Doubts over plan to replace PPP with trust

25th April 2008 at 01:00
The SNP government still has a lot of work ahead to win widespread support for its proposed alternative to public private partnerships
The SNP government still has a lot of work ahead to win widespread support for its proposed alternative to public private partnerships.

Local authorities are cautiously optimistic about aspects of the Scottish Futures Trust, but want much more detail before deciding whether to back it.

Other organisations have also provided mixed responses to the first stage for consultation on the way forward, and many potential pitfalls have been identified.

The trust seeks to provide a better deal for taxpayers than projects funded through PPP or the Private Finance Initiative by using bonds to fund new schools and other public buildings.

Aberdeenshire Council sees the retention of public funds within the public sector as one of the main benefits, while setting up a trust to generate surpluses for investment in projects would make for a "more transparent" system.

The council wants reassurance that risks will be carried by the trust and not by local authorities. It fears, however, that costs to local authorities could shoot up as a result.

Argyll and Bute Council says that dealing with all contracts in the same way should create "economies of scale" and lead to better planning.

But the trust could also "reduce innovation" and "stifle development of the market" by creating a monopoly. There are also fears that stockpiling surpluses could create "unnecessary tensions" over which projects should benefit from investment and the criteria for choosing.

West Lothian Council lists "fundamental" issues that need to be addressed, such as the effect of clashing with UK fiscal policy and how the trust would fit in with the International Financial Reporting Standards, a new set of global accounting guidelines.

South Lanarkshire Council believes the trust would work best for "very large" projects, but that existing methods of procurement would be more suitable for smaller works.

The Convention of Scottish Local Authorities says the trust has potential benefits, such as the formation of a "centre of expertise", but is concerned about loss of local flexibility in handling building projects and calls for clarification on several concerns.

The Scottish Funding Council supports the "objectives and overall approach" of the trust and hopes that testing more fully-formed proposals will reveal "substantial benefits to colleges and universities".

However, the Chartered Institute of Public Finance and Accountancy said there was "insufficient detail" to judge whether the trust would represent value for money.

At the Scottish Trades Union Congress in Inverness this week, First Minister Alex Salmond said the trust would provide value for money that the "excesses" of PPPs did not.

He asked why, if billions of pounds could be released by the Treasury to save Northern Rock, bond finance could not be used to fund new public buildings.

Leader, page 22

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