school."
That is clear. She went on to say:
"We will have a school building fund to which local authorities can request access."
She also said:
"We can still use the schools fund. However, the futures trust will provide a very attractive option for local authorities and I think that many are waiting with great anticipation to use it."—[Official Report, Education, Lifelong Learning and Culture Committee, 27 June 2007; c 40.]
I say to the Cabinet Secretary for Finance and Sustainable Growth that we are still waiting, as are councils throughout Scotland. There is no longer a schools fund, nor is there a school building fund to which local authorities can request access. Again, if that is incorrect, I would be delighted to give way to the cabinet secretary, if that is not too dramatic for him.
Will the member give way to me instead? [Laughter.]
I will. The cabinet secretary would be a poor substitute for Margo MacDonald. I am sure that she will make a more cogent point.
Will Jeremy Purvis explain why both the Government and the previous Executive are hung up on a scheme that neither of them really likes. Why do they not just fund things from the Public Works Loan Board?
The reality, as Margo MacDonald knows, is that it would be possible to construct only a fraction of the schools that are being constructed in the Borders if they were funded from the capital budget for a few years. We need to use private finance and we need a proper relationship with private finance in order to do that. The point of this afternoon's debate is that it is disingenuous to deny that there should be a relationship with private finance, as the SNP has done all along.
When the Cabinet Secretary for Finance and Sustainable Growth came to the Finance Committee last week, he did so having lauded the Falkirk and Aberdeen schemes—the non-profit-distributing alternatives. I asked him:
"Both you and the Deputy First Minister have cited the Falkirk schools scheme as an alternative to PPP. Is that the case?"
He said, "Yes." I said that, on 21 May, I received a written answer from the Minister for Schools and Skills, which stated:
"‘Scottish Government revenue support for the Falkirk schools project will average £5 million per year for the 30 year duration of the PPP contract.'—[Official Report, Written Answers, 21 May 2008; S3W-12863.]"
John Swinney said:
"The issue comes down to terminology … PPP is a generic family term for all such approaches."—[Official Report, Finance Committee, 27 May 2008; c 578.]
The next day, he came to the Parliament with a statement. We have a handy tool on our office computers—the find and replace function. The cabinet secretary had gone through his statement, found all references to PPP and replaced them with PFI. We have not heard the cabinet secretary mention PPP since his appearance at the Finance Committee.
Margo MacDonald asks why the matter is important. It is important because councils and the public sector throughout Scotland need clarity about where the Government support will be. On revenue support, only the Falkirk and Aberdeen schemes are able to benefit, because they have revenue support from the Scottish Government. They both have the equivalent of £5 million a year over 30 years. On 28 May, I asked the cabinet secretary whether that revenue support was available for other schemes. He said:
"Subject to the approval of projects in the normal fashion, the revenue support payments will be made available."—[Official Report, 28 May 2008; c 9017.]
So that is a yes. However, page 22 of the Government's infrastructure investment plan states:
"specific grants have been rolled up and transferred into the local government settlement. Included in the rolling up are the PPP Revenue Support Grant and the Schools Fund Capital Grant."
You should finish your quotations.
The cabinet secretary heckles me now, but he did not take up the opportunity to intervene before.
When the cabinet secretary sums up the debate, will he provide clarity to councils? Will revenue support grants be available for NPD schemes in the future—yes or no?
This has been a fascinating debate, as much as anything else for the variety of views expressed by members of the former Administration, ranging from the far left to the apologetic neo-right.
The debate has reminded me of a person whom no one in the chamber—not even a political anorak like myself—will ever have heard of: the right hon Percy John Pybus. He nationalised London transport in 1932. He was a Conservative, taking over a bill piloted by Herbert Morrison under the Labour Government of the previous year, and he used funds made available to him by the Bank of England, which had in effect been nationalised by Andrew Bonar Law in 1917.
We are in a period of change in the economic politics of this country that is similar to what hit in 1929 to 1931. We are facing the period of peak oil and—much more dramatic—the complete collapse of the housing retail driver, which has produced apparent affluence in the past few years.
A nice quotation turned up when I was looking through The Guardian archives this morning:
"When Gordon Brown looks back on his career and broods darkly on why he never became prime minister"—
this was written in 2001—
"London Underground may be carved on his heart."
That was the underground that Gordon privatised and handed over to Metronet. What became of Metronet? Ask the bankruptcy commissioners.
That shows that, before us, there is a tidal shift in economics. Anyone trying to raise social product capital over the past 10 years has been faced by the runaway housing inflation in this country. In Germany, the price of housing has roughly flat-lined; here, a house purchased in a London suburb for £50,000 in 1986 is now worth £500,000. That gain has competed with the need to provide social product capital for our infrastructure, notably for our transportation system.
