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6. Constraints
6.1 In taking the SFT concept forward the Government recognises that it has to operate within the constraints of a devolved administration. More specifically the Scottish Government has no borrowing powers under the terms of the Scotland Act.
6.2 Another new and significant potential constraint which needs to be factored into our thinking has emerged. From April 2008 the UK Government has committed the UK as a whole to move to accounting under the International Financial Reporting Standards. EU Member States are also committed to introducing these new standards.
6.3 These new accounting rules will change the basis on which the balance sheet position of PFIs is assessed and hence could potentially affect the decision on whether or not a project will score as public expenditure Hence the changeover to IFRS is likely to make more difficult the task of designing an SFT which would continue to provide the additionality of investment in public service facilities which has been secured through private sector investment over the last 15 years. Accordingly, the SFT proposals in this paper will be developed in the light of the final IFRS outcome.
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