Scottish Futures Trust
On a point of order, Presiding Officer. At the weekend, under the section "Six figure salaries" in The Sunday Times, I saw an advertisement for a chief executive of the Scottish Futures Trust. The advertisement has no salary attached to it, but it states that
"remuneration will reflect the responsibilities and experience and will include an attractive salary, a performance-related bonus and a pension scheme."
The advert also says that
"This is an exciting, high profile leadership role operating at the highest levels of government".
The Cabinet Secretary for Finance and Sustainable Growth stated to the Parliament on 10 September that the Scottish Futures Trust would be
"a company that is owned by ministers".—[Official Report, 10 September 2008; c 10601.]
I looked on the Scottish Government's website for information on the appointment, but there was no mention of it. I have since received confirmation from the Scottish Parliament information centre that there was no mention because SFT is a private limited company.
Having considered the rules in chapter 13 of our standing orders, I am concerned that Parliament will not be afforded the opportunity to scrutinise the operation of the SFT—if, indeed, it carries on. We would have such an opportunity with other Government departments and agencies.
Do you, as Presiding Officer, have any information from the Scottish Government on this issue? Will you be able to ensure that Parliament will be able to scrutinise properly this private limited company that is wholly owned by ministers? So far, public information is lacking from the Government website.
I thank Mr Purvis for warning me of that point of order, which—I am glad to say—really was a point of order.
I have had no communication from Government ministers on this issue. However, under standing orders, any member may put a question to the Scottish Government that relates to any matter for which ministers have general responsibility. Rules of admissibility are applied to each question on a case-by-case basis.
Further to the point of order, would it be for you, as representative of the Parliament, to secure information that would confirm that "general responsibility" includes a minister-owned private limited company? I am not sure whether the principle also applies in other areas.
It is not for me to secure information from the Government, but questions will be analysed and assessed case by case. That should allow all members to scrutinise these matters.
We now move to the debate, for which time will be tight. The debate is on motion S3M-2862, in the name of John Swinney, on the Scottish Futures Trust.
Earlier this year, I undertook to update Parliament on progress with the Scottish Futures Trust, and I am happy to provide that update now. Before I go into detail, I can perhaps assist in dealing with the point of order that Mr Purvis has just made.
Ministers carry responsibility for a number of private companies. Caledonian MacBrayne comes to mind, as does NorthLink Ferries. We regularly answer questions in Parliament about those and various other organisations—that will be the case with the Scottish Futures Trust, into the bargain.
I am grateful for that clarification from the cabinet secretary. In order to provide utter transparency, will he provide, on the Scottish Government's website, information on the recruitment of professionals to the SFT?
Information will be provided to Parliament. I have just opened a debate on the Scottish Futures Trust, so I will share some information with Parliament this afternoon. If members want more information, there are plenty of opportunities to pursue it through parliamentary questions as, indeed, many members have already done. I am delighted to answer such questions as part of my ministerial responsibilities.
Following discussions with the chair of the Scottish Futures Trust, Sir Angus Grossart, I announced on 7 November the appointment of two additional non-executive directors—Councillor Jim Fletcher and Colin Maclean. Councillor Fletcher is known to many in Parliament as the experienced leader of East Renfrewshire Council. Many members will be aware of his commitment to excellence in delivering public services. He brings to the SFT valuable experience of local government and public infrastructure and I am delighted to welcome him to the board. Colin Maclean has a wealth of business experience from a long and successful career in the oil and gas sector, mainly with BP, which has taken him to the far corners of the world. Among the posts he has held with BP are group head of procurement worldwide and director of the BP Grangemouth complex.
Those individuals bring significant and different perspectives to the SFT board and I welcome them both to their posts. I intend to make two further appointments to the board shortly. On executive capacity, members might have seen in last weekend's press the recruitment advert for the SFT's chief executive. Mr Purvis mentioned it. In advance of that appointment, an executive team is in place and has been working under Sir Angus's leadership to establish the SFT and take forward the work streams that are identified in the strategic business case that we published in May.
The business case contains a specific pledge that one of the SFT's early activities will be to commence programme delivery of hub pathfinders for community-based infrastructure. The hub's aim is to encourage development of the joined-up infrastructure that is needed for the vital core services that support communities throughout Scotland. Today, just a few weeks into the operation of the Scottish Futures Trust, I can announce a significant step forward. The early focus of hub development and resources will be on two pathfinder areas: the south-east and the north. All the public bodies in the south-east area have committed to the pathfinder and the next stage of development will commence immediately.
The initial focus on primary and community care facilities is being widened, with the possibility of other services being added. With a broader remit and an efficient model of delivery and funding—under our direction, and now with SFT expertise—the hub has emerged quickly and at the pace of development that is required for the initiative. The SFT is discussing with bodies in the north territory what the right boundaries and partnerships are so that we can move ahead there, too.
Each pathfinder will receive expert advisory and structural support from the SFT and the Scottish Government will provide financial backing of about £1.4 million for each pathfinder during the development stages, and an additional £30 million of capital provision to fund hub facilities throughout Scotland. The pathfinders will seek private sector development partners through a procurement process during 2009.
Another specific pledge in the business case was that the Scottish Futures Trust would establish programme development arrangements for a schools investment programme. On 11 September, the day after the SFT was established, Fiona Hyslop pledged that, during the current session of Parliament, 100,000 more school pupils will benefit from a 21st century education that is delivered in first-class schools.
Is the cabinet secretary aware that Lasswade high school in my constituency is one of only eight secondary schools in category D? Can he confirm today that there will be an early start to a new Lasswade high school?
I cannot give Rhona Brankin that specific commitment about Lasswade, but I can tell her that the Government is taking forward exactly what Fiona Hyslop announced, which is a partnership with our local authority colleagues, working through the SFT, to take steps on continuing improvements to our school estate. I will say more about that in a moment.
Scotland's school building programme is continuing apace—it is expected that 250 schools will be delivered during the current session of Parliament. Under the concordat, we have substantially increased the capital resources that are available to local authorities by between 13 and 15 per cent, and many local authorities are making schools investment their priority.
In the light of certain exchanges at First Minister's question time, I want to set out what the Government has helped authorities to achieve for the benefit of pupils and communities. More than £1 billion-worth of construction work is under way on almost 50 schools in eight local authority areas, including Dumfries and Galloway, Falkirk, West Lothian and East and West Dunbartonshire. All eight projects have been signed off with a firm funding offer from this Government since May 2007. Moreover, under the infrastructure investment plan that we published last March, authorities will invest another £1 billion in dozens more schools over the next three to five years.
That list covers only large-scale projects in excess of £5 million. In addition to that £2 billion of investment, hundreds of millions of pounds have already been invested in and will, over the settlement period, continue to be spent on smaller-scale projects of less than £5 million.
Improvement of the learning and teaching environment in many more schools the length and breadth of Scotland is an absolute priority of this Government. With our local authority partners, we are already looking strategically at ensuring further significant investment in the schools estate. In September, Fiona Hyslop announced the establishment, with the Convention of Scottish Local Authorities, of a joint working group to develop a new strategy for the school estate that will be tailored to meet the needs of pupils, teachers and communities and will contribute to the Government's education agenda. The SFT has met the strategy working group to discuss how they can best work together to ensure that the aspirations of the Scottish Government and local government for improving the school estate can become a reality. Those discussions will focus on issues such as that which Rhona Brankin highlighted in her intervention.
A third pledge in the SFT's business case was that the trust would provide guidance, structuring and compliance assistance for non-profit-distributing schemes. Moreover, when the SFT was debated in June, members identified the need for a robust option appraisal framework for NPD schemes. I am pleased to say that that guidance, which has been developed and issued by the trust, is now available on the Government's website, thereby discharging the undertaking in the business case and meeting the needs that members identified in June. I commend that guidance to all parts of the public sector that might be considering major infrastructure projects.
At this stage, I put on record my appreciation to the chair of the SFT, who over the past couple of months has put a lot of energy and commitment into giving shape and substance to the trust's collaborative ethos. Sir Angus Grossart has met many key stakeholders, including COSLA, the Confederation of British Industry, a range of local authorities and other public infrastructure interests to discuss and come to an understanding of their priorities and the expectations that they have of the SFT. Such examples demonstrate the progress that has been made under the trust and which will continue to be made over the coming weeks and months.
Is it fair to say that under the previous Administration's private finance unit, which was managed by Sandy Rosie, all those functions were carried out by civil servants—and not at a cost of £17 million over four years?
What the Government is determined to do—this, I think, is the meat of any discussion about the SFT—is to guarantee that we deliver greater value by bringing together the different projects and interventions of different public sector partners and ensuring more collaboration. That is the intention behind the SFT's work in the period ahead. I hope that Mr Kerr will, in the course of the debate, demonstrate greater willingness to support the Government in implementing its infrastructure investment proposals.
That is one element of the Government's wider infrastructure investment programme, which also covers significant investment in a variety of school, health, transport and water sector projects. More projects in the Government's capital programme are under way: there are schools developments in the Western Isles, in Moray and on Orkney. There are health projects such as the development in Tayside and the new Southern general hospital in Glasgow, and there are various transport improvements that we have already set out to Parliament.
As part of the investment programme that I have described, we intend to ensure that the SFT maximises value for money on the ground for the Scottish taxpayer. The trust provides Scotland with a new capability: the know-how and expertise to support value for money in infrastructure investment. I have set it the goal of releasing savings of up to £150 million per annum for additional investment. The Government will focus its work on securing that objective.
There are important points about the funding regime in which the SFT will operate that require to be clarified. Not least, we need clarity from Her Majesty's Government on the practical implications of the application of the international financial reporting standards that are due for incorporation into the accounting practices of the Scottish Government and the United Kingdom Government on 1 April 2009. Important clarity is required on whether the Scottish Government and Scottish public services will be given the same assurances and guarantees that have been given to Whitehall departments on budget cover for off-balance sheet public-private partnership and private finance initiative schemes. I have asked the Chief Secretary to the Treasury for that clarity and look forward to receiving it.
The Government is making important progress on development of the Scottish Futures Trust, in line with the business case that we made in May as part of the Government's infrastructure investment plan. I encourage members to support the Government's motion, which sets out that progress.