Rather than trawl through history, I will make the point that in my constituency three new schools were opened in the previous parliamentary session. In my constituency now, we are waiting for three new academies—in Laurencekirk, Alford and Kemnay. They have been waiting for a year for £120 million input from the Scottish futures trust. How many more years will we have to wait until we can get some new schools in my constituency?
Does the member remember reading in the past fortnight a report in The Guardian—a paper largely committed to the liberal cause—on the low quality of schools delivered by PPP?
Let us look further at the situation and contrast it with the continent, where private capital can be used under terms directed by the Government. In the French road building programme, for example, the roads are completed according to a schedule and then passed back to the state in a regular system, and the notions of profit are determined by the state. I think that one would find that the French road and rail systems are infinitely superior to our own.
What about our kids?
The problem is that our kids will have to pay the social costs involved in the housing retail driver that has dominated this country until now. Furthermore, our economic models have essentially been derived from the services sector. As a former military officer, Mr Rumbles will understand the cost-plus notion, in which the plus comes from the contractors. They are the people who have given us the great Chinook—£500 million spent on helicopters that have never flown. They are the people who have given us a situation in Scotland in which what remains of our heavy industry is run by BAE Systems—not a company to be trusted with much.
I want finally to make one point about an area of infrastructure that we have not examined to any depth: maritime communications. That is up for grabs at the moment with the likely cessation of the Rosyth to Zeebrugge ferry. We can go in for infrastructure investment in this area by using the long-distance trans-European transport networks programme, which could produce, with the input of the Scottish Government, the sort of collaboration that would provide not only a service from Zeebrugge to Rosyth but, as Napier University has been exploring, the notion of communications right up the eastern coast to Orkney, Scandinavia, Iceland and beyond. That would be a transport system worthy of the arc of opportunity. That is the sort of thing that would cost us £1 billion over 30 years—a fortieth of what Gordon Brown has blown on Northern Rock.
I welcome the opportunity to take part in the debate. As other members have said, it is an important debate because infrastructure is key to growing the Scottish economy. It has been agreed across the Parliament that that is an important policy priority.
It is important that we get the infrastructure in place. We must have a proper roads network that provides connectivity and an adequate schools estate, which is fit for purpose for our young people to learn in. The question is how we fund such infrastructure projects. There are clearly limitations to the funds that are available from current funding pots, even though the Scottish budget has doubled to £30 billion since the start of devolution.
Consider the position of the schools estate at the start of devolution: 40 per cent of schools were not fit for purpose. The Executive had to consider how it would raise finance. The option of PPP was one that was very much supported, because it could be used to raise the £5.3 billion that has been required to improve the school estate over the past eight years.
In recent weeks, I have visited a number of schools in my constituency, some of which were funded by PPP. Contrary to what Christopher Harvie said, those schools have been well received by pupils, teachers and parents. They will provide an excellent platform to enable the children to learn and, I hope, go on to make a major contribution to the Scottish economy.
If the SNP had its way, those pupils would still be housed in the old school buildings. In the run-in to the last election, the SNP opposed PPP tooth and nail. In its manifesto, which on this policy issue was basically a drive to say anything to get a vote, it developed the Scottish futures trust. As Elaine Smith said, the SNP told the Scottish people that it would provide funds at low costs of interest and that there would be limited profits. We see the realities of power now that "Taking forward the Scottish Futures Trust" has been published. The Cabinet Secretary for Finance and Sustainable Growth acknowledged to the Finance Committee last week that the model to be used is the NPD model, which is essentially a variant of PPP. As other members have said, it will still involve profits because the profits will be built in at the start. That is clearly at odds with what the SNP told the electorate and possibly some of its own members before the last election.
There are holes in the proposals in the document. Private sector finance is clearly an important policy area to explore in order to fund infrastructure projects, particularly when we consider that a six-month delay in a £100 million project costs £3 million. However, page 39 of the document admits that details of how private finance will be raised are still to be explored. Alex Neil talked about an intellectual vacuum; that is not just an intellectual vacuum but a gaping hole in the policy.
Much was made in the press release launching the policy of the £150 million-worth of savings that would be generated. Of course, the issue is covered in the document but, as its terms were drafted by PricewaterhouseCoopers, there is, as we might expect, a lot of consultant-speak about "value-for-money drivers" but very little information about how those savings will be derived. If no work has been done on how private finance will be raised, how can it be said that the policy will generate £150 million of savings?
It will be a long time before the first school is delivered under the Scottish futures trust. It is no wonder that SNP members have been squirming as the debate has progressed. If the SNP's answer to investment in Scotland's infrastructure is the Scottish futures trust, it is time to send it the message that it cannot be trusted with Scotland's future.
Mr Brown, you have five minutes.
Just as Charlie Gordon, quite reasonably, cited his experience in Glasgow City Council as his reason for supporting Andy Kerr's amendment, I will draw on my experience in Ochil and in Clackmannanshire Council in highlighting my reasons for supporting John Swinney's motion.
