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Building a Better Scotland - Infrastructure Investment Plan: Investing in the Future of Scotland

Chapter 2: Investment Plans by Portfolio

Communities

2.1 This portfolio seeks to make Scotland a country where everyone has the opportunity to enjoy a decent quality of life through affordable housing, strong communities, access to employment and freedom from poverty, inequality and discrimination.

2.2 The net capital investment for the services included in the Communities Portfolio committed for the next three years is as follows:

2.3 The above net investment incorporates planned public sector expenditure on capital assets and infrastructure. Additionally, the move to the new prudential regime in capital investment for housing and changes to 'set aside' rules for capital housing receipts has enabled local authorities greater flexibility in deciding what is an affordable and prudent level for borrowing, some of which they may utilise to invest further in housing stock. Local authorities are currently preparing their Standard delivery plans, which detail how they plan to achieve the Scottish Housing Quality Standard (see below). We expect these delivery plans to be linked to local housing strategies which address local need. The private sector also has a major contribution to make in managing and funding housing and other community infrastructure, utilising rental income and managing property investments. We expect local authorities will take an enabling role here, via local housing strategies to address the broad spectrum of housing need in Scotland.

2.4 Recent years have seen significant change in the Executive's approach to housing including increased investment in affordable housing for sale and rent and a greater focus on the function of the housing market as a whole. Later this year we will publish a statement articulating our policy goals for housing in Scotland. The statement will take stock of the progress that has been achieved so far across the whole spectrum of housing issues; it will pull together the full range of our ambitious agenda to improve the quality, affordability and accessibility of housing in Scotland; and will acknowledge the challenges that we anticipate over the coming years. The housing policy statement will set the context for future developments such as the housing legislation we plan to introduce this session.

Scottish Housing Quality Standard (SHQS)

2.5 It is important that we provide the people of Scotland with a decent home. We are committed to modernising all social rented housing stock in Scotland and to providing improved living conditions for tenants. The introduction of a SHQS ensures that houses are fit for the 21st Century, by providing a minimum set of quality standards for tenants of all social landlords. In the rented sector, local authorities and Registered Social Landlords (RSLs) are expected to ensure their stock meets the Standard by 2015. In the private sector, it is a matter for individual owners to decide whether to make improvements to meet the Standard. However, local authorities are also expected to take account of the Quality Standard in monitoring the condition of private sector stock, to consider what measures might be adopted to encourage private owners and to report on this in future local housing strategies.

Affordable Housing

2.6 A key objective is to ensure there is an adequate supply of decent and affordable housing for everyone in Scotland. Investment in affordable housing provides grants to RSLs, private sector developers and individuals. This provides new and improved housing in disadvantaged communities to replace or improve poor quality housing. It also delivers new housing supply to help people on low incomes rent social housing or buy a home in areas where demand exceeds supply or where market prices are beyond the reach of their incomes.

2.7 The Executive will invest £0.9 billion in capital (£1.2 billion in total) over the next three years in new and improved affordable homes to support economic growth and ensure people have housing choices that meet their needs. It is expected that private finance of around £500m will be levered in through the development programme element of the Affordable Housing Investment Programme. This is inclusive of the expenditure relating to housing transfers to community ownership which itself has led to an injection of significant re-investment in housing in Community Ownership transfer areas. The Executive has raised its three year target for the supply of affordable homes from 18,000 for the period 2003-06 to 21,500 for the period 2005-08. Investment to achieve the new target will be 46% above the 2004-05 level - an annual increase in real terms of over 10%. There is an associated Efficient Government project for the Communities Scotland Development Programme. It is designed to reduce costs associated with housing development and construction in order to provide savings which can secure an increase in housing provision.

Sustainable Housing

In Scotland, housing accounts for a significant level of carbon dioxide emissions. The principle of sustainability is embedded in the Communities Scotland Development Programme and sustainability indicators measure performance relative to carbon dioxide emissions, the use of Brownfield sites, average energy cost per household and the adoption of a Sustainable Development policy by Registered Social Landlords (RSLs).

Building Standards

The Building (Scotland) Act 2003 introduced the objective of 'sustainable development' and this has been implemented in the Communities Scotland Development Programme. Additionally, work is ongoing on the implementation of Energy Performance of the Buildings Directive to improve the efficiency of our new homes.

Modernising Private Sector Housing

2.8 Poor housing standards and repair are detrimental to the health of individuals and of communities. House owners in the private sector are responsible for the condition of their houses but they may need help in order to overcome financial or practical barriers to carrying out necessary works. Local authorities have powers to provide assistance through improvement and repairs grants which are targeted according to individual financial circumstances on a prescribed test. They can also assist in other ways and can act to deal with problems of house condition on an area basis. The Executive provides local authorities with funding for these activities through Private Sector Housing Grant, encouraging them to make innovative and most cost-effective use of these resources.

Housing Transfers to Community Ownership

2.9 The transfer of local authority housing to registered social landlords unlocks investment to bring houses up to the Scottish Housing Quality Standard (and to maintain them at that Standard). The transfer also gives tenants more involvement in decisions affecting their homes and guarantees about future rent levels. Three whole transfers of local authority stock (Glasgow, Scottish Borders and Dumfries and Galloway) were completed in 2003 resulting in the transfer of approximately 100,000 local authority houses and the repayment of some £1 billion of council housing debt. Over the next 10 years, this programme will generate nearly £2 billion to be invested in the housing stock and new build. This re-investment is funded by a combination of private borrowing, rental income, grant provision from the Scottish Executive, and revenue released through debt right off from the Treasury. Housing will be brought up to the Scottish Housing Quality Standard to ensure they are sustainable, energy efficient, warm and damp-free, and have modern central heating systems. A further seven local authorities are now on the Community Ownership Programme and are developing investment generating transfer proposals.

Vacant and Derelict Land Fund

2.10 The Vacant and Derelict Land Fund is investing £12m per annum in three local authority areas - Dundee City, Glasgow City and North Lanarkshire - to improve land to make it attractive for further development. The key objectives of the Fund are to tackle long term vacant and derelict land, stimulate economic growth and job creation, and promote environmental justice and improved quality of life. The local authorities consider how best to utilise the potential opportunities of the land to regenerate the associated communities. Due to the current increases in the value of land and property, the Executive is reviewing existing opportunities to reinvest sales proceeds from the sale of the regenerated land to fund further regeneration opportunities.

Tackling Fuel Poverty

2.11 We are investing £137m over the three years from 2005-06 in improving the energy efficiency of domestic housing and tackling fuel poverty by ensuring our most deprived population has appropriate heating and insulation systems. The Central Heating Programme provides free central heating and insulation and is open to all households in the private sector who lack central heating, or who have a heating system which is broken and beyond repair, and where the householder or spouse is aged 60 or over. The programme is also available to all households in local authorities and housing associations who currently lack central heating. The Warm Deal provides eligible households with a comprehensive £500 package of works comprising insulation, draught proofing, energy efficient light bulbs and advice on energy use and conservation. By having efficient central heating and effective insulation, we will reduce energy consumption and carbon dioxide emissions. The funding will enable the eradication of fuel poverty as far as practicable by 2016.

Regeneration

2.12 Across the Executive as a whole, we are committed to take every opportunity to regenerate our communities, securing extra value from all our investment and infrastructure programmes in order to tackle poverty and close the opportunity gap. In order to do this, we must seek to ensure that all communities have sufficient access to opportunities and services. The table below sets out some examples of where investment in infrastructure can contribute to regeneration outcomes. We want to:

• identify and secure new collaborative opportunities from portfolio-related investment;
• ensure that the potential contribution to area regeneration is considered as a critical factor in major investment decisions;
• improve the co-ordination of our infrastructure investment both between portfolios and geographically.

2.13 Our capital investment programmes must of course reflect the needs of Scotland as a whole: and this will rightly remain the key determinant of investment decisions. But across all portfolios, the Executive is committed to take account of the Closing the Opportunity Gap targets when considering capital investment. We are committed to regenerating our most deprived areas, to closing the gap in the varying standards of living of Scotland's population and generating further economic growth.

2.14 But investment in infrastructure is not in itself enough. To ensure sustainable communities and bring about lasting improvements to quality of life of individuals, families and neighbourhoods, we need joined-up policies, investment and action across a range of economic, social, physical and environmental issues. This co-ordinated approach aims to deliver:

• access to economic opportunities (e.g. through new businesses and improved transport) along with the skills and support (e.g. training, child care and other support services) to take advantage of these opportunities;
• improvements to the local environment, open spaces and facilities;
• good quality and responsive public services (e.g. education, health and neighbourhood services such as street cleaning, roads and lighting, and police);
• safer communities; and
• genuine community engagement in shaping the place they live.