I move,
That the Parliament agrees that modern infrastructure is essential to economic well-being and excellent public services in Scotland; notes actions to invest in public infrastructure set out in the Scottish Government's £35 billion Infrastructure Investment Plan; notes efforts to promote collaboration among public authorities and agencies in planning and developing capital projects to maximise value for money; believes that identifying and managing risk effectively through the capital project life cycle and providing a range of approaches to structuring and financing infrastructure investment are important objectives to be pursued; notes the steps being taken by the Scottish Government to develop the non-profit distributing model for capital schemes to achieve an appropriate balance of risk and reward; believes that the establishment of the Scottish Futures Trust, with its role of maximising value for money by facilitating and encouraging effective and efficient investment in public infrastructure schemes, is in the public interest, and calls on the Scottish Government to ensure that the Scottish Futures Trust makes a full contribution to these objectives.
There is no spare time available in the debate, so the Presiding Officers will be rigorous in ensuring that members stick within the times that are available to them.
I am pleased to be taking part in this debate.
The Cabinet Secretary for Finance and Sustainable Growth delivered his speech in his usual combative style, but we have just heard an 11-minute defence of the indefensible. He may earn points for style, but he gets nothing for content.
Yesterday, we had a debate on the Scottish economy, in which Mr Swinney claimed that it was Westminster's fault that the Scottish economy had "flatlined", to use the word that he used. Labour members offered him helpful advice from our 15-point plan on how he could stimulate the Scottish economy. A key part of that stimulus is getting major infrastructure projects approved and started.
The Scottish National Party has placed great faith in its proposed Scottish Futures Trust funding model, but SNP members seem to be the only people who have any faith that the Scottish Futures Trust will deliver. In May this year, in "Taking forward the Scottish Futures Trust", the SNP published its strategic case for its preferred model. Since then, the economic landscape has changed dramatically, as we all know. Now is not the time for experiments with new funding proposals. Mr Swinney will no doubt reject my arguments, but he may find it difficult to answer the many critics of the Scottish Futures Trust. He will no doubt hear during the debate that there are many such critics.
"If the Scottish Futures Trust is not yet ready then the Scottish government should recognise the crisis affecting industry and be bold by allowing councils and health boards to use existing PFI models to bring new schools and hospitals forward now."
Those are not my words; they are the words of the Scottish Building Federation, which is the lead voice in the construction industry in Scotland. To put things in perspective, the construction industry is the largest source of private investment in Scotland. It contributes more than £13 billion to Scotland's gross domestic product—10 per cent of it—and employs more than 220,000 people. Crucially, it also invests in skills and training; more than 4,000 new apprentices were taken on last year.
The Scottish Building Federation has reported that the construction industry is losing capacity at an alarming rate. It is predicted that 20,000 jobs will be lost by Christmas. As I said in my speech in the debate on the economy yesterday, it is not only tradesmen who are being laid off; redundancies have hit solicitors, surveyors and estate agents.
The many firms and workers in the construction industry are looking to the SNP Government for assistance. The Scottish Building Federation has said:
"In the current climate Scottish construction firms look to the Scottish government for a continued pipeline of public sector work that has underpinned growth in the sector over the last decade."
Will Mr Whitton acknowledge that the Government has a £3.5 billion capital investment programme that is 100 per cent committed in this financial year and will be for the duration of the spending review period? Will he acknowledge the contribution of that programme, not to mention the schemes outwith it, to boosting the construction industry in Scotland?
I do not accept that. The programme always existed. We are talking about plans for the Scottish Futures Trust, which people have said is providing a logjam and preventing further projects from coming on board.
Where?
The minister should allow me to continue.
A Scottish Building Federation representative has said:
"Whilst a number of projects are underway no, I repeat no, new contracts have been signed for major projects announced since the Scottish Futures Trust consultation was published."
The consultation paper was published in December last year. Therefore, there has been complete stagnation in the past 11 months.
It is interesting to consider the list of projects that the SNP Government has announced or approved since it took office in May last year. There are 35 of them. Of that number, 11 have started work and, of those, seven are being funded by public-private finance initiatives. [Interruption.]
Order. I am sorry, Mr Whitton. Members should know by now that I do not encourage sedentary conversations between members while another member is speaking. I hope they will stick to that.
Thank you, Presiding Officer. We are well used to Mr Stevenson getting a little excited.
I am happy to report that among those seven projects is a £134 million project to build six new secondary schools in my constituency. Some of them are nearing completion and the pupils will move into their state-of-the-art premises in time for the start of the new school term next summer, but where will the workers go who are currently working hard on those six new schools? Work could be done to refurbish several primary schools in my constituency that are regarded as being class C, which means that they are in need of major repair. The Labour-led East Dunbartonshire Council would like to get on with that work, but it has not heard from the Scottish Government what funding model it should use. That state of affairs cannot be allowed to continue.
Ministers have been asked for clarity, but I fear that Parliament will be waiting a while if a recent exchange involving Mr Mather, the minister for the economy, is anything to go by. Last Wednesday, he appeared before the Economy, Energy and Tourism Committee. When my colleague Lewis Macdonald asked him when he expects the Scottish Futures Trust to be fully established and when the first project would go to market, Mr Mather replied:
"It will be established as soon as possible."
He continued:
"Absolutely stellar people are involved in it, and they are conscious of the need to get it to an operational level as soon as possible"
and said that he is
"loth to see the process rushed."
When Mr Mather was asked whether he expects contracts to be let in this financial year, he replied:
"I have a folk memory that that will happen."
When pressed on whether he was confident that that will happen, he replied:
"I have been told that it will."—[Official Report, Economy, Energy and Tourism Committee, 5 November 2008; c 1231.]
If he carries on like that, it could be Mr Mather who is a folk memory.
Mr Mather was not the only minister who gave evidence to a committee last Wednesday—his boss, Mr Swinney, appeared before the Local Government and Communities Committee. He, too, was asked how the SFT would operate. He replied:
"The Government is in the process of setting out how the trust will operate and how any future revenue flows will be deployed to support investments in the years to come."—[Official Report, Local Government and Communities Committee, 5 November 2008; c 1364.]
So there we have it—almost a year after the consultation was started, of the "stellar people" running the Government, one minister is relying on folk memories about whether projects will start in this financial year and another is still wondering how the trust and its revenue streams will operate. Meanwhile, thousands of workers from Scotland's construction industry and associated trades are being put out of work.
There is no doubt that the Scottish Futures Trust idea is causing a logjam in public infrastructure procurement. The facts speak for themselves.
Name one.
The Raith interchange. How is that?
No new contracts have been signed since the consultation was announced. Is it any wonder that the Scottish Building Federation and others have appealed to the SNP Government to ditch SFT and allow contracts to be placed by using existing funding models, including public-private partnerships and the private finance initiatives.
The most telling evidence on the current crisis in the construction industry came at a meeting of the Economy, Energy and Tourism Committee on 29 October this year, in which several witnesses from construction-related industries took part. In summary, they said that no one knows what the SFT will do and how it will do it, that the construction industry is in crisis because of the hiatus in building projects, and that the delay is putting off international contractors from investing in Scotland. That situation cannot and should not be allowed to continue. Only last week, the SNP achieved a remarkable breakthrough when, for the first time I can remember, the First Minister, Mr Salmond, admitted that he had made a mistake. I hope that Mr Swinney follows that lead and is big enough to admit that he, too, has made a mistake by trying to introduce the Scottish Futures Trust at this difficult time for the Scottish economy.
On Monday, my colleague Andy Kerr asked the SNP to end the uncertainty surrounding public building projects by dumping the Scottish Futures Trust. We repeat that call today. For the sake of Scotland, which Mr Swinney says he cares so passionately about, he should accept the Labour amendment, drop the plans for a Scottish Futures Trust and do what the construction industry is appealing for by bringing major infrastructure projects to market now, even if that means using public-private partnership models. That would show some leadership and give a much-needed boost to the Scottish economy, and it might save hundreds, if not thousands, of jobs.
I move amendment S3M-2862.3, to leave out from "notes actions" to end and insert:
"believes that the Scottish Government has failed to deliver a workable method of funding for public infrastructure projects, a view supported by, among others, the building industry, the financial services community and the trades unions; considers that this damaging hiatus is costing jobs and harming the Scottish economy, and therefore calls on the Scottish Government to bring an end to its Scottish Futures Trust proposals immediately."
I must confess that, unlike Jeremy Purvis, I did not spend Sunday flicking through the recruitment section of the newspapers, although perhaps some might argue that I ought to have. I make the case that modesty forbade Mr Purvis from making: what an excellent chief executive of the Scottish Futures Trust he would make, given that he would save not merely £150 million—he tells us that he would save £800 million each year.
Does the member agree that the downfall would be that Mr Purvis would not get the performance bonus?
Another candidate speaks.
We have consistently said that we have no problem with the Scottish Government developing a new approach to funding capital infrastructure and no objection to the creation of the Scottish Futures Trust. We also have no problem with the aggregation of projects, better contracting within the public sector or, if it is attainable, lower-cost finance. We know from the business case for the SFT that it is pursuing a number—14 to be precise—of objectives. One of those is the non-profit-distributing model of PPP/PFI, so it is not exactly new and it may not be improved, either.
We do not share with the Labour Party and the Liberal Democrats an obsession with PPP, just as we do not share with the SNP an aversion to it. Our approach is simple and straightforward: the only issue should be the delivery of best value for taxpayers. If the SFT provides better value than PPP, it should be used. If it does not, it should not be used. If PFI/PPP represents better value, it should be available and used where it is the best option. I would have thought that that would be uncontroversial; sadly for the taxpayer, it is not.
It is clear that, in the current financial situation, there is less interest from private sector funders for PPP or any new variant. We cannot be sure for how long that will continue, but it should give those on all sides of the argument pause for thought.
Labour's amendment mentions the concerns of the building industry, the trade unions and the business community. It is true that the unions want the SFT to be scrapped, but they also want PPP to be scrapped.
The building industry is not calling for the SFT to be scrapped. The Scottish Building Federation, which Mr Whitton mentioned, has made it clear that its problem is with what happens in the meantime before the SFT is finalised. CBI Scotland does not want the SFT to be scrapped either; its concern is the same as the SBF's.
Once again, the Labour Party and Liberal Democrats are out of step with business and public opinion, but in step with each other. It is about time they showed some consistency. Today, the Liberal Democrats state in their amendment that the SFT is
"nothing more than a … quango".
Barely five months ago, Liam McArthur issued a press release in which he said that it was all his idea.
The Labour Party's amendment states that the Government has
"failed to deliver a workable method of funding",
but in May Andy Kerr was claiming the credit for having invented it.
Labour's amendment prays in aid the condemnation of the SFT by the trade unions. Andy Kerr is right: they hate it because they see it as being PPP in all but name. PFI offends them—although not enough to stop various trade union pension funds investing in it—because profit to anyone other than trade unions appears to be a problem.