In Ochil, there are five PPP state secondary schools projects across three local authorities; one is complete and the other four are at various stages of construction. That might, on the face of it, appear to be a good legacy of the Labour-Lib Dem-Tory PFI scheme—Holyrood magazine this week described PPP as PFI's illegitimate son, although the phrase used was rather fruitier than that. However, when we start to look in some detail at Labour's PFI adventure, it seems more like an oppressive hangover than a golden legacy. I am glad that Michael Matheson is not in the chamber to hear this, but it was the SNP-run Clackmannanshire Council in 2002—not Falkirk Council—that was the first to have a trust model approved by the former Scottish Executive. Indeed, it was approved in a phone call to our chief executive from, of all people, Nicol Stephen. However, when Labour took control of the council in 2003, it immediately changed the trust model back to a PFI model.
That is when it all went wrong for Clackmannanshire, the smallest mainland council in Scotland. The bill for its three PPP-built secondary schools will be in excess of a quarter of a billion pounds over the period of the project—and that is for a population of around 48,000. What that means, apart from the fact that the council is now mortgaged to the hilt, is that there is no prospect of any substantial investment in its primary schools, which are decaying and are, to absolutely no one's surprise, subject to a review that is widely expected to result in closure proposals.
Incredibly, these three massively expensive new secondary schools have no swimming pools. Despite local objections and petitions by pupils and Alloa swimming club, which is one of the most successful clubs in the UK, the Labour council would not support the incorporation of pools into the entire PPP secondary school estate and into any of the schools being built in Clackmannanshire.
Will the member give way?
I am sorry; I have only five minutes.
The local council said that developers do not like swimming pools because of the space that they take up and the on-going maintenance costs. That bears out my experience of PPP as being developer-driven. Developers do not like to refurbish schools; instead, they say that they prefer to start from scratch. However, that means that the policy becomes environmentally unsustainable, because buildings that are, in many respects, worthy of refurbishment simply get torn down.
Moreover, developers do not like refurbishments as they often preclude the sweetheart deals that they manage to strike over land for developments that have nothing to do with the school and are often built at the expense of playing facilities and green space for children.
I have known councils to change the location of proposed schools because the developer wanted it that way. In our scheme, for example, we had to take out the children's whiteboards at the developer's request and cover the cost of demolishing one of the schools because the developer refused to fund it at the previous price.
The SFT model outlined by the cabinet secretary will have the virtue of putting those who use—and those who pay for—our new schools back in charge of where they are located and what facilities they have.
Why did the local Labour Party exchange the trust model that the SNP had won for the present PFI scheme? The debate on the subject that took place in the council chambers when the decision was taken was fascinating. It is worth recalling that not one Labour councillor was prepared to advance a single argument for the merits of PPP; indeed, most of them said that they did not like or want it. The only argument for accepting it was the cliché that we have had to listen to for a number of years—it is the only game in town. That was the reality as those Labour councillors saw it. The picture that Andy Kerr painted, whereby there was a kind of schools supermarket in which, on arrival at the checkout, a council would be asked whether it would like to pay for its new schools through traditional borrowing, through the use of a trust or by putting them on a PPP gold credit card, is not an accurate representation.
The argument that PPP is the only game in town—that there is no alternative—is one of intellectual poverty. It means that the merits of any given proposal are not considered. PPP is a Thatcherite policy with a Thatcherite slogan: "There is no alternative." Everyone knows that, under Labour, PPP was the only game in town when it came to our schools. That is why the Scottish Government is right to consider as many options as possible for getting the best value for taxpayers' pounds.
I hope that the SFT will result in the process being far more open and transparent. At the meeting to decide on the preferred bidder in Clackmannanshire—from which the public and the press were excluded—I recall that we were handed one sheet of A4 paper, which was taken from us as we left. It is to the cabinet secretary's credit that he has listened not to the siren voices of the developers and consultants who have ridden on the gravy train of PPP, but to the parents, pupils and taxpayers of Scotland. That is why I will support the motion.
Peter Peacock, you have five minutes.
Without doubt, one of the biggest challenges that the public sector has faced in recent decades has been to find the right level of infrastructure investment. From the 1970s until the late 1990s, in particular, there was massive underinvestment in public infrastructure and in the maintenance of the assets that we had. For most of that period, I was either the chair of the finance committee of a big regional council or a council leader. Over those years, I watched the condition of the infrastructure for which I was responsible decline. There were more than 200 schools in the area, many of which were built in the 1860s and the 1960s. Those that were built in the 1960s often had higher maintenance requirements. Over the whole estate, we had less than £4 million a year to spend on rebuilding and refurbishment. The rate of decline of the stock was far greater than the rate at which we could invest to recover that decline.