Delivering these outcomes is and will be especially challenging in Scotland's most deprived areas.

2.15 Key examples of how infrastructure investment is used by each portfolio to enable regeneration are detailed below:

Further information on each of these key regeneration examples above is included in the detailed section on each Ministerial portfolio.

2.16 However, over and above these existing portfolio activities, we have been reflecting on how better to deliver a joined-up, comprehensive and proactive approach to regeneration, spanning all relevant portfolios, so that we genuinely make the most of the very significant levels of investment by the Executive, and find new ways to transform communities across Scotland by linking economic opportunity to the needs of our most deprived neighbourhoods. We intend to publish a policy statement on regeneration by Summer 2005, to generate a wide-ranging debate on the way ahead.

Administration and Other

2.17 The Administration Portfolio incorporates the management of the Scottish Executive as well as two associated departments - National Archives of Scotland and General Register Office for Scotland. The main item of infrastructure planned for the next ten years is the creation of a Scottish Family History Centre campus in Edinburgh, to be fully operational in 2006. This will establish a 'one-stop-shop' for genealogy research and should be a significant attraction for visitors, contributing positively to Ancestral Tourism, a key project of Visit Scotland. It will bring together services provided separately by the two departments and the Court of the Lord Lyon, as an integrated "ScotlandsPeople" service which will also be available over the Internet. Further information is available at www.scotlandspeople.gov.uk.

2.18 The Scottish Executive has also already saved substantial accommodation costs in the last three years as a result of an estates rationalisation programme. The ongoing commitment in Efficient Government to ensure value for money is being achieved and will lead to further improvements in how the estate is managed. Expenditure included within the 'other' category (see Spending Review table in the Introduction) incorporates capital expenditure on Audit Scotland and the Scottish Parliament.

Finance and Public Service Reform

2.19 The Finance and Public Service Reform Portfolio includes the Executive's financial support to local authorities to enable the local delivery of a number of the significant infrastructure schemes detailed in other portfolios. This includes:

• delivery of the School Estates Strategy (Education and Young People);
• identifying and improving waste management and recycling in line with the National Waste Strategy and Area Waste Plans (Environment and Rural Affairs);
• improving local roads, bridges, and street lighting (Transport); and
• implementation of the significant investment in flood prevention and coastal protection measures (Environment and Rural Affairs).

In addition, some 'specific grants' for investments dedicated to particular initiatives are funded from individual portfolios, as explained throughout the portfolio sections of this plan.

2.20 Local authority spending on activities such as education and local transport is critical to Ministers' top priority: growing Scotland's economy. Local authorities are separately accountable for local spending, and under the prudential regime can now also determine the aggregate level of local capital investment. In addition, the Finance and Public Service Reform Portfolio funds a number of initiatives which are directly related to growing Scotland's economy. The Cities Growth Fund, detailed below, demonstrates our commitment to the sustained economic growth of Scotland's six City-Regions and our confidence in local authorities and their Community Planning partners to deliver their City-Vision strategies.

2.21 Initiatives in this area are consistent with the Partnership Agreement commitment to encourage Best Value in the delivery of public services:

"We will help improve the public service infrastructure in a way that delivers best value, continuing to develop a range of funding options including PPP where appropriate, and other innovative and workable models." (Partnership Agreement, page 47, Developing a confident, democratic Scotland)

Supported Borrowing for Local Authorities

2.22 Local authorities can use loans to finance their capital expenditure. Supported borrowing is the proportion of these loan repayments that is funded by the Scottish Executive. This covers capital expenditure on education, social work, roads, public realm, flood prevention, parks and sports facilities, museums and galleries, IT and other local authority services.

2.23 The prudential regime introduced in April 2004, for local authority capital funding gives local authorities greater flexibility and responsibility over their capital investment decisions and allows them to make full use of the various options for financing improved infrastructure. Consequently, local authorities can decide to borrow more than is funded by the Scottish Executive through their supported borrowing if they can demonstrate that their plans are affordable and will not place an undue burden on local taxpayers. These arrangements require authorities to plan investment more strategically and take a more rigorous approach to asset management. As part of these arrangements, we are encouraging local authorities to build sustainable development into their investment appraisals and planning.

Glasgow City Council was one of the first local authorities to utilise the prudential borrowing regime to implement a pilot project to overhaul its primary schools estate, having already successfully implemented a large PPP project to renew and modernise all of its secondary schools. The pilot project enabled the Council to learn lessons to improve the design and reduce future risks for the next phases of the primary school project.

Cities Growth Fund

2.24 Cities have a vital strategic role in Scotland's economic and social development, and each of Scotland's six cities is key to the success of its wider City-Region. However, the Review of Scotland's Cities highlighted concerns, particularly from the business community, that capital investment was lagging behind development. Building Better Cities: Delivering Growth and Opportunities, launched in January 2003, sets our policy for city growth and has an explicitly spatial approach to economic development and regeneration, essentially identifying that there are key places in Scotland that need to be successful if Scotland as a whole is to prosper. The regeneration of particular places and communities is seen as key to the overall success of each city, and therefore to each of the City-Regions that surround them.

2.25 The Cities Growth Fund, established in summer 2003, now provides Scotland's six cities with a dedicated source of infrastructure investment funding and is beginning to make a visible difference to Scotland's cities. The Fund supports our ambitions for Scotland's six cities as detailed in the Partnership Agreement commitment:

"To realise the potential of our great cities, working with Glasgow, Edinburgh, Dundee, Aberdeen, Inverness and Stirling and their neighbours to prepare growth strategies that maximise the unique characteristics and opportunities of each city."

2.26 Ministers commissioned ten-year City-Region strategies - City-Visions - from each city's Community Planning Partnership (see box). The City-Visions provide a coherent framework for each city's programme of major projects financed by the Cities Growth Fund, details of which are at Appendix B. Many of the projects would not have been launched had it not been for the availability of the Fund, and a number have already succeeded in leveraging significant third-party investment.

2.27 The City-Visions are intended to evolve over time to take account of changes in the local economy and potential new challenges. Examples of the continuing need for development include:

• the regeneration of the Clyde Valley - from the Clyde Waterfront to the Clyde Gateway and beyond - major, long-term projects of great complexity;
• the long-term project to regenerate Dundee's Central Waterfront, reconnecting the city centre and its people with the River Tay;
• maintaining Aberdeen's position as the 'energy capital of Europe', with an increasing focus on renewable energy sources;
• a major commitment to renew Edinburgh's city centre public realm, conserving and enhancing the city's unique built environment; and
• significant, long-term projects to improve streetscape and urban design in both Inverness and Stirling.

Community Planning

Each City-Vision describes the outcomes intended for each City-Region, focusing on the issues identified during consultation. Local ownership of the City-Vision process and management of individual projects by Community Planning Partnerships ensure Funds are targeted at the realisation of local priorities for each City-Region.

The partnership approach will continue throughout the life of the ten-year City-Visions and beyond, and encourages Community Planning partners to think strategically about how best to support economic growth for this fund and other infrastructure investment. Cross-region bodies such as the new Clyde Valley Community Planning Partnership owe their existence to this approach, and many City-Vision projects have a City-Region focus, such as Edinburgh's £4.8m investment in bus service improvements and park and ride schemes; the Clyde Valley's £1m Waste Management Innovation Fund; and the £9.7m expansion of Glasgow's vocational training scheme for potential early school-leavers to cover all eight local authorities in the Clyde Valley area.

Each City-Vision draws on substantive local evidence to justify the choice of particular investment plans. Local consultation has been thorough and continues through the Community Planning process in tandem with stakeholders at City-Region level - notably other local authorities and Local Enterprise Companies.

Best Value

2.28 Scottish local authorities spend nearly £1.6 billion on capital each year. With the introduction of the prudential regime for capital, local authorities are intending to increase the pace and volume of delivery of capital projects to address perceived infrastructure deficits. The effects of the statutory duty of Best Value are expected to encourage substantial long term improvements in the planning, procurement and management of capital projects within the public sector. Best Value also includes the duty to contribute to the achievement of sustainable development.

Scottish Public Pensions Agency and E-voting

2.29 We are providing almost £10m over two years for investment in new IT systems for the Scottish Public Pensions Agency, which will deliver efficiency savings include ensuring that the NHS and Teachers' pension schemes' members receive a high quality service. We are also exploring the possibility of using innovative IT developments to modernise the electoral process.

