I welcome this opportunity to set out the Government's proposals for the establishment of the Scottish futures trust. In doing so, I wish to set the initiative in the context of Scotland's infrastructure investment needs and the Government's plans to address those needs.
Infrastructure investment is vital for Scotland's economic growth and the provision of excellent public services. In late March, the Government published its infrastructure investment plan, which shows clearly where our priorities for investment lie. The infrastructure investment plan includes investment of £14 billion over the next three years and of more than £35 billion over the next 10 years. Because of the critical contribution that infrastructure investment makes to economic growth, we raised public funding for direct public sector investment over the spending review 2007 period to the highest ever level, despite receiving a very tight budget from the Westminster Parliament.
The infrastructure investment plan highlights the physical assets that are needed to grow the economy and to support high-quality public services. We will work with the public and private sectors to realise our plans. That is why the infrastructure investment plan sets out significant continuing opportunities and why we regard the Scottish futures trust as a high priority that will allow us to do more for our money, put a new focus on sustainability and provide wider benefits for the Scottish economy.
My priority as Scotland's finance minister is to get best value and the best deal for Scottish taxpayers, regardless of whether the investment comes from private or public sources. That is why the SFT is designed to marry the benefits of strong and effective public procurement with the project management and project delivery skills that the market can bring.
As the infrastructure investment plan makes clear, over the next three years there are many, many opportunities for new investment, including opportunities for new private investment in buildings and road projects that amount to more than £3 billion. Although there are many bidding
The Government has brought forward a strong pipeline of projects to invest in the infrastructure of Scotland. Those projects are being implemented throughout our country. Indeed, this morning, the First Minister inaugurated the construction of the M74 completion project, which is one of the many projects that the previous Administration failed to deliver. Reading across sectors, there is a significant volume of projects in the plan, progress on which will be accelerated and enhanced by the introduction of the SFT.
I will now deal with specific sectors. We are delivering on schools. We came into government with a commitment to match the previous Administration's school building programme brick for brick. We are doing exactly that. We have taken the pragmatic decision to support the 19 private finance initiative projects that reached financial close under the previous Administration—it signed the contracts, but we are paying the bills for its decisions. When we came into office, we discovered the shocking reality of the previous Administration's approach. In order to realise those projects, we have had to put in place significant additional funds that were not budgeted for by the previous Administration.
Since May 2007, we have signed off another seven projects that will result in 45 schools being built. Some of those are non-profit distributing projects, covering 14 of the 45 schools. Another four projects, of which three are NPD, are in the pipeline—in time, they will deliver a further 13 schools, nine through NPD projects. Since last May, we have signed off projects with an investment value of some £1 billion.
We have improved projects when the opportunity to do so has existed, as our approach to the NPD model demonstrates. The model has been designed to tackle the unacceptable components of PFI and to deliver better value for the taxpayer. Audit Scotland has vindicated that approach, pointing up the need to reflect on the lessons that can be learned from the past few years of the PFI programme.
The Opposition is interested in numbers, so I will give the Parliament numbers. Some 250 schools will be delivered during the four-year parliamentary session.
An important part of the concordat and our new relationship with local authorities is the new funding settlement, which involves far less ring fencing of funds, thereby allowing local authorities to identify and control their own expenditure on local priorities. The local government settlement includes around £3 billion for infrastructure, including schools. The revenue settlement includes support for the schools PFI projects and has the potential to support prudential schemes.
Many authorities are making schools their investment priority. The infrastructure investment plan sets out authorities' plans, in response to the new opportunities that we have created, to invest in schools infrastructure more than £1 billion from traditional capital sources over the next five years.
In total, almost £2 billion will be invested in new and improved school buildings. That is £2 billion of investment by this Government and our local authority partners in the future learning success of Scottish schoolchildren the length and breadth of the country.
With our local government partners, we are committed to continuing the programme of improvements to the school estate. We recognise the resource requirements and the lead times involved. We said in the infrastructure investment plan that we will take decisions on future resources over the period of the current local government settlement no later than the next spending review.
As for the way ahead, we will move forward on two fronts concurrently. In response to the Audit Scotland report, the Government has already started discussions with the Convention of Scottish Local Authorities and the authorities on how to take forward Audit Scotland's recommendations for a new policy and financial strategy for future school investment. In tandem, the Scottish futures trust will also work closely with the local government sector towards developing new ways of delivering and funding schools and, of course, other infrastructure. As part of that, I shall expect the SFT to look at the significant number of projects that authorities have already identified in the infrastructure investment plan and offer to discuss with them how the trust might help to deliver greater efficiencies and value for money.
