Delays continue on Scottish hub deals

Grant Prior 7 years ago

Contractors are facing continuing delays reaching financial close on schemes planned under the £2bn Scottish Hub programme following changes to accounting rules.

The Scottish Government has been forced to reclassify the £745m Aberdeen Bypass from a private to public sector project.

The move follows an Office for National Statistics review after a tightening of EU rules around publicly-funded building programmes.

The bypass is funded under the non-profit distribution (NPD) scheme which is an alternative to the PFI model.

Fine points of the bypass decision have been referred back to the EU for reclassification which is having a knock-on effect on the Hub programme.

Building plans under the Hub programme run by the Scottish Futures Trust operate under a similar NPD model.

Deputy First Minister John Swinney said: “I have previously advised Parliament that, while ONS was undertaking its review, there would be some delays in reaching financial close on a number of projects within the Hub programme, because of the need to reflect on ONS’ findings.

“In April, I authorised SFT to take forward initial changes to the hub model aimed at reinforcing a private sector classification, while recognising that further changes might be needed after ONS had reported. This work is proceeding well.

“SFT has submitted proposals to ONS and it is likely that they will be in a position to respond by late October or November.

“I have given careful consideration to whether, in the interim, Hub projects that are currently in the pipeline should be advised that they can reach financial close in advance of the ONS responding. In doing so, I recognise and share the concerns of project partners and other stakeholders.

“The Government remains committed to the Hub programme. However, I must also take into account the risks that could arise as a result of taking projects to financial close in advance of ONS reaching a conclusion.

“As a result, I do not expect it to be possible for these projects to reach financial close over the coming weeks. SFT will engage closely with project partners to consider the implications for them and I will of course keep the position under close review.”

The ONS is also reviewing two other NPD projects signed since September 2014 – the Dumfries and Galloway Royal Infirmary and the Edinburgh Royal Hospital for Sick Children.

Swinney added: “I reiterate to Parliament that the Office for National Statistics’ conclusions will have no impact on the timetable or cost of the AWPR project itself.”

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