We have no objection to equity profits in PPP schemes, and if the non-profit-distributing model of PPP delivers better value for the taxpayer, it will over time squeeze out other versions, because no public body will sign any other form of deal.
Judging by the First Minister's comments earlier today, his primary concern is to reduce the level of private profit. The key for us is not the level of profit to the private sector, but the cost to the taxpayer, the quality of the service, the level of flexibility and future proofing. If the SFT beats other models on those fronts, that will be fine, but if it does not, ideology should not prevent options such as traditional PPP from being used.
In our previous debate on the SFT, we expressed concerns about the impact of refinancing provisions in current versions of NPD schemes. I understand that the Government agreed to look into the matter, but it is about time we got some answers on what precisely it will do to make the refinancing provisions of less concern to potential bidders.
The United Kingdom Government has recently updated its guidance to increase the share of refinancing gains that can be retained by the public sector. That guidance also affects projects in Scotland. Commenting on that guidance, the Business Services Association said that it would
"substantially reduce the attractiveness of being involved with PFI deals and they come at a time of serious economic challenge and testing of confidence."
In addition, we are told that the margins on PPP deals are rising, making them more expensive. Coupled with the potential issues arising from moving those deals on balance sheet, PFI and PPP are less attractive than they were. That is another reason why we think the Labour and Liberal Democrat amendments, which would rule out the SFT, are wrong. However, it is also another reason why the SNP needs to demonstrate in what ways, if at all, the SFT is better.
It is clear that the construction industry believes that there have been delays and that new projects would have come on stream if the Government had not taken a policy decision to prevent them. Whether or not that is true, no one should believe that the level of PPP projects would have been maintained if the previous Executive had continued in office. How many PPP deals would have been signed in the national health service, with its proposed zero per cent increase in spending from the Labour Party, or in transport, which was also to receive no additional funding?
What will happen when all PPP schemes come on balance sheet? Will it be cost neutral? Would the previous Executive have taken a different view from the current one? At what point will Government, the NHS or a council decide that it has reached the ceiling for the proportion of its budget that it wants to commit for a generation?
There are big questions about the future of PFI and PPP, but there are also big questions about the future of the SFT. However, the only question that members need ask is this: why should public bodies not be able to choose the method of procurement and funding that they consider most appropriate? Why is ideology more important than infrastructure? I leave it to those who are against a choice to argue their case.
I move amendment S3M.2862.1, to leave out from "notes the steps" to "public interest".
It is always a pleasure to follow Mr Brownlee, who today gave—to paraphrase another quotation—the longest application letter in history.
Given the delays in procuring projects in rail, health, schools and roads, and given that the Economy, Energy and Tourism Committee was told by a representative of Grant Thornton that private sector procurement jobs are being lost because of delays in bringing forward a pipeline of projects, there is an urgency to the SFT debate that the SNP Government is simply setting its face against. Ministers have got themselves into a zone in which they genuinely believe that the schools that they are opening were conceived, designed, built and financed by them. It is a kind of reverse Munchausen's syndrome—they are craving sympathy for good things that have happened but were not caused by them.
There was sufficient clarity from Nicola Sturgeon on the BBC website during the election campaign. A voter asked:
"If I vote your party into power next May, will you promise to immediately stop all PPP funding for schools in Scotland?"
Nicola Sturgeon replied: "Yes".
There was still clarity a month later. On 27 June last year, 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:
"We will have a school building fund to which local authorities can request access … 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.]
Mr Brownlee and the SNP still think that there will be a schools fund from the SFT, but councils are now waiting not with anticipation but with desperation. They are not putting forward any feasibility or architectural studies for new schools or other new buildings because they simply do not know whether there will be central Government support for the projects.
As last year moved into this year, the terminological inexactitude began. In the Finance Committee, I asked the Cabinet Secretary for Finance and Sustainable Growth whether the Falkirk schemes, which both he and the Deputy First Minister cited on several occasions, are a replacement for PPP. He replied: "Yes", but on 21 May, shortly before that committee meeting, I had received the following answer to a parliamentary question:
"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.]
Faced with that answer in committee, John Swinney replied:
"PPP is a generic family term for all such approaches."—[Official Report, Finance Committee, 27 May 2008; c 578.]
Within the space of two minutes in a committee meeting, the Government's favoured option as a replacement for PPP became a member of the PPP family. I do not know what choices Derek Brownlee thinks that councils will ask for, but no money has been put on the table.
When the Cabinet Secretary for Finance and Sustainable Growth came to Parliament on 10 September, we hoped that the delay and uncertainty would be ended and that there would be clarity. However, there is still no clarity today. The cabinet secretary failed to explain why, when he said that the SFT was the result of work with local councils, Glasgow City Council and the City of Edinburgh Council had told the Parliament the previous day that they did not know what the Government was planning to put in place.
Two months on, after a meeting with Sir Angus Grossart, COSLA sent council chief executives and leaders a bulletin saying:
"However it was clear from Sir Angus' introduction that the type of detail we are looking for is still not there."
The cabinet secretary's statement said that the trust will fund infrastructure but did not say how. Indeed, COSLA asked the SFT whether it will provide funding; this is what the COSLA bulletin says about the response:
"They were clear that they don't have the funding themselves and local government will have to make its representations to Scottish Government on money. However by strengthening the case for projects SFT has the potential to influence Govt's mind about their merit and this would then open up the possibility of centrally provided funding."
That is an absolute contradiction of the SFT's memorandum of association at Companies House, which states that it will fund infrastructure. Now, local authorities are being told that the SFT is simply a lobbying arm that will try to influence the Government to invest.
The cabinet secretary's statement in September said that the trust will build infrastructure but did not say when. We have already heard quotations from Jim Mather, the minister who says that it is "above my pay grade" to attend the meetings of the Council of Economic Advisers and that it is a "folk memory" whether the SFT will let financial contracts this year.
The Government now says that the SFT will be a new advisory body but makes no reference to the central Government centre of procurement expertise or, indeed, the brand new infrastructure investment unit that it has just set up. The Government's website says:
"The IIU will provide policy support to Scottish Ministers on planning and public funding of infrastructure as well as providing support to the Scottish Government's Infrastructure Investment Group."
That is exactly what is in the advert for the chief executive of the SFT.
Why does the Government not mention the new body's payroll costs, which come to £14.5 million over the next five years out of a budget of £22.95 million? Page 39 of the strategic business case for the SFT stated:
"The details of how investment will be raised from the private sector has not been explored in any detail as part of this SBC".
Nor is it part of any current considerations. Councils are crying out for that information; our schools and communities need certainty. Bland assurances that the Conservatives seem to accept are not good enough for us. That is why the Scottish Futures Trust should cease and the money should be spent elsewhere.
I move amendment S3M-2862.2, to leave out from "agrees" to end and insert:
"considers that the proposed Scottish Futures Trust is nothing more than a £22.95 million quango that will duplicate existing functions of government and therefore believes that the Scottish Government's Scottish Futures Trust should not proceed."
We now move to the open debate. I warn members that they are on a very tight six minutes each.
The debate is an important one made even more important by the current UK financial crisis. Thanks to the union, we are part of the UK economy, which has the biggest budget deficit in the western world. A significant part of that deficit is thanks to PFI and its credit-card interest rates. In that climate, the SNP Government is concerned first and foremost with ensuring maximum value for money from capital investment projects and achieving that value without burdening future generations with huge debt.
Would Joe FitzPatrick be concerned if, for example, the Waverley line was to be privately built, privately financed through private borrowing and leased back from a private sector operator? That is what his Government proposes.
We need to ensure that each of our capital investment projects represents best value for the Scottish taxpayer. That is what the Scottish Government is doing. The cabinet secretary has set out plans for the largest ever investment in Scotland's infrastructure, which amounts to £14 billion over the next three years and a total of £35 billion over the next 10 years. That is some pipeline. We must ensure that the money is spent wisely and avoid the costly mistakes that we have witnessed with PFI, under which excessive profits and windfall gains have been made on investments and public access to community facilities has suffered.
During the Finance Committee's inquiry into methods of funding capital investment projects, other committee members and I attended extensive evidence-taking sessions. There was little evidence in favour of PFI. There was a lot of opinion—largely from organisations with vested interests—but no hard evidence to show that its continuation would be in Scotland's national interest. However, there was an abundance of shocking evidence on the travesty that it represents. Let us examine some of that evidence—we do not have time to examine it all, so I will be as brief as I can—starting with a statement from economist Dr Jim Cuthbert that sums up why PFI went so badly wrong. He told the committee that there was a
"push to get schemes off the Government's books, almost at any price".—[Official Report, Finance Committee, 29 April 2008; c 446.]
Clearly, that is Dr Cuthbert's opinion. However, unlike those who extolled the virtues of PFI, the Cuthberts backed up their opinions with hard facts, much of which they obtained under freedom of information legislation. Their evidence on Hairmyres hospital was damning and concluded that the PFI contract for the project had delivered one hospital for the cost of two. They found that the companies behind the deal stood to gain around £145 million from an investment of just £8.4 million.
Is the member prepared to respond to the Cuthberts' recent findings? They 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."
In the same paper, the Cuthberts compare the cost of borrowing under the non-profit-distributing organisation model that is at the heart of the Scottish Futures Trust with that under PFI. The ratio is 1.32 for NPDO, compared with 1.49 for PFI. The Cuthberts looked at early NPDO models that were produced to comply with rules set by the Government of which Andy Kerr was part. It is well known that Andy Kerr and the previous Government were strongly against moving to NPDO. Councils that used NPDO had to do what they could to comply with the Government's rules. I am confident that the Scottish Government and the SFT will improve on the early NPDO models to ensure that we get better value for taxpayers' money.
The Finance Committee also saw material from an internal presentation by a construction company that is a major player in several PFI consortia. It included an illustration of the company's expectations from a generic PFI project, which showed that high returns on equity were not the exception in PFI projects but the norm. The presentation went on to suggest that such returns were possible because the complexity of the PFI system reduced competition.
We heard about schemes such as the Inverness airport terminal PFI project, which was bought out by the Scottish Executive shortly after completion at a cost of £27.5 million. The construction cost of the terminal was £9.6 million but, due to the PFI contract, the private company concerned walked away with a 200 per cent profit. That bung of nearly £18 million did not come from some Labour-Lib Dem Executive slush fund; it was £18 million of taxpayers' money—Scotland's money—squandered by Labour.
With the Scottish Futures Trust, we aim to avoid repeating the costly mistakes of the previous Administration. We will learn the lessons of PFI/PPP and existing NPDO projects to ensure that we deliver better value for money, with greater public accountability, public ownership and community access to facilities at a price that the public can afford. With the Scottish Futures Trust, we will achieve all that without burdening future generations with huge debt at credit-card interest rates.
