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1 THE ROLE OF INFRASTRUCTURE INVESTMENT IN SCOTLAND
Our Overarching Purpose
The Scottish Government has established a coherent strategic approach that aligns all the resources and polices of the public sector with a single overarching Purpose:
To focus the Government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth.
Through this alignment of public policy and the resources, government in Scotland is equipped to deliver a step change in the prosperity of Scotland, unlock the nation's full potential and deliver benefits for all of Scotland's people.
The Scottish Government intends to target its investment to support policies and approaches that will deliver its Purpose through five Strategic Objectives - to make Scotland wealthier and fairer; smarter; healthier; safer and stronger; and greener.
Infrastructure and Place
A key priority supporting the Purpose is a commitment to invest in infrastructure and place. Under the Scottish Government's Economic Strategy investment into infrastructure and place will be focused on improving connectivity; providing sustainable, integrated, and cost-effective transport alternatives to the car; and improving the planning and development regime. The last goes hand in hand with the commitment to make government in Scotland more efficient and to streamline its dealings with business, with better regulation and more efficient procurement practices.
In developing Scotland's infrastructure, the Scottish Government recognises that good building design should be responsive to its social, environmental and physical context. It should add value and reduce whole life costs. Good building design should be flexible, durable, easy to maintain, sustainable, attractive and healthy for users and the public; and it should provide functional efficient adaptable spaces for home work and recreation. Equally important to the design of individual buildings is the design of sustainable places. Well-designed buildings and places can revitalise neighbourhoods and cities; reduce crime, illness and truancy; and help public services perform better.
The Scottish Government is committed to the link between infrastructure and the desired economic and sustainable improvements in society, and therefore has raised public funding for infrastructure investment over the Spending Review 2007 period.
This Infrastructure Investment Plan highlights the commitment to the physical assets needed to grow the economy, and to support high quality public services. These will underpin the development of the human capital offered by our greatest asset - Scotland's people.
In Scotland, as across the UK, the current stock of capital per worker is well below that of our main competitors. Research ( Productivity in the UK 7) has shown that differences in capital investment levels are key factors in explaining the UK's productivity gap with the US, France, and Germany.
In addition to the policy role for infrastructure investment in relation to economic growth, other factors can be identified which support the need for further infrastructure investment in Scotland at this time.
Firstly, over the last 30 years long-term investment has been inadequate, reflecting the prioritisation of successive governments in allocating public expenditure. Although this legacy has been recognised and partly addressed through additional public and private sector investment since devolution, more is required.
Secondly, it can be seen that assets created some 30-40 years ago have not always provided the length of good service anticipated at the outset. In hindsight, contributory factors in some cases have been short-term forecasts of demand and user specification, non-sustainable design and construction practice, and inadequate lifecycle maintenance. Climate scenarios also provide an increasingly sophisticated picture of likely climate change over the coming century. For Scotland, likely increases in the frequency and severity of rainfall and storm events will have significant implications for our infrastructure. It is vital that key national and community assets account for such risks and are fit for purpose not just when built but throughout their economic lifecycle if they are to provide good value. As part of this we need to consider the carbon impact and sustainability of the asset's life cycle from construction, through use, maintenance and ultimately, disposal.
The Scottish Government will take such factors into account when allocating its resources, and will strive to improve strategic planning and care of infrastructure across the public sector. We will work with the public and private sectors toward that aim.
Summary of the investment priorities
Within the objective of a fairer and wealthier Scotland, transport improvements between homes and workplaces encourage people to join the labour market when previously they were economically inactive or unemployed, as transport problems are often a major barrier to accessing work. Reduced journey times for commuting and business travel, both within Scotland and beyond, will also have a positive impact on labour productivity, helping to improve Scotland's comparative advantage.
Reductions in transport costs enable a business to lower the price of its products or services, improving business competitiveness which can in turn increase sales, helping to stimulate business expansion and the recruitment of more staff. Enhancing transport infrastructure and services can open up new markets, and help to build a critical mass of businesses that drive up competitiveness and deliver growth.
