LABOUR has called for an investigation after it emerged that the private sector is set to be handed more control of public building projects worth billions of pounds, potentially saddling Scottish taxpayers with increased debt.
The Herald revealed in February that an EU rule change meant projects to build new schools, roads, hospitals and health centres partially with private sector cash may have to be reclassified as public sector projects.
If they were deemed public projects, the schemes, many of which have already been delayed, would have remained on the Scottish Government's books, meaning it would have had to set aside hundreds of millions of pounds while building work was ongoing.
A internal Scottish Futures Trust document leaked to The Guardian reveals that the private sector is set to be handed more control of non-profit distributing model (NPD) projects, the SNP's alternative to Private Finance Initiative, as a way of getting around the EU ruling.
It means that private sector lenders and contractors will pay all upfront building and project costs, which is then added to long-term debt to be paid from the public purse over decades. A 20 per cent stake in each affected project, currently held by the public sector, would be transferred to a new private sector charity. It means that potentially, the public sector will be left with a stake of just 20 per cent, compared to 40 per cent currently, in the vital projects.
The internal Scottish Futures Trust document states: "Any perception of public sector control over the [project] delivery company must be avoided … Public-sector financing of projects [through debt or capital financing] must be limited in order to maintain clarity of risk-transfer to the private sector delivery partner.
"The complete removal of any capital contribution to projects through the construction phase, or on construction completion, is the cleanest approach and will be adopted across the programme."
Labour's finance spokeswoman Jackie Baillie has written to the Auditor General for Scotland, Caroline Gardiner, calling for an urgent investigation.
She said: "The utter hypocrisy of the SNP has been exposed. Having scrapped the old system because they claimed it handed too much to the private sector the SNP have replaced it with something that means even more money and influence is given to the private sector.
"The SNP Government tell anybody who will listen that only they can protect our public services from the hands of private companies yet here we find they are handing over an increasing share of our public estate to the private sector. Yet again with the SNP they say one thing in public and another in private.
"Audit Scotland must urgently investigate just what has gone wrong on the SNP Government's watch. Of course there should be private sector involvement so we can build schools and hospitals, but with the SNP’s approach future generations will be saddled with crippling debts. Under the SNP Scotland will be facing Wonga levels of debt for years to come."
The diktat from Brussels, issued last September, has caused a long-term headache for the Scottish Government and the Scottish Futures Trust, which delivers the NPD projects. A senior Scottish Government source admitted to the Herald six months ago that the private sector could end up with more involvement and control over the projects as a result of the overhaul.
Finance Secretary John Swinney was forced to set aside £150 million from Scottish Government coffers and secure a £300 million UK Treasury loan to ensure that Edinburgh's new Sick Kids Hospital and the Dumfries and Galloway Royal Infirmary, could be signed off.
Other projects affected include new high schools in Kelso, Dundee, Forfar, Dalkeith and Angus and health centres in Lothian and Inverclyde.
A Scottish Government spokeswoman said: "We fully expect these signed projects to be delivered on time and on budget, regardless of their national statistical classification.
"Following the revised European accounting guidance, the ONS has been reviewing the balance of public and private sector investment in some key infrastructure projects – including the AWPR [Aberdeen western peripheral route] and two new hospitals.
"At key stages in this process the Deputy First Minister has updated Parliament – both in the chamber and to the Finance Committee – and as soon as the ONS publish their report, the DFM will immediately update Parliament about any potential implications."
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