SCOTTISH Labour has called for an urgent review of the way public infrastructure projects are financed after a report warned of “worrying indications” that the current scheme is not giving value for money.
Economists Margaret and Jim Cuthbert, who prepared the report for Labour also expressed concerns over a lack of transparency at the Scottish Futures Trust (SFT) and the long-term sustainability of its funding model.
The agency was set up by the SNP administration to run its alternative to the private finance initiative – a funding method for schools, hospitals, and other public projects.
The non-profit distribution (NPD) programme established by the SFT aimed to allow private companies to build and maintain public infrastructure with debt finance which is then paid off by the taxpayer, but without the “most extreme” profits seen under previous arrangements. It created five hubs across Scotland, which established partnerships between the public and private sectors.
The Scottish Government said the set-up was transparent and has helped to improve the efficiency and effectiveness of infrastructure investment in Scotland.
However, the report by the Cuthberts states: “Given the lack of auditable information, it is very difficult to tell whether SFT is delivering optimal value for money in either the narrow or broad sense – but there are worrying indications that it is not.
“The financial projections for one hub scheme to which we have had access imply that, over the 25-year lifetime of the scheme, the total payments of interest, principal, and dividend on subordinate debt would amount to over three times the amount of capital originally raised through sub debt.”
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