A vast injection of new capital into infrastructure was needed. That is why I am pleased that when we were in government we made significant advances on that front, although they were never sufficient. I am afraid that the Scottish futures trust offers no answer to how we can maintain the current rates of investment, let alone to how we can gear up investment.
As a finance convener and as a council leader, I spent a great deal of my time trying to get round public sector accounting rules. I had a fair degree of success in that on the revenue front, but progress on the capital side was virtually impossible because of the old section 94 consents, which had to be applied rigidly. Thankfully, we did away with section 94 consents when we were in government and introduced the prudential code, which offered much more flexibility but still represented a prudent approach to dealing with finance.
As a finance convener, I considered issuing bonds on more than one occasion. We had the power to issue bonds, as did every local authority at that time, but we did not use it throughout the 17 years for which I was responsible for such matters, and nor did any other local authority. I acted not out of principle, but simply because the use of bonds offered no advantage whatsoever. It did not do so then and it does not now. Not a single extra penny would be released for investment. All that would happen is that borrowing in the current prudential regime would be displaced. In any event, bonds are not a cheaper form of finance per se, so why would one want to replace Public Works Loan Board funding—which Alex Neil mentioned—or other open market borrowing with bonds? One would not. Moreover, a bonds system is more difficult to administer. Bonds are a key part of the SFT model, but they will not add anything.
I turn to the magical wheeze whereby local authorities will join together to issue a municipal bond, not for their own area, their own spending requirements and their own statutory responsibilities, but for another area and for statutory responsibilities for which they are not responsible. I seriously doubt whether the powers exist that would allow a council to be the principal funder of a project in another area that would produce no direct benefit for that council's area.
Leaving that aside, why would a local authority do that anyway? Why would it raise money for roads or schools or old folks homes outside its area or responsibility when it could not raise enough money for such provision within its area? That would involve it in saying no to its own constituents' infrastructure needs, but saying yes to the infrastructure needs of other people. That simply will not wash. Such a system will not come to pass because it is the antithesis of what local government is about—looking after local interests before the interests of other areas.
As members have said, page 7 of the SFT document that was issued a couple of weeks ago confirms that NPDs are PPPs. I know an NPD when I see one, because I approved the first one. I went to Argyll and Bute to announce it and I cut the sod for one of the first schools that was built under that arrangement. I can tell members that it is no cheaper for the public purse than is any other form of PPP.
Will the member give way?
I say with respect that I will not, because the time for my speech has been cut.
NPDs are PPPs, but I doubt whether the SNP's plan for the NPD model will get off the ground, because no grant support is available for it, as Jeremy Purvis said. Not a single extra penny is on offer above what the previous Administration provided. Under our PPP schemes, councils had to find part of the finance, but they received substantial grant support to continue with building programmes. Even under the old section 94 consents, huge Government finance was given to loan fund support as, otherwise, projects would not have happened. Both those approaches acknowledge that, to get any local capital spending going, central Government support is needed. When council tax levels are frozen, if it is necessary to cut services to raise far more cash than was required for previous PPP projects in order to fund additional borrowing, that will not happen. To pretend that it will is a delusion.
The Scottish futures trust has become the nae futures trust. At every turn, the policy is flawed and unworkable. The latest iteration is in the document that was published two weeks ago, which contains pages of consultancy gobbledegook that masquerades as a capital investment strategy. The policy will fall apart and the SNP will take responsibility for it when it does.
The debate has been excellent and many good points have been made. The cabinet secretary would do well to listen to people such as Peter Peacock, from whom we have just heard, and Keith Brown, who has a different perspective. They have experience of local government and Peter Peacock also has considerable experience of national Government.
This afternoon's debate is best likened to the Cheshire cat in Alice in Wonderland—we think that we have it fixed, but it fades away to nothing before our wondering eye. The SNP's Scottish futures trust is like a Cheshire cat, but this time it is from Alex in Wonderland—it has no existence and is not what it purports to be. The SFT is certainly not what the SNP proposed originally in its manifesto.
Like others, I do not deride any efforts to identify new methods of support for capital infrastructure projects—for schools, hospitals, roads, railways and of course bridges. We still have a legacy from the Conservative years of a lack of investment, short termism and a lack of interest in public assets. I detected understandable embarrassment from the Conservative group as it supported the SNP's policy. Some of that legacy was put right under our watch, when Liberal Democrats were in government. We built new schools and refurbished hundreds with leaky roofs and clapped-out buildings. We built new hospitals and opened the first new railway lines since Beeching. SNP ministers are still living on that legacy as they preside over school openings and railway-line developments that the Liberal Democrat and Labour partnership facilitated and financed when in government.