I turn to other sectors. Just as we are delivering on schools, we also have ambitious transport plans. Those include upgrading rail connections between Inverness, Aberdeen and the central belt; the Scottish Borders rail project; the expansion of rail services between Edinburgh and Glasgow; and the construction of the M74 extension. We have committed to the replacement Forth crossing as the largest civil engineering project to be tackled in Scotland for more than a century. As we have said before, we will announce to Parliament
The infrastructure investment plan sets out a continuing strong programme of investment in the Scottish health service. We have reviewed and revised the previous Administration's investment strategy, as announced by the Deputy First Minister earlier this month. The debate about plans for acute hospitals in the central belt has been resolved quickly. The Glasgow Southern development, which is the largest health project ever in Scotland, is proceeding with a capital value of around £800 million, and it is proceeding as an investment in the public sector.
We have recognised the importance of education facilities and skills development in the infrastructure investment plan. The educated and skilled Scottish workforce, supported by the sustained strengths of the Scottish education system, is acknowledged internationally, and its infrastructure is a vital part of our economic strategy.
Let me now explain why we have moved on from the PFI model. The PFI model, used on a project-by-project basis, does not represent best value for the taxpayer. Excessive profits have been made, with huge returns for small investments based on projects that supposedly carried significant risk that did not materialise. The ability to sell on investments after an early period of construction risk has passed and then make huge returns demonstrates that windfall gains have been made. In addition, during the lifetime of this parliamentary session, the unitary charge payment for such profits will have risen from £500 million each year to nearly £800 million each year—an increase of 60 per cent when our budget is increasing by 1.4 per cent each year in real terms. That demonstrates that the previous Government's credit card spree is now creating a real financial squeeze on Scotland's budget.
For those reasons, the Government believes that we must take a different course. Obviously, under current devolved powers, the UK borrowing regime constrains the Scottish Government. However, investment and borrowing levels that are set in relation to the UK as a whole are not designed for Scotland's economic circumstances. Therefore, a Government priority will be to maximise the value that we deliver from our investment plan. That is why we believe that the Scottish futures trust is a more appropriate method of going forward than the previous Administration's reliance on the expensive PFI model.
Last week, I announced the setting up this summer of the Scottish futures trust as a delivery vehicle to take forward key SFT work streams. The SFT will provide opportunities for better value investment in Scotland's vital public service
The SFT is different from and better than PFI in three ways. First, it will have at its core the non-profit distributing model of finance. The NPD model takes out the equity gains that have meant excessive profits in the PFI model. NPD employs a capped form of investment return, which allows surpluses to return to the public sector for reinvestment in the wider public infrastructure of Scotland. The NPD model offers the public sector a share of refinancing gains on all levels of debt, which PFI does not, and it offers a board membership for the delivery company that is better suited to the partnership ethos that underpins such a form of delivery and funding.
Secondly, the SFT will become a centre of excellence, providing a level of expertise in the development of projects and the negotiation of contracts that is not available to many smaller public bodies and local authorities. It will therefore deal with bidders on a more equal footing and be in a position to deliver more competitive and realistic deals. Such central expertise is provided by other nations, but there has been a shortcoming in that regard in the arrangements in Scotland. An important consequence of the new approach will be swifter project planning and delivery, which will save money because the high construction inflation costs that result from delays in project development will be avoided.
Thirdly, pooling projects will lead to efficiencies in terms of delivery, risk and finance, which will result in savings.
The early activity of the SFT will maximise value for the public sector by establishing the key strengths that deliver better-quality and more consistent assurance of infrastructure investment. The SFT will deliver new health facilities in our communities through the hub pathfinders. It will improve the delivery and funding of schools, housing, waste facilities and flood defences by working in partnership across the public sector to develop the right national strategies. It will ensure better value finance by providing guidance, structure and compliance for on-going NPD programmes. It will commence development and delivery of a Scotland-wide local authority bond issue, and it will undertake further, detailed development of innovative asset provision models.
The SFT will provide a national focus on our infrastructure requirements and plans and promote strategic and aggregated solutions on funding and delivery mechanisms. There will be close dialogue with public and private sector interests during the next year as the SFT sets about its work.
Aggregation is not just important to infrastructure investment; public bodies in Scotland are joining up in all sorts of ways to deliver services more effectively. For example, in local government the Improvement Service, which is backed by Scottish Government funding, is developing services that are shared between authorities. The McClelland review of public procurement in Scotland recommended the establishment of procurement centres of expertise, and that recommendation is being taken forward.
