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More clarity needed on financing public infrastructure projects

Tuesday January 28th, 2020

A £3.3 billion investment programme in Scotland’s infrastructure has enabled more public buildings and new roads to be built. But the Scottish Government needs to be clearer about how and when they use privately financed contracts.investment_9147687Sml

Models for investing in public infrastructure, such as roads, schools and hospitals, using private finance have been in place since the 1990s, enabling additional infrastructure investment.
In a new report out today, Privately financed infrastructure investment, public sector watchdogs say greater transparency is needed over decision making to show projects represent value for money.
The Scottish Government accepts that using private finance to pay for public buildings is more expensive than other forms of funding but uses this to enable additional infrastructure investment.
Private finance comes at a cost. Over the lifetime of active PFI, NPD and hub contracts, the public sector makes annual payments to cover the cost of financing, building and maintaining the assets, as well as other services the private sector is providing. Currently, assets worth £9 billion are under contract and the Scottish public sector will make payments worth over four times the capital value of the assets built (over £40 billion) with £27 billion still to be paid between now and 2047/48.

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