SFT Delivers £131m Savings and Benefits Across Public Sector Infrastructure

On 11 July 2012, the Scottish Futures Trust (SFT) published its 2011-12 Benefits Statement outlining where it has secured £131m of benefits and savings across Scotland’s public sector infrastructure during the past 12 months.  For the third consecutive year, SFT has achieved savings well in excess of £100m (made up of a variety of elements including additional investment, efficiency gains and avoided costs), and since 2008 when SFT was established, cumulative savings and benefits amount to over £370m.

A major contributor to the 2011-2012 Benefits Statement has been the substantial savings SFT has achieved within the Scotland’s Schools for the Future programme.  Through careful management of the £1.25bn budget as well as challenging construction costs, SFT’s work will help pay for an additional 12 schools to be built within the existing budget, thereby increasing the number of schools to be built within the Scotland-wide programme from 55 to 67.  Further ancillary benefits include the substantial employment opportunities created within the construction industry when work starts on the additional schools, as well as the increased number of pupils and communities that will benefit from well-designed energy efficient schools.

In delivering value for money, SFT continues to pursue alternative funding sources to allow projects to be brought forward that would otherwise be delayed for years until budgets were to become available.  With the rapid decline in capital budgets across the UK, attracting and delivering ‘additionality’ of investment is essential and currently SFT is leading a £3bn programme of additional infrastructure investment over and above traditional capital budgets which is being delivered through three very unique schemes – the Non-Profit Distributing (NPD) programme; the Tax Incremental Financing (TIF) and the National Housing Trust (NHT) initiatives.  Each of these schemes is important for economic recovery as they all help sustain jobs in the construction and related sectors.  Taken together these represent, in relative terms, one of the largest investment programmes over and above capital budgets in Europe.

Currently, Scotland has over £750m of NPD contracts in procurement, with that figure set to rise to £1.2bn over the coming year.  And over the next couple of years this will more than double to around £2.5bn.  In its delivery, SFT is supporting both the public and private sectors by simplifying contracts, shortening the procurement processes and publishing a clear project pipeline to allow businesses plan ahead and resource accordingly, thereby minimising the cost and time involved in getting construction projects into the ground. 

In relation to TIF, at a time when traditional sources of funding are under immense pressure, the appeal of TIF to attract extra funds is such that for every £1 invested, an additional £5 or more can be released from the private sector.  With the public sector set to invest approximately £500m into seven TIF pilot projects across Scotland, it is projected that this will leverage an additional £2.5bn of long-term private sector investment in Scotland.

Just over a year since its launch, SFT has driven forward the NHT initiative whereby developers are appointed to build a specified number of affordable homes on land they already own.  Since the launch, tenants have moved into the first completed NHT development and SFT has signed contracts with developers to build over 600 homes across 12 sites, helping protect around 700 jobs.  Building on the success of NHT, procurement of phase 2 of the initiative was launched in late 2011 and in the coming year, this should see the number of NHT homes to be built increase to over 1,000 – homes that would otherwise not have been built.

Another area of work that has made a considerable impact has been the work progressing through SFT’s new asset management programme.  After initially being asked by Scottish Government to undertake a review of public sector property asset management, SFT has now been asked to take forward this new work stream where cost efficiencies of £500m can be delivered over a five year period. 

Sir Angus Grossart, chairman of the Scottish Futures Trust, said:  “The Scottish Futures Trust has demonstrated significant progress in times of economic challenge.  Central to SFT’s success in delivering £131m of savings and benefits has been the strong strategic alliances it has established with local authorities, health boards and other public bodies across Scotland to collaboratively deliver value-for-money on public sector construction projects. 

“Over the last year, the innovative £2.5bn Non-Profit Distributing (NPD) programme is helping bring forward procurement of construction projects which will deliver long-term benefits to the economy as well as increase the public sector pipeline of construction work to support employment across Scotland."

Barry White, chief executive of the Scottish Futures Trust, explained:  “Thanks to the collaborative working arrangements embraced by Scottish public sector bodies, together we have secured £131m of net benefits and savings to the taxpayer.  These figures clearly illustrate the robust challenge and commercial expertise SFT brings to public sector infrastructure investment across Scotland.

“It is our responsibility to ensure the public pound stretches further in these challenging times.  Nowhere is this better illustrated than through the work SFT is delivering by managing the £1.25bn Schools budget so that an extra dozen schools can be built within the existing budget. 

“SFT’s work in delivering innovative funding solutions, such as through the National Housing Trust initiative, demonstrate what can be done to boost construction, protect jobs and provide high quality, sustainable and affordable homes.”