Modernising Government Fund

2.30 Under the 'Customer First' programme with local authorities we are providing £6m over 2005-06 for investment in a national infrastructure to support better access to public services and the secure sharing of information across the public sector. This includes targeted improvements for the delivery of 'first time' services to local authorities, improved access to services, e.g. through the use of a national entitlement card scheme, and promoting the availability and take up of online services.

Enterprise and Lifelong Learning

2.31 This portfolio seeks to increase prosperity for all the people of Scotland by supporting business, encouraging enterprise, building on the excellence of our universities and colleges, and improving skills and employability.

2.32 The net capital investment for the services included in the Enterprise and Lifelong Learning Portfolio committed for the next three years is as follows:

2.33 The nature of this portfolio, particularly the Enterprise networks and distribution of European Structural Funds, adds significant infrastructure to Scotland in order to grow the economy and regenerate communities. However, while there will be a lasting legacy of improved infrastructure in Scotland, in a number of cases the method by which the funds are invested is dependent on the market circumstances and areas of need identified.

Scottish Further and Higher Education Funding Councils

2.34 Capital investment of £420m over the three years of the spending review represents a substantial increase of £276m in the level of infrastructure investment to refurbish Scotland's Colleges and Universities. The condition of this estate has raised concerns from the Auditor General and the Scottish Parliament, and these concerns have been acted upon by the Scottish Executive and the Scottish Funding Councils. This increase, combined with exploration of PPP opportunities, will help to replace the existing poor quality estates with modern, high quality, flexible accommodation and facilities, appropriate to the expectations of students and needs of employers in the 21st Century. Modern buildings create the opportunity for efficiency gains across each sector, and between schools and colleges, through better space utilisation and provision of more sustainable facilities, reducing overheads and improving the environment.

2.35 A key objective in the Joint Corporate Plan 2003 - 2006 for the Funding Councils was that colleges and higher education institutions meet their obligations under the relevant disability legislation, including the Disability Discrimination Act 1995 and the Special Educational Needs and Disabilities Act 2001. This is to be assessed in 2005-06.

2.36 In 2004-05 an array of estate management and financial statistics to monitor the performance of each sector in investing in their infrastructure were established. Through working with the colleges, the Funding Councils are in the process of identifying and progressing viable and affordable strategic estates solutions particularly in the highest priority areas of Glasgow and the west of Scotland. Colleges (which are independently managed) currently prepare estates strategies and if these identify the need for significant capital expenditure then a business case is completed and submitted to the Council for capital funding approval.

2.37 The approximate capital value and timing of these estate improvements is detailed below:

The projects below are well advanced business cases which have not yet been approved by Council. The Glasgow city centre project is our highest priority estates project which will be developed during 2005-06.

2.38 The colleges noted above are those most in need of refurbishment. The capital expenditure beyond this is dependent on the business cases put forward by each college but the most recent review of the college estate has highlighted that improvements are still required for the majority of colleges to bring them to the Council's acceptable standards.

2.39 Our Universities also require improvements in their infrastructure. A recent survey estimated required expenditure of approximately £200m on teaching infrastructure and £250m on science infrastructure. The Universities have ten to fifteen year capital plans that aim to improve the current estate including meeting the requirements of the disability acts. In the past, disposal of surplus buildings has provided funds for improvements to the remaining University buildings.

2.40 Additional improvements in infrastructure and equipment have also been made possible through the Science Research Investment Fund. The fund will invest £163m (of which approximately 30% is funded by the Funding Councils) in science related projects from 2002-03 to 2005-06. A third phase of this fund has just been announced which will see investment of £103m in 2006-07 to 2007-08. Existing plans are available in Universities' Estates strategies.

The University of Strathclyde is in the process of implementing its estates development framework, which is a £200m capital investment programme over the period 2002-03 to 2013-14. The programme includes the consolidation of the Strathclyde Institute for Biomedical Sciences in the John Arbuthnott Building and a major development of a state-of-the-art sports and health facility on the John Anderson campus. Full details of the University's estates development framework is available on the website http://www.strath.ac.uk/

Scottish Enterprise and Highlands and Island Enterprise

2.41 The Enterprise Networks develop and grow the economy through the revised Smart, Successful Scotland strategy which highlights the vision to:

• grow businesses for a fast learning, high earning nation;
• improve global connections for a globally connected nation; and
• enable learning and skills development to ensure every Scot is ready for tomorrows jobs

2.42 The Enterprise Networks allocate funding through supporting businesses, improving the productivity of our people and improving infrastructure to achieve these objectives.

2.43 In this plan we focus only on the physical infrastructure - not covered in this document are the many additional ways in which the Government assists in and funds the creation and development of businesses and the economy. The infrastructure investment described here will be targeted to improve and encourage the growth of Scotland's existing and developing industries.

Scottish Enterprise

2.44 Scottish Enterprise (SEn) invests in commercial and industrial property to promote economic development where there is evidence of market failure. It has prioritised eight economic zones in order to focus their investment over the next five years. Within these zones, there are a number of specific projects in which it is considered that infrastructure investment will achieve maximum economic impact.

2.45 The most significant investment will centre on three strategic projects within the Glasgow region - Clyde Waterfront, Clyde Gateway and Glasgow Science/Technology. Funding, on these initiatives alone, estimated to be in excess of £200m over 5 to 7 years will be targeted at generating jobs and investment in support of the project objectives. Details of SEn's spending plans are included within their 'Five Year Investment Plan for SE Competitive Place'.

Other initiatives supported by SEn funding include the development and promotion of Edinburgh's Science triangle and waterfront, two significant projects in Dundee - the regeneration of the waterfront area and the expansion of the city's digital media and medi-parks, initiatives aimed at regenerating and diversifying the economies of Aberdeen and Ayrshire and rural development through a rural development fund.

Highlands and Islands Enterprise

2.46 Highlands and Islands Enterprise (HIE) has set out their investment priorities within their Operating Plan 2004 - 2007. There are a number of prominent strategic projects which HIE will seek to support during this period, including the development of the Scottish Year of Highland Culture 2007, the roll-out of broadband throughout the region and various renewable energy projects. Furthermore, projects as diverse in nature as the Highland Medi-Centre, the Argyll Marine Science Initiative and the redevelopment of the Aviemore Highland Resort will benefit from HIE funding.

European Structural Funds

2.47 Public sector organisations in every part of Scotland, subject to defined programme objectives, are eligible to apply for European Social Funds and European Development Funds to develop the local economy in partnership with the public and private sectors. The Structural Funds, which are worth over £1 billion in the period 2000-2006, lever in additional private sector funding, and place a strong emphasis on two main themes - sustainable development and equal opportunities. This supports the Scottish Executive's policy and is reflected in the core criteria developed in Scottish Structural Funds Programmes. Key projects in Scotland for the European Structural Funds that will incorporate infrastructure investment include:

• over 1,350 projects in the East, West and South of Scotland focussing on projects of maximum economic impact and tackling problems in areas of need. An example includes investment of £5.6m of European Funds in the Edinburgh Biomedical Research Institute based at the Royal Infirmary in Edinburgh. The site will form part of a nexus including the Medical School and the proposed Biomedical Research Park which will provide state-of-the-art facilities and jobs for research and new company spin-offs in a field where Scotland is already in a powerful position. A main outcome will be enhancement of Scotland's position as a pioneer in this rapidly-growing area. European funds are also being proposed for multi-agency regeneration work in Fraserburgh and Hawick, both of which have suffered severe job losses in traditional industries over recent years, as well as the Piping Centre in Glasgow.

• over 700 projects have already been approved in the Highland and Islands focusing on the strategic drivers of transport, renewables and Information Technology. Projects delivered include major infrastructure improvements to ports, airports and roads. Additionally, £3.6 million of European funding has been contributed to a Highlands and Islands Enterprise project in Kintyre to convert a former textiles factory for an inward investor to produce wind turbines, creating 165 jobs.

2.48 The current strategy covers the period from 2000 - 2006. Thereafter the future of the European Structural Funds is undetermined due to the recent enlargement of the European Union. However, as European grants are also matched with Scottish Executive expenditure, even if the grant is removed, there will still be a considerable level of funding that could be invested in Scotland's infrastructure either within the Enterprise and Lifelong Learning Portfolio or other portfolios.