The Scottish futures trust is about securing not only less expensive funding but a new approach to the organisation and packaging of infrastructure investment opportunities in Scotland. Instead of the market having to respond to a large number of individual projects that have been procured by many public organisations, the SFT will operate at a higher level of aggregation, as well as being involved in single projects.
I expect the whole of the public sector and the private sector to work together on those important issues as we move forward with the Scottish futures trust and the £35 billion of infrastructure investment that is set out in our infrastructure investment plan. The Government has made clear its intention to pursue an ambitious programme of capital investment—investment that is taking place right now, right here in Scotland. The Scottish futures trust has a key role to perform in developing that programme of investment and I look forward to it delivering value to the taxpayers of Scotland.
I thank the cabinet secretary for the copy of his statement.
Oh dear, oh dear. What a wobbly Wednesday the Scottish National Party is having. Their plans for a local income tax are falling apart at the seams, as are their pledges on class sizes and the Scottish futures trust. After two years, what do we have? We have a shambles at the heart of Government, a cabinet secretary who should hang his head in shame, a financial sector that has ridiculed the Government's plans and a construction industry that is unwilling to support those plans. Massive costs are being added to the cost of public infrastructure such as schools and
"hard to spot the difference between the outgoing scheme"— in other words, the public-private partnership—
"and plans for a Scottish Futures Trust", or does he think that John Penman is just as daft as he thinks the rest of us are? Does the cabinet secretary not agree that all that he has achieved is a change of name? Surely going from PPP to the Scottish futures trust is just like going from Windscale to Sellafield, Marathon to Snickers and independence to separation lite, or swapping one credit card for another.
In a policy document in August 2006, the SNP said that the new Forth crossing would be supported by a bond issue. On "Newsnight Scotland" last Tuesday, the cabinet secretary said that the crossing would be supported by a bond issue. Why then, in his evidence to the Finance Committee yesterday, did he say that it would not be prudent to reveal how the crossing would be funded? Does that new-found prudence mask the fact that he has not done his homework, or—as I suspect—is he making it up as he goes along?
Given his party's name change from Labour to new Labour, Mr Kerr is an example of someone in a glasshouse who should not be throwing stones, particularly around the Parliament. Who knows? In years to come, we might even see the party change its name back to Labour to try to resurrect its dormant fortunes.
On even a modest piece of arithmetic, my impression is that the Government has been in office for one year, and not the two years that Mr Kerr cited.
On "Newsnight Scotland" last week, I did not say that the replacement Forth crossing would be paid for by a local authority bond. I said no such thing, but the interview has been the subject of Mr Kerr's manipulation and misrepresentation for seven continuous days.
I have the entire transcript in front of me—Mr Kerr should not worry about that. The transcript shows that I said what we have
We have always said that we will set out this year how the replacement Forth crossing will be supported, paid for and developed. I say to Mr Kerr that there is nothing in the transcript that contradicts in any way anything that I have said on the subject. Instead of misrepresenting people's positions, he should return to the facts of the matter.
We do not care what it is called; we welcome the pragmatic acceptance of the role of the private sector in public services, even if that is not welcomed by all those on the Government's side of the chamber.
The cabinet secretary said that he was out to get the best deal for Scottish taxpayers. We all would agree with that. Whichever of the 14 options for the Scottish futures trust that the Government set out in the most recent document it chooses, can he guarantee that the cost to the public purse over the lifetime of whatever asset is procured will always be lower than it would be under any of the alternatives that are currently available?
That is the direction of the Government's proposals and that is exactly what we intend to deliver. Indeed, it is at the heart of why we are doing this. We cannot continue to travel along the trajectory that the previous Administration set of increasing unitary charge payments. We are having to wrestle with charges that the previous Administration inflicted on us by its spending on and investment in PFI contracts.
Mr Brownlee talks of the possible options for the Scottish futures trust. He is, of course, aware of the enormous challenges that face the advocates of PFI, given the changes to the accountancy rules that the United Kingdom Government will introduce in 2009-10. Under those changes, all PFI schemes will have to come on balance sheet, thereby becoming a direct burden on the public purse. The changes will compromise the ability of those who argue for PFI projects to sustain that argument in the period ahead.
The Government's initiative demonstrates sound and prudent planning for what lies ahead as a result of the changes to the accountancy rules, which will be inflicted on us by the United Kingdom. The Government is planning to deliver the value for taxpayers that will see us through that challenge.