In contrast to the wasteful spending under PFI, the Government is bringing forward a model of capital investment that, for the first time, will have the public interest at its heart. The Scottish Futures Trust will not only provide more bang for the public pound but provide better management of projects and greater public accountability. I commend the motion to the chamber.
It was noticeable today that Mr Swinney spoke a good bit faster than usual, which made it more difficult for us to follow the steps that the Scottish Government is taking to develop its non-profit-distributing model for capital schemes to achieve, as the motion says,
"an appropriate balance of risk and reward".
The issue is not just the speed at which Mr Swinney spoke but, as Jeremy Purvis said, the fact that we are dealing with proposals that have changed significantly. The Scottish Futures Trust started as a fund, became a funding mechanism and now appears to be an advisory board. The problem lies in the fact that, in that process of change, the whole basis of the Scottish Futures Trust has altered. We heard a lot of rhetoric from Mr Swinney, but there was little indication of progress in developing something that will work. No one who is dependent on the establishment of the Scottish Futures Trust believes that it is a workable proposition at present.
The SNP has made efforts to lend its scheme some substance. Mr Mather told the Economy, Energy and Tourism Committee:
"Absolutely stellar people are involved in it".—[Official Report, Economy, Energy and Tourism Committee, 5 November 2008; c 1231.]
I presume that he was referring to the retired investment banker, Sir Angus Grossart, who has been appointed as the chair of the trust. With all due respect to Sir Angus Grossart, it is the endorsement of today's, rather than yesterday's, bankers that is needed to take the proposition forward.
It is not just people from the financial sector who have expressed doubts. Week after week, committees of the Parliament hear from representatives of various sectors, including the construction industry. As Mr Whitton said, they are concerned about interruptions to the flow of projects. Business leaders spoke to the Transport, Infrastructure and Climate Change Committee last week; they are pleading with ministers to return to tried and tested models of procurement to get new schemes into the pipeline. Local authorities' vital school projects have been held back, as they have waited for a chimera that never materialises. So far, no bank, no chamber of commerce and no local authority—no one whose involvement would be required to make it a success—has endorsed the SFT.
As we have been seeking details from the Government week after week, some poor civil servant has no doubt been sent off to rack their brains and come up with another excuse for the non-delivery of a manifesto promise. Everyone in Scotland who is remotely concerned with investing in public services recognises that the emperor has no clothes. There is a black hole at the heart of the SNP's approach to public procurement, which jeopardises jobs and vital industries as well as vital services, and which has been created—regrettably—because of the ideological blinkers that are being worn by Mr Swinney and his party.
When Mr Salmond said today that PPP was redundant, whose redundancies was he referring to? Was it those of the construction workers up and down Scotland whose jobs are threatened by the SNP's failure to come up with a workable scheme? It beggars belief that Mr Swinney has referred to the West Dunbartonshire Council and East Dunbartonshire Council school building projects—they are not all in Mr Whitton's constituency; some of them are in mine, I should point out. Those schools were built under PPP, not under the Scottish Futures Trust.
We should be straightforward and honest about this. The SNP accepted that there were projects in the pipeline. Those projects have, quite rightly, been allowed to progress. The problem is that there are no new schools projects getting into the pipeline. Six, 12 and 18 months down the track, we will all pay a very substantial penalty for that.
Gordon Matheson, Glasgow City Council's education convener, summed up the position clearly. He said:
"the Scottish Futures Trust has proved an embarrassing let-down. It has been scathingly critiqued by economics experts for simply not stacking-up, and being incapable of delivering what it promised. Every Council, of whatever political party, desperately needs the Scottish Government to get a grip on its capital plans. A large-scale school building programme such as that currently underway in England, would help to stimulate our economy and provide 21st century learning environments."
We need the schools now. Scotland's children and parents, and our construction industry, deserve much better from the Scottish Government.
There needs to be a serious response to what Gordon Matheson has said. It is all very well engaging in rhetoric about the shortcomings of PPP, as Mr FitzPatrick did. Indeed, there were some shortcomings to PPP, and it is not the only procurement method, but the Government's problem is that it has put all its eggs into a basket that is empty. The Scottish Futures Trust has no substance. Nobody can come up with a project or mechanism that actually works for the people who need to use it.
The danger is that the issue will affect not just schools but health centres and transport projects. We do not know how major transport projects will be advanced. I am not talking only about the Borders railway but about very substantial projects such as the new Forth crossing. How is the Government going to provide a funding framework for such major projects, which are crucial requirements for the future of Scotland, if its core flagship mechanism is not a mechanism but simply an advisory board with no substance? That is the problem that we face, and that is the reality that Mr Swinney must address. I hope that, in slower, easier words, he can tell us what he will do and what steps we should be taking.
It is often said that political parties campaign in poetry but govern in prose. When it comes to the Scottish Futures Trust, the Scottish National Party is certainly governing in prose.
Today's speech from John Swinney was a damp squib. We heard about a pathfinder in not one but two areas. We heard about the working group on the strategy for the school estate, but I think that most members and councillors in Scotland are quite clear about which schools need urgent work. We heard about an option appraisal framework, which is available on the internet. We will treat the framework seriously and review it, but it does not take the project much further forward, although the cabinet secretary tried to suggest that it does.
From day 1, the Scottish Conservatives have taken a pragmatic approach to the debate, and we continue to do so. I see that an angry Andy Kerr is shaking his head. He can shake his head all he likes, but today when a front-bench member of his party was asked whether he acknowledged that there is £3.5 billion of capital expenditure in the budget, he said that he did not accept that. I do not know how anyone can miss a clear budget line that shows £3.5 billion.
We do not allow ideology to enter into our thinking on the issue. If the Scottish Futures Trust can offer an additional stream that can add value and add to the range of options open to local authorities and public bodies, we will support it. However, we will support it on the basis that it is additional and not the only game in town.
The member knows that one of the budget lines in the business case is the £22 million that will be the cost of the SFT, £15 million of which is simply the payroll. When will the member make up his mind about whether that money is being properly spent? We have had nearly two years of this Government, but there is still no information about the funding mechanism. When will Conservatives make up their minds about the waste of money that is going on?
Our position is clear. We think that we should continue with PPP and PFI at the moment. If the SFT can add value and will improve the range of options, we will support it. It is for individual local authorities and public bodies to consider, project by project, which funding model is the most appropriate, taking account of the whole-life value of the project and other factors such as how quickly a project needs to be built and the servicing and maintenance that will be required.
We are pushing for PFI and PPP in the current climate because there has been a delay. We accept that capital spending is going on—we do not pretend that nothing is happening—but I hope that the Government accepts that there has been a hiatus and that a number of capital projects are delayed.
The Economy, Energy and Tourism Committee has taken evidence on the matter recently, as members said. A witness from Grant Thornton put the matter neatly when he said that about £200 million-worth of PPP projects are currently online whereas, in the peak years—although not in every year—of the previous Administration, about £1 billion-worth of PPP projects were online. The drop in spending from £1 billion to around £200 million indicates that there has been something of a hiatus.
The witness from the Scottish Building Federation put it neatly to the committee, too. He said:
"We are already losing significant capacity in the industry by the week."—[Official Report, Economy, Energy and Tourism Committee, 29 October 2008; c 1127.]
A witness from Reform Scotland told the committee:
"We need leadership … and a timetable."—[Official Report, Economy, Energy and Tourism Committee, 8 October 2008; c 1088.]
The witness from Grant Thornton told us:
"People will not be able to hold on until 2010 in the hope of seeing a pipeline then."—[Official Report, Economy, Energy and Tourism Committee, 29 October 2008; c 1129.]
If the SFT can add value and come up with something that adds to the range of options, we will be happy to endorse and support that. However, in the meantime it is critical that the Government does not allow a delay until 2010 and that we continue with capital projects, particularly in schools and hospitals, where there has been a delay.
There are still difficulties, and questions remain to be asked of the SNP Government about its plans. We heard that there will be £150 million of savings, but we have yet to hear where those savings will come from. It was said today that finding those savings will now be set as a goal for the SFT. Where will they come from?
We heard the First Minister and several SNP members saying that they are against PFI and PPP because people will still be paying for the buildings for the next 20 years. Well, there will still be a unitary charge on an NPD model, so if owing money for 20 or 30 years is the problem, the SNP has not solved it by using the NPD model. The unitary charges are just slightly different from the charges that are made under PFI and PPP.
We also heard about the lower cost of finance, but we have still to hear any detail on that. Why will private sector organisations accept a lower premium for the risk? We need to hear details about that.
The SNP manifesto clearly states:
"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."
That should continue.
Our economy has been built on unstable sands; it has been built on debt. PPP has transferred vast sums of money to the private sector and it has allowed the resultant debt to be hidden. The Scottish Futures Trust is an attempt to return sanity to our economy. All Governments use the tool of debt, but it must be used openly, its aim being to serve the public and not to divert public wealth from the many to the few. That is why the SFT must be the way forward. In an independent Scotland, there might be other ways forward, but we are not independent, and the SFT makes the best use of our limited powers.
No debate on PPP and SFT can go on without considering the wider economy. There can be no doubt that responsibility for our present financial crisis rests with new Labour. It is simply not good enough for new Labour to blame the wider economy. One only has to look at Norway, Sweden and Finland, which are still doing so much better than we are and are likely to avoid recession, to see that the desperate pleas of a failed Westminster Government are simply not acceptable.
Does the member recognise that the nations that he has mentioned are using PPP?
Those nations' economies are strong, so Gordon Brown's desperate excuse that it is somehow the fault of the wider world economy is shown to be nonsense. The harm is being done to Scotland by Westminster. Brown attempted to build a strong economy on Keynesian principles but, unlike previous Governments, he has not used public money to fund that. Rather, he has used irresponsible borrowing. He built the economy on the unstable foundations of individual indebtedness, financial services indebtedness and, through PPP, vast and hidden Government indebtedness.
The failure of Brown's Government and other similar neo-conservative Governments to regulate borrowing has impacted on our banks, bringing to their knees Northern Rock, Bradford and Bingley and, of course, Lehman Brothers in the USA. Equally, deregulation of lending has resulted in ever-increasing personal indebtedness. As with the banks, now the individual pays the price. Gordon Brown has built UK growth on the back of unsustainable debt.
PPP is just one more example of new Labour's economic incompetence. PPP could stand for "promoting the profits of plutocrats", or "plundering the public purse", because that is what it did and, alas, continues to do.
It has been said of capitalism that it worships at the altar of wealth. The possession of wealth stands above all other considerations. Wealth comes before community and society and is above all.
