£500m shortfall in transport costs ‘a mistake’

Scotland’s top civil servant will tomorrow admit that mistakes were made over the reporting of the costs of multi-million-pound transport projects.

The costs of a number of transport projects were underreported, but Sir Peter Housden, insists this was not deliberate. Picture: Contributed

The Permanent Secretary to the Scottish Government, Sir Peter Housden, will seek to reassure MSPs that the costs of the projects are not being deliberately underplayed.

Earlier this year, the Scottish Government faced criticism when it emerged that there was a £500 million difference in the reported cost of five key transport projects including the new Forth Crossing, the Aberdeen bypass, improvements to the Edinburgh to Glasgow rail line and the new Borders railway.

But Sir Peter, who was called on to explain the difference, will tell MSPs that the “complexity” of the projects had led to the incorrect figures being given to Holyrood’s public audit committee.

The new M74 motorway extension. Picture: Jane Barlow

In a letter to the committee, Sir Peter says he now agrees that “improvement” should be made to the way in which costs were reported so parliament had a more accurate picture of the true price.

The Scottish Government was accused of “not reporting the full costs” of the transport projects by the public audit committee’s then convenor Iain Gray, who asked Sir Peter to explain the discrepancy.

Mr Gray had said before this summer’s parliamentary recess that he hoped Sir Peter would appear before the committee to answer their questions “as soon as possible”.

Sir Peter will appear tomorrow, when he will be asked questions about the projects that also included upgrades to the M8, M73 and M74.

Meanwhile, Sir Peter admitted that the £500m mistake had been made partly because the cost of buying land had not been included in the accounts.

Sir Peter writes “we agree that there are further improvements to be made in the format of reporting. The variance arises from the fact that in addition to construction contract costs, Audit Scotland included in its analysis the costs of enabling works, such as buying land.”

He went on to promise that there would be a shake-up in the way the Scottish Government recorded the spending of taxpayers’s cash on major projects.

“The complexity arises here from the fact that major projects are funded through a variety of sources. We intend, however, to include both total and construction costs in future returns, and make transparent both the elements of cost and the underpinning assumptions.,” he said.

Labour MSP Mr Gray, who is no longer convenor of the committee after taking up a frontbench role, said that Sir Peter would be asked to answer what he said were “very serious questions” about the mistakes.

Mr Gray said: “To provide inaccurate or incomplete figures to the parliament’s audit committee is a serious matter indeed. A key problem is that much of the SNP’s capital programme is being delivered by private finance schemes and they have failed to reveal the full lifetime costs and on-going revenue costs.

“The SNP seem to think they are accountable to no-one, but that is not the case, and they have been found out.

“These are very serious questions about the reporting structures of what are massive projects and it’s unacceptable that the Scottish Government will take until the end of the year to report fully on the changes that will be made to improve the system.

“Sir Peter must explain at the Audit Committee why these failures have taken place and why they cannot be resolved sooner.”