16 May 2008
A parliamentary committee is to investigate the need to improve the management of public sector assets in Scotland following concern about the way billions of pounds of public investment are planned and managed.
CIPFA Scotland has been asked by the Scottish Parliament finance committee to give written evidence on asset management as part of its inquiry into the financing of capital investment projects.
The request follows verbal evidence given to the committee by the head of CIPFA Scotland, Angela Scott. She told the MSPs that reviews of asset management – by the local government Improvement Service and by Scottish Finance Secretary John Swinney – had concluded that there was a 'poor level of asset management planning and a poor corporate approach'.
Organisations needed to take 'a more corporate approach to assessing the existing asset base and a more holistic view of what the likely needs will be for the next 20 to 30 years,' she said.
Scott told Public Finance that CIPFA was concerned about the need to improve the process before investment decisions were made. This meant agreeing corporate aims and translating these into asset plans. From those plans, investment, maintenance and disposal needs would be determined.
Scott added: 'One of the essential principles of asset management is that we should consider the costs and income stream of an investment not just today but over its whole life, say for the next 30 years.
'Decisions should be made with the knowledge of the full-life costs, not just the upfront capital costs. Whole-life costing is more apparent in Private Finance Initiative/public-private partnership projects as the whole-life costs are locked into the contract.
'However, there is no reason why there should not be such a focus under traditional procurement.'
Scott said CIPFA was happy to comply with the MSPs' request for more information. It was also bringing out guidance on good asset management.
The finance committee's decision to focus on asset management as part of its wider-ranging inquiry comes at a time when concern has been voiced about various aspects, including councils' arrangements for managing property assets.
Audit Scotland disclosed earlier this month that Aberdeen City Council had lost up to £5m in potential capital receipts because property was sold at less than the market value.
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