Will the member give way?
Not just now.
Under new Labour and Gordon Brown, the worship of wealth has been subordinated to a new god—the god of credit, which Brown and new Labour have exalted above all. PPP put the public sector into debt to the private sector. By doing little to curb the reckless excesses of the banking system and individual borrowing, it encouraged indebtedness in institutions and individuals.
PPP is not simply credit; it is expensive credit, and a costly way of paying on the never-never. It keeps expenditure off the books and hides enormous debts but, like all irresponsible borrowing, it cannot be kept secret for ever
Will the member take an intervention?
Mr Kerr has had one go; that will have to be enough.
What about me? Can I have a go?
Very briefly.
Given that most PPP projects in the world today are in Sweden, Finland and Norway, could they not be said to be worshipping at the altar of the same god?
There is a fundamental difference. We would not find the same levels of personal indebtedness in any of those countries. The idea that an economy can be driven solely through indebtedness does not exist there. I am glad to see that Jeremy Purvis is converting to the idea that small, independent countries do so much better, and I welcome the Liberal party's support for such small, independent countries.
What has new Labour's irresponsibility cost Scotland? This year, the cost is £500 million; in 2024, it will be £979 million, and the last repayment will not be made until 2049. What has it cost Renfrewshire? In education, it cost £4.4 million in 2006-07 and £9.9 million this year—money taken from Renfrewshire children's education to feed the monster of PPP.
There is no doubt that PPP must be brought to an end, and that many in Scotland, when they cast their vote in 2007, voted for the SNP to bring an end to the Thatcherite economics of Brown and new Labour. Equally, there is no doubt that ending the expensive PPP programme will not halt investment. There is £842 million for the new Southern general hospital, £95 million for a replacement prison in the north-east of Scotland and £80 million for Inverclyde Council's schools project. Those are but a few examples of the investment that is going ahead under the Government team.
The SFT will ensure that future SNP Governments are not saddled with the huge debts that result from irresponsible borrowing. What will future Governments have to thank us for? No more West Lothian College disasters—it cost the taxpayer £20 million to sort that one out. No more Hairmyres hospital failures—a one-for-the-price-of-two deal. No more Inverness airport rip-offs—bought at a cost of £27.5 million, it cost less than £10 million to build.
The fundamental principle of SFT is that it uses the non-profit-distributing model. The Tories themselves described PPP as the unacceptable face of capitalism, and quite right they were.
SFT will ensure that there will be essential expertise in new deals. It will aggregate capital investment—one advantage of that approach that has already been seen is the fact that the Government has saved £15 million on its electricity bill, which is a saving of almost 8 per cent.
PPP must come to an end. Even Labour has to accept that. On 1 April 2009, the UK will adopt the new international financial reporting standards, which will mean that expensive errors can no longer be hidden.
Some semblance of sanity must return to Government borrowing. When we look to the future, it is clearly a future without Brown's credit-card PPP. It is clearly a future of rational and sustainable development by the SFT. The future is bright, the future is SNP.
How can I follow that thunderous address?
I welcome the opportunity to take part in this debate. It is logical that we have it the day after we had a debate on the economy. It is absolutely correct that we discuss such issues at this time, given that unemployment has increased by 13,000, there are forecasts that the economy will shrink by 2 per cent and there might be between 50,000 and 117,000 job losses in Scotland in the coming years. Added to that, as David Whitton noted, the Scottish Building Federation fears that 20,000 jobs will be lost in the construction industry by Christmas. The human impact of those job losses and the recession will be felt throughout Scotland's communities. When such events occur, people look to Governments for a response. One way in which the SNP Administration can respond is by speeding up its infrastructure programme in order to boost the economy.
The school building programme is crying out for investment. A third of Scotland's schools are in need of repair or new build. However, the programme has ground to a halt. The clock continues to tick on the Scottish Futures Trust, but as yet it has produced no new projects and no new finance. There continue to be questions about the Scottish Futures Trust. Despite the cabinet secretary's comments today, people will continue to ask questions about how the SFT will attract finance. The cabinet secretary reiterated the objective of attracting savings of £150 million a year, but we have been given no details of how that will be achieved. In addition, we have been warned that building inflation is starting to rise.
Against that backdrop, the cabinet secretary's ambitions appear to be overstated. We still do not know any detail about the use of local authority bonds, which, it turns out, have been legal since 1975. Scotland's councils are still asking questions about the funding that will be available to them. Under traditional PPP projects, the Government provided 80 per cent of funding, but there have been no clear answers on whether that will continue.
Joe FitzPatrick spoke about the evidence that the Finance Committee heard on the NPD model. In my opinion, very little of that evidence suggested that the NPD model was value for money, and the Institute for Public Policy Research shares my view on that. There are only a few examples of the NPD model: more are needed in order to back up SNP members' bold claims.
I will not be negative—I do not want the SNP to accuse the Labour Party of negativity for the second week in a row. I will offer some practical suggestions for ways in which the SNP Administration can bring forward extra moneys to boost the capital investment programme. First, it could abandon the Scottish Futures Trust, which would release £22.9 million, and bring that extra money to the table.
The Government has said that £3.5 billion is committed to the capital investment programme in each financial year of the spending review period. It would make sense to bring forward some of the £3.5 billion from each of the two final years of the period in order to boost capital investment.
Mr Kelly makes an interesting point. Does he accept that my ability to do that is restricted by the United Kingdom Treasury rules under which I operate? Will he join me in arguing for such flexibility to ensure that we front load our capital investment programme, which I would be happy to support?
I believe that the cabinet secretary has received a letter from the Chief Secretary to the Treasury that indicates she has not placed any restrictions on him in relation to bringing projects forward.
The Government should bring forward the results of the strategic transport projects review and implement it immediately. The Government should also examine the use of end-year flexibility moneys. In 2009-10, £174 million of end-year flexibility money is available in addition to the £42 million underspend from last year.
Those are a few of the positive measures that can be brought forward. It is time for action. The SNP needs to wake up to that or it will suffer further drubbings at the polls, like the one last week in Glenrothes.
During the SNP's election campaign, we were promised that the Scottish Futures Trust would be up and running by Christmas last year—a brand new, more effective way of funding new schools and much-needed new infrastructure projects. Members can imagine my disappointment when it did not arrive by Christmas day, and all I got was a Marks and Spencer jumper instead.
Now Christmas is approaching again, and I wait with bated breath. The plans are still murky at best, with no indication of how long it will be before the SFT builds anything. Children, patients, public transport users and people all over Scotland will be disappointed, as the infrastructure that they want and need does not arrive. We find that instead of a funding body, we are getting a very expensive advisory body.
The Scottish Government has tried to mislead the public on its progress on school building projects and to take credit for infrastructure successes that were not of its making but of the making of the previous Liberal Democrat Executive, and has stalled much-needed investment across the country with its indecision.
The SNP Government promised to match the school building programme of the previous Liberal Democrat Administration "brick for brick", but what it really meant was that it would allow the programme that was in place prior to the election to continue without scrapping any of the planned projects, which is hardly the same thing. Many people voted for the SNP not so that it could take credit for our work in building and improving hundreds of schools, but because they had been promised more.
I do not believe that dogma should be the driving force here. Mr Brownlee will recall that it was Lib Dem-led Argyll and Bute Council that pioneered the non-profit-distributing method. We should not be driven by dogma, but I believe that the SNP Government has been. It has been guided by blind opposition to PFI and PPP down a road that has taken us to the SFT, which has described itself as being part of the same family. We are going round in circles instead of driving forward and building the schools and infrastructure that our country needs. The vehicle is not the important thing; value for money and the delivery of infrastructure are. The important thing is that the building projects that are needed in our schools and elsewhere are brought forward and completed quickly and effectively.
I am sorry that the Conservatives are again propping up the SNP. They should listen to Grant Thornton Ltd and others instead of ooh-ing and aah-ing over the cabinet secretary's new clothes.
Can Margaret Smith point us to anyone or any organisation—including Grant Thornton—that has given evidence to either the Finance Committee or any other committee over the past year calling for the Scottish Futures Trust to be abandoned?
Derek Brownlee's colleague, Gavin Brown, mentioned the comment by the representative of Grant Thornton and others that they had heard that 2010 was when the SFT would have its own funding capability, which is quite a way off. They talk about that being "a big hiatus" and "very uncertain". They know the reality of what that means for the economy in which we find ourselves.
Mr Swinney has now had to admit that the first school to be built under the SNP will not be commissioned until 2009. That is clearly not the same as a new school being available now. Right now, no SNP schools have been contracted, none is being built and none is opening its classroom doors to Scotland's children, yet that is what we need to happen.
The cabinet secretary claims that the certainty of the Government's investment plans is a "particular strength" in these troubled times. Again, that is simply not true. Nothing about the plans is certain. There is no accelerated capital programme for schools in Edinburgh or elsewhere to help to boost the economy, and no decisive action whatever is being taken. COSLA describes the Scottish Futures Trust as "a joke" and, in recent weeks, a series of construction industry stakeholders and others have given evidence to parliamentary committees about the lack of detail in the Government's plans and the economic impacts of the delays, including job losses and the loss of key skills from our country.
All the delays would not be quite so galling if the end result was worth it—a revolution in finance that would change investment in Scotland for ever. However, in its plans for the trust the SNP has delivered not only a close relation of PPP, which the SNP claims to oppose, but a complete and utter shambles. Unions, business interests and local authority organisations are queuing up to complain about the trust model, with their views on the initiative ranging from "sketchy" and "imprudent" to "unworkable". It is clear that the SNP Government is losing the confidence of the business community and others and that its proposed model may be unaffordable for local authorities and unattractive to investors. Given the economic climate, exactly why would banks leap at the chance to sign up to projects under such an unworkable vehicle with absolutely no track record?
Throughout Scotland, we see the Government's failure on infrastructure funding. As the pipeline stalls and the projects dry up, we will have a black hole in infrastructure investment and projects across the country, which will mean job losses in the construction industry and all sectors. Uncertainty and confusion over what the Government is doing and when changes will happen are already causing problems and will continue to do so as long as they continue.
In my constituency, the new Forth crossing remains a pressing concern. As I have said to the cabinet secretary before, the people of Queensferry, whom I represent, want to know how the new Forth crossing is going to be funded, and they need to have answers soon. In opposition, Jim Mather told us that the SFT could save as much as £450 million on the cost of the new Forth bridge—enough, in fact, to dual the A9. Is it not a pity that in opposition, SNP members knew so much, yet in government, they do so little?