I say to Joe FitzPatrick that SNP ministers will be opening Liberal Democrat-Labour schools until the completion of PPP 2 in 2012, when 383 schools will have been completed, 224 of which will be under PPP or a member of its family. I would have thought that SNP ministers would be significantly embarrassed to open PPP schools, given their castigation of it. Some of those projects were financed under a non-profit-distributing model that, as we have heard, Liberal Democrat-led Argyll and Bute Council developed. John Swinney has lauded that model as the way forward and has acknowledged that it is part of the PPP family.
Will the member give way?
I will give way in a moment.
I did not understand why Keith Brown said that, although an alternative had been available to Clackmannanshire Council, for whatever reason, the decision changed when the administration changed. Options that the previous Government's ministers had approved were available to that council, as has been said.
It is perhaps appropriate that I have wondered whether Alex Neil would lay into the SNP Government on the ground that this son of PPP is "morally criminal".
Not at all. Will the member confirm that, according to its evidence to the Finance Committee, the Liberal Argyll and Bute Council decided to go down the NPD road after examining the costs of PFI and concluding that, despite what Labour members have said, NPD was a less expensive model?
Alex Neil makes a reasonable point, as far as it goes—different options are appropriate in different situations. However, we should recognise that, at the time to which he refers, the market was immature and that there has been a process of development from PFI, through PPP, to the non-profit-making model.
The SNP's plans for a futures trust have been variously described as "a joke", "muddled", "unworkable" and "flawed", to name only the kinder comments. John Swinney spoke of projects being accelerated and enhanced by SFT. However, in the understatement of the year, Michael Watson of McGrigors said:
"there is a bit of a hiatus at the moment in the delivery of projects".—[Official Report, Finance Committee, 29 April 2008; c 405.]
There bloody well is.
Oh no.
Excuse my language, Presiding Officer—there is a real hiatus in the delivery of projects. It goes back to the lack of grant support for projects to which a number of members, especially Jeremy Purvis, referred. That is the key reason that projects are not being taken forward. We need John Swinney to provide somewhat clearer answers than he did in his previous statement on the issue.
Today's motion is possibly the most incomprehensible that has yet come before the Parliament. As David McLetchie pointed out, it does not dare to put the long-awaited Scottish futures trust proposals to Parliament for approval—it is left to the Conservative amendment to do that. The minister's statement and today's debate had to be dragged out of the Government like a dentist drawing teeth.
Will the member give way?
I must make some progress.
The infrastructure investment is aspirational only and bears little, if any, relationship to reality. The Government's document is a scoping paper, at best, and sets out no less than 14 options, all of which require further work.
That brings me to the subject of the new Forth bridge, which is at the core of the Liberal Democrat amendment. It is not some insignificant local project, but £4 billion of investment. Can the cabinet secretary do today what the First Minister would not when questioned by Nicol Stephen last week and give the nation's Parliament some information on how the Government intends to find that £4 billion? In particular, what method of funding will it use, and what will be the timetable for the project? There are two possible answers to that question. The first is that the Government knows the answers fine well and is again treating Parliament with discourtesy and disrespect. The second and most likely answer is that it does not have the faintest glimmering of an idea and that, like Mr Micawber, it is hoping that something will turn up. We are entitled to some answers from the cabinet secretary.
There is another issue. The SNP's problems on capital funding exist because it has no ideological bearings and no core beliefs beyond independence. It is telling the world that, contrary to its rhetoric, it believes in the private sector; David McLetchie demonstrated that clearly.
Mr Brown, you must finish now.
In conclusion, the issue that we are debating is one of the most important of the session. Evasion and avoidance—spin and mood music—will not do. This is Scotland's Parliament, and it deserves and requires sober, hard facts. How many schools will be built, by which method, when and how? How will the Government fund the new Forth crossing? It is time for answers.
It is important for me to respond to points that have been made by SNP back benchers about what they call the scandalous PFI disaster. They picked out a handful of examples of the scheme not working successfully but completely ignored the fact that it has delivered on time and on budget hundreds of school, hospital and transport projects that are producing excellent results the length and breadth of Scotland and the UK. It is worth nothing that the Canmore Partnership presented the Finance Committee with the results of a KPMG survey that stated clearly that 85 per cent of operational PFI projects delivered good or very good performance. It is important that I point out at the start how successful PFI and PPP have been. The model is not perfect by any stretch of the imagination, but the vast majority of projects have been extremely successful.
Does the member disagree with his Westminster counterpart Edward Leigh, who said that PFI represents
"the unacceptable face of capitalism"?
Mr Leigh and I will agree on some things and disagree on others. Once again, Keith Brown has picked out one specific example. I do not think that Edward Leigh was referring to PFI as a whole; I think that he was referring to one or two examples where it had not been successful. In response to Keith Brown's point about Ochil and Clackmannanshire, I agree that, in certain circumstances, PFI and PPP are not the right way forward and NPD may well be the best option. However, in many other cases—particularly for larger and riskier projects—PPP and PFI have an excellent track record.