I thank the cabinet secretary for the advance copy of his statement. I enjoyed it a good deal more than I did
After a year of effort, the announcement finally admits that the main SNP promise is not possible, which the cabinet secretary must have known, from his detailed understanding of the Scotland Act 1998, when he first made the promise. I dispute Andy Kerr's assertion: the only thing about the Scottish futures trust that the Government has not changed is its name.
Five months ago, the cabinet secretary made a statement to Parliament committing the Government to a new Forth crossing at a cost of between £3.25 billion and £4.22 billion. He said that the Government would
"move forward on the legislative and procurement options for delivery" and that the work would
"include consideration of the appropriate transfer of risk to the private sector, in line with current Government policy on the development of the Scottish futures trust."—[Official Report, 19 December 2007; c 4552-3.]
In 2007, in "Let Scotland Flourish: An economic growth strategy for Scottish success", John Swinney promised, along with Mr Mather, that
Yesterday, the cabinet secretary stated to the Finance Committee that the Government's much-vaunted Scottish futures trust model would not be appropriate for the Forth crossing. Has the cabinet secretary got a clue where he will find the £4 billion that he needs and has he already decided that PPP is not so bad after all?
The position that I set out to the Finance Committee yesterday is exactly the position that I set out in Parliament some months ago and exactly the position that was set out in the interview that I gave to "Newsnight", which is that the Government will set out to Parliament its procurement approach to the Forth replacement crossing in due time, after evaluation of all the options, and in this calendar year. That is exactly what we are working to do and it is what we promised to do. Mr McArthur is always whining on about us not delivering our promises. We promised that we would deliver that and that is exactly what we will do.
We come to questions from back-bench members. I emphasise the word "questions". We do not have time for preambles and there should certainly not be speeches. That way, I will be able to get everybody in. I repeat that I have no leeway to take time out of the next debate.
The cabinet secretary will be aware that SNP-controlled Falkirk Council led the way in developing the non-profit-distributing model. This week, the council confirmed to me that at no time did it receive any support whatever from the previous Administration in making progress with the proposal.
Does the cabinet secretary agree that one legacy of PFI under the previous Administration is that communities often cannot afford to access the community facilities in new local schools? How will the cabinet secretary ensure that, under the new NPD model, facilities are available to communities at an affordable price that is similar to the price that their local authorities charge for their facilities?
My recollection of the experience in Falkirk, from observing the debate at the time, is that the previous Administration put obstacle upon obstacle in the way of Falkirk Council when it tried to innovate and to protect local communities' interests.
Mr Matheson makes a strong point about access to community facilities. What on Earth is the point of modern community facilities being outwith the financial reach of local organisations or not observing the protocols of access? The composition of the board of the delivery vehicles in the NPD model provides much wider ability to take into account the public interest, expressed through the independent directors on the board. As a consequence, I am optimistic that access to facilities for local community organisations will be much enhanced by the development of an initiative which, at its very heart, has the importance of protecting and promoting the community interest—a feature that was singularly absent from PFI.
The cabinet secretary's statement contained little mention of the idea of local authority bonds. However, when the business case was launched, that idea seemed to be central. Local authorities have had the power to issue bonds since 1975, but none has chosen to do so. If no council has chosen that route to build infrastructure for which it is responsible, why on Earth does the cabinet secretary believe that councils will choose that route to build national infrastructure for which he is responsible?
I rehearsed this point at the Finance Committee yesterday: we want to use the Scottish futures trust to bring together local authorities' interests in order to support a Scotland-wide municipal bond. The advantage of our approach is that we are providing support, advice, expertise and motivation in order to bring local authorities together to support the
The facility is made available by schedule 3 of the Local Government (Scotland) Act 1975, and we should encourage local authorities to use their borrowing powers in that way. In the present financial climate, in which there is great uncertainty in financial markets, it is important to remember the greater certainty that municipal bonds can offer. Support for public infrastructure is a very attractive proposition for the marketplace, and one which the Scottish futures trust will support.