I welcome the opportunity to speak in the debate. I listened with interest to the Cabinet Secretary for Finance and Sustainable Growth's opening remarks. It should be clear to everyone that we cannot continue to support the public-private partnerships and private finance initiatives that were established under the previous Conservative and new Labour Administrations.
One of the main arguments from the new Labour Government and the previous Scottish Executive was that PPP projects would be off balance sheet so would not count under the public spending rules. We are now told that all those projects are liable to come back on balance sheet, with the potential that future public procurement programmes will be jeopardised. Without direct intervention from the Exchequer, it is possible that there will be no future public works programme in Scotland.
In evidence to the Local Government and Communities Committee, the Cabinet Secretary for Finance and Sustainable Growth advised that the cost of servicing PPP debt will reach £1 billion a year within the next couple of years. My colleague Bill Wilson has already indicated how long that situation will last.
The cost of PPP to the public purse has been damaging. The profits made by the private contractors have been, and continue to be, obscene.
One of the greatest critics of PPP, Professor Allyson Pollock, has stated:
"the Scottish Futures Trust … is not so much an alternative as a PFI hybrid."
Is the member not comparing like with like?
That has still to be evidenced, Mr Kerr. For example, a recent Unison document states:
"Unison Scotland has previously estimated the sums wasted on PFI as £5.8 billion, taking into account a whole range of factors including higher financing costs. These new figures show that is in fact likely to be an under-estimate."
In February 2008, the Kier Group announced that it had made a 500 per cent return on its investment in the Hairmyres hospital PFI project. It sold a 50 per cent share to Innisfree M & G PPP for £13.8 million in cash, which was on top of £2.2 million of deferred profit from an August 2004 refinancing deal.
Many PPP projects have led to other issues, particularly for workers in schools and hospitals. Many cleaners and caretakers found that they were transferred to contracted-out services, often with an offer of "take it or leave".
I put on record my tribute to the work of Jim and Margaret Cuthbert, who have attempted to follow the trail of many contracts that were let under PPP funding arrangements. Through freedom of information requests, they received direct access to contract details that enabled them to highlight some of the worst examples of excessive profiteering. Such profits, it must be added, have been made at the expense of the public purse.
During the inquiry into the proposed closure of Monklands hospital's accident and emergency unit, a number of those who gave evidence highlighted that one possible reason for the proposed closure was Lanarkshire NHS Board's financial commitment to servicing the PPP debts of the hospitals at Wishaw and Hairmyres. Vital services in the Monklands area were therefore being sacrificed to feed the profits of construction contractors.
I am also aware of the implications of local authorities failing to get the design right under PPP contracts. On one primary school project, an extra £1.5 million had to be spent on additional classroom space just prior to completion, due to the failure to get the right school roll number. On a community school/centre project, the council failed to ensure that the design provided adequate disabled access for wheelchair users. That flaw was pointed out only upon completion of the project. The operator's proposed solution was to put a doorbell on the entrance that the janitor could respond to and open the door for wheelchair users. However, the janitor pointed out that, due to cutbacks in staffing levels that had been imposed by his new employer, as well as being expected to open the door he could also be cleaning up after a school child had been sick or dealing with other essential duties. He was expected to drop what he was doing and run to open the door. The problem was eventually resolved at additional expense to the local authority. In the same building, community groups that wanted to store equipment such as chess boards were advised that the storage cost would be £1,000, because the building was designed with inadequate cupboard space.
Such examples are repeated throughout the country. The main difference is that when the building is owned and controlled by the local authority, the authority can send in its own workers to carry out the work. Under PPP contracts, the work is carried out by the contractor's staff and charged at its rates.
In the past, I have commented on the role of some civil servants in promoting the procurement of public buildings through PPP. A recent Private Eye article highlighted the issue of proper scrutiny of the PPP agenda by the National Audit Office. That body, which was created to hold the Government to account, was accused of being actively involved in promoting the PPP mantra, along with the PFI industry, at conferences to plug the initiative.
I urge Parliament to support the motion in the name of the cabinet secretary. Let us move forward to provide the public infrastructure that is required throughout Scotland.
Nineteen months into this Government's period of office, finding ourselves in recession, and having exhausted, I hope, rhetoric about private profiteers—although, after Mr Wilson's contribution, that might be a triumph of optimism over experience—we should surely be at the point where the Government has a workable financing model for the provision of public infrastructure. Irrespective of what we call the model—and even if, as many believe, the Scottish Futures Trust is just PPP by another name—the priority surely must be to resolve the issue, start refilling the pipeline of public infrastructure projects and contribute with deeds, not words, to offsetting what will undoubtedly be a very painful recession.
Before I say any more about the Scottish Futures Trust, or whatever the financing model is, let us remind ourselves what painful recession means. It means that successful Scottish companies might cease to exist; it means that many of the critical skill sets that underpin our economy might be lost; and it means that some families' breadwinners will become redundant, with all the attendant breakdown and personal pain that goes with economic stagnation. Those are terrible prospects, and they are understood better by those who have experienced them than those who talk about them.
This is no time for prevarication, and no time to create considerable uncertainty in the construction industry and all the supply-line companies that feed off it, but there is no doubt that that has happened: civil engineering contractors and the Federation of Master Builders say so. Among the providers of many vital services in Scotland there is increasing concern about a lack of direction and a lack of clarity.
One can only wonder why a Government that seeks to change the financing model has taken so long to bring forward a workable alternative, and—even more important—why it has been so difficult for the Government to win friends for the scant ideas that have been put forward thus far.
A few months ago, the cabinet secretary announced that Sir Angus Grossart would chair the Scottish Futures Trust. Sir Angus's comments indicate that the changes required are far from seismic, and that, in fact, they employ not much more than common sense. He gave an informative interview to The Times on 12 September, and it is worth while reflecting on what he said:
"My basic assumption is that, with a small, experienced specialist team, there will be improvements through better procurement, better co-ordination and a more effective use of experience."
That is hardly rocket science, and it is certainly not 19 months of science. However, to be fair, I add that Sir Angus shared some other thoughts. He said:
"We would hope to refine the processes,"—
which, incidentally, are the PPP processes—
"the mechanisms and the skills so that the public sector retains a greater part of the benefits while still engaging with the private sector. It seems a perfectly straightforward and clear objective."
I could not agree more. But again I have to ask why, 19 months into the process, we still have no model. Anxiety levels are increasing among service providers and the Scottish construction industry.
In the interests of good governance and of the economic wellbeing of companies and individuals, we need to stop the prevarication and get a model that suits the economic circumstances that we find ourselves in, provides high-quality facilities for the general public, and is attractive enough for the private sector to see merit in becoming involved.
Perhaps in an attempt to lay to rest once and for all wild assertions about private profiteers, the Government and its supporters could desist from happily giving the impression that there is something wrong with private sector involvement, and accept the fact that the private sector always has had, and always will have, a hand in the provision of public sector infrastructure.
Perhaps we should listen again to the wise counsel of Sir Angus Grossart. When he was asked how the private sector will be encouraged to invest, he reminded us:
"There has got to be sufficient return for the capital and the risk which is involved".
Let us remind ourselves that the private sector, quite justifiably, needs to cover its risk. If that cannot be done in part by selling on assets, it will surely be done through a different scale of up-front charges. No matter what we call the model, we will not encourage private companies to take risks with their shareholders' money without an adequate premium.
The cabinet secretary was at pains to mention his partnership with local government. Will he assure us that, under whatever model is used, the level playing field support—the 80 per cent revenue support—that was previously available to local government will continue? That support from central Government will allow local government to continue to provide infrastructure.
I do not agree with Tom McCabe on many issues, but I regret that he is no longer a member of the Finance Committee because he brought a great deal of intellectual power to its work.
The case that the Labour Party and the Liberal Democrats have put today is based largely on the mythology that they are trying to spread throughout Scotland. The first myth is that we are not matching their record on the provision of schools. The reality is that, in the first 18 months of the SNP Administration, the Government has given the go-ahead for 49 schools, which is more or less equal to the number that got the go-ahead in the last 18 months of the previous Administration.
The cabinet secretary made that point too, but the West Dunbartonshire schools were announced on 17 December 2005. They are projects of the previous Administration. Does the member accept that point?
When the previous Administration started, it inherited projects as well. That is the on-going life of Government. There is no big secret about that. We made a firm commitment that we will build or refurbish 250 schools in the four-year period, and unlike the previous Administration we will keep that promise.
The second big myth is that there is a black hole in the flow of projects since we came to power. Let me confuse that argument with some facts. The reality is that the value of projects for which contracts have been signed since the SNP came to power in May 2007 is £1.8 billion. The value of projects that have been approved since we came to power is £2.5 billion, and £1.4 billion-worth of those will be funded under not-for-profit models. The value of projects that have been announced since May 2007 is £5.7 billion. That is an unprecedented record and one for us to be proud of. I defy any member of the Labour Party or the Liberal Democrats to identify an 18-month period in the first eight years of devolution in which they announced £5.7 billion-worth of projects.
We heard some other myths. Margaret Smith made the incredible statement that no new schools have been contracted since we came to power. She does not know her facts. The fact is that £870 million-worth of schools have been contracted since the SNP came to power.
The point that I was making, and which other members have made, is that all those projects were started by us. I am happy to accept that that is the way of Governments—that one leaves and another comes in and takes over. The problem is not what we have been saying, but the fact that your guys have been taking the credit for things that the previous Administration did.
The member says that that is what she intended to say, but when she checks the Official Report tomorrow she will find that she actually said that no schools had been contracted. That is factual nonsense, because £870 million-worth of schools have been contracted.
Much mention has been made of the £22 million that has been committed to the Scottish Futures Trust so far. However, those who made the point typically looked at only one side of the income and expenditure account; none of them mentioned that when the SFT is fully up and running it will save up to £150 million every year. For those on the Labour and Liberal benches who cannot make the calculation, that means a saving of £600 million over four years. As Jim Mather has been quoted as saying, £600 million is roughly the cost of dualling the A9 between Inverness and Perth. As a result, the savings made by the SFT will far outweigh the costs of setting it up.
I say to Labour members in particular that one of the reasons why we have to use instruments other than normal mainstream funding for investment is that their Government at Westminster is denying us the right not to money that we are not entitled to, but to money that we are. If the UK Government gave us our fossil fuel levy money with no strings attached, our share of the Olympics regeneration money and our share of the prison money, investment in Scotland would be even higher than it already is under this successful SNP Administration.
I welcome the Cabinet Secretary for Finance and Sustainable Growth's update on the Scottish Futures Trust. The cabinet secretary talked about the trust as if it were up and running and already existed as an arm's-length company. There might well be a new model of financing, but there is still no board, no chief executive and no agreed management statement on how the trust will operate. No wonder there is anxiety in the marketplace.