Good transport links to Europe and the rest of the world are an important element in attracting, and retaining, inward investment and high value-added activities that may be transient if competitive advantage is being threatened. International transport links are vital as a means to transport products and to enable business representatives to promote their products and services abroad so as to retain and grow export markets. Transport is also important for the Scottish tourism industry as tourism depends on the travel industry to bring visitors to Scotland and help them get around when they are here and assisting in bringing the benefits to the whole of Scotland.
The Scottish Government has identified key programmes and projects to invest in Scotland's strategic transport networks, committing over £1 billion a year to support the efficient movement of goods and people via an improved road and rail infrastructure throughout Scotland.
In excess of £500 million a year will be invested into Scotland's water and waste water infrastructure, supporting vital economic and social developments as well as renewing supply and treatment infrastructure in accordance with modern standards.
A skilled and educated workforce, a traditional strength of Scotland, is essential to a smarter Scotland, and to building our comparative advantage and to the delivery of sustainable economic growth. Investment by all individuals and by the state in early years, school, and 'further and higher' education has a proven impact on the employability and productivity of individuals and, in turn, business growth. Learning and skill development in work is also key to developing a more adaptable economy. The benefits of high quality school buildings and facilities are self evident. There is increasing evidence too about the return on investment from early years intervention. On top of benefits to the individual, Scotland's Scandinavian neighbours offer lessons about the potential positive impact of high quality, affordable and widely available early years provision on labour market participation and population.
Scotland's colleges and universities are an important part of the country's high international reputation for well educated individuals. Moreover, they provide the bulk of our most highly skilled, creative and innovative people and help generate the ideas upon which Scotland's prosperity depends. In order to function and produce the people that our economy needs, our colleges and universities need to invest in their estates and buildings. This requires not only the support identified in this Plan in the form of capital funding from the Scottish Budget, but also additional private investment. By providing capital funding, the Scottish Government is supporting the education and learning of around 150,000 full-time equivalent students each year. There will be direct Scottish Government capital investment in excess of £190 million a year within the universities and colleges sector.
The further and higher education sector is a good example of where investment directly contributes to the achievement of more than one of the Strategic Objectives. Thus, businesses are wealth creating agents and need a highly skilled and qualified workforce in order to compete effectively in the knowledge economy. FE/ HE can also impact upon the private rate of return - an individual can typically expect higher earnings over their lifetime as a result of the skills and qualifications they have acquired. Moreover, as well as the benefits to the individual, there is also a social return. This can measure the benefits to society as a result of investment in an individual's education through, for example, capital funding of the educational facilities. This is where the link to growing the economy is strong.
Investment in schools continues to be a priority as the PPP schools construction programme is rolled out over the next few years, involving a 25-30 year commitment of some £170 million a year from the Scottish Government and also funds from local authorities. Under the Local Government Concordat further schools investment is being taken forward by education authorities with funding support through the local government settlement.
By making Scotland healthier through tackling health inequalities and supporting healthier lifestyles and choices, supplemented by early interventions and anticipatory, responsive services, we will increase the productivity of Scotland's workforce, reduce absenteeism, improve public sector efficiency and increase participation in the labour market by reducing the number of people on incapacity benefit.
Our aim is to support people to lead longer, healthier lives and our approach will involve a particular focus on the health and wellbeing of the areas and communities with the worst health record. One central objective of NHS service provision and therefore infrastructure expenditure is to reduce health inequalities in the Scottish population.
With a value of £4.3 billion, the NHS estate is a major component of the Scottish public infrastructure. The maintenance, improvement, and expansion of such a large asset base supports private sector job creation, particularly in the construction sector.
Besides structures, the NHS procures high-tech capital goods in the form of medical equipment and IT. By providing a dependable customer base, the NHS gives a strong incentive to establish a firm local supply base for these high-value-added industries, thus enhancing the growth potential of the Scottish economy.
The Scottish Government will provide over £500 million a year into the NHS estate, and will look to additional investment through the 'hub' initiative for primary/community care facilities in conjunction with local authorities.