The other myth that was put forward by the Government—which it has tried to peddle a number of times—is the idea that there will be cheaper borrowing through the Scottish futures trust. Simply saying that we can get cheaper borrowing through the Scottish futures trust does not make it true, no matter how many times that is repeated. At no point has the Government taken the time or trouble to explain how it might get cheaper borrowing through the Scottish futures trust. Indeed, it produced the consultation at the same time as it started work on the strategic business case. Would it not have made more sense to produce a strategic business case and then ask the interested parties and stakeholders to comment on what is a more thorough piece of work, even though it is still full of gaps? Almost all the 89 respondents to the consultation asked how the Government was going to secure cheaper borrowing because they could not see how it would do that. Those respondents were not just developers and private companies; they included councils and public authorities. For example, Mr McLetchie mentioned the response from the City of Edinburgh Council, which is run by the SNP and the Lib Dems.
We will evaluate any proposal that is put to the Parliament on its merits. We think that there should be a spread of available funding options and that the best option for any specific project should be chosen, whether it is PFI, PPP, NPD, conventional funding or municipal bond issues. Whichever option is most appropriate for a project is the one that should be pursued.
Will the member take an intervention?
Not at this time.
I note, in passing, that the SNP manifesto appeared to concur with that sentiment in stating clearly that
"it will be open to local authorities and other public bodies to choose between PFI/PPP and Scottish Futures Bonds for planned and future projects."
It is, therefore, disappointing to hear the evocative rhetoric from some SNP back benchers who rule out the use of PFI and PPP, as the cabinet secretary appeared to do in his evidence to the Finance Committee.
It is important that, as Mr Brownlee's amendment asks, we get whole-life cost data for all the projects that we have undertaken and the ones that we are going to undertake, so that we can make an accurate and fair comparison between PPP, NPD and conventional funding in order to make the right decision, grounded in reality, each time. We are pretty sure that PPP has benefits in bringing together design, construction and service delivery, and it certainly brings long-term operational efficiency. We challenge the Government to pull those data together, so that we can compare each funding method on a fair, like-for-like basis.
Will the member give way?
Not at this time. I am afraid that I am not going to take any more interventions.
I apologise to the SNP back benchers, but it has to be said that the proposed NPD model involves profit. Calling it non-profit is a complete misnomer; there is capped profit rather than no profit. In many cases, the capped profit can end up being about the same as it would have been under PFI or PPP; the only difference is that it is front loaded.
The watchword—or watchphrase—must be best value overall for the taxpayer in the whole-life cost of the asset as well as its fitness for purpose. We think that the Government needs to step up the pace on the Scottish futures trust. We are a year on and there has been a perceived hiatus in activity—especially in education if not so much in other areas—which brings with it the danger of a loss of skills. The Government has taken something of a Rolf Harris approach to the SFT so far. It has sketched about for a little while and then dropped the pencil, and every couple of months the cabinet secretary, John Swinney, has shouted out, "Can you tell what it is yet?" We need a lot more clarity, a bit more realism and a bit less hostility towards the private sector.
I will start by addressing Christopher Harvie's speech. I do not share his views or agree with his definitions, but I welcome the SNP to the "apologetic neo-right"—to use the definition that Mr Harvie used. That is exactly where they are. It was embarrassing to watch Alex Neil's face during the debate. I almost felt sorry for him as it dawned on him that he has been sold down the river by his leadership on this matter.
For years, I have listened to SNP members quote three main sources: Allyson Pollock, at the University of Edinburgh; the Cuthberts; and Unison. During those years, what they said was gospel. Let us consider how the gospel now reads.
Allyson Pollock says:
"A new name can't save a poor policy".
Of the model that the SNP is proposing, she says:
"it is not so much an alternative as a PFI hybrid."
Given Allyson Pollock's criticism of the Government's model, Mr Neil should hang his head in shame.
Mark Hellowell—who is also of the University of Edinburgh and whose research was also widely used by the SNP against PFI/PPP—says of the NPD model:
"Evidence suggests that this form of public-private partnership does not lead to lower levels of profit-making than PFI."
I welcome Mr Neil to the world of the profit-making private sector by the route of the SNP's policy.
On the Argyll and Bute scheme—which I was happy to sign off when I was in government because I wanted models of PFI to develop in the public sector and in the private sector—Mark Hellowell says that the
"‘internal rate of return' was more than 15 per cent—which is about the norm for the mainstream PFI market".
It was Mark Hellowell who said that—not Labour members, as Alex Neil implied.
What do the Cuthberts say?
"There is a danger that the Futures Trust will be hailed as a great success even if all it achieves are marginal improvements over PFI."
And what does Unison say about the model?
"What is being proposed is mainly window-dressing, and looks nothing like what the SNP promised in their Scottish Futures Trust policy document."
