11 Nov 2002
The Government's Public Private Partnership policy, a key element of the programme to modernise Scotland's public service infrastructure, is delivering real benefits for Scotland's taxpayers and Scottish business, Helen Liddell said today.
The Scottish Secretary was addressing Placemakers, a construction and property industry group, in Glasgow.
Helen Liddell said:
"This Government's programme of public expenditure has helped transform the construction industry in Scotland. Government is one of the construction industry's biggest clients and innovative Public Private Partnership solutions are helping to modernise our public services. The Government is putting schools and hospitals first through PPP. It is no longer useful to think in terms of private good, public bad, or public good, private bad. These arguments are no longer relevant.
"The private sector is a key partner in helping the Government deliver its reform agenda. However, this is done within a structure where the private sector puts its own capital at risk, so it only gets paid when it delivers.
"This provides powerful incentives to innovate, manage risks more effectively, deliver projects on time and on budget and maintain assets and quality of service throughout the length of the contract.
"There are great opportunities for private companies, not least in the export market. As more countries adopt PPP, the challenge for Scottish business is to step up and seize these opportunities. Scots know-how is in demand across the globe, that applies equally to construction and civil engineering as to any of our more easily recognised exports."
Construction in Scotland is a multi-billion pound industry with an annual turnover of £7.1 billion. The industry accounts for 5.6 per cent of Scotland's GDP and provides employment for 5.5 per cent of the Scottish workforce.
Scotland is very much at the forefront of PPP activity in the UK with 86 projects currently on the go with a total capital value of £2.6 billion.
Of these 59 worth around £2bn are up and running. The other 27 deals in the procurement stages are worth another £0.5bn. The average deal is worth about £30m.
Taken over a 10 year period, this level of investment will be worth £300m of new money per annum. This compares with conventional capital investment of £2bn per annum, which is itself expected to rise by a quarter over the current 4 year period. Over the next few years, by far the greatest activity for the Scottish Government will be on schools, with over £600m of expenditure planned.
Helen Liddell added:
"Earlier this year I opened Balfron High School, Stirling Council's 25-year partnership with Jarvis. It has provided a new school with twice as many places. The new campus offers sports, arts, leisure and recreation facilities as well as opportunities in lifelong learning for the wider community - and a new traffic system to handle the coaches transporting the majority of the school population into the village. This is testament to the innovation and added value that partnerships can bring to public investment projects. And I accompanied the PM when he opened St Andrew's School. The PPP for Glasgow schools is a groundbreaking exercise in creating educational facilities that are second to none. It is about doing the very best for our children and I have seen the interest of other Governments who want to know how Glasgow does it.
"The future for all of us depends on making partnerships work, whether it's in formal contracts or simply through Government and business working together in informal partnerships."
NOTES FOR NEWS EDITORS
1. Placemakers is a London club established in 1971 for the property and construction industry.