SNP ministers have been forced back to the drawing board over a series of key infrastructure projects after it emerged that contracts have fallen foul of EU rules.
The Office of National Statistics (ONS) has ruled that The Aberdeen Western Peripheral Route (AWPR) road scheme, delivered through the Scottish Government's alternative to PFI using private sector cash, should be classified as a public project due to high levels of ministerial control.
It means agreements for the project, and potentially a series of others to build hospitals, health centres and schools already in the pipeline, will have to redrawn to keep them off the public balance sheet. The ONS is also reviewing deals to build the new Dumfries and Galloway Royal Infirmary and the Edinburgh Royal Hospital for Sick Children.
A series of projects have faced ongoing delays since the issue emerged in February. A leaked report this week revealed that the private sector was set to be handed significantly more power in the schemes to address the issue, potentially leading to increased debts for the taxpayer.
John Swinney, the deputy First Minister, is expected to give MSPs a full update on the issues once Holyrood returns from its summer break later this month.
He said: "This decision published by ONS means we need to give further consideration to the contractual arrangements that apply to the AWPR, with a view to securing a private sector classification.
"I have instructed Scottish Futures Trust to engage with ONS and other parties to clarify the detailed points of interpretation that have underpinned the decision and their potential implications."
Labour's shadow finance secretary Jackie Baillie described the ruling as a "hammer blow" to the SNP's investment strategy.
She said: "The fact that this flagship project doesn’t meet EU requirements has huge implications for how we finance the building of roads, schools and hospitals.
"On the one hand John Swinney says this has no impact on the budget or timetable for the Aberdeen bypass project, yet on the other hand he says there will need to be a renegotiation of the contract. It doesn't add up."
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