THE Scottish Government is facing a massive cut in future building projects after being told many current schemes costing more than £1 billion must now to be funded by ministers.
The public spending watchdog has said that the £745m Aberdeen Western Peripheral route (AWPR) must be funded directly from Government coffers - after ministers tried to hive it off the national accounts as a non-profit distribution (NPD) scheme. This sees private firms building schools and hospitals with the Government funding them over 25-year periods or more.
New EU regulations prevent states from using private finance to avoid putting major public assets on their national accounts. A report by Audit Scotland today warns this could also mean the £200 million Dumfries and Galloway Royal Infirmary and the £150 million new Edinburgh Sick Children’s hospital facing a similar problem.
“If this is the case, the Scottish Government will have less capital DEL budget to spend elsewhere and will face a choice of progressing fewer capital projects, or finding alternative ways of funding them,” the Audit Scotland report said.
The Scottish Government is currently having talks with the Treasury about how best to deal with the issue and put “contingency measures in place.”
It adds: “The Scottish Government will need to balance the financial and governance implications of its mitigating actions.”