SNP told 'show us the money' as alternative to PFI launched

Published on Tuesday 20 May 2008 10:21

EDINBURGH'S education leader today called for urgent action to fund new city schools as the Scottish Government unveiled its long-awaited plans to replace private finance initiatives.

Councillor Marilyne MacLaren said she backed plans for an alternative funding mechanism as "better value to the public purse".

But she warned large sums of money were needed to ensure the Capital's new schools programme could go ahead.

The SNP promised at last year's elections to replace PFI/PPP with a non-profit making Scottish Futures Trust, which would fund infrastructure investment in schools, hospitals and roads.

Today First Minister Alex Salmond and Finance Secretary John Swinney published the strategic business case for the SFT and announced the creation of a new public sector company to take the initiative forward.

They said up to 150m would be released each year for increased investment in infrastructure through greater partnership, improved preparation and handling of projects, and better value finance, including the non-profit distribution model.

The original idea behind the SFT was to raise money by issuing bonds. But the Convention of Scottish Local Authorities has argued the Scottish Government has no powers to issue bonds.

So it now plans to harness the existing bond-issuing power of local councils to enable a Scotland-wide municipal bond to fund infrastructure projects.

Speaking at the Infrastructure Investment in Scotland conference at Heriot-Watt University, Mr Salmond said:

"The development of the Scottish Futures Trust is the way forward, offering both better value finance and secure investment."

"By releasing up to 150 million each year for increased investment, we can ensure more resources for our public infrastructure compared to wasteful PFI."

Edinburgh has five schools waiting to be refurbished or replaced.

But Portobello, James Gillespie's and Boroughmuir high schools, along with St John's Primary and St Crispin's Special School, are all in limbo because the city council cannot afford the 165m needed to upgrade them.

Cllr MacLaren said more information was urgently needed on how local authorities can apply to the Scottish Futures Trust for money to fund projects and there was a lack of detail on how the new funding mechanism will work.

And she said the city council will only be able to afford to rebuild the "wave three" schools if the Scottish Government provides 80 per cent of the money, whether through the SFT or some other means.

"We are talking about costs of 165 million," she said. "By the time we actually start building, I would be extremely surprised if it's not going to be considerably more than that.

"Even with our contributions of 20 per cent, we are going to need an awful lot of money and we are just one local authority.

"Non-profit distribution does not mean that we don't need help from the Scottish Government."