Regional Selective Assistance

2.49 The Regional Selective Assistance (RSA) scheme contributes directly to the Executive's top priority of growing Scotland's economy through encouraging investment projects which support employment in the Assisted Areas of Scotland. Consistent with our Smart, Successful Scotland strategy and a key component of our domestic regional policy, it is planned that in 2005-06 accepted RSA offers will lead to the creation and safeguarding of 6,000 jobs in the disadvantaged areas of Scotland. It contributes to the Scottish Executive's vision by:

• targeting those areas of greatest need;
• helping create and safeguard jobs; and
• supporting business investment.

Broadband - IT network

2.50 In urban areas, it is generally the case that the broadband market operates satisfactorily, but there is a danger of a digital divide opening up between urban and rural areas. Connectivity is a key objective as this will deliver potential competitive advantage to business as well as new market opportunities. The Scottish Executive allocated a further £24m to broadband in December 2002 and has used some of this funding to increase broadband demand (through, for instance, broadband marketing and business incentives) and thereby improve the commercial case for rollout. Broadband coverage in Scotland has now increased to around 92% and will reach approximately 97-98% commercially by July. The Executive is committed to achieving pervasive access to affordable broadband coverage. It is therefore using the remainder of the funding for a supply-side intervention to deliver broadband coverage to those remote areas in Scotland where there is still no forecast provision. The target is to deliver affordable broadband access to every Scottish community by the end of 2005. An open procurement exercise is underway to achieve this and is progressing well. It has already achieved state aids approval from the European Commission and a contract is expected to be signed early this year with delivery over 2005. Initiatives to stimulate broadband demand are also continuing.

2.51 There are also two pathfinder projects in the Highlands and Islands and the South of Scotland that constitute major initiatives to provide higher capacity connectivity to the public sector in remote rural areas. These projects aim to provide connectivity to schools and other main local authority sites.

Electricity Transmission

2.52 The Scottish Executive has set a goal that 18% of electricity generated in Scotland should come from renewable sources by 2010 (40% by 2020). As much of Scotland's renewable potential is located in rural areas, there will need to be an investment in the energy transmission systems to upgrade capacity to transfer the power from these areas to where the demand exists. However, any investment, which must be made by the company which owns the relevant section of the transmission network, must be approved by the Office of Gas and Electricity Markets (OFGEM).

Transport

2.53 Improvements to the transport infrastructure encourage a safe and accessible Scotland. This then helps enable growth in our economy, regeneration of our communities, reduced harm to the environment, and improvements to our health and quality of life. Our strategy - Scotland's Transport Future- was produced in accordance with the National Planning Framework for Scotland to ensure the planned needs of Scotland would be achieved.

2.54 The strategy outlined in Scotland's Transport Future details the investments that will be made in our transport infrastructure from 2003 to 2011 with a clear focus of reversing previous years of underinvestment in public transport, and leading to over 70% of transport expenditure being allocated on public transport compared to only 23% in 1998-99. It was recently announced that a new Transport Agency will be charged with the role to plan, develop and deliver an integrated and sustainable transport network in Scotland, focused on the delivery of improvements to Scotland's transport infrastructure and efficient operation of our national road and rail networks.

2.55 The strategy has driven our planned net capital investment for the services committed for the next three years as follows:

2.56 The above table represents the proposed Transport investment, which incorporates planned expenditure on capital assets and infrastructure. In addition, the Transport Portfolio has existing contractual obligations to pay the annual service charge for the M74/M6 contract and the M77 route between Glasgow and Kilmarnock. Both of these road projects were delivered with successful PPP funding options and the funding commitment for the financial years 2005-06 to 2007-08 increases from £34m to £42m by the end of the spending review period.

2.57 The future investment programme in this portfolio is suitable for a range of delivery methods and both public and private funding. A decision on how each of the major infrastructure projects will be procured will be determined as each detailed business case is prepared and value for money has been fully assessed.

2.58 The challenges ahead are to maintain the momentum of our £3 billion programme of new infrastructure and service improvements, and deliver on the aspirations that the successes of the last five years have generated. The planned expenditure over the spending review period is part of our planned investment of £3 billion over a ten year period to bring our roads and railways up to expected standards.

2.59 The key major transport infrastructure projects proposed within our strategy are:

Rail Projects

• integrating our travel networks through the Edinburgh and Glasgow Airport rail links;
• improving and expanding our existing infrastructure through the Edinburgh Waverley Station improvements project;
• the biggest expansion of the Scottish Rail network in modern times through the Airdrie-Bathgate, Larkhall-Milngavie, Stirling-Alloa-Kincardine and Borders rail links; and
• Reducing congestion in Edinburgh through the introduction of tram lines.

Road Projects

• more effectively linking our motorways through the completion of the M74, the M8 and M80;
• completion of the M77 (Fenwick-Malletsheugh in Spring 2005) to improve journey times and reduce the level of accidents;
• completion of the Aberdeen Western Peripheral route; and
• improving existing roads for example the A8 Baillieston-Newhouse and associated improvements - completed; A80 Auchenkilns roundabout and A78 Ardrossan-Stevenston - completed.

2.60 The planned phasing of our expenditure is indicated below. This phasing is subject to the satisfactory completion of statutory procedures, including public consultation, where appropriate, and Parliamentary approval. The projects are also dependant on third party contributions towards some of these projects. Outcomes of future spending reviews will also be a contributing factor on the delivery timetable of the major rail and road projects as noted in the phasing timetable below.

Source: Scotland's Transport Future - the Transport White Paper - published 16 June 2004

2.61 These are our flagship projects which when they have been driven forward to delivery, will make a real difference to the people and business of Scotland. For example, the Edinburgh and Glasgow airport rail links will be good for travellers and good for business and so will work towards our target of growing the economy. The Airdrie-Bathgate rail link, along with the central belt's targeted motorway and trunk road improvements will improve flows in the central belt, reduce congestion and help commuters to get to work and goods to get to market. The Aberdeen Western Peripheral Route will be a major part of working to fix Aberdeen's congestion. Our programme of investment will take place over the next decade, but even inside the spending review period itself, trains will run for the first time on the Larkhall-Milngavie line and on the reopened Stirling-Alloa-Kincardine rail link.

2.62 We are also committed to maintain and improve Scotland's trunk road network. Road Improvement schemes are spread throughout the network and provide cost-effective local solutions where larger schemes cannot be justified. This is important because whilst major projects will provide the more substantial improvements to the trunk road network, the minor schemes provide more modest but no less important solutions to road safety and congestion stress points which occur across the network. Funding will be allocated to Road Bridge Strengthening and Improvement schemes which will deliver a needs-based, prioritised programme of structural maintenance which will help to safeguard the structural integrity of the motorway and trunk road network and maintain its value, safety and serviceability.

2.63 In addition, to the major transport infrastructure projects and the improvements to the trunk road network, we have recognised the importance of ensuring our local road and other transport networks are maintained and new statutory Regional Transport Partnerships (RTPs) will, subject to Parliamentary approval, be established in 2006-07. The additional funding allocated will provide support for strategic regional, local road and public transport projects that will be identified and managed by the new proposed RTPs. Capital funding of £46m has been provided in the financial years 2006-07 and 2007-08 for the first two years of operation.

2.64 Other capital public transport initiatives which are supported by the Transport Portfolio include Partnership Agreement commitment to introduce 20 mph speed zones around schools and safer routes to school for walking and cycling as well as the development of Home Zones to improve safety for pedestrians and cyclists in residential areas. During the period 2000-08, over £55m will be allocated to local authorities for cycling, walking and safer projects, including safer routes to school. In addition, over £49m will be allocated to local authorities to spend on capital projects for the introduction of 20 mph schemes around schools, related safety projects and the development of Home Zones. Funding has been made to sustrans (the sustainable transport charity) to undertake extensive upgrades to the national cycle network across Scotland, in partnership with local authorities.

2.65 Other initiatives are the development of piers and harbours owned by local authorities, harbour trusts and Caledonian MacBrayne in the Highlands and Islands area. Major works are planned to improve pier and harbour facilities including projects at Brodick, Kennarcraig, Largs, Lismore and Cumbrae. Work on several other projects is also planned over the period 2005-06 to 2007-08 with around £24m being allocated. There is also an investment programme funding the provision of new vessels for Clyde and Hebrides lifeline ferry services, including a second new vessel for the Wemyss Bay-Rothesay route and a new vessel for the Largs-Cumbrae route. The combined estimated cost of these 2 new vessels is over £15m. For the longer term, the capital investment needs of the lifeline ferry network will be considered following recent investment appraisal studies.

