Swinney asks to
pay Forth bridge loan over 20
years
See also
£300m rail link ‘offers poor value for money’
Line is to run between Edinburgh and Tweedbank
Michael Settle - Herald Scotland - 27th June 2010
Calls are
growing for the biggest rail project in Scotland to be
urgently revised after a report said the economic benefits of the
scheme had diminished significantly.
Business groups, politicians and transport experts reacted after The Herald learned that the benefit-to-cost ratio of the £300 million Borders railway scheme had slipped over the past three years as estimates for housebuilding in the Borders and passenger forecasts on the 35-mile route had been revised downwards.
Transport Scotland, the Government agency overseeing construction of the line from Edinburgh to Tweedbank, due for completion by 2014, said the line would deliver a 20% return on investment – far lower than the 100% rate previously considered good value for money by the Department for Transport.
The findings prompted accusations that the Scottish Government was in danger of passing on a white elephant to generations of taxpayers.
The Conservatives accused the Scottish Government of not facing up to its responsibility to restrain public spending, and of giving the project’s Liberal Democrat proponents ammunition ahead of next year’s Scottish Parliament elections.
Jackson Carlaw MSP, the Tories’ transport spokesman in Scotland, said: “I do think that all projects have to be examined in the light of the considerable financial pressure that is going to be put on Government spending. We should look very carefully at this to see if it should continue.”
Although officials estimate the construction costs of building the route could be up to £295m, as it is being financed and built by a consortium of private companies, the real cost to taxpayers is likely to be several times higher as repayments are made over the next 33 years.
A survey of Borders residents, conducted by John Lamont, Tory MSP for Roxburgh and Berwickshire, had revealed widespread indifference to the project, Carlaw said.
Labour, which has backed the project, demanded that more details on its business case be given to the Scottish Parliament. Charlie Gordon MSP, Labour’s transport spokesman for Scotland, said: “I’m concerned that these changed circumstances have not been reported to Parliament. It is important that all projects of this nature have a sound business case.”
Business groups claimed committing to the project could jeopardise other major investments planned over the next 30 years, including a £70m upgrade of Glasgow’s Subway.
Garry Clark, head of policy at the Scottish Chambers of Commerce, said: “When you ask businesses what their priorities for transport are, the Borders railway is rarely mentioned as a priority – and that’s true of businesses in the Borders as well.”
Plans to reconnect the Borders to the UK rail network for the first time in nearly half a century were passed by the Scottish Parliament in 2006 under pressure from Liberal Democrat MSPs and the Scottish Borders Council.
However, a due diligence exercise carried out by Transport Scotland when it took over the project in 2007 found that estimates for house building in the Borders and passenger forecasts had been wildly overestimated.
The agency has so far steadfastly refused to publish its revised business case, claiming that such information is commercially confidential.
A spokesman for the organisation said the benefit-to-cost ratio (BCR) had slipped from between 1.55 and 1.75 to 1.2 over the next 60 years once land factors and a technical design review had been taken into account.
He added: “As stated in Parliament, the due diligence report was commissioned to assist with understanding the scheme prior to Transport Scotland taking up the role of authorised undertaker and was based on the project as it was at that time. The outline business case was examined further when Transport Scotland took over the role, taking into account additional elements.”
Stephen Glaister, professor of transport and infrastructure at Imperial College London and head of the RAC Foundation, said it was vital that governments north and south of the Border assessed the economic benefits that major schemes deliver.
“The simple point is that when governments make decisions like this they have to consider what alternatives could be funded, what else the money could be spent on,” he said. “A BCR of 1.2 isn’t very good.”
The Herald contacted Jeremy Purvis, the LibDem MSP for Tweeddale, Ettrick and Lauderdale, as well as his Westminster party colleague Michael Moore MP, who is now Secretary of State for Scotland, but neither was available for comment.
Swinney asks to pay Forth bridge loan over 20 years
Hamish Macdonell - Scotland on Sunday - 27th June 2010
John
Swinney, the Finance Secretary, is to renew appeals to the UK
Government for help in funding the new £2 billion replacement Forth
Road Bridge.
Swinney has written to George Osborne, the Chancellor, to ask for permission to extend the payment schedule for the bridge over 20 years so that other major projects can be funded as well.
The Finance Secretary approached the Treasury with exactly the same request two years ago but was turned down by the then Labour government.
However, now that a new Westminster government is in place which has promised to adopt an attitude of "respect" towards the devolved administrations, Swinney hopes his request will be treated more favourably.