As a result, I seek some clarity from the cabinet secretary on the trust's corporate governance structure. This afternoon, he offered us pretty thin gruel with the announcement of two additional non-executive directors. However, he has also indicated that he intends shortly to make another two appointments. When he sums up, will he tell us the size that he envisages the complete board will be and, crucially, the date that he envisages the board being in place?
Given that the advertisement for the chief executive has been published, will the cabinet secretary tell us whether that person will be appointed by the board, the chairman or ministers? By what date does he envisage the SFT's chief executive and the full senior team being in place?
I turn from that corporate governance guddle—and it is a guddle—to the operation of this trust that has yet to be established. When the issue was previously discussed, the cabinet secretary said:
"we will set"
the SFT's
"objectives and direction through a management statement, which we will publish, that is agreed between the Scottish Government and the new company's chair and board."—[Official Report, 10 September 2008; c 10601.]
When is this governing management statement expected to be agreed between the SFT's board and the Government? Is there a target date?
The SFT's business case, which as the cabinet secretary says was published in May, proposed in addition to the SFT board an infrastructure board for Scotland to oversee the SFT's activities. Does that infrastructure board for Scotland still form part of the business case or has it been ditched? If it has been ditched, will the cabinet secretary tell us what has happened?
I turn from that corporate governance guddle and operational spaghetti of boards that we do not know will be appointed to the question whether any of this actually matters in the real world where people fear recession and fear for their jobs. It is fair to say that all business organisations and construction organisations in Scotland believe that the guddle, confusion and delay matter greatly. I happily accept that things are slightly different in local government because a non-profit model has been tried in it, but I want to focus on central Government procurement.
The Government claims that there are absolutely no delays in procurement in Scotland, but those in the industry overwhelmingly say that there are delays. Ministers will have seen the Scottish Building Federation's list of projects that have been approved, but—crucially—not procured. The cabinet secretary basks in a reputation for being a reasonable man and a business-friendly minister. He should publish a list of central Government projects that have been approved but not yet procured and clear up the issue. As a start, perhaps the cabinet secretary, aided by his expert officials at the back of the chamber, will name for us in his summing up any capital projects that have been approved and procured in the past two years by central Government or its agencies, rather than by local government.
In his summing up, the cabinet secretary can either gracefully admit that there have been dangerous and damaging delays in moving from agreeing and approving projects to the procurement stage because the model is largely untested in central Government and its agencies, or he can deny that there have been any delays, as we have heard. I simply say that the evidence will speak for itself. The cabinet secretary should not leave it to interest groups throughout Scotland to try to cobble together what is happening on the brink of the biggest recession that we have faced certainly for a decade or two—perhaps for more decades than that. He should publish the data. That is the least that he owes to every Scot who works in a business and is struggling to deal with the consequences of the recession. I am looking for a commitment from the cabinet secretary when he sums up that he will publish a list that shows what has happened over the past two years in central Government.
I am sure that we had all hoped to leave the chamber with a greater understanding of how the Scottish Futures Trust will deliver infrastructure, but sadly we do not have that understanding so far.
Not many members will agree with Bill Wilson's assertion that the SFT brings sanity to the debate; rather, it is sowing the seeds of confusion, delay and contradiction, as Wendy Alexander pointed out.
Jeremy Purvis and Des McNulty exposed the truth. In its most recent manifestation, the SFT is no more than an advisory body. I am not sure that the Conservatives or any of the SNP back benchers are up to speed on that yet. They keep on talking about the SFT as an alternative to PPP/PFI. It is worth emphasising that a range of options, from PPP to NPD to straight capital funding, was available to the previous Administration, which pressed ahead with two rounds of school building programmes. Each project increased understanding of managing PPP/PFI schemes to get better value. Indeed, the Liberal Democrats in Argyll and Bute Council introduced a much-praised NPD scheme in response to concerns about early costs.
Will the member take an intervention?
I will not, as we are tight for time.
In the Lib Dem manifesto, we promised continued public sector investment. We said that there would be 250 new or refurbished schools in this session and 100 new or refurbished health centres, as well as major new investment in public transport. We wanted to build on the record investment that was made in previous years, and we acknowledged the importance of on-going investment. We do not have a bright future under the SNP Government; instead, the already gloomy outlook of recession is being further darkened by the SNP's SFT proposals.
As Margaret Smith pointed out, Alex Salmond spent the election campaign promising that he would scrap the public-private partnership system. He said that his Scottish Futures Trust would be up and running by Christmas 2007. He did not tell the electorate that no new building would be commissioned until the SNP had set up the mythical new trust.
The Government's school estate statistics, which were published less than six weeks ago, are revealing. They show that 551 primary schools and 107 secondary schools are in the poor condition category, which means that they are showing major defects and/or not operating adequately; and that 106 primary schools and 11 secondary schools are in condition D, which is the bad category, meaning that their economic life has expired.
Will the member take an intervention?
I will not.
As David Whitton and Margaret Smith pointed out, the SNP is one and a half years into government but it has commissioned nothing to speak of to address that situation. How can the Government be so comfortably numb about that?
Then there is the new Forth road bridge, which my colleague Margaret Smith mentioned. According to the infrastructure investment plan, the new Forth crossing is the Government's number 1 national development, yet no money has been confirmed to pay for it. Ministers were still reviewing various funding options in September this year. It is not good enough for the SNP to avoid answering such questions; it is time to stop hiding and give a straight answer. Where will the £4 billion come from? It is one thing to say that a bridge will be built and it will be ready in time, but it is entirely different to have worked out where the money will come from, how the project will be managed and therefore whether it will actually be built.
We believe that a strong and successful Scotland needs a level of investment that allows schools, hospitals and new transport infrastructure to be built, and to be built in a planned and steady way. Unfortunately, confusion and delay continue to be the hallmarks of the Government's approach. Nothing that we have heard today will allay the fears of communities throughout Scotland. The situation must be rectified urgently if Scotland is not to be plunged further than necessary into recession. The Government undervalues what infrastructure investment delivers. Among other things, it connects Scotland to markets; ensures that children learn in modern facilities and that our hospitals are fit for purpose; and has a role in securing thousands of jobs. The Government chooses to focus only on dogmatic opposition to the PFI. The uninformed and sometimes hysterical stances to the PFI that the Government took in opposition would have benefited from mature reflection on its taking office. Instead, the unthinkable happened and that approach has been rolled into the Government without review.
The situation is worse than that, because the Government consulted on its plans and, now that it has done so, it is clear that Alex Salmond has, for once, succeeded in uniting civic Scotland—although, mind you, it is united in opposition to his plans. Responses to the SFT consultation from key stakeholders have been utterly disparaging of the draft proposals. Businesses, councils, Audit Scotland, the Scottish Council for Development and Industry and the Edinburgh Chamber of Commerce have used all sorts of descriptions, including "flawed", "sketchy", "window-dressing" and "unworkable". What does the SNP do in response to that united opposition? It ploughs on regardless. That is not good enough.
The Government must listen and change direction urgently. It should start by ditching the new quango and signalling today that it will free up investment immediately for schools and transportation projects.
The Conservatives welcome the contribution that the cabinet secretary has made to our understanding of how the new mechanism for funding public projects will work, although our understanding has been progressed by only a limited margin.
Since the Government came to power, it has been particularly keen to avoid any attempt to introduce PPP projects or to suggest that that is how projects should be funded. It has been most interesting to hear the complaints from Labour and Liberal Democrat members about how we have turned our backs on the mechanism that they used to use. Of course, that is not true of the Conservatives—we still believe that those mechanisms are effective, but there is a certain irony to those complaints when we consider the record of the Liberal Democrats and the Labour Party in opposition in Westminster. Labour was fervently opposed to PFI and said that it would deal with the problem when it arrived in office. Well when it arrived in office it evolved the PPP system, which was—give or take some—almost indistinguishable from the mechanism that it replaced.
However, that evolutionary approach is reasonable. It was and remains a concern for us that the new Government in Scotland has decided to progress several new funding mechanisms to replace PPP. The problem is that time is passing as the system evolves and we get more news about how it will operate: 19 months have elapsed since the election of this Government and, in spite of the unbridled enthusiasm of members such as Alex Neil, there is without doubt a hiatus in the investment that is required for projects that would have been funded by PPP. In my backyard, a Liberal Democrat and Conservative council is looking for funding for new secondary schools in places such as Laurencekirk and Kemnay. The council is ready to take advantage of a mechanism once one is presented to it, but no mechanism seems to be available, as yet.
Jeremy Purvis expressed legitimate concerns about the amount of money that is being invested in setting up the SFT. However, the fact that the SNP set itself ideologically against PPP, but has now begun to progress towards something that is almost indistinguishable from it, means that this is something that we need to encourage the Government to get on with. The problem is that we have not made progress.
We must make the scheme attractive to investors. If we rule out incentives for investors, there will be no investment. The sooner we have an attractive project and an attractive scheme that will encourage investors and investment in our infrastructure development, the sooner we will have something that will work.
As the Conservatives have said consistently, we will evaluate proposals on their merit, because value for money is more important than ideology. Although much detail is still to be produced, two points are clear: the SFT will advise on PPP projects and in 2010 a new private futures trust will be established to provide private investment. It will be interesting to see how the left wingers among the SNP back benchers react to that—I will be particularly keen to hear Bill Wilson's reaction.
The SFT has changed from the original plans: it is not what it was in the SNP's manifesto, nor is it what it was in the consultation paper. However it is dressed up, the key principle of PFI or PPP is maintained: the levering in of private investment in public infrastructure. Concerns remain about aspects of the Government's proposals, including the length of time before the SFT starts to commission real projects. The current estimate is that it will do so in 2009 at the earliest. Furthermore, there are no details of exactly how investment will be raised from the private sector, with the exception—of course—of use of the non-profit-distributing model of PPP.
Let us move the SFT forward. Why does the Government not consider the option of putting in place a choice? It should allow those who are choosing to invest public money to let the market decide what gives best value for money.
There is no doubt in my mind that today we need public investment more than we have at any time during the 10 years of the Scottish Parliament. The actions of this Government in setting itself ideologically against PPP have created a delay in delivery of projects, which may occur now or in the future. Parliament's priority today is to move forward and to offer encouragement to the Government to deliver a working model at the earliest possible opportunity.