2.66 Capital funding will be provided to Highlands & Islands Airports Ltd (HIAL) over this period to enable HIAL to support the continuing growth of airport services in the Highlands and Islands. Essential capital projects including new Instrument Landing Systems at Inverness, Stornoway and Kirkwall have been undertaken to ensure continued operation at HIAL's ten airports. A new terminal at Wick should be delivered in 2005 and major extension of the runway at Sumburgh is to be included in the capital investment projects.

2.67 We have increased funding support to British Waterways Scotland for capital expenditure which will help realise the great potential of Scotland's reopened canals in the central belt as well as ensuring the canals in the Highlands - the Crinan and the Caledonian - can continue to be used by a growing number of people.

2.68 Transport provides capital grants for Freight Handling facilities at ports and railheads which will encourage the switching of freight from road to rail and water and help meet the Partnership commitment to take more freight off Scotland's roads.

2.69 Our plans are to ensure there is an effective long term strategic programme of commitments to enhance and improve our transport network. The National Transport Agency will be charged with procuring and delivering the long-term strategic investment plan.

2.70 The agency will also undertake a strategic projects review commencing before 2007 and covering all transport modes. This review will be on a scale that we have not tackled before and will look forward to 2020 and beyond. It will depend very heavily on input from local authorities, Regional Transport Partnerships, transport operators, businesses and users. This review presents the opportunity to consider, plan and prioritise the transport infrastructure investment requirements to support Scotland's growing economy and to deliver the emerging National Transport Strategy.

Health and Community Care

2.71 Capital asset investment within the Health and Community Care Portfolio is significantly increasing to enable NHSScotland to contribute to the objectives set out in the White Paper Partnerships for Carelaunched in February 2003. The objective for "Redesigned services, to meet national standards and deliver quicker treatment" noted that: "Staff need to have the tools to do their job. So we are investing heavily, not only in NHS staff themselves, but also in modernising the infrastructure of NHSScotland and above all in the information systems and communications technology necessary to deliver redesigned healthcare." Chapter 6 (paragraph 30)

2.72 The level of capital investment will ensure that NHSScotland is better equipped and resourced than ever before to improve the quality of care provided to patients. Frontline staff will therefore have better facilities and equipment to give the best care.

2.73 The planned capital investment in 2005-06 represents an increase of 21% on 2004-05 and therefore already includes a significant increase for investment in infrastructure. The planned investment committed for the next three years is as follows:

NHS Boards and Special NHS Boards

2.74 NHS Boards are responsible for delivering health services to their local population and receive the majority of the portfolio's capital funding. This allows resources to be clearly applied and prioritised in support of the objectives set out in Local Health Plans and supporting property strategies. Examples of investments included within the capital plans of NHS Boards include:

• £8m to redevelop Ailsa Hospital in Ayr;
• £9m for the development of a West of Scotland Secure Unit;
• £12m to support the development of the Ayrshire Community Hospital;
• £9.2m for Phase 2 of the Glasgow Royal Infirmary;
• £4m for the refurbishment of wards at the Dumfries and Galloway Royal Infirmary;
• £4.3m for transitional acute services in Forth Valley in advance of the opening of the new hospital in Larbert in 2009;
• £6.9m for the redevelopment of the Chalmers Hospital in Grampian;
• £7.2m for the development of the East Sutherland Elderly/Community Hospital; and
• £1m for new X-ray equipment at Raigmore Hospital in Inverness.

2.75 Special NHS Boards such as NHS 24, National Services Scotland, the State Hospital and the Scottish Ambulance Service are allocated capital budgets for continuing minor works, already approved projects and projects identified outside the delegated limits. The investment of £23.7m over three years in our ambulance fleet is the highest single ongoing allocation. However, we are also investing over £8m to further develop the Golden Jubilee National Hospital by improving capacity and therefore reduce waiting times for the people of Scotland.

Primary Care Infrastructure

2.76 Primary Care infrastructure investment of over £51m in over 100 projects has occurred between 1999 and 2004. This has included a major programme of upgrades to Health Centres, new builds where General Practitioners (GPs) were not able (as independent contractors) to lead developments and contributions towards visionary developments involving effective joint working such as the Dalmellington and Broxburn centres, which provide joined up service delivery. The programme for 2004-06 is developing wider momentum for joint working projects, supporting delivery of the Partnership Agreement commitment on Community Health Service Centres and also providing support for Disability Discrimination Act compliance, new dental surgeries in areas of low NHSScotland coverage, GP premises that better support training in the community and improvements in the IT infrastructure.

2.77 New capital investment of £115m will significantly increase our ability to progress our agenda to modernise and deliver premises which bring diagnosis and treatment closer to patients. Projects will be determined by NHS Boards and will include joint working projects, clinician training in the community, new dental facilities to support the reinvigoration of NHS Dentistry, and specific IT infrastructure improvements.

2.78 Investment through public capital will be supplemented through projects delivered under a joint venture arrangement similar to the LIFT initiative in England. Legislation by the Scottish Parliament is required, and the procedures in hand, to allow this additional investment to improve services.

Medical equipment

Our analysis of capital plans and ongoing monitoring of value for money, particularly from Audit Scotland, has identified that more spending is required to replace and improve on existing medical equipment. Specific provision for medical equipment of £125m over three years substantially increases the level of investment in equipment and will ensure that staff have modern equipment with which to deliver appropriate health care for the 21st Century.

IT Infrastructure

2.79 Support for the National Information Management and Technology strategy has been increased to £107m over the next three years to support a number of projects crucial to the delivery of modern and effective health care in Scotland. Developments include the purchase and implementation of a Picture Archiving and Communication System across Scotland that will improve the effective distribution of x-rays together with continued investment in eHealth and the hardware and communications platforms that are fundamental to support modern healthcare.

Beatson Oncology Centre, Cancer Plan/Equipment, Outpatient Programme and other Partnership Agreement Initiatives

2.80 We have identified specific national projects that will improve healthcare in Scotland. An example of this is the significant investment to complete the radical overhaul of the Beatson Oncology Centre to ensure Scotland has a state of the art facility to care for cancer patients. Other initiatives planned for 2005-06 include investing in dental training facilities (£1.5m) and colorectal screening and diagnostic offices (£2m).

Provision for Major Refurbishment Projects and Meeting Local Needs

2.81 There are a number of projects at early stages of development, most notably in Glasgow, Argyll & Clyde, Dumfries & Galloway and Borders that are likely to result in a capital investment in excess of the local capital allocation. To facilitate these national and local priority projects specific Scottish Executive support is available to meet the needs.

2.82 In addition, capital funding is available from the Scottish Executive to improve the flexibility of capital schemes while ensuring the needs of the public are met as soon as feasibly possible, for example, enabling NHSScotland Boards to initiate a capital project dependant on future receipts prior to the receipts being received. The nature of capital expenditure is such that there will be occasions where larger projects would be impossible to undertake within the context of a NHSScotland Boards formula allocation. The available funding allows the allocation to be increased to meet the expenditure profile of such projects and for such sums to be repaid by NHSScotland Boards over an agreed period, usually no longer than three years.

PPP in health

2.83 There are currently a number of projects in various stages of development which are considered suitable for procurement through PPP. Current estimates of the infrastructure investment supported in this manner are in the region of £780m over the three year period from 2005-06.

2.84 Major investments planned during 2005-06 to 2007-08 include two Ambulatory Care and Diagnostic Centres in Glasgow which are currently in procurement (£176m), Forth Valley community hospital and acute services strategy with a combined value of approximately £280m, and the Right for Fife Strategy and St Andrews Community Hospital at £130m. Detailed information about the health infrastructure investment programme can be found at the PPP/PFI and Capital Website for NHSScotland.

2.85 The projects currently in development with their estimated capital values are given below.

* At 2004 prices (£m)

2.86 The exact timing of some potential PPP schemes cannot yet be determined as procurement is yet to commence. As such the timescale given above is indicative. In the case of larger schemes in particular (over £100m) it is important that the timing of schemes coming to the market is timed to coincide with available capacity in order to ensure appropriate levels of competition. Work is currently underway to manage the timing of schemes and to provide advice to projects coming forward as to how schemes can be marketed and prepared to generate maximum market interest. This work is being conducted by the Health Department in co-operation with the Financial Partnerships Unit in order that a Scottish Executive wide approach to PPP market capacity and deal flow is taken.

