The £7.5bn bill for transport hushed up by Holyrood

Audit Scotland attacks Scottish Government for failing to make the cost of major infrastructure projects public. Picture: Ian Rutherford
Audit Scotland attacks Scottish Government for failing to make the cost of major infrastructure projects public. Picture: Ian Rutherford
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A number of major transport projects vital to Edinburgh and the Lothians are among a raft of improvements that will cost taxpayers a total of £7.5 billion over the next three decades – yet the Scottish Government has not made the figure public.

A report by Scotland’s spending watchdog today criticised the Government for failing to give the public or MSPs a clear picture of the financial impact of the economically vital projects – the new Forth road bridge, the Borders railway, the Edinburgh-Glasgow rail improvements, and a series of improvements to the M8 motorway.

Audit Scotland said all the schemes were on track to be completed within budget and on time, delivering a major boost to the economy of Edinburgh.

But it warned they still carried “significant risks” and said key decisions had been taken without the benefit of up-to-date business cases.

The report said that although the £3.8bn total capital cost of the projects – which also include a new Aberdeen bypass – had been made public, the full £7.5bn cost over the next 30 years, including capital costs, repayments and operating costs, had not been revealed.

The revelation is sure to lead to outraged calls for greater transparency at a time when public spending accountability has never been more important.

Auditor general Caroline Gardner said: “Transport Scotland and the Scottish Government need to improve their reporting on major projects to the public and to the Scottish Parliament.

“The estimated full public spending commitment for these five projects has not been reported until now and the forecast building costs for some have been incompletely or inconsistently reported.

“It is important for the Scottish Government to demonstrate that this spending is affordable.”

The Forth Replacement Crossing was the only project where the Government had published the full costs, including the £1462 million capital investment and annual operating and maintenance costs for the two bridges of £18m.

Audit Scotland said that by 2018/19, when the other four projects should be operating, Transport Scotland would incur charges for them of £225m a year and these charges would continue over 30 years.

Detailed costs are not provided for the individual schemes because the prices involved are considered commercially confidential.

Audit Scotland said: “All five projects are live and have significant risks with the potential to impact on cost and time owing to their scale, complexity and long-term nature.

“Transport Scotland is managing these risks but is unable to eliminate them completely.”

The report said Transport Scotland had not used complete and up-to-date business cases as the basis for certain important decisions and changes affecting the Borders Railway and Edinburgh- Glasgow Improvement Programme (EGIP).

“Consequently, at certain decision points it had not demonstrated viability, value for money and affordability for these projects,” the damning dossier said.

The new Forth road bridge is being paid for straight from the Scottish Government’s capital budget. But the other two road projects are being financed through the Government’s Non-Profit-Distributing (NPD) contract method and the two rail schemes are using Regulatory Asset Base (RAB) financing, a special form of financing for rail projects.

Both mechanisms involve meeting most of the costs after completion through ongoing annual payments to contractors.

Public services union Unison criticised the use of NPD and said that it was effectively the same as the controversial PFI system.

It said it was “clearly wrong” that the full financial commitment for the projects had not been reported before now.

Dave Watson, Unison’s head of bargaining and campaigns, said: “We have long warned about the high costs and lack of transparency about PFI/PPP. It is mortgaging future generations to the hilt at greater cost than conventional financing.”

Scottish Labour’s transport spokeswoman Elaine Murray said the report was a slap on the wrist for the SNP.

She said: “This report shows that the SNP believe they are accountable to no-one and think they are beyond reproach, which is clearly not the case.

“We are talking about huge sums of money and it is only right that there is proper accountability in place when reporting progress on these projects and Audit Scotland has identified that this is not happening.”

Transport Minister Keith Brown said the Government was making record investment in roads, railways and bridges which would improve links and boost economic recovery.

He welcomed the report and said the Government was committed to improving the presentation of cost estimates.

He said: “Our intention is to publish the costs for each individual project once they are in construction and when the information would no longer be considered commercially sensitive.

“We agree good-quality business cases and up-to-date advice are an essential part of good governance and decision- making.”

Watchdog says schemes are on track to be completed on time and within budget, but warns of ‘significant risks’ ahead

M8 IMPROVEMENTS: Three separate projects involving the M8, M73 and M74, all designed to complete the central Scotland motorway network, have been bundled together and contracts are due to be let later this year. Audit Scotland says: “The 2014 completion estimate announced in 2009 has slipped by about three years to April 2017, largely owing to uncertainty about how to finance the project in the difficult economic conditions since 2008.” The initial £279-335m cost estimate has been revised to £588m which the report judges “reasonable”.

EDINBURGH-GLASGOW RAIL IMPROVEMENT PROGRAMME: Originally a £1.1 billion scheme to improve journey times and increase capacity including electrification, the project was trimmed last year to £650m and completion put off from 2016 to 2019.

Audit Scotland says: “The project is at a risky stage because the objectives,

scope and costs for phase one have changed considerably

and this is still to be reflected in an approved business case.”

FORTH REPLACEMENT CROSSING: The largest public capital investment project since devolution is being well managed and is on track for completion in October 2016 at a cost of £1462m. Audit Scotland describes it as a “high-risk” construction project. But it adds: “Many of the risks lie with the contractor. However, if there are any delays, Transport Scotland could still incur additional costs as a result of inflation increases.”

BORDERS RAILWAY: The £353m scheme to build a rail link from Edinburgh to Tweedbank is due for completion in September 2015. After earlier cost increases – from an origianl estimate of £155m in 2008 – and hold-ups – including a 12-month delay due to a change in financing method – Audit Scotland says it is now on track.

But it notes Transport Scotland has classified it as a high-risk project. “Current risks for the construction relate to ground conditions, the condition of existing assets such as bridges and tunnels, flood risk assessment and adverse weather.”

New company to oversee buses and trams

A NEW company will oversee the bus and tram network intergrated under a single system of council ownership – if councillors give it the green light next week.

Dubbed “Transport for Edinburgh”, it will see timetables co-ordinated for ease of travel, while an exclusivity agreement has also been signed with Edinburgh Airport to marry its schedule into the network.

A report into the project estimates the tram will be in profit by year three but the city will provide a loan of up to £3 million to cover start-up costs in the early years of operation.

Projections over the next 15 years suggest the tram will achieve revenues of £228m while the bus company will make £2.6 billion.

Through surplus cash from Edinburgh Trams and an annual dividend from Lothian Buses, the city expects to receive £36m in payments that can be attributed to infrastructure maintenance, tram maintenance and refurbishment costs.

Edinburgh Trams will pay a monthly fee to the council for maintenance of the depots and trams.

Where revenue is insufficient any month, the unpaid balance will be carried forward to the next, or later, months.

The board of directors for Transport for Edinburgh – owning both Edinburgh Trams and Lothian Buses – would be made up of three executive directors (all from Lothian Buses) and six non-executive directors, three of whom will be councillors.