MINISTERS will this week unveil plans to commit up to £60 billion to finance dozens of infrastructure projects to help prevent Scotland from tipping back into recession.
Amid fresh warnings that the UK is heading for its worst peacetime economic downturn since the end of the 19th century, the Scottish Government will announce plans to fund more than 80 building projects as part of a 15-year plan.
Expected funding of up to £4bn a year will come from public funds, but also from a mix of new loans and investment from banks and private lenders.
Ministers are also planning to use new powers in the Scotland Bill going through the UK parliament to enable them to borrow up to £2bn from the UK Treasury’s coffers and have asked that the limit be increased so they can borrow up to £5.6bn.
In the meantime, they plan to raise the rest for their capital projects programme through “innovative” financing methods.
Ministers insist the extra cash will not create a re-run of the costly high-interest loans created by old PFI deals in Scotland, which have left the taxpayer paying back far more than the capital cost for new public buildings.
Infrastructure minister Alex Neil said that the 80 major projects to be unveiled this week were the best way to inject growth back into the flatlining economy. The capital projects were all significant developments, he said, that will both boost growth and deliver a lasting legacy that benefits generations to come.
“It will also provide crucial support for employment, with every additional £100 million of capital we invest per year estimated to generate £160m worth of economic activity and support 1,400 jobs in the wider economy for that year,” he added.
“All of these projects will signal a clear intent and provide the kind of solid foundations and certainty our construction industry demands.”
Scottish Government sources estimate it will commit between £45bn and £60bn to spending on projects over the coming 15 years.
In the short term, they include the new Forth Road Bridge – to be completed by 2016 – completion of the dual-carriageway on the A9 between Perth and Inverness, improvements to the Edinburgh-Glasgow rail link and more school-building work.
Also in the pipeline is a new Sick Children’s hospital in Edinburgh, plus building work for the new Glasgow colleges and at schools including James Gillespie’s in Edinburgh and a new high school in Wick in Caithness. Other infrastructure work is likely to include work to bring superfast broadband to much of Scotland.
The infrastructure push is also being pursued by Chancellor George Osborne, who last week announced he too would be pushing more funds into infrastructure south of the Border after talks with major pension funds on investing in the British economy.
However, officials in Scotland say they have a head start on the rest of the UK outside of London, with funded projects now “shovel-ready”.
Much of the work is to be managed by the independent Scottish Futures Trust, which will manage contracts and funding, with cash being sourced from banks and other funds. However, officials insist that the massive profits earned by banks and other lenders through the old Private Finance Initiative will not be replicated this time round.
The government’s so-called “non-profit distributing model” will still offer lenders a rate of return, but the SFT says they will be “regulated”.