2.87 This work continues to develop and evolve with further information being provided in 'industry days'. The health PPP programme is founded on standardised guidance and the Standard Scottish Health PPP Contract. The Scottish Executive manages the health and schools programme and provides 'quality assurance' through the Key Stage Review process undertaken for it by Partnerships UK.

Education and Young People

2.88 This portfolio seeks to give every child and young person the best possible start in life, through delivering the National Priorities in Education and Closing the Gap for those who are not sharing the general level of attainment and wellbeing.

2.89 The net capital investment for the services included in the Education and Young People Portfolio committed for the next three years is as follows:

2.90 The above net investment incorporates planned expenditure on capital assets and infrastructure. Additionally, Scottish Executive revenue support has been made available for increased infrastructure available from PPP investment projects. Further details of the significant expenditure on PPP projects are detailed below.

The School Estate

2.91 All children deserve the best possible start in life and a modern learning and teaching environment in our schools is an important foundation for their education. The Scottish Executive is therefore committed to enabling the renewal of 300 schools by 2009, as a major part of the largest ever school building programme in Scotland.

2.92 The joint Scottish Executive/CoSLA School Estate Strategy, which was published in February 2003, and our commitment to its implementation, confirms that education is at the heart of the policies of the Executive. This provides a framework for further improvement in the management of school buildings and the estate's capacity to support the effective and efficient delivery of school education. Since June 2002, we have announced support for £2.3 billion of infrastructure investment in the form of 29 PPPs, as well as trebling direct capital grant for expenditure on the school estate from £26.7m in 2002-03 to £76.7m in 2004-05. The amount of this grant has been increased further for 2005-06 to 2007-08 as shown in paragraph 2.89 above. The Scottish Executive has offered financial support to local authorities for school PPP projects with capital values as detailed below:

2.93 The figures above are indicative of the scale of PPP projects for which the Executive has offered financial support. The actual size and content of projects ultimately contracted for is decided by each local authority, according to the levels of funding which they commit to the PPP in addition to that provided by the Executive. Further details of the schools PPP projects which the Executive is supporting can be found, alongside information about other PPP projects, on the website of the Executive's Financial Partnerships Unit.

2.94 The schools PPP programme and grant increases will accelerate tackling the legacy of under-investment in school buildings right across Scotland. This major investment in the fabric of Scotland's schools will contribute towards achieving our vision of a school estate in which schools are well-designed and well-built, with modern facilities that inspire both learners and teachers and meet the aspirations and serve the changing needs of both schoolchildren and the wider community. The school estate still has too many school buildings which belong to the 19th rather than the 21st Century; but we are addressing that.

2.95 We are also ensuring that our schools will remain fit for purpose in the future, and we are embedding the principles of sustainable development in the school building and refurbishment programme. The right deployment of resources to maintain the estate will help to ensure that our schools do not again fall in to their previous state of disrepair.

2.96 PPP is just one of the menu of funding options - including the Schools Fund and its predecessors and local authority capital allocations (now replaced by the prudential framework)- that have already made a big contribution to the improvement of our schools since devolution. The period between 1999 and the end of 2002 saw 120 schools rebuilt or significantly refurbished in addition to much other smaller scale improvement work.

2.97 Each education authority now has in place a long-term schools estate management plan. These provide a current assessment of the condition and suitability of the estate and set out options and plans for improvement and modernisation, as well as possible changes to the pattern of school provision. They take into account population and school roll projections and other predicted changes in demand and need. They form part of the basis for both authority and Executive spending decisions.

Secure Accommodation

2.98 An additional 29 places to the secure estate were announced on 24 March 2003. These places will offer much needed facilities for girls only and as far as possible avoid under 16s being remanded to young offenders institutions. A £21m investment over three years will be made by the Scottish Executive towards the redevelopment subject to financial and value for money details being finalised with providers. Consequently, by 2007 Scotland will have 125 secure accommodation places available.

Other Capital Commitments

2.99 Additional capital funding will also enable greater investment in Gaelic-medium education reflecting our commitment to aid local authorities in meeting the requirements of the Standards in Scotland's Schools Act 2000 for education authorities to plan for and secure improvement in the provision of services. The remaining capital funding will allow our Non-Departmental Public Bodies, for example the Scottish Qualifications Authority, to continue with appropriate investment in information technology infrastructure to achieve ongoing efficiencies.

Justice

2.100 The Justice Portfolio has responsibility for police, fire, community justice services, criminal justice policy, civil law matters, and administrative support to the Supreme and Sheriff Courts. The Scottish Prison Service, Scottish Court Service, and the Accountant in Bankruptcy are Executive Agencies of the portfolio.

2.101 The net capital investment for the services included in the Justice Portfolio committed for the next three years is as follows:

2.102 In addition to the above direct allocation, the Police Forces and Fire Service receive annual capital grants distributed from Justice through the local authorities of £31.4m and £23.6m (increasing to £24.6m in 2006-07) respectively.

2.103 The above net investment incorporates planned expenditure on capital assets and infrastructure. Additional revenue support is available for increased infrastructure from PPP expenditure and this has been used by the Scottish Prison Service to build a new prison within the period of the spending review. The information included below incorporates the main features and benefits of the capital expenditure and PPP plans for each of the services.

Fire

2.104 Over £5m of capital has been provided under the New Dimension programme to improve the Fire Service's response to major incidents. This equipment has already proven its worth at the recent tragedy at the Stockline plastics factory in Glasgow. The majority of expenditure in the next three years is for ongoing maintenance of the Fire Service's current estate and equipment as well as upgrading current IT systems to increase efficiency within the service. A major procurement is planned in the provision of a new radio communications system - Firelink - which will provide interoperability across Brigades and with the Police in the United Kingdom. The service is currently considering whether the procurement will be on a conventional purchase or service agreement basis.

2.105 The Fire Service has an objective of reviewing capital expenditure plans to increase efficiency and maximise benefits. The recent Scottish Executive consultation document - The Future of Fire Service Control Rooms in Scotland- is an example of how the service is reviewing the efficiency and effectiveness of the service with a view to rationalising the number of control rooms, although no final decision will be taken without further consultation with stakeholders. Additionally, each of the eight fire services in Scotland are completing Integrated Risk Management Plans by April 2005 which will have an impact on the operation of the service and subsequent adjustments to estate, vehicle and equipment requirements.

Police

2.106 The Scottish Police Service, which comprises eight police forces and a number of common police services, requires not only to maintain a network of police stations and contact centres across Scotland but also to equip police officers and staff with the required level of modern technology and equipment, including vehicles, to enable them effectively and efficiently to meet the full range of policing demands.

2.107 Capital grants paid to Forces currently total over £31m each year, to which Forces may add from borrowing. Additional capital grants are paid to the common police service organisations and the Scottish Drug Enforcement Agency as well as to individual Forces to meet specific investment needs. These amounts vary from year to year but in 2006-07 and 2007-08 will total over £10m.

2.108 The Police Service generally is required to make the most effective use of the resources at its disposal. Over the last few years, for example, rationalisation to the police estate has led to the closure of a number of smaller, underused police stations and the building of new stations in areas of population growth. Some forces have also undertaken joint collaborations with other public and private sector agencies including rural post offices. Forces have invested significantly in central contact centres, reducing the overall number of such centres from well over 100 to around 18. Forces are also making a range of other improvements through better use of modern technology and better sustainability.

2.109 Specific improvements planned over the next few years include:

• A new Scottish law enforcement campus involving a number of agencies, the centrepiece for which will be a new headquarters for the Scottish Drug Enforcement Agency (SDEA). £10.9m is being set aside towards the cost of this development in 2005-06 and 2006-07 although planning is still at a very early stage.
• Bringing together the existing police forensic science laboratories into a national Police Forensic Science Service to improve efficiency and utilisation of the existing services. Planning is underway for two new labs to replace existing increasingly cramped facilities within Police headquarters buildings.

2.110 Increased investment is also in prospect for the Police College to ensure that appropriate facilities are in place in good time to train the additional police officers who will be needed to replace the significant number of officers who are due to retire in around 2009 and 2010.

2.111 The Police Service has recognised the advantages of improved procurement and has saved significant amounts on vehicles and the new Airwave communications system currently being installed, by co-ordinating the procurement exercise across all forces.

Secured by Design

An example of improved strategic co-ordination of infrastructure plans includes the initiative that all new housing built by Communities Scotland will aim for Secured by Design accreditation. This is a police certificate which signifies that the house has been designed to make it more difficult to break into.

