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New financing plan needed, says report- The Daily Telegraph

Simon Johnson, The Telegraph, 16 October 2009

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Alex Salmond’s scheme to finance new roads, schools and hospitals has achieved nothing in two years and a fresh plan is desperately needed, a think tank has concluded.

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Reform Scotland said the Scottish Futures Trust (SFT) had failed to build or fund any public infrastructure projects since the SNP came to power in May 2007. But its new report, published today, argues Scottish ministers urgently need to recover lost momentum or the economy will suffer.

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The think tank suggests a new funding mechanism, entitled the Scottish Capital Partnership (SCP) which would use a mix of public and private money.

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However, unlike the controversial private finance initiative (PFI), the bulk of the money under SCP would come from public borrowing at Government interest rates.

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Under PFI, money was borrowed at much higher commercial rates but the risk remained with the taxpayer, who was left to count the cost when there were problems in the contract. 

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Under Reform Scotland’s blueprint, management companies would be invited to submit bids to build and run projects but would be forced to stump up 10 per cent of capital.  Ben Thomson, the think tank’s chairman, argued that this would be an incentive for companies to ensure projects were delivered on time and within budget.

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He said: “We desperately need a new vehicle to get momentum back into public sector infrastructure projects and, after two years of achieving nothing under the Scottish Futures Trust, our proposals provide that vital mechanism.”

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Mr Salmond has attacked PFI’s for delivering excessive profits to companies at taxpayers’ expense, but Mr Thomson said that 80 per cent of privately-built projects were delivered on time and budget, compared to only 20 per cent by the public sector. 

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