Treasury attempts to settle Forth Bridge row with Holyrood

8 Jan 09
The Treasury has agreed to hold talks with the Scottish Government over the funding of a £2bn bridge for one of Scotland’s main estuarial crossings

09 January 2009

By David Scott in Edinburgh The Treasury has agreed to hold talks with the Scottish Government over the funding of a £2bn bridge for one of Scotland’s main estuarial crossings. But it will continue to rule out a request by the SNP administration for permission to spread the capital cost of the planned second bridge across the Forth over 20 years. Scottish ministers will be urged to consider other options, such as a public-private partnership. The dispute, which threatens to lead to a further deterioration in relations between the Scottish Government and Westminster, emerged after the request by Finance Secretary John Swinney was rejected by Treasury Chief Secretary Yvette Cooper. Swinney wants to fund the new crossing from traditional capital spending budget allocations but have the flexibility to spread the cost over 20 years. Cooper dismissed this as ‘not a credible option’ and stressed that the UK-wide public spending framework ‘does not allow for bringing forward spending in this way to fund major infrastructure projects’. Chancellor Alistair Darling said the Scottish Government had been ‘asking to borrow money from budgets that have yet to be allocated over an extremely long period’. He added: ‘That’s something that we just don’t do.’ A Treasury source confirmed to Public Finance this week that it was willing to hold ‘ongoing discussions’ about the funding of the bridge. But the request to spread the cost over such a long period had been categorically ruled out. The Treasury will continue ‘helpful’ discussions and provide advice on other options. However, the Scottish Government is firmly against PPP solutions for any major infrastructure projects. It believes it can fund the estimated bridge cost of between £1.7bn and £2.3bn from existing capital budgets. But it warns that other projects, like schools and hospitals, could be delayed unless the Treasury allows the flexibility to fund the bridge over 20 years. Opposition parties called Swinney’s handling of the project ‘incompetent and irresponsible’. A Scottish parliamentary debate on the issue is expected to take place next week.The Treasury has agreed to hold talks with the Scottish Government over the funding of a £2bn bridge for one of Scotland’s main estuarial crossings. But it will continue to rule out a request by the SNP administration for permission to spread the capital cost of the planned second bridge across the Forth over 20 years. Scottish ministers will be urged to consider other options, such as a public-private partnership. The dispute, which threatens to lead to a further deterioration in relations between the Scottish Government and Westminster, emerged after the request by Finance Secretary John Swinney was rejected by Treasury Chief Secretary Yvette Cooper. Swinney wants to fund the new crossing from traditional capital spending budget allocations but have the flexibility to spread the cost over 20 years. Cooper dismissed this as ‘not a credible option’ and stressed that the UK-wide public spending framework ‘does not allow for bringing forward spending in this way to fund major infrastructure projects’. Chancellor Alistair Darling said the Scottish Government had been ‘asking to borrow money from budgets that have yet to be allocated over an extremely long period’. He added: ‘That’s something that we just don’t do.’ A Treasury source confirmed to Public Finance this week that it was willing to hold ‘ongoing discussions’ about the funding of the bridge. But the request to spread the cost over such a long period had been categorically ruled out. The Treasury will continue ‘helpful’ discussions and provide advice on other options. However, the Scottish Government is firmly against PPP solutions for any major infrastructure projects. It believes it can fund the estimated bridge cost of between £1.7bn and £2.3bn from existing capital budgets. But it warns that other projects, like schools and hospitals, could be delayed unless the Treasury allows the flexibility to fund the bridge over 20 years. Opposition parties called Swinney’s handling of the project ‘incompetent and irresponsible’. A Scottish parliamentary debate on the issue is expected to take place next week.

PFjan2009

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