Scottish Court Service (SCS)

2.112 The Scottish Court Service undertook a significant review of its estate in 2003-04 which underlined the significant improvements that would be required to bring the estate up to required standards. At present a major amount of the investment by the Courts has been on the modernisation, over successive years, of Parliament House in Edinburgh. This project is currently under review. The remaining investment has improved the accessibility of all Scottish courts for the disabled, and allocating separate rooms for children to provide evidence or improving video equipment to enable vulnerable witnesses to not attend the court.

2.113 SCS has identified the need for a new court in Livingston as part of its estate review. This reflects the altered population trends in this area. An opportunity to create a new court and an integrated Justice Centre with West Lothian Council, the Police and the Crown Office and Procurator Fiscal Service is being investigated. This would form part of the Council's new Civic Centre development.

Scottish Prison Service (SPS)

2.114 The Scottish Executive's consultation paper on the prison estate ( SE consultation paper) in 2002, which built on the Estates Review of the SPS and financial verification work completed by PricewaterhouseCoopers LLP, has been a key driver in improving the estate of the SPS to meet the rehabilitation and ongoing needs of Scotland's prisoners. The Estates Review identified the need for potentially three new prisons. The results of the consultation were announced in September 2002 and this recognised that there may not be the need for the third prison due to amendments to the criminal justice system increasing the alternatives to prison sentences.

2.115 The first prison in Addiewell, West Lothian has received planning permission and is in the process of being procured through a PPP and this has been advertised in the Official Journal of the European Union. The second prison, which is planned to be built on the current site of HMP Low Moss by 2007 (subject to planning permission), will either be built and operated by the private sector or by SPS management and unions, working in partnership, who have been given the opportunity to 'bridge the gap' with the private sector on costs and delivery.

2.116 SPS currently has 15 establishments of various age and fitness for purpose. The strategy considered the modernisation of the current estate as well as the future demand for additional prisons. This led to £110m being allocated on improving the current prisons to bring the estate up to standard. This funding will enable phase one of the estate modernisation to be achieved thereby ensuring that seven prisons (including the two new prisons) are fully fit for purpose. The planned modernisation of the estate has been accelerated with a further £54m additional funds per year from 2006-07. The accelerated completion of the modernisation will allow the commencement of phase two of the estate modernisation to occur earlier than planned. SPS is currently revising its estates strategy to take account of the additional investment in our prisons and an updated strategy is expected to be published in 2005.

2.117 The additional funding for the estate will help end the practice of 'slopping out' and improve the conditions for our prisoners, deliver efficiency savings through modern facilities providing better ways of working and ensure we have a prison estate fit for the 21st Century.

Crown Office and Procurator Fiscal Service

2.118 The Crown Office and Procurator Fiscal Service (COPFS) provide Scotland's independent public prosecution and deaths investigation service.

2.119 The net investment incorporates planned expenditure on capital assets and infrastructure over the next three years. There are currently no planned PPPs.

Estates Rationalisation

2.120 COPFS occupies 63 properties across Scotland, nine of which it owns, whilst it is a minor occupier in 34 Sheriff Court buildings owned by the Scottish Court Service. The Department is contributing to Efficient Government by rationalising the estate in Edinburgh to bring staff together in fewer buildings thereby saving costs. The increase in capital investment in 2006-07 and 2007-08 is for the refurbishment of the Glasgow office at Ballater Street, which will modernise the existing building to improve business working arrangements. In the medium term, COPFS is looking to further improve how the estate is utilised, considering cost effective ways to meet local needs, ensuring existing building layouts are appropriate to promote efficient working practices and ensuring all offices are used to their full potential.

Investment in IT Systems

2.121 The majority of investment planned in each year is for the purchase and upgrade of the IT equipment and systems. This investment will build on the Future Office System (FOS) which is key to the organisation in tracking cases as they proceed through the prosecution cycle. Previous investment in FOS has saved approximately £1m per annum on administration costs which will be reinvested back into the system from 2004-05. The FOS will be further improved to meet the High Court reforms recommended in the report by Lord Bonomy.

2.122 The IT investment is also being utilised to improve joined up working with other criminal justice partners such as the Scottish Court Service, Police and Scottish Legal Aid Board. This will improve efficiency by sharing common information sources and reducing the manual handling of information.

Tourism, Culture and Sport

2.123 This portfolio seeks to enhance everyone's quality of life in Scotland through widening participation in sport and culture, and building on a successful and sustainable tourism and creative industries sector, to grow the Scottish economy, creating jobs and opportunities.

2.124 The net capital investment for the services included in the Tourism, Culture and Sport Portfolio committed for the next three years is as follows:

Tourism

2.125 The restructuring of the area tourist boards to create a new tourism network will improve the delivery of tourism business support and tourist information services throughout Scotland. The VisitScotland information and booking website - www.visitscotland.com - is a PPP development to improve the business infrastructure of tourism in Scotland. While it is not envisaged that there will be significant capital investment required to set up the tourism network, we are investing resources to ensure the restructuring achieves its goals. However, infrastructure investment throughout other portfolios - for example, improvements in ferry services, airport links and cultural attractions - will ensure Scotland's attractions improve and become more accessible.

Arts and Culture

2.126 The creation of the Cultural Commission was announced to Parliament in April 2004. The Commission will make recommendations on the development of the arts and culture, aiming to promote much wider access, excellence and building on the nation's reputation for creativity. It will work in full consultation and partnership with the people of Scotland to develop a long-term strategy, including capital needs, for our arts and culture. The Commission will therefore have a lasting effect on how we deliver and access the arts and culture in Scotland with a subsequent impact on our infrastructure. More information about the Cultural Review is contained at the Cultural Review Homepage

2.127 The principal national cultural collections within Scotland are presently managed by the three National Institutions namely National Library of Scotland (NLS), National Museums of Scotland (NMS) and National Galleries of Scotland (NGS). The National Institutions each have an annual capital budget for purchases to add to their collections. The Scottish Executive also holds an annual budget for building projects which the National Institutions can bid into, for instance to upgrade their existing estates or invest in Information and Communication Technology. In addition, £1.8m of the £8.3m we are making available to the NLS to assist with the acquisition of the Murray Archive will be for new educational facilities to enable the best possible access to arguably one of the most important archives in the world.

It is important that the visitor experience, especially for young people, is enhanced at these collections, and in 2004 the £32m Playfair project delivered a significant new facility, providing new visitor facilities and linking the Royal Scottish Academy and the National Gallery in Edinburgh. The majority of the funding came from private sector and charitable sources, including the Heritage Lottery Fund.

2.128 In 2006-07, we shall make major new investments in our infrastructure. Over £7m will be spent to purchase outright the Scottish National Gallery of Modern Art building, relieving the NGS of annual rental payments of over £0.5m per annum. In addition we will provide capital investment of £9.5m to various projects under our commitment to the Highland Year of Culture in 2007.

Built Heritage and Architecture

2.129 Capital investment in the historic environment is delivered through a programme of Historic Environment Grants worth £12.5m annually. This helps meet the cost of repairing and regenerating historic buildings and maintaining and enhancing conservation areas and generates over £40m of investment annually in Scotland's historic fabric. Historic Scotland has worked in partnership with Scotland's cities to establish City Heritage Trusts for investing in the quality of our city centres and has also recently consulted on proposals to establish a Regeneration Fund. This will support projects for the regeneration of Scotland's most important historic areas, including our important network of historic towns.

2.130 Historic Scotland is also the largest operator of paid visitor attractions in Scotland and operates world class tourist destinations such as Edinburgh and Stirling Castles and is responsible for the care and maintenance of 330 monuments. It has an active programme to enhance the visitor experience throughout its estate, for example by constantly improving the shops, cafés and interpretation and education facilities at the monuments. The continued investment in these facilities will ensure we have high quality tourist attractions and a historic environment that is appreciated and enjoyed by the people of Scotland.

2.131 The Royal Commission on the Ancient and Historic Monuments of Scotland is responsible for maintaining a public record of Scotland's archaeological and historic environment, and has an archive of 3.5 million records and artefacts which is growing. Current storage facilities are no longer adequate. From 2006-07 a further £12m will be made available for additional storage accommodation for the Royal Commission as a permanent home for the national collection of material relating to Scotland's archaeology, buildings and maritime heritage to cope with the increasing quantity of collections being deposited.