Under the Scottish futures trust, will there be no repetition of the extortionate profits that were made under Labour's PFI? At Hairmyres hospital, in return for £100 equity, dividends of £89 million were paid out. There was also extortionate profit on refinancing. Will the cabinet secretary guarantee that, under the Scottish futures trust, we will never see a repeat of that daylight robbery of the taxpayer? [ Interruption. ]
The volume of Andy Kerr's sedentary protestations at any mention of the PFI projects that he sanctioned suggests that he is a guilty man. Accusations are being bandied around by Mr Kerr, which suggests to me that he is somebody who feels rather guilty about the decisions that he took when he was a minister in office. [ Interruption. ]
Under the Scottish futures trust, the Government is advancing a set of initiatives as part of the NPD model. Those initiatives clearly put in place constraints to guard against the excessive profits that were realised under PFI schemes. The constraints will be at different levels. In particular, there will be constraints on the secondary market, in which there has existed an ability to trade on individual projects and make significant returns. The Government is taking action to ensure that the excessive profits that were made under PFI will not be realised in the future.
Cabinet secretary, you may find that it was not actually Mr Kerr who signed off Hairmyres. Perhaps you will want to revise and check your facts before going any further along that particular road.
You have also stated this afternoon that you
"have no doubt that the package of investment opportunities that is available in Scotland is attractive and competitive."
How do you address the concern that has been expressed by the assistant director of the Confederation of British Industry Scotland, that the more business thinks that the Scottish Government is hostile to delivering public services, the less likely it will be that investment and jobs will come to Scotland; and the warning from contractors that was reported in The Sunday Times last weekend, that Scotland could face an exodus of business and talent if your plans for SFT go ahead?
I did not accuse Andy Kerr of taking the decision on the Hairmyres hospital; what I accused Andy Kerr of doing was taking decisions in relation to various PFI contracts. He has a formidable track record in taking those decisions.
On her point about the view of the business community, I gently remind Elaine Murray of the survey that was undertaken a few weeks ago about the general attitude of the business community in Scotland to this Administration. That survey indicated that the business community recognises that this Government is connected to its concerns and that it is taking decisions to put the business community at a competitive advantage. At yesterday's Finance Committee, Dr Murray was trying to persuade me of the merits of signing up to unleashing another generation of excessive profits out of PFI contracts. I will not sign up to that.
Of course there will be a unitary charge under the NPD model, but the crucial difference will be that the cost to the public purse will be much less than the exorbitant PFI unitary payment charges that the public purse is currently having to carry. That crucial difference will deliver value for money to Scottish taxpayers.
The cabinet secretary and Mr Matheson have lauded the Falkirk schools project that was started under the previous Administration. With regard to that not-for-profit NPD scheme, the answer that was given to me on
"Scottish Government revenue support for the Falkirk schools project will average £5 million per year for the 30 year duration of the PPP contract."—[Official Report, Written Answers, 21 May 2008; S3W-12863.]
Will the cabinet secretary confirm that answer?
Yesterday, the cabinet secretary said that PPP and NPD are members of the same family. Will revenue support grants that have been made available for the Aberdeen schools project and the Falkirk schools project be available for other NPD schools projects?
Subject to the approval of projects in the normal fashion, the revenue support payments will be made available. That is not a carte blanche for every project: each project has to be assessed in order that a judgment can be arrived at, so Mr Purvis cannot expect me to give any answer to that question. If we have made a commitment to a particular project, we will honour that commitment, but each project has to be assessed on its merits. If Mr Purvis has been given a parliamentary answer by another minister, I confirm the contents of that parliamentary answer.
The cabinet secretary has mentioned the new accountancy standards that are being introduced by Westminster. Does he agree that Scotland is now, with the development of the Scottish futures trust, ahead of the curve in finding a solution to the problems that were posed by the introduction of international financial reporting standards?
The IFRS will be a major challenge for the various elements of the United Kingdom Government in relation to PFI projects. We have introduced our initiative with a view to the implications of the IFRS changes, which will have the consequence of putting on balance sheet all the PFI projects that are currently off balance sheet. We await guidance from the Treasury about how that will be handled with regard to the budget arrangements. However, the IFRS is a given and we have to take decisions accordingly to ensure that we are properly equipped to handle it.
I thank the cabinet secretary for his statement and for a not-so-subtle rewriting of history on the Scottish futures trust.
Will the cabinet secretary inform Parliament what share of refinancing gains on levels of debt from recent PPP models are—or were—available to the public sector?
"the type of project that could be taken forward under the auspices of this model".
Will the real John Swinney stand up?
"could for example build a new Forth Bridge using this."
I interpreted the word "this" as referring to the Scottish futures trust. If the Presiding Officer will indulge me, I will read the complete answer to Mr McAveety for the record. I said:
"Well there's every possibility that that could be done. But what we—on the Forth Road Bridge replacement crossing for example—we'll set out the procurement and funding operation and approach that we take to that specifically during this year, but of course that's the type of project that could be taken forward under the auspices of this model. There's already schools being built under this model"— that is, the NPD model—and that we
"have health projects coming forward in this model, we'll have transport projects coming forward in this model"— the NPD model—
"so there is a very reliable way to invest in the capital infrastructure and investment of Scotland as a result."
