Scottish Futures Trust in need of a shake-up, says report- The Scotsman

Bill Jamieson, The Scotsman, 16 October 2009

A new way of managing and financing public projects in Scotland such as schools and roads is being urged by an independent think tank today.

The plan, called Scottish Capital Partnerships, would replace the flawed Private Finance Initiative (PFI) and shake up the controversial Scottish Futures Trust.

Under the Partnership scheme, proposed by Reform Scotland, projects would continue to be financed jointly by the public and private sectors.

The bulk of the money would come from public borrowing at government interest rates. But independent management companies would be invited to submit bids to build and run projects as well as put up equity risk capital. This is usually about 10 per cent of the total required.

Said Reform Scotland chairman Ben Thomson, who is co– author of the report, "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."

SFT has yet to build or fund any projects and there is confusion about its role.

"It is vital that we move quickly to enable infrastructure projects to proceed because we need to ensure that Scotland is investing in its future if we are to create the environment for sustainable competitive growth," Mr Thomson said.

Sir Angus Grossart, the chairman of SFT, declined to comment on the report last night. But sources close to SFT say that political suspicion over PFI and PPP contracts has caused setbacks and delays.

The proposals have been welcomed by leading economics expert Professor John Kay, a member of First Minister Alex Salmond\’s Council of Economic Advisers: "This is an important contribution to the debate on how Scotland can maintain its infrastructure, manage projects more efficiently and move beyond the failed PFI model," he said.