Sport

2.132 Sport 21 ( Sport 21 2003-2007), the national strategy for sport in Scotland, sets out a vision for 2020 and 11 key targets, several of which require improvements to the sporting infrastructure in Scotland. Part of the required investments in our sporting facilities is being taken forward by the National and Regional Sports Facilities (NRSF) Strategy to ensure we meet our vision of having a national network of world class training and competition facilities. This will promote a Scotland where everyone can participate in sport, excelling at their own level, and provide opportunities for our children and young people at all ages to grow and develop through the provision of increased access to sports and leisure facilities. Our best and aspiring athletes will have more of the top-class facilities they need for training and competition which will help them achieve at the highest levels in the coming years. In addition, our communities, and in particular our young people, will be able to enjoy increased opportunities to take part in many different activities to help improve their health and general well-being and also give them more opportunities to aspire to the very highest levels of athletic achievement. However, these facilities will need to be complemented by a network of quality locally accessible sports facilities for community use. Audits of these facilities by sportscotland have indicated that substantial investment will be required to meet the Sport 21 targets.

2.133 The Executive has committed £28.8m over the three years (2004-07) to help deliver our national and regional sports facilities strategy (this includes resources of £16m previously set aside for the Euro 2008 bid). In addition, sportscotland has set-aside £21.2m from the Lottery Sports Fund for this purpose. sportscotland has also allocated £1m from its Lottery funded Building for Sport Programme (BFSP) to complementary sports facilities included in two of the bids. These funds will lever in the other funding required to meet the total estimated cost of approximately £230m of delivering the successful bids (set out below).

* Elements of these projects have been allocated funding from the Building for Sport Programme

2.134 The Executive and sportscotland are continuing to discuss with partners the sporting needs of the Highland, Tayside, Fife, Ayrshire and South of Scotland areas with a view to filling other geographic gaps in our regional facilities network.

Environment and Rural Affairs Department

2.135 This portfolio seeks to increase prosperity in rural Scotland, to improve the environment and promote sustainable development throughout Scotland.

2.136 The net capital investment for the services included in the Environment and Rural Affairs Portfolio committed for the next three years is as follows:

Note: The infrastructure investment of Scottish Water is dependant on consultations currently ongoing (refer paragraph 2.142)

The Capital budget for Agricultural and Biological Science in 2005-06 is distorted by a one-off assumed receipt of approximately £15.75m from the disposal of the Scottish Agricultural Science Agency site at East Craigs, Edinburgh. This sum is restored to the baseline in 2006-07 and 2007-08.

2.137 The above net investment incorporates planned expenditure on capital assets and infrastructure. Additional infrastructure investment will become available from PPP expenditure.

Water

2.138 In the period 2002-03 to 2005-06 we will have invested a minimum of £1.8 billion in the water industry to secure better drinking water quality and better sewage treatment. Details of this investment are included in the second review of Water Quality and Standards- Investment Priorities For Scotland's Water Authorities 2002-2006. The merger of the former water authorities to form Scottish Water has increased the ability to deliver this necessary investment more effectively and improve the standard of service to customers. Scottish Water has also been challenged to save costs through a rigorous programme of efficiency measures, to minimise the burden on customers. The efficiency measures include reducing operational costs by more than one-third and capital procurement costs by one-fifth by 2005-06. Further efficiencies are planned as part of the Efficient Government agenda.

2.139 More than half of the investment programme is being channelled through a new innovative joint venture - Scottish Water Solutions Ltd- involving Scottish Water and two commercial consortia. This joint venture is being incentivised to deliver the efficiency targets through a performance mechanism that will share the reward or any adverse costs between the partners.

2.140 The Water Industry Commissioner (WIC) completes an annual review of the performance of Scottish Water in achieving value for money in delivering infrastructure investment and the results of these reports are included on the website - www.watercommissioner.co.uk.

2.141 We will continue to make significant investments in our water infrastructure to improve the quality of our water. On 9th February 2005, Ministers set out objectives for Scottish Water's investment programme for the period 2006-2014; and the principles of charging that are to apply in the period 2006-2010 in the Scottish Executive Statement on Water Services: Objectives and Charging. In specifying these objectives, Ministers are seeking to achieve the maximum affordable improvement in public health and standards of environmental protection, and support housing and economic growth in communities across Scotland through investment in new strategic water and sewage. The formulation of these objectives was the culmination of 2 years work - drawing upon advice on the investment needs identified by the Quality and Standards 3 Board, responses made to 2 formal public consultations: Investing in Water Services 2006-2014 & Paying for Water Services 2006-2014, Scottish Water's Initial Strategic Plan and the findings of customer research: Investing in Water Services 2006-2014 - Research into Customer Views.

2.142 In the above statement, Ministers specified the following essential objectives to be delivered in the period 2006-2014:

• to improve the quality of some 530 kilometres of rivers and coastal waters
• to improve the quality of drinking water for 1.5 million people across Scotland
• to meet the strategic capacity requirements for 120,000 estimated new homes and over 4000 hectares of land for commercial development
• to take action on odour from 35 wastewater treatment works, with the aim that they will all conform with the statutory code of practice on sewerage nuisance that we need to introduce under the terms of the Water Services Bill and
• to remove over 1100 homes from the risk of sewage flooding.

2.143 Ministers also specified a number of desirable objectives which they would wish to be delivered but only on the basis that they can be delivered efficiently and with stable charges. These are described in more detail in the Statement on Investment Objectives.

2.144 Scottish Water will now prepare its second draft business plan on the basis of the objectives and the principles of charging that Ministers have specified. The WIC will, by means of a Strategic Review of Charges, establish the resources required to deliver all essential investment objectives and also the desirable objectives to the extent that the latter can be delivered efficiently, and charges to customers rising by no more than inflation. A draft determination will be published by the WIC by end June 2005.

Environment Protection - Flood Prevention and Coast Protection

2.145 The safety of the Scottish people and their homes will be further protected with significant increases in the level of funding for local authorities, which are responsible for flood prevention and coast protection schemes. Funding for these schemes increases significantly from its base of £14m in 2005-06 to £42m per annum by 2007-08. The funding in the two years 2003-04 and 2004-05 enabled 1,100 properties to be protected from flooding while the three years funding from 2005-06 will enable 4,950 properties to be protected. However, it is recognised that further work is required to protect more homes from the risk of flooding and therefore we are committed to improving our flood defences further over the next ten years. This significant increase in expenditure for flood protection will require local authorities, engineering consultants and relevant construction companies to ensure they have sufficient capacity to meet the additional workload.

2.146 The additional investment in the three years from 2005-06 will allow the flood prevention schemes planned for the following areas to proceed as planned (subject to the completion of the statutory process):

• two schemes in Edinburgh with a value of approximately £50m commencing in 2005-06, subject to outcomes of a public local inquiry in to one of the schemes;
• the White Cart scheme in Glasgow is planned to commence construction in 2005-06 with a value of over £30m;
• further schemes in Galston, Dunfermline and other smaller schemes will be able to progress in 2005-06.

2.147 The National Technical Advisory Group is preparing guidance on the preparation of flood prevention schemes. The Group is currently considering sustainable flood management to ensure new schemes take up available opportunities.

Environment Protection - Waste Management

2.148 The Scottish Executive and Scottish Environment Protection Agency published the National Waste Plan in February 2003 to meet EU directive requirements for recycling, composting, energy recovery and landfill in 2010, 2013 and 2020. This built on the framework set out in the National Waste Strategy (1999) and Area Waste Plans for improving sustainability by reducing the 90% of our municipal waste sent to landfill and increasing our level of recycling from 7%. The dramatic changes proposed will result in 55% of municipal waste being recycled and composted, 14% used for energy recovery and only 31% landfilled.

2.149 The Scottish Executive has allocated significant funding through a specific grant scheme - the Strategic Waste Fund (SWF) - to support these changes. All 32 local authorities have been awarded indicative funding totalling £945m to 2020 - of this some £200m has been allocated in the three year period from 2005-06. These awards - mostly revenue grants - will aid the implementation of segregated kerbside collections to households, and also fund PPP projects for infrastructure in Argyll and Bute and Dumfries and Galloway. Inverclyde Council have also been given an award to build a Materials Recycling Facility in Greenock as part of their wider regeneration agenda.

2.150 The infrastructure requirements to support achievement of the targets has been summarised below with the majority of projects planned to commence prior to 2010, although some areas have yet to finalise their plans. In addition to this infrastructure investment, some £10m has been paid out in 2004-05 to purchase additional bins and refuse collection vehicles required to implement the kerbside collections. We would expect expenditure of this nature to continue to 2020 as a rolling programme of replacement will be required.