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4.(vii) LOCAL GOVERNMENT

Introduction

The continued development and quality assurance of infrastructure such as roads and schools is essential to the success of Scotland's economy, and local government plays a major part in contributing to this.

Capital spending by local authorities is mainly for buying, constructing or improving physical assets such as:

• Buildings - schools, houses, libraries and museums, police and fire stations, etc.;
• Land - for development, roads, playing fields;
• Vehicles, Plant & Machinery - including street lighting, road signs, etc.

However, local authorities also provide grants and advances to the private sector, or the rest of the public sector for capital purposes.

Local authority capital expenditure can be financed by a number of sources, but primarily it is through (a) central and other government support, (b) capital receipts from the sale of assets, (c) the use of contributions from revenue, (d) borrowing, and (e) non-government contributions such as lottery funding.

Public Private Partnerships ( PPP) provide an additional and different route for local authorities. Also, increasingly developments key to local economic growth and community development are being funded from private investment.

The Scottish Budget and the Concordat signed by the Scottish Government and the Convention of Scottish Local Authorities ( COSLA) provides for significant growth in the capital resources being made available to local authorities in the 3 year period 2008-09 to 2010-11. Support for almost £3 billion of capital investment is being provided to local government through a mixture of capital grants and revenue support for a notional level of new in-year borrowing. This includes capital funding for police and fire boards and the regional transport partnerships. Within this settlement, local authorities also receive committed revenue grant from the Scottish Government towards the cost of PPP projects, based on capital expenditure and scope of approved projects.

In addition to the new in-year borrowing supported by the Scottish Government, local authorities are free to undertake their own additional self-financed borrowing, under the Prudential Code, subject to affordability.

Under the Concordat, the extent of ring-fenced funding is being reduced with a considerable number of specific grants, for example the PPP Revenue Support Grant and the Schools Fund Capital Grant, being rolled up and transferred into the local government settlement. This will give local authorities more flexibility to deploy resources according to their own local needs and priorities.

Developing the national infrastructure requires substantial investment and co-operation from central government, local government and the private sector. The new partnership with local government provides the opportunity for a more integrated working relationship to develop to ensure effective delivery and investment in infrastructure projects.

Local Government Capital Spend

Table 4(vii).1 summarises the total approved capital expenditure in Scotland's local government for the period 2008-09 to 2010-11. It excludes capital investment in housing and capital funding to the Joint Boards for Fire and Police. It also excludes spending on grants and advances to the public and private sector for capital purposes. Authorities plan on a 5-year horizon and future developments captures their committed capital spending for the 2 years 2011-12 and 2012-13.

Table 4(vii).1: Approved General Fund Capital Expenditure by Local Authority ²⁰

Table 4(vii).1 demonstrates the significant approved investment which local government are making in local infrastructure development - totalling in excess of £5.2 billion of planned expenditure in non-housing infrastructure by local government alone. Investment levels in future years can be expected to increase as new capital programmes are approved and additional funding options become available. Additional investment will also be made on grants and advances to other public and private sector parties that will support further local economic development and community infrastructure.

Local infrastructure - Public Investment

Table 4(vii).2 summarises the infrastructure projects where local government is providing more than £5 million of the investment. The details contained in the table are taken from information in approved Capital Plans available in February/March 2008. A number of these projects have also attracted investment from other sources, including central government, which may not be included within the investment figures. Further details on individual projects and other projects being undertaken may be found on the respective local authority websites detailed in Appendix A. Some additional information on a selection of projects appears at the end of this table.

Table 4(vii).2: Local Government Projects over £5m Investment

Table 4(vii).2 indicates the significant investment which is being taken forward by local government within Scotland. The projects below provide examples of the diversity and scale of this investment:

North Lanarkshire - Schools and Centres 21

The Council has approved the next phase of the programme to upgrade its schools and community leisure estate. A funding strategy has been agreed, including the use of prudential borrowing, capital receipts, Schools Fund, and savings from schools rationalisation. This will raise £250 million to be invested in the programme that includes new build and major refurbishment of secondary schools, primary schools and community facilities, including community centres, libraries, etc.

The project will be delivered on the basis of a long-term framework agreement covering the four-year period from 2008-09 to 2011-12.

City of Edinburgh - Trams

The Edinburgh Tram Project has a budget of £545 million for Phase 1a, which will run from the Leith Waterfront to Edinburgh Airport. Advanced utility diversions are currently underway and work is anticipated to begin on the tram infrastructure works this summer. The current programme anticipates trial running to commence in 2010 with the tram operating commercially from 2011. The investment associated with this is also included within Chapter 4.(iii) Transport.

Moray Flood Alleviation

The Council has been committed to the development of Flood Alleviation Schemes for Lhanbryde, Elgin, Forres and Rothes up to the flood prevention order stage. The total gross costs over the 5 year period 2008-12 are estimated to be £117 million.

Glasgow Schools

The Council is taking forward its Project 2002 to invest in the secondary school estate. The total costs over the 30 year life span are estimated to be £1.2 billion with the project delivering 11 new build and 18 refurbished schools over a 3 year period with a 30 year concession. Initial capital of £225 million has been invested in the programme.

In addition, Glasgow has been taking forward its pre-12 strategy. This has an estimated cost of £240 million with 34 new build campuses set to replace 88 primaries, 46 nurseries and 7 ASL schools. The project is funded through Glasgow's capital fund, prudential borrowing, capital receipts and the Schools Fund.

City of Edinburgh - Flood Relief Schemes

The Council is currently progressing two major Flood Prevention Schemes.

Braidburn (£29 million) - two advanced work contracts have been completed and the main contract for these work was let in May 2007 and work is underway. It is anticipated that works will be substantially complete by 2010.

Water of Leith (£51 million) - the commencement of the Water of Leith Scheme was delayed by the requirement to hold a public enquiry. However, this project has now been approved and works are expected to commence in 2008, with anticipated completion in 2012.

Details of Local Government Capital Plans can be located on their websites at the addresses included in Appendix A.

Local Infrastructure - Private Investment

Significant levels of investment are being privately funded at local government level through partnership arrangements. Table 4(vii).3 summarises the investment in the schools estate over the coming years through PPP projects and the status of these projects:

Table 4(vii).3: Private Investment in Scotland's School Estate

Under PPP, over the next 4 years £1.1 billion is being invested in schools infrastructure in addition to local government direct investment in schools. This is in excess of the £1 billion of schools projects (with capital values over £5 million) which have been approved by local government and are listed by authority in Table 4(vii).2.

Regional Transport Partnerships

Regional Transport Partnerships ( RTPs) were established in December 2005 to create a step change in transport delivery and strategic thinking, at regional level across Scotland, by having local authorities combine their public service delivery to achieve strategic benefits and to better serve the needs of people and businesses. They were tasked with the development of regional transport strategies.

In the past the RTPs produced Capital Plans that were approved by Ministers. In future the RTP capital grants will be rolled into the LG Capital Grant, apart from SPT which will receive £25 million per year over the next 3 years.

Fire and Police Joint Boards

Details of the capital investment in the police and fire services is included in Chapter 4.(v) of this Plan. Final funding arrangements are in the process of being agreed.

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