Scottish National Infrastructure Company could see companies like the now defunct Carillion and private banks cut out of future public building projects in Scotland
THE SNP has announced at its annual conference that the Scottish Government will look at establishing a Scottish National Infrastructure Company, as part of a new infrastructure commission.
The Commission, which will include business, trade union and local government representatives, will advise on strategic priorities to pursue as part of the £7 billion boost in national infrastructure, outlined by First Minister Nicola Sturgeon in the Programme for Government in September.
The proposal for a Scottish National Infrastructure Company to replace private finance in the building of public infrastructure in Scotland was passed at the SNP’s last conference in June after a ‘#supportSNIC’ campaign from within the party led by former MP’s Ann McLaughlin and George Kerevan.
— The SNP (@theSNP) October 7, 2018
Infrastructure Secretary Michael Matheson said of the announcement: “We have already committed to increasing Scotland’s infrastructure spending to internationally competitive levels, and in establishing an Infrastructure Commission we will ensure that our additional £7 billion investment delivers maximum benefits to our economy and public services.
“The creation of an Infrastructure Commission was a key recommendation of the Growth Commission report and shows our commitment to make maximum use of all the economic levers at our disposal.
“The Commission will also explore how we build our infrastructure by considering proposals for a publicly owned Scottish National Infrastructure Company that would be established with fair working conditions at its heart.
“First class infrastructure is vital for our economic future – and by boosting spending and ensuring investment in key strategic projects, we will deliver for all of Scotland.”
When an SNP minority government in 2007 ended the use of Private Finance Initiative, it introduced a Non-Profit Distribution (NPD) model, which still relied on private financing paid back through government debt instalments, but did not give private consortiums equity stakes in the projects. The Scottish Futures Trust, which manages NPD’s, said average profits under NPD were 12 per cent, compared to 16 per cent under PFI.
A Scottish National Infrastructure Company would see the role of private finance excluded completely from public infrastructure projects and build an expert team to deliver public infrastructure provision, a measure which advocates of SNIC say would see public infrastructure be more affordable and higher quality.
#SupportSNIC campaign coordinator Rory Steel welcomed the announcement but said the “devil will be in the detail” in terms of whether what the Commission comes up with matches their ambitions.
Steel said: “Announcing a Commission to look into the creation of a SNIC is a fantastic move that could revolutionise how we build and manage our infrastructure.
“The devil will be in the detail, however we hope that SNIC will team up with the National Investment Bank and other partners to drive private financial interests out of public infrastructure.
“For far too long, private pockets have been lined with public money under Public-Private Partnerships to the tune of billions. A SNIC can ensure quality infrastructure for the public need under Public-Public Partnerships.”
The proposal for a public-public partnership would see local authorities working in combination with SNIC to deliver infrastructure, with the local authorities providing the borrowing capacity – potentially through the soon-to-be established Scottish National Investment Bank – and SNIC providing the expert team and planning/financial support. It would see companies like Carillion, which went bust at the start of the year leaving a number of live infrastructure projects in Scotland and the rest of UK up in the air, and private banks cut out from the public infrastructure building process.
Craig Dalzell, head of policy and research at the Common Weal think-tank, which proposed the original idea in a policy paper, said: “Common Weal enthusiastically welcomes the announcement of the investigation into a Scottish National Infrastructure Company.
“The proposal to create a SNIC has been one of Common Weal’s major policy campaigns and we were extremely pleased to see it adopted by acclaim at the previous SNP conference.
“The SNIC can be expected to work closely with the upcoming Scottish National Investment Bank – another Common Weal policy now coming to fruition – and that partnership will prove to be a substantial game changer in terms of the way that Scotland plans, procures and manages public works.
“The days of PFI and related public-private partnerships being “the only game in town” will soon be firmly behind us.
“We look forward to watching the development of the plans and stand by to offer our assistance in their development to ensure that the Common Weal vision that so many people want to see embedded in them can be brought to the fore.”
Picture courtesy of Dennis@Stromness
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