Clarity call over trust fund plan

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Questions have been raised over how the Scottish Government's policy for building major public projects, such as schools and hospitals, would work.

Several experts and organisations involved in the sector said more clarification over the Scottish Futures Trust was needed.

Ministers said it would cost less than PFI deals with private companies.

The government, which will announce further details of the trust this week, said work was "progressing well".

It claimed the trust would release up to £150m each year and improve on current PFI/PPP schemes, which were having to make "horrendous" repayments.

It is intended to be a not-for-profit system of accessing funds which, in the long-term, would generate low-interest loans, probably funded by issuing local authority bonds.

Reducing private sector profit appears to be a more important policy objective then reducing the cost of infrastructure to the public sector Andrew GordonCanmore Partnership

But Michael Watson, a partner in the legal firm McGrigors, told the Scottish Parliament's finance committee, which is looking into the issue, he was unsure if such bonds would allow different councils to work together to raise cash for a single, large-scale project.

And Ian Wall, former chief executive of the development and investment company, the EDI Group, said local authority bond financing would not raise finance any cheaper.

The Canmore partnership, which promotes public infrastructure projects across the UK, said the current not-for-profit model was still "not generally accepted" by the market.

The organisation's chief executive, Andrew Gordon, stated in a submission to the committee that the government had prohibited bidders offering PFI alternatives to not-for-profit bids, regardless of whether they offered better value for money.

He added: "This leads us to conclude that reducing private sector profit appears to be a more important policy objective then reducing the cost of infrastructure to the public sector."

'Innovative funding'

The prospect of recycling extra cash for further investment was welcomed by Glasgow City Council, but the authority added that the current consultation document on the trust raised important issues, "with the basic query of the how the Scottish Futures Trust will actually work".

More critical was public sector union Unison, which claimed ministers had failed to provide evidence on how the trust was different to PPP/PFI, in terms of cost to the public purse.

The union added that the Scottish Futures Trust would also result in the creation of a new, un-needed quango, employing "staff on fabulous salaries".

A Scottish Government spokesman said the Scottish Futures Trust company was due to be set up shortly to develop "innovative funding models" for delivering new infrastructure projects and boost the economy.