Page last updated at 00:10 GMT, Friday, 16 October 2009 01:10 UK

Private firms model for projects

building - generic
The think tank said not enough was happening to drive large projects

Private companies could be brought into partnership with the Scottish government to drive efficiencies in large projects, it has been suggested.

Plans set out by think tank Reform Scotland propose a new model for funding building projects called Scottish Capital Partnerships.

The proposal would replace the controversial public finance initiative (PFI) and variations which followed it.

Reform Scotland also said the SNP's Scottish Futures Trust had not worked.

The think tank's report said it was time to move on from the weaknesses of PFI and the delays that have accompanied the SNP government's alternative approach, known as the Scottish Futures Trust.

Our proposals would involve no additional on-cost - indeed, we believe they will lead to significant savings
Ben Thomson
Reform Scotland

The key to the think tank's new idea is that the private sector could bid competitively to take a share in the ownership of the new partnerships, investing alongside government.

These partnerships would be set up to use money borrowed at the cheaper interest rates government can access.

They would have an incentive for the private sector companies in the partnerships to secure the best value for money when they contract with the builders and operators of the facility - a school, hospital or bridge.

At present, PFI and Public-Private Partnerships, favoured by the Labour UK government, are more likely to have private operators which provide all of a project for a pre-agreed fee, without any incentive through the long period of the contract to keep down costs to the taxpayer.

'Skills and efficiencies'

Ben Thomson, chairman of Reform Scotland and an Edinburgh financier, said: "We desperately need a new vehicle to get momentum back into public sector infrastructure projects and, after two years of achieving nothing under the Scottish Futures Trust, our proposals provide that vital mechanism.

"Our proposals would involve no additional on-cost - indeed, we believe they will lead to significant savings for the taxpayer.

"They are more likely to deliver key public service projects on time and within budget, ensuring real value-for-money.

"Management companies will bring the skills, innovation and efficiencies which until now have often been lacking in public sector infrastructure projects. This is why so many of them end up behind schedule and grossly over budget."

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