I suggest that that puts Mr McAveety's gas at a peep.
I thank the cabinet secretary for an advance copy of his statement. Although some people are inclined to a generous interpretation of the facts, will not many of them have expected something more radical from the Government than a close family member of PPP? Will the cabinet secretary tell us what proportion of capital investment over the period of the investment programme will be funded conventionally? If he is not able to tell us now, will he calculate the figure or proportion and publish it as soon as possible?
Mr Harvie will know from the infrastructure investment plan and the capital programme that I have set out in the spending review for three years that, in that programme, we are spending in excess of £3 billion through conventional procurement, so the overwhelming majority of the programme will be undertaken under conventional funding models. With the Scottish futures trust, we are seeking to leverage out the maximum amount of value for the Scottish taxpayer. I would have thought that that concept would have been warmly welcomed across Parliament.
Will the cabinet secretary help me to interpret his statement? It says that the Scottish futures trust will bring together the expertise to
"provide a Scotland-wide municipal bond to fund future infrastructure projects."
Is that wishful thinking or weasel words? It does not say that the Scottish futures trust will provide the municipal bond; it says that it will provide the expertise—in other words, the know-how. Will he confirm that for me?
The cabinet secretary said that schools projects such as those in Aberdeen and Falkirk will be considered on their merits. Will he give an undertaking to consider the merits of the case that the City of Edinburgh Council has made, which is not about how the schools are to be funded but about where it will get the money to fund them?
I have said that the Scottish futures trust will provide the expertise to bring local authorities together to launch a Scotland-wide municipal bond. Clearly, the power to issue bonds under the Local Government (Scotland) Act 1975 is held by local authorities. The Scottish futures trust would—as I explained in one of my earlier answers—essentially bring different parties together to support such a concept, but the legal authority to issue bonds lies with local authorities.
Margo MacDonald will be familiar with the decisions that have been arrived at on local authorities' revenue and capital budgets for the duration of the spending review. As a consequence of those decisions, the City of Edinburgh Council is aware of the resources that it has at its disposal. We have continuing discussions with many local authorities about their capital investment plans and how they wish to deploy them.
Will the cabinet secretary tell Parliament precisely what new powers, as indicated in the document, "Taking forward the Scottish Futures Trust"—the least convincing public finance document that I have read in 25 years as an elected member, and one that was clearly not written by civil servants—and in his statement, are being given to local authorities and others that they do not already have to raise finance for capital spending? Secondly, what restrictions, if any, are being removed from current borrowing restrictions?
No new powers are being given to local authorities. We are encouraging local authorities to co-operate in exercising the powers that they hold under the Local Government (Scotland) Act 1975. In relation to the question of wider borrowing by local authorities, the decisions on borrowing levels at local authority level are clearly driven by the affordability and sustainability of the commitments that local authorities enter into. That is a matter for those authorities. The Government provides information and borrowing support to local authorities as part of the normal
The public purse in Scotland is clearly carrying a growing burden of commitment. I have highlighted the fact that during the current session of Parliament alone, the cost of the unitary payments will have gone from £500 million when we came to office to £787 million at the end of the session. At a time when our budget is on average increasing by 1.4 per cent in real terms over the three years, and the total increase in payments is of the order of 60 per cent, we are clearly wrestling with a significant squeeze on Scotland's public expenditure. That will obviously have an effect on the ability of local authorities to take on other commitments.
Will the cabinet secretary give an estimate of the grant support that he will provide to authorities that propose projects using his proposed non-profit-distributing model, to help meet the revenue costs that are associated with those projects? Will he encourage local authorities to compare their net costs in revenue terms with other procurement methods, including PPP? Where will responsibility lie for any additional overheads, slower decision-making or other costs that arise as a result of the use of that preferred method?
As a keen follower of local government finance, Mr McNulty will be aware that the Government has put in place a 13 per cent increase in the capital budgets of local authorities. We have given them a settlement that commands or creates a rising share of the total Scottish block for local authorities. That is the nature of the financial support that the Government is making available.
It is for local authorities to determine which procurement route they wish to follow. The Government offers these proposals to local authorities to encourage their participation in a more efficient and cheaper form of investment in the capital estate. We will hold further discussions with local authorities to ensure that our vigorous capital programme is sustained and developed in the years to come.