There will, sadly, have been no great sigh of relief from our construction industry, our construction-related businesses or workers in the industry after the Cabinet Secretary for Finance and Sustainable Growth's speech. We had the announcement, which had previously been made to the Finance Committee, that there are two more members of the SFT's board, and that two more are to come. He announced the pathfinders for the community hubs, which were in the system anyway and were delayed by the SNP. I share Gavin Brown's view that what we have had today is a damp squib, and that we are no further forward.
On the pragmatic approach, at the heart of everything I have sought to do in the SFT debate is an attempt to ensure that we retain value for money—I will expand on that later—and focus on the jobs that, because of the opportunity costs that result from the SFT not being available, are being lost to Scottish businesses and workers.
Mr FitzPatrick and Dr Bill Wilson adopted a vehement attitude to PPP—
PFI.
And to PFI.
Let us consider the evidence that they used and examine what people are now saying about the Government's new model. Allyson Pollock, a great critic of me and of PPP, said in recognising that the SNP's policy is simply PPP, that
"A new name can't save a poor policy".
She also said that
"it is not so much an alternative as a PFI hybrid."
Mark Hellowell of the University of Edinburgh said:
"Evidence suggests this form of public-private partnership does not lead to lower levels of profit-making than PFI."
All the private sector profits that Dr Wilson spoke about will in no way be stopped by the model that is proposed by the cabinet secretary.
If Andy Kerr is saying that the SFT is exactly the same as PFI/PPP, what is he complaining about?
Like every sector of the Scottish community, I am complaining about the fact that we do not have a model or an alternative to PPP. The member should listen to what the construction industry is saying. It does not have a clue what the SNP is proposing.
COSLA met the deal maker, Angus Grossart, but the deal maker had no deal. He had no detail, and COSLA left the meeting none the wiser, despite the fact that Angus Grossart is the very man whom the cabinet secretary put in position to solve problems.
Considering Mr Brownlee's comments, I hope that he searches the job pages this weekend. If he sees an advert for a cheerleader for the SNP, he should apply. His analysis of what is happening in our infrastructure and economy does not reflect the views of our financial sector, construction industry and others who know most about what is really happening and those who most fear the loss of jobs in Scotland.
Dr Wilson suggested that the Scottish Futures Trust is somehow debt free and that there are no charges attached to it. That is not, and never was, the case. John Wilson spoke about all the problems of PPP contracts for schools. Does he not understand that there were, sadly, problems with traditional contracts throughout the public services? The point is that, although no model is perfect, PPP has delivered and continues to deliver, with value for money, schools, hospitals and other infrastructure projects throughout the country.
Alex Neil spoke about savings, but I have not seen one bit of evidence to associate £150 million savings with the SFT. We do not have a model, so how can he assert that savings can be made?
Many members commented about the delay, including Tom McCabe, Margaret Smith and Des McNulty. Let us look at wee bit further back into the history of the Scottish Futures Trust. Page 19 of the SNP manifesto said:
"we will introduce a not-for-profit Scottish Futures Trust".
That is another manifesto promise broken because we all know that we are not talking about a not-for-profit Scottish Futures Trust.
The ultra-loyalist Alex Neil and I regularly appear together on "Newsnight Scotland". On 28 August 2007, he said on the programme that, within three months, the SNP would announce its detailed plans for getting rid of PPP and for introducing a not-for-profit futures trust. It was not the first broken promise, and it will not be the last. It will certainly not be the last time Mr Neil gets it wrong. More than a year later, the construction industry, the financial sector and the trade unions are none the wiser.
As recently as 29 October 2008, here in our Parliament, John Watt of Grant Thornton said:
"It is uncertain; we just do not know what SFT will look like. A number of people in the industry are concerned about what SFT is and what it will mean … The last date that I heard for SFT having its own funding capability was 2010, which is quite a way off. People will not be able to hold on until 2010 in the hope of seeing a pipeline then."—[Official Report, Economy, Energy and Tourism Committee, 29 October 2008; c 1129.]
The cabinet secretary has set out no further detail today. Wendy Alexander and others have asked for the detail to allow us to judge the trust, but ministers simply do not have that detail. We do not know what the SFT will look like, although, as Tom McCabe hints, we have had some understanding from Sir Angus Grossart—it will probably look like PPP.
As we all know, the SFT is not a not-for-profit model. Unison has described it as "PFI-lite", but it is looking increasingly like full-blown PFI/PPP. John Wilson quoted Unison to aid the point that he was trying to make; I suggest that he read Unison's more recent briefings, which undermine his Government's policy and stance.
The Scottish public have been misled on the not-for-profit point and the non-profit-distributing model, but the real tragedy is that the debate, the dithering and the Government's inability to deliver the model are causing untold damage in our construction industry as work and skills are lost to Scotland. People in the financial sector will tell members that most people who are involved in infrastructure development in Scotland are leaving and working in England or the rest of Europe because they do not have a clue what the Scottish Government is up to. I suggest that the cabinet secretary does not have a clue either.
Inaction is costing jobs and ideology is costing futures. The loss of skills and jobs to Scotland is utterly unacceptable. The First Minister and his Administration have personally turned off the pipeline that has been talked about so much in the debate. There is a brain drain and a jobs drain because of the Scottish Government's ideology. That is unacceptable, which is why our amendment and, indeed, the Liberal Democrat amendment call for an end to the nonsense.
The Government has had long enough and does not have a clue about how it will deliver its alternative to PPP/PFI. That is unacceptable. When asked when the work will run dry and the building sector will be in crisis, the Scottish Building Federation responded:
"We are already there. If we do not take action now"
on the SFT—to take Mr Swinney's sedentary comment into account—
"there will be no point in doing so in six months' time when the work dries up."—[Official Report, Economy, Energy and Tourism Committee, 29 October 2008; c 1133.]
That is why members must support the Labour amendment and draw an end to the farce.
Among the many fascinating speeches in the debate, the most fascinating was perhaps that of Alison McInnes, who made a compelling argument for an acceleration of capital investment projects to ensure that we speed up the programme and get more activity into the marketplace. How does that sit comfortably with the £800 million of swingeing cuts about which we hear from the Liberal Democrats every day of the week?
There is growing recognition that tax cuts have a contribution to make at this difficult economic time. We have challenged everyone in the Parliament to work together to try to make those tax cuts while protecting services; £22 million for a new quango is only one example of wasteful expenditure.
There we have the answer. If we cut £22 million over five years, that means that there is £778 million to go by next April if the Liberal Democrats want to make £800 million of public spending cuts.
Mr Whitton made a couple of interesting remarks. He refused to accept that the Government has a £3.5 billion infrastructure investment plan. I even intervened on him to try to save him from himself, but he refused to take up my kind invitation to him to correct the record. I tell him that there is, without a shadow of doubt, a programme in excess of £3.5 billion in the Government's capital investment programme.
Mr Whitton went on to make the startling revelation that the construction industry is in crisis because of the Government's approach to the Scottish Futures Trust. However, yesterday, we got a lecture about the global financial crisis from all Labour members as they tried to absolve Gordon Brown of any responsibility for the mess that the economy is in.
John Swinney should listen to and read about what happens in the Parliament's committees. Every witness who has been asked detailed questions on the Scottish Futures Trust has given evidence to suggest that it is at the heart of many of our problems.
Mr Kerr always used to be on message, with his pager at the ready to tell him what to say. He should go off and listen to the Prime Minister's explanation of the global financial crisis with which we are dealing.
That brings me to Wendy Alexander's points about the content of the programme. I apologise to Parliament, as it will take me some time to go through this part of my speech. Since May 2007, the following contracts have been signed and approved by the Government: the NHS Forth Valley Clackmannanshire community health services project; the NHS Forth Valley acute hospital project; the NHS Fife St Andrews community hospital and resource centre project; the East Dunbartonshire schools project; the West Lothian schools project; the Aberdeen city schools project; the Falkirk schools project; the Perth and Kinross schools project; the Dumfries and Galloway schools project; the West Dunbartonshire schools project; the Inverclyde schools project; the A7 Auchenrivock improvement project—
I will take no interruptions from Mr Purvis at this stage—we will have the whole list.
There is the A77 Haggstone climbing lane and Glen App improvement project; the state hospital project; and the Royal Botanical Gardens gateway visitors centre project. The icing on the cake—the project that Mr McCabe waited for ever to secure—is the M74 completion. Mr Harvie hates that project, but I must put it on the record for Parliament today.
How many of the schemes that the cabinet secretary has listed were in the 2005 infrastructure investment plan? All of them were.
We have delivered the projects that the Administration that Mr Purvis supported never managed to deliver.
I say to Wendy Alexander that the board of the Scottish Futures Trust is in place; two more members will be appointed. We are recruiting the trust's chief executive, and its management statement will be based on the business case that I have put to Parliament. That demonstrates the operational strength that is emerging in the Scottish Futures Trust.
Mr McCabe made a point about potential delay to projects. I remind Parliament of what I said in answer to a parliamentary question from Wendy Alexander on 9 October. If I am not being ungallant, my answer rather took her breath away. I told her that in 2009 the Scottish Futures Trust would commission its first new school building programme. I went on to say that the previous Administration approved its first projects in 2001-02—two years after it was established. We are on track to deliver the capital investment that Scotland requires.
Mr Kelly made a fascinating and helpful contribution to the debate. He said that when there is unemployment, people expect Governments to accelerate capital investment programmes. This Administration has done precisely that on affordable housing; I am delighted that we have attracted Mr Kelly's support for our decision. Crucially, he went on to say that I should change the structure of our capital programme and invest money from the year 3 programme in the year 1 programme. I would love to be able to change the shape of our capital programme, but that requires the consent of HM Treasury, which I do not have. Mr Kelly claimed that he has a letter to me from the Chief Secretary to the Treasury saying that the Treasury has placed no road blocks on my capital spending programme in that regard, but the letter says no such thing. It is interesting that a private letter that the Chief Secretary to the Treasury sent to me is in Mr Kelly's hands. I may be able to explain why that is the case—the letter was also copied to Jim Murphy. That tells us something about the flow of information from Her Majesty's Government to the crowd on the Labour benches.
The Administration is taking forward the Scottish Futures Trust. Today we have demonstrated the progress that has been made in establishing the organisation—
Order. There is far too much noise in the chamber.
We have demonstrated that we have an agenda to invest in schools and health care facilities and to deliver aggregation within capital expenditure, effective project management and a lower cost of capital, delivering value for money for the taxpayers of Scotland. That is the direction in which the Government is taking capital expenditure, through the Scottish Futures Trust. It builds on the £3.5 billion of capital expenditure that we will spend, to the letter, in this financial year, to assist the construction sector in Scotland. If Labour Party members want to support us in securing greater financial flexibility for that programme, I will be delighted to welcome their support.