Swinney has been invited to "provide input" into the UK comprehensive spending review process, which will conclude in the autumn.
SNP ministers were never invited to help draw up spending plans when Labour was in power and Scottish Government ministers hope this latest offer from the Treasury signals the start of more fruitful dialogue between the administrations.
As part of that process, Swinney intends to raise the issue of the replacement Forth Road Bridge with Treasury ministers. He has already written to Osborne, flagging up the problems the Scottish Government will face in trying to pay for such a massive project over just six years, as currently envisaged.
In his letter to the new Conservative Chancellor, Swinney described the new bridge as a "critical element" in Scotland's economic infrastructure and said he wanted to work with the Treasury to find a "sustainable option" to fund it.
Swinney said: "Under current funding arrangements this project would have to be fully funded in the next two Spending Review periods, when capital budgets are expected to be particularly tight. There is, therefore, an urgent and powerful case for according the Scottish Government greater financial flexibility to help meet the challenge of funding this large, unavoidable, once-in-a-generation investment.
"Such arrangements could involve enabling the Scottish Government to draw capital spending forward from or defer it to future Spending Review periods. Alternatively, if the Scottish Government gained borrowing powers, we could achieve the same objective of smoothing over time the very large cash flows associated with the Forth Replacement Crossing."
Construction work on the new Forth Road Bridge is expected to begin in the next year and finish in 2016. If it is funded conventionally, by the Scottish Government, Swinney would have to find the £2bn necessary from the budgets of the next six years – taking a sizeable chunk for each one.
Even without the budget squeeze coming from London, that would inevitably have meant cuts and cancellations for other transport projects.
But, with the Scottish block grant likely to be cut by £1.5bn next year and by similar amounts for the next few years, Swinney will have to squeeze other departmental budgets to an even greater degree than previously forecast to cover the cost of the new bridge.
Swinney's preferred option is to get permission to extend payments for the bridge over the next 20 years.
A spokesman for the Scottish Government insisted yesterday that the construction timetable would be adhered to but it would be much easier if the financial strain was eased over a number of years.
See also:
Borders rail link rolls into trouble
Train to Borders is delayed – again
Corrosion in Forth bridge cables not as bad as feared, say engineers
Some Scottish Bridges
See also
£300m rail link ‘offers poor value for money’
Line is to run between Edinburgh and Tweedbank
Michael Settle - Herald Scotland - 27th June 2010
Calls are
growing for the biggest rail project in Scotland to be
urgently revised after a report said the economic benefits of the
scheme had diminished significantly.Business groups, politicians and transport experts reacted after The Herald learned that the benefit-to-cost ratio of the £300 million Borders railway scheme had slipped over the past three years as estimates for housebuilding in the Borders and passenger forecasts on the 35-mile route had been revised downwards.
Transport Scotland, the Government agency overseeing construction of the line from Edinburgh to Tweedbank, due for completion by 2014, said the line would deliver a 20% return on investment – far lower than the 100% rate previously considered good value for money by the Department for Transport.
The findings prompted accusations that the Scottish Government was in danger of passing on a white elephant to generations of taxpayers.
The Conservatives accused the Scottish Government of not facing up to its responsibility to restrain public spending, and of giving the project’s Liberal Democrat proponents ammunition ahead of next year’s Scottish Parliament elections.
Jackson Carlaw MSP, the Tories’ transport spokesman in Scotland, said: “I do think that all projects have to be examined in the light of the considerable financial pressure that is going to be put on Government spending. We should look very carefully at this to see if it should continue.”
Although officials estimate the construction costs of building the route could be up to £295m, as it is being financed and built by a consortium of private companies, the real cost to taxpayers is likely to be several times higher as repayments are made over the next 33 years.
A survey of Borders residents, conducted by John Lamont, Tory MSP for Roxburgh and Berwickshire, had revealed widespread indifference to the project, Carlaw said.
Labour, which has backed the project, demanded that more details on its business case be given to the Scottish Parliament. Charlie Gordon MSP, Labour’s transport spokesman for Scotland, said: “I’m concerned that these changed circumstances have not been reported to Parliament. It is important that all projects of this nature have a sound business case.”
Business groups claimed committing to the project could jeopardise other major investments planned over the next 30 years, including a £70m upgrade of Glasgow’s Subway.
Garry Clark, head of policy at the Scottish Chambers of Commerce, said: “When you ask businesses what their priorities for transport are, the Borders railway is rarely mentioned as a priority – and that’s true of businesses in the Borders as well.”
