Chamber and committees

Discretionary fiscal stimulus measures were introduced by countries across the world in response to the onset of the global downturn, and the fall in global demand. These actions have helped support demand and jobs in many countries, including Scotland.

The Scottish Government introduced a discretionary fiscal stimulus through the accelerated capital spending programme - a key element of the Economic Recovery Plan. It is estimated that the accelerated capital spending programme “ which involved the acceleration of £293 million capital spending into 2009-10, and £53 million into 2008-09 “ has supported over 5,000 jobs in the Scottish economy over the period.

In December 2008 the Scottish Government estimated the potential impact on the Scottish economy of the temporary 2.5% reduction in the rate of VAT “ a key element of the discretionary fiscal stimulus package introduced by the UK Government at the 2008 Pre-Budget Report. This analysis, using the Scottish Government input output model and applying Treasury assumptions regarding the proportion of the VAT cut that would be saved by consumers, estimated that this action would directly support around 5,400 jobs in Scotland. However, the analysis estimated that if the same level of support (around £1 billion) was directed towards capital expenditure this would have directly supported around 10,000 jobs in the Scottish economy in 2009. This analytical note was published via the Scottish Parliaments Information Centre in December 2008 (Bib. number 47241).

I refer the member to the answer to question S3W-33171 on 22 April 2010, which sets out the costs incurred up until financial year end on 31 March 2010. All answers to written parliamentary questions can be found on the Parliament''s website, the search facility for which can be found at www.scottish.parliament.uk/Apps2/Business/PQA/Default.aspx.

A breakdown of the money already spent, and forecast to be spent, on the Glasgow Airport Rail Link branch line is set out in the following table:

Work stream	Jan 2007 “ Sept 2009 (Cancellation P6 FY 09/10)1	Oct 2009 “ May 2010  (P7 FY 09/10 “ End P1 FY 10/11) 2		Total Cost to Date3,4	Remaining cost  to close out GARL		Total
	£m	£m		£m	£m		£m
Branchline Works “ post Sept 2009 all costs incurred relate to the close out of the GARL project	18.84	1. Land and associated costs 2. Legal/ agreements adviser costs 3. Consultant costs 4. 3rd party final account	0.40 0.60 0.40 2.48	22.72	1. Land and associated costs 2. Legal/ agreement advisers	2.65 0.10	25.47
Combined works (covering both Mainline and Branchline) 5	7.60	0.06		7.66	0.00		7.66
Total	26.44	3.94		30.38	2.75		33.13

Note:

1. Costs were included in figure reported in answer to question S3W-27501 on 25 September 2009.

2. Costs were included in figures reported in answer to question S3W-31078 on 4 February 2010, S3W-33171 answered on 22 April 2010.

3. Excludes VAT.

4. Excludes Parliamentary Bill costs (£3 million).

5. Costs which cannot readily be split between main line and branch line.

The cancellation of the Glasgow Airport Rail Link project resulted in a net reduction of government expenditure. Based on the last estimated costs for the project, these figures are detailed in the following table:

Financial Year	2009-10 £ million	2010-11 £ million	2011-12 £ million	2012-13 £ million	2013-14 £ million
Forecast Capital Expenditure	48.7	62.6	37.7	23.5	3.2

 

In addition, Network Rail Regulated Asset Base expenditure will reduce by £12.1 million with a small annual reduction in Scottish Government expenditure as repayments will now not be required for the cancelled branch line works.

The 2007-2013 European Structural Fund Programmes are not yet at their half-way point but about two thirds of the total budget has been allocated to projects. The Operational Programmes for the European Structural Funds in Scotland originally presented, overall, a profile of roughly equal commitments in each of the seven years. Approximately 80,000 people have been assisted to date, through training and support towards employment provided by projects supported by the European Social Fund. The latest forecast, from project sponsors, for gross jobs to be eventually created by the projects that have been allocated awards from the European Regional Development Fund is approximately 20,000. This includes 2,200 jobs from the projects for which funding was announced in April 2010.