Safer and stronger communities have an important role to play in delivering our overall Purpose. By investing in well-designed, sustainable housing and the social infrastructure needed to support the population we will make communities safer and stronger. We will increase the attractiveness of Scotland as a place to live and work, attract high quality businesses and talented migrants, reduce out-migration and secure the productive engagement of an even higher proportion of the population.
The Scottish Government will invest £200 million a year in prison developments and investment in the buildings and other assets which support our prosecution, police, courts, and fire services.
The Government is working in partnership with local authorities and other responsible authorities through the Local Government Concordat and the introduction of new flooding legislation to ensure a more sustainable approach to flood risk management. In addition to flood risk, the Scottish Government is also working to address other unavoidable impacts of climate change through the development of Scotland's first climate change adaptation strategy. This strategy will identify priority action to safeguard the smooth functioning of our communities' services and infrastructure.
By making Scotland greener we will protect and enhance the natural and built environment that is so highly valued by those living, working and visiting Scotland and which underpins many of our important businesses and sectors.
With our wealth of natural resources and our excellent research base we have the potential to become one of the world's leading nations in managing our environmental impact. This represents an unparalleled opportunity to boost our economy and enhance our environment and quality of life for decades to come. We are investing in the development of renewable energy, and through the Local Government Concordat in waste recycling and flood prevention/relief schemes.
Climate Change
The Scottish Government recognises that climate change is one of the most serious threats facing us and future generations and is determined that Scotland will play its part in rising to the challenge that climate change poses.
In the Spending Review 2007 we committed to ensuring that public spending across portfolios contributes to the action needed to meet the 80% emission reduction target proposed in the Scottish Climate Change Bill consultation and to reduce emissions by 2011 in line with that pathway towards the 80% target reduction.
Our priorities in the 2007 Spending Review period include delivering increasingly high standards of environmental performance and design as we refurbish the public sector estate, including schools, hospitals and prisons, and requiring the same of all new buildings and investments drawing on public funds. Our consultation on a new housing strategy includes higher environmental standards for all new homes. We are also committed to building on the recommendations of the Low Carbon Building Standards Strategy1 and to set out a clear route to our goal of zero-carbon buildings, progressively tightening the energy efficiency standards in our building regulations.
To deliver these priorities we are developing a carbon assessment tool - to be in place by 2009-10 - that can be applied across all Government spending in Scotland. This will allow the Government and others to be in an even better position to judge the carbon impact of spending on transport, housing, health and enterprise. The tool will capture in monetary terms the damage costs of the climate change that is caused by each additional tonne of greenhouse gas that is emitted and it will allow us to take decisions on that basis.
However, even if similarly ambitious emissions reduction targets were replicated worldwide, some degree of climate change remains unavoidable as the impacts of climate change over the next 30 to 40 years have been determined by past and present emissions already in the system. This change will have significant implications for the lifecycle of key infrastructure. The Spending Review 2007 committed to the development of Scotland's first climate change adaptation strategy. This strategy will identify priority action to safeguard the smooth functioning of our communities' services and infrastructure.
The National Planning Framework
Planning and development structures are key to the delivery of infrastructure. The National Planning Framework for Scotland will help to ensure the contribution of the planning system to economic development is explicitly recognised and taken into account. The second National Planning Framework will take forward the spatial aspects of the Government Economic Strategy, setting clear priorities for improvements in infrastructure to support Scotland's long-term development. It will reflect the Scottish Government's commitments on sustainable economic development, climate change, regeneration and housing supply.
The Scottish Government considers that the following projects should be identified as national developments:
(1) Replacement Forth Crossing
(2) Edinburgh Airport enhancements
(3) Glasgow Airport enhancements
(4) Grangemouth Freight Hub
(5) Rosyth International Container Terminal
(6) Scapa Flow Container Transhipment Facility
(7) Grid reinforcements to support renewable energy developments
(8) Glasgow Strategic Drainage Scheme
(9) 2014 Commonwealth Games facilities.
National Planning Framework priorities will be taken into account when considering future policy and spending decisions and therefore have a significant effect on investment plans for each Ministerial portfolio.
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