Plans to reconnect the Borders to the UK rail network for the first time in nearly half a century were passed by the Scottish Parliament in 2006 under pressure from Liberal Democrat MSPs and the Scottish Borders Council.
However, a due diligence exercise carried out by Transport Scotland when it took over the project in 2007 found that estimates for house building in the Borders and passenger forecasts had been wildly overestimated.
The agency has so far steadfastly refused to publish its revised business case, claiming that such information is commercially confidential.
A spokesman for the organisation said the benefit-to-cost ratio (BCR) had slipped from between 1.55 and 1.75 to 1.2 over the next 60 years once land factors and a technical design review had been taken into account.
He added: “As stated in Parliament, the due diligence report was commissioned to assist with understanding the scheme prior to Transport Scotland taking up the role of authorised undertaker and was based on the project as it was at that time. The outline business case was examined further when Transport Scotland took over the role, taking into account additional elements.”
Stephen Glaister, professor of transport and infrastructure at Imperial College London and head of the RAC Foundation, said it was vital that governments north and south of the Border assessed the economic benefits that major schemes deliver.
“The simple point is that when governments make decisions like this they have to consider what alternatives could be funded, what else the money could be spent on,” he said. “A BCR of 1.2 isn’t very good.”
The Herald contacted Jeremy Purvis, the LibDem MSP for Tweeddale, Ettrick and Lauderdale, as well as his Westminster party colleague Michael Moore MP, who is now Secretary of State for Scotland, but neither was available for comment.
Swinney asks to pay Forth bridge loan over 20 years
Hamish Macdonell - Scotland on Sunday - 27th June 2010
John
Swinney, the Finance Secretary, is to renew appeals to the UK
Government for help in funding the new £2 billion replacement Forth
Road Bridge.Swinney has written to George Osborne, the Chancellor, to ask for permission to extend the payment schedule for the bridge over 20 years so that other major projects can be funded as well.
The Finance Secretary approached the Treasury with exactly the same request two years ago but was turned down by the then Labour government.
However, now that a new Westminster government is in place which has promised to adopt an attitude of "respect" towards the devolved administrations, Swinney hopes his request will be treated more favourably.
Swinney has been invited to "provide input" into the UK comprehensive spending review process, which will conclude in the autumn.
SNP ministers were never invited to help draw up spending plans when Labour was in power and Scottish Government ministers hope this latest offer from the Treasury signals the start of more fruitful dialogue between the administrations.
As part of that process, Swinney intends to raise the issue of the replacement Forth Road Bridge with Treasury ministers. He has already written to Osborne, flagging up the problems the Scottish Government will face in trying to pay for such a massive project over just six years, as currently envisaged.
In his letter to the new Conservative Chancellor, Swinney described the new bridge as a "critical element" in Scotland's economic infrastructure and said he wanted to work with the Treasury to find a "sustainable option" to fund it.
Swinney said: "Under current funding arrangements this project would have to be fully funded in the next two Spending Review periods, when capital budgets are expected to be particularly tight. There is, therefore, an urgent and powerful case for according the Scottish Government greater financial flexibility to help meet the challenge of funding this large, unavoidable, once-in-a-generation investment.
"Such arrangements could involve enabling the Scottish Government to draw capital spending forward from or defer it to future Spending Review periods. Alternatively, if the Scottish Government gained borrowing powers, we could achieve the same objective of smoothing over time the very large cash flows associated with the Forth Replacement Crossing."
Construction work on the new Forth Road Bridge is expected to begin in the next year and finish in 2016. If it is funded conventionally, by the Scottish Government, Swinney would have to find the £2bn necessary from the budgets of the next six years – taking a sizeable chunk for each one.
Even without the budget squeeze coming from London, that would inevitably have meant cuts and cancellations for other transport projects.
But, with the Scottish block grant likely to be cut by £1.5bn next year and by similar amounts for the next few years, Swinney will have to squeeze other departmental budgets to an even greater degree than previously forecast to cover the cost of the new bridge.
Swinney's preferred option is to get permission to extend payments for the bridge over the next 20 years.
A spokesman for the Scottish Government insisted yesterday that the construction timetable would be adhered to but it would be much easier if the financial strain was eased over a number of years.
See also:
Borders rail link rolls into trouble
Train to Borders is delayed – again
Corrosion in Forth bridge cables not as bad as feared, say engineers
Some Scottish Bridges
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