The allocations to Scotland for the European Social Fund and the European Regional Development Fund were fixed in Euros for the 2007-13 programme period. There has been no additional allocation from the European Commission.

The Economic Recovery Plan is estimated to support around 15,000 jobs in the Scottish economy. This figure is based on estimates of the impact of some of the actions within the Economic Recovery Plan. It is assumed that in the absence of these actions these jobs would have potentially been lost.

The timing of the impact of all the actions taken within the Economic Recovery Plan varies according to each particular programme.

For example, some of the actions such as accelerated capital spending, have a direct short-term impact through boosting demand alongside more long-term benefits, including supporting the retention of key skills and creating a lasting legacy of capital assets. In addition, measures within the ERP such as support for skills development, training and funding additional places for apprentices, help improve long-term employability and participation in the labour market.

I refer the member to the answer to question S3W-31248 on 11 February 2010. All answers to written parliamentary questions are available on the Parliament''s website, the search facility for which can be found at http://www.scottish.parliament.uk/apps2/Business/PQA/Default.aspx.

However, I can assure the member that the government will not be using the discredited PFI model to procure the schools in the £1.25 billion school building programme.

I have asked Barry White, Chief Executive of the Scottish Futures Trust to respond. His response is as follows:

The Scottish Futures Trust (SFT) is seeking to improve value for money across infrastructure investment and is implementing a variety of means to achieve this. No single funding and financing model will be able to meet the new challenges that we face in delivering public infrastructure in changed economic times.

Over the past year, SFT has:

advanced the Non Profit Distributing (NPD) model of finance to improve value for money on projects such as Borders Railway and the Aberdeen Western Peripheral Route;

brought into procurement a joint venture model in the hub programme;

devised a highly innovative partnership financing model for the National Housing Trust to deliver £130 million of additional housing in its initial phase, and

driven forward the introduction of Tax Increment Financing (TIF) to finance unlocking infrastructure for economically important regeneration projects.

I have asked Barry White, Chief Executive of the Scottish Futures Trust to respond. His response is as follows:

The following table lists the projects being supported by the Scottish Futures Trust in 2010-11 as identified in their Business Plan, and, where appropriate, gives the procurement model being used.

Project/Programme	Procurement Method
hub Partnership	To be determined on a project by project basis
Schools programme development	Capital
Scotland waste management	To be determined on a project by project basis
National Housing Trust	New financing model
TIF (Tax Incremental Financing)	New financing model
Spending landscape/IFRS	-
Borders Rail	Non Profit Distributing
Forth Replacement Crossing	Capital
Aberdeen Western Peripheral Route	Non Profit Distributing
Renewables infrastructure	To be determined on a project by project basis
Social Housing Collaborative Procurement	-
Tayside Mental Health	Non Profit Distributing
Moray Schools	Non Profit Distributing
Western Isles Schools	Special Purpose Vehicle
Orkney Schools	Special Purpose Vehicle

 

It is estimated that elements of the Economic Recovery Plan are supporting around 15,000 jobs in the Scottish economy. This figure is based on estimates of the impact of some of the actions within the Economic Recovery Plan.

It is estimated that the accelerated capital spending programme “ which involved the acceleration of £293 million capital spending into 2009-10, and £53 million into 2008-09 “ has supported over 5,000 jobs in the Scottish economy over the period.

Support for Homecoming has helped generate additional activity in tourism related sectors such as hotels, catering and retail and is estimated to have supported around 1,000 jobs.

The acceleration of European Structural Funds is estimated to support approximately 8,000 jobs across all sectors of the economy, through ERDF (European Regional Development Fund) funding for new projects. Other projects, supported by the European Social Fund (ESF), are assisting people back into employment.

An extra £31 million was allocated to boost affordable housing supply, which is estimated to have supported around 500 jobs.