Capital Budget (Impact of Infrastructure Project Delays)

– in the Scottish Parliament on 3 May 2023.

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Photo of Jackie Baillie Jackie Baillie Labour

2. To ask the Scottish Government what financial assessment has been made of any impact on the capital budget of delays in delivering infrastructure projects. (S6O-02173)

Photo of Shona Robison Shona Robison Scottish National Party

The Scottish Government continuously reviews the impact that factors such as project delays, inflationary pressures and market conditions have on our capital programme in order to ensure that Scotland’s money is being spent in the right places. That is done through the annual budget process, and periodically with our six-monthly reporting on the infrastructure investment plan.

The “Scottish Budget: 2023-24” set out over £6.3 billion of capital spending to support employment and the economy through our large-scale infrastructure plans to move us along the path to net zero carbon emissions and underpin the provision of quality public services.

Photo of Jackie Baillie Jackie Baillie Labour

We know that the cost of infrastructure projects has risen, partly due to inflation, partly due to the availability of materials, and partly due to not having enough construction workers. That will lead to cost overruns and delays. We are already seeing that with the national treatment centres and projects such as the replacement St Brendan’s hospital on Barra, which was promised by Nicola Sturgeon in 2007 and has now been completely cancelled.

Will the cabinet secretary commit to publishing a list of all capital projects, with revised costs and timelines, before the start of the summer recess?

Photo of Shona Robison Shona Robison Scottish National Party

Jackie Baillie is quite right to point to all the pressures that are impacting on capital budgets. She mentioned inflation, labour costs and the cost of materials, all of which are absolutely factors. In addition, we have the combined effects of Covid, Brexit and the war in Ukraine, and the flat and falling capital grant allocation that Scotland has received from the United Kingdom Government. That is all putting pressure on our capital programme.

We will continue to work through the capital projects, many of which—as Jackie Baillie will understand—are at different stages. Many are well advanced and some are at an early stage. We will of course inform Parliament of any major changes to the capital programme.

The Deputy Presiding Officer:

There are a number of brief—I hope—supplementaries. The first is from John Mason.

Photo of John Mason John Mason Scottish National Party

The cabinet secretary mentioned inflation. Can she say anything more about that? It seems that the UK, with 10.1 per cent inflation, has a higher rate of inflation than Italy, at 8.3 per cent; Germany, at 7.2 per cent; and France, at 5.9 per cent. What is different about the UK?

Photo of Shona Robison Shona Robison Scottish National Party

John Mason makes an important point. One of the key differences is the issue of Brexit, which has exacerbated all the global factors. There are also the UK Government’s economic policies, such as the mini-budget to which I referred earlier, which is costing the UK £74 billion. Those issues will impact on our budgets. Building materials were increasingly hard to source last year, and price inflation in the sector peaked at around 25 per cent last summer.

All those issues will impact on our capital budget, but we will ensure, through the difficult choices that we will inevitably have to make, that we prioritise our capital budget according to the clear priorities that have been set out. The prospectus that was launched by the First Minister reiterates what those priorities are.

Photo of Elizabeth Smith Elizabeth Smith Conservative

In relation to Jackie Baillie’s question, is the cabinet secretary aware of concerns that have been raised at the Finance and Public Administration Committee by former ministers and former civil servants that when it comes to financial decision making, financial rules have sometimes been seen as “optional”? I ask that when she looks at infrastructure projects, that matter is also addressed so that we clearly see what the rules are supposed to be.

Photo of Shona Robison Shona Robison Scottish National Party

I look forward to giving evidence, along with the permanent secretary, on matters relating to decision making for ministers and the advice that is given by the civil service.

I do not recognise some of the characterisation in Liz Smith’s comments. In my experience as a minister for more than 15 years, decision making is very robust, not least because the advice that we commission and receive is the best advice available to ministers.

Does that mean that decisions are always correct in light of things that later occur? Of course any Government will face issues when decisions are made on the basis of the best available advice at the time but circumstances change thereafter. I look forward to getting into more of the detail of that at the committee’s evidence session.

Photo of Willie Rennie Willie Rennie Liberal Democrat

Last year, the Auditor General, talking about the late ferries, said that there had been

“A lack of transparent decision making, a lack of project oversight and no clear understanding of what significant sums of public money have achieved.”

This year, the Government has admitted that the bosses were paid big bonuses that the Government had no clue about, and that the crew has been paid £1.6 million for ferries that cannot sail. Has the Government learned a single thing in the past year?

Photo of Shona Robison Shona Robison Scottish National Party

Yes, we have, and ministers have apologised for the delay to the ferries and for the distress and difficulties that have been caused. The delivery of six new major vessels to serve Scotland’s ferry network by 2026 is of course a key priority for the Government.

The issue of bonuses has been gone over in fine detail. I wrote to the Net Zero, Energy and Transport Committee on the latest issue. On remuneration packages, the new chair of Ferguson Marine has been very clear that, going forward, bonuses will not feature in those packages, but those legacy bonuses could unfortunately not be avoided, due to contractual issues.

I am happy to write to Willie Rennie with more detail on the issue of the payment of crew for non-sailing vessels. Transport Scotland continues to work closely with CalMac Ferries, Caledonian Maritime Assets Ltd and Ferguson’s to align the recruitment of crew with vessel deployment plans. If the member wants more information on that, I will make sure that I or the appropriate minister write to him.