SNP comes under fire for £60bn spending ‘wish-list’

THE SNP government’s £60 billion “mega” spending plan designed to revive the flagging economy has been branded a “Christmas wish list”, with doubts emerging over the timing of projects and how costs will be met.

Hours after infrastructure secretary Alex Neil set out his blueprint for new building projects in parliament yesterday, it became clear that many of the schemes had already been announced, while others are not due to be completed for decades.

The plan was dismissed as “economic madness” by opposition parties, and some experts questioned how it would be paid for, with much of the Scottish Government’s blueprint reliant on risky private finance funding schemes.

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The announcement, made while First Minister Alex Salmond was on the other side of the world on a trade mission to China, revealed that less than a quarter of the proposed £60bn Infrastructure Investment Plan – about £12.8bn worth – was grounded in firm spending plans due to be carried out before the next Scottish election. These include £1.6bn for the new Forth road bridge, which should be finished by 2016.

Mr Neil also appeared to step back from reports that the government was ready to build the Scottish leg of a high-speed rail link, which would cut train journey times between Scotland and London.

In all, 80 projects were set out as part of the infrastructure programme, which included proposals to deliver new colleges and hospitals, as well as the next generation of broadband.

Long-awaited plans to completely dual the A9 between Perth to Inverness and the A96 between Aberdeen and Inverness over the next 15 to 20 years are at the heart of the plan. But each of these schemes will cost £3bn – about twice the price of the new Forth bridge – with no proposals in place to fund them.

Professor Jo Armstrong, of Glasgow University’s Centre for Public Policy for Regions (CPPR), said it was “sensible” for the government to explore various funding mechanisms, but she added that many of them would rely on private finance schemes.

“Your guess is as good as mine as to how secure that private finance is going to be, even in the short term let alone of the 20-year time horizon,” she said.

As well as the PFI-style non-profit distributing (NPD) method of funding, the plan also includes tax incremental financing (TIF), the National Housing Trust (NHT), as well as the regulatory asset base (RAB) for rail developments.

“There’s actually quite a lot of different funding streams to tap into,” Prof Armstrong said. “All of them in one way, shape or form are effectively borrowing to be repaid out of different budgets. NPD is a variation of PPP [public-private partnership] but it is about capping the returns to the private sector.”

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Professor Ron McQuaid, director of the Employment Research Institute at Edinburgh Napier University, said the investment in construction could help tackle youth unemployment. But he said of the plan: “It is limited – if we want to get growth, there will have to be large-scale private investment as well.”

He also urged caution over the level of borrowing involved. “You can’t just spend at ridiculous rates in order to get investment today, because we will be paying back in the future when we will be feeling the effects a few years down the line and this may well be with us for a long time,” he said.

Scottish Liberal Democrat leader Willie Rennie said the country was enjoying record low interest rates as part of the UK, but warned this would change under independence.

“Given that government bonds in Greece and Italy have rocketed in costs, this is the biggest uncertainty hanging over every one of the projects listed,” he said. “The projects sound good but there’s no evidence that the finances are soundly thought through.”

Tory transport and housing spokesman Alex Johnstone said many of the schemes were “incredibly important”.

But he added: “It is not sufficient to simply loan the money that is needed. The SNP, like Labour, seem to think that you should borrow your way out of a debt crisis, but this is economic madness.

“With the uncertainty caused by the SNP’s refusal to get on with the referendum, Scotland needs stability if it is to be asked to fund these long-term plans.”

Mr Neil said the plans for high-speed rail would be dependent on action from Westminster, which has set out plans only for a new line between London and Birmingham.

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“We think there should have been a UK-wide plan and we would have been happy to participate in a UK-wide plan to have a high-speed line from London right through to Glasgow and Edinburgh, and do that in one planned project,” he said.

He said clarification would be needed from the UK government on how the gap between Birmingham and the Border would be closed.

No money has yet been set aside for any Scottish part of the line. It is estimated that completing the high-speed link from the north-west of England to Scotland would cost about £15bn, and Scotland would be expected to contribute £8-9bn to the project. Mr Neil said: “We also need to see the colour of the money in London so it wouldn’t be good money after bad.”

He added that the Scottish Government was committed to diverse projects, including the Glasgow-Edinburgh M8 motorway upgrade, the Borders rail link, the completion of the first phase of Edinburgh’s tram line and a new prison, HMP Grampian, all of which are expected to be under way or near completion by the end of the current five-year parliamentary session.

Work on the Aberdeen bypass will also get under way if legal obstacles are overcome.

Labour infrastructure spokesman Lewis Macdonald said key questions needed to be answered, including how much private cash was needed to make them a reality and which government budgets would be “raided” to pay for them.

He added: “This is just a wish list of projects that Alex Neil says some future Scottish government will build. It’s a bit like sending a letter to Santa.

“The SNP has been in power for five years, yet many of the schemes were in previous plans and still the work has not started.”

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Liberal Democrat Scottish Secretary Michael Moore said the investment plan showed the financial provisions in the Scotland Bill, which would devolve more powers north of the Border, had been accepted.

He added: “I hope this will end some of the mixed messages coming from Scottish Government ministers, where they attack the Scotland Bill on the one hand and then start using the new powers it brings.”

The infrastructure investment plan was supported by business leaders.

CBI Scotland director Iain McMillan said: “Many of the capital projects identified in the plan, particularly those relating to transport, such as the dualling of the A9, the A96 and M8 and the Edinburgh-Glasgow rail improvements, are ones CBI Scotland has called for and their inclusion is very positive and will be widely applauded by business. We are also very supportive of the benefits that the other infrastructure projects will bring to the Scottish economy.”