WHEN is private finance used to build public projects not private money? And when is a profit deemed to be too much? When it is something called the non-profit distributing model, or NPD for short.
Audit Scotland is responsible for the nation’s bookkeeping. It is a vital role because it keeps local and national government across Scotland’s town halls and in Holyrood honest.
Just before parliament broke up for the summer, Audit Scotland analysed spending on five major transport projects. Its report is fair as it describes encouraging progress in delivering new roads, rail and a colossal bridge – the Queensferry Crossing.
Audit Scotland shed light on how the Scottish taxpayer is paying for the £3.8 billion roads, rail and bridges. Some readers may have thought that, with the SNP in power, all those terrible private finance projects had ended: no more would private financiers gorge themselves on public contracts; a road would be paid for on completion, not by future generations. During the 2011 Scottish general election, BBC Scotland produced an issues poll that found as many Scots wanted to end such arrangements as wanted improvements in the health service. The SNP promptly declared it would do exactly that. Good politics after all is to align yourself with public opinion.
But the Audit Scotland report throws up a new, previously unknown side to how the Nationalist government is funding capital expenditure. It is using a variation on the previously despised private finance initiative. PFI has become NPD. A title that suggests no nasty profit made by business.
Yet, that turns out not to be the case. The Forth replacement crossing is being built by businesses. Huge international companies. These pesky organisations are making money. Profit is being made! How inconvenient. It turns out that the non-profit distributing model means no such thing. This is a mortgage on tomorrow’s taxpayers.
Transport capital spend on just five projects analysed by Audit Scotland is £3.8bn. But you, the taxpayer, will pay £7.5bn over 30 years. That is nearly £4bn that future taxpayers will pay for the Nationalist government’s five projects. That, according to Audit Scotland, is £225 million a year for 30 years in interest payments.
Parliament has been kept in the dark over the figures. It transpires that in the six-monthly progress report on capital spending from the Permanent Secretary – the highest ranking civil servant in Scotland – the figures provided are inaccurate or, as the Auditor General put it, “inconsistent”.
So it transpires that all governments use ways to pay for roads, rail and bridges that involve large contracts with profit paid back over three decades. PFI or NPD.
Transport infrastructure is an important investment in Scotland’s future. But clarity, openness and transparency on funding would be most welcome.
• Tavish Scott is the Liberal Democrat MSP for Shetland