All the people whose views the SNP used against the previous Government as evidence against its model of public provision for infrastructure projects are damningly critical of the model that has now been developed—"PFI-lite", as Matt Smith said.
Perhaps, during the recess, when Mr Neil and his colleagues take a break and take time to reflect on matters, Mr Neil could visit the arc of prosperity countries—nations that the SNP continually point to as examples of how business should be done and among which are some oil-rich nations. Mr Neil could go to the conference on PPP in the arc of prosperity nations that will be held on 28 and 29 October 2008. At that conference, Sweden will talk about using PPP to meet its infrastructure needs and there will be an address on road financing in Norway, a country that is rich in oil but which uses PPP as a means of delivering its public infrastructure programmes. Alternatively, he might like to go to the talks entitled "PPP and the Danish State", "Danish Archives PPP Project", "PPP in Norway, Possibilities and Conceptual Issues" and "E18 Grimstad to Kirstiansand Project". All those discussions concern PPP projects that are being delivered by sane, rational Governments in the interests of their communities.
We heard a lot—from Keith Brown, in particular—about PFI/PPP being the only game in town. Utter tosh. One need only go to the Scottish Parliament information centre or read the evidence that was presented by the previous Government about the balance of infrastructure investment that was made available to the public sector to see that that is not the case. The traditional funds that were invested in the development of capital projects rose to more than five times their initial level over the time when we were in power.
South Lanarkshire Council, which covers my area, has rebuilt all its school estate so that children can learn and teachers can teach in an appropriate environment. The secondary schools were delivered by PPP, and the primary schools were delivered by traditional public finance. PFI/PPP is not the only game in town—quite the opposite.
Will the member give way?
I would like to continue to deal with some of the key speakers.
Mr Brownlee said that there are a number of themes in his amendment. In recent times, there has only been one theme for him—to support the SNP Government.
Will the member give way?
I will take an intervention about what Mr Brownlee finds he cannot support in the Labour motion.
I understand Mr Kerr's anger at the fact that the Conservative party has put forward a reasonable proposal on capital investment that he seems to have been unable to produce for himself, but the fact is that we simply do not accept some of the assertions in the Labour amendment. However, unusually, given that it is a Labour amendment, we agree with quite a lot of it. I know that Mr Kerr is a keen runner; if he had walked up the stairs to speak to me, he might have got an agreement.
Oh. So the political approach of the Tory party is that it is not about the politics; it is about whether I walk up the stairs. Is that the Tory party's political analysis? Is that how the Tory party in Scotland will be taken forward—if someone does not speak to them, they go in a huff? That is pathetic, Mr Brownlee.
I will move on to the Scottish futures trust. Someone mentioned roads, and of course the dualling of the A9 to Inverness was raised at First Minister's questions. Not much was said about the original Scottish futures trust document, "The Scottish Futures Trust: A better deal with Scottish Futures Bonds", which the SNP issued in 2006. It says that using bond issuance will make investments available for truly Scottish decisions, and that we will get
"a new Forth bridge; the dualling of the A9 to Inverness; improvements to the trunk route network … and … a bullet train connecting Glasgow, Edinburgh and Aberdeen."
That is complete fantasy, not just in terms of what the SNP can deliver, but with regard to the so-called Scottish futures trust.
Mr FitzPatrick and Mr Neil reminded me of Statler and Waldorf in "The Muppet Show": they sat there grimacing as they realised that they have been sold out. I will consider some of the key points that Alex Neil made. He talked about Norway—I remind him that an oil-rich nation such as Norway is using PPP. He talked about value for money—I remind him about the Argyll and Bute model, in which the rate of return for the private sector is equal to, if not more than, the rate of return in traditional PPPs.
Not true.
How is it not true? The very research that he has quoted year in, year out in the chamber and beyond is now simply "not true"? Is he having a sudden dawning realisation—at last—that the University of Edinburgh's facts are "not true"?
Will the member give way?
I will not take Mr Neil's intervention because I understand what he is trying to do. The evidence that he has used to attack PPP in the past was given to him by the University of Edinburgh—by Mark Hellowell and Allyson Pollock in particular—and he does not like it when they now discover that the SNP Government's plans are no different from those of the previous Government.
Mr McLetchie's comment was very interesting. He reminded members about some of the technicalities, and of the fact that the NPD model is not a non-profit model whatsoever. He also talked about the "docile nature" of the motion—I have to say that that is matched only by the docile nature of Mr McLetchie's amendment.
I hope that the Parliament will support the motion in my name. SNP members have moved from shambles to shamelessness on the Government benches; from the fluffy world of opposition where they could say anything they liked to the real hard reality of government. They have realised that they have had to sell out their principles in favour of the new model of the Scottish futures trust. It is a pathetic sight: the so-called left wingers on the SNP back benches selling out their principles to support their Government and keep the private sector on board. We just had to look at their faces as they were sold down the river without a second thought from their leadership.
Robert Brown's credentials for chastising the Government for discourtesy to Parliament were somewhat weakened by the expletive that he came out with in his speech. It certainly brought a new frisson to the Liberal Democrat benches.
I will begin with Charlie Gordon's speech. Not for the first time in a debate on this subject, the points that he raised had significant worth. He advanced the central point—with which I do not disagree—that infrastructure is essential to the process of boosting economic growth. However, he went on to—essentially—criticise the Government for having no coherent approach to the infrastructure programme that we are bringing forward. I advise Mr Gordon to examine the Government's infrastructure investment plan, which is a very deliberate and genuine attempt to address the issue that he raises.
The Scottish public sector has historically not been particularly well connected or joined up, and the infrastructure investment plan, which captures £14 billion of investment over the next three years under the Government's programmes as part of a 10-year programme to invest £35 billion, is a genuine attempt to try to draw together those different projects and establish a method of working together more collaboratively. That lies at the heart of so many of the interventions that the Government is taking in relation to advancing its policy agenda.
I hope that Mr Gordon will take the time to examine the infrastructure investment plan, and that he will recognise the Government's attempt to try to bring all those projects together. The plan captures the volume of activity over which the Government is presiding in terms of infrastructure investment.
One of the central contentions of the debate has been that nothing is happening on infrastructure investment. I know that it is not warmly welcomed by all members, but I would have thought that Mr Gordon and some other Labour members—such as Mr McAveety, who I see is now in the chamber—might have given a warm welcome to the fact that the Government has taken the necessary steps to award and deploy the M74 contract. The First Minister initiated the construction phase of the project the other week.
I would also have thought that somebody might have applauded the fact that, since May 2007, the Government has approved seven schools projects that will result in 45 new schools. I accept that a number of those emerged from commitments that the previous Administration made, but I say clearly and directly to all the members who scaremongered their way across the parliamentary chamber all afternoon that this Government took the pragmatic decision to allow those projects to take their course and, therefore, the children of Scotland are getting those schools as a consequence of decisions that this Administration took.
In the previous parliamentary session, the Government built three new schools in my constituency. We are now in the second year of this parliamentary session and are still waiting for Government approval to fund three academies. Aberdeenshire Council is ready and waiting—it has been waiting for a year now—so when will the Government fund those schools?
The previous Administration may have built plenty of schools, but it certainly never paid for them and the next generations of our citizens will pay for every one of them. Members can take a glance at the document that I have set out and see the escalating cost of the PFI contracts for which we have had to pay as a consequence of the previous Administration's decisions. The cost has spiralled from £500 million every year when we came into office to £800 million every year, but we get lectures about prudence from the crowd in the Labour Party. What an absurd proposition.
If Mr Rumbles wants to know about capital investment in our school estate, perhaps he would like to look at the local authority settlement, which delivers a 13 per cent increase in local authorities' capital budgets. How on earth does he expect schools to be paid for if not by the investment in our local authorities' capital programme?
This Administration takes a different approach to capital investment: it works in partnership with our local authorities to deliver capital projects at local level in Scotland—that is the case not only in the school estate; we have made announcements that our predecessors dithered about for years, such as the decision to build the new Southern general hospital in Glasgow—and to do it as effectively and efficiently as we possibly can.
In his ludicrous amendment, Mr Kerr sets out the fact that he wants us
"to restart the building of schools, hospitals and the transport infrastructure."
Has he never heard of the school building projects in Aberdeen, Falkirk, Dumfries and Galloway or Perth and Kinross; or of the Southern general in Glasgow, the M74 and the Airdrie to Bathgate rail link? What a preposterous pile of rubbish we have heard from the Labour Party today.
Mr McArthur offers us his generous amendment about the Forth replacement crossing and suggests that the Government has changed the timetable for setting out how it intends to proceed with the project. On 19 December 2007 and 15 January 2008, I said that those issues would be brought before the Parliament during 2008, and they will be. That is another promise that this SNP Government has kept.
As the infrastructure investment programme sets out, so far this parliamentary session, between us, the Government and the local authorities are putting £2 billion into the schools investment programme. We will come back to the Parliament with further proposals on investment in the school estate, but we will do it in an orderly fashion once we have considered the conclusions of the Audit Scotland report that said that we have to deliver a better school estate strategy than the previous Administration did.
When we came into office, we found not a school estate strategy or a programme for investing in our schools but an unfunded bill to pay for the last set of projects that were put forward by the previous Administration—for which we had to find the money.
We have had an illuminating debate today, in which all the Opposition parties have had to accept that the Government has an ambitious agenda for investing in the infrastructure of Scotland and a reliable means of bringing that investment together and aggregating it to deliver the greatest value for the people of Scotland. That is what this Government was elected to do, and that is what we are going to deliver.