WIREDGOV

Aberdeen route to be delivered on time and on budget.

The Aberdeen Western Peripheral Route (AWPR) project will be classified to the public sector, following a review by the UK Office of National Statistics (ONS).

The Scottish Government will now give further consideration to the contractual arrangements that apply to the AWPR, with a view to securing a private sector classification.

The decision has no impact on the cost or project timetable and the AWPR is expected to be completed on time and on budget.

Deputy First Minister John Swinney has advised the Scottish Parliament that, following recent updates to European statistical standards, ONS has completed its review of the AWPR and has given the project a public classification.

Mr Swinney has committed to reporting further to the Scottish Parliament early in the next term.

The Deputy First Minister said recently:

“This is a statistical accounting classification and has no impact on the cost or delivery timetable of the AWPR or the two NHS projects that the ONS has also indicated it will review. We fully expect these projects to be completed on time and on budget – as they are currently on track to do.

“Infrastructure investment is at the heart of our economic strategy – delivering jobs, increased economic activity and productive assets of benefit to the people of Scotland.

“The programme of revenue-financed NPD/Hub projects has played an important role in maintaining investment – with two projects worth £29 million completed and another 18 under construction.

“Each additional £100 million of public sector capital spending in 2015-16 is estimated to support around 1,000 full time equivalent Scottish jobs, just over half of which are in the construction sector.

“This decision published by ONS today, means we need to give further consideration to the contractual arrangements that apply to the AWPR, with a view to securing a private sector classification.

“I have instructed Scottish Futures Trust to engage with ONS and other parties to clarify the detailed points of interpretation that have underpinned the decision and their potential implications.

“I have updated Parliament at key stages of this process and I will do so again at the earliest available opportunity following its summer recess.”

Notes To Editors

The classification decision comes after ONS reviewed the status of the AWPR in response to a new standard and associated technical guidance on National Statistical Accounts (the European System of Accounts, or ESA 10), produced by Eurostat and taking effect across the European Union from September 2014, some 18 months after the OJEU (Official Journal of the European Union) notice for the AWPR was issued.

The guidance relates to the factors that are taken into account when considering whether a body or asset is controlled more by the public sector than the private sector and therefore whether it should be classified to the public sector. Factors can include the relative degree of public and private sector control over the governance of a project and the balance of risk and reward shared between public and private sector partners.

ONS has also confirmed that it will review two other NPD projects signed since September 2014 – the Dumfries and Galloway Royal Infirmary (DGRI) and the Edinburgh Royal Hospital for Sick Children – with a view to providing a classification opinion on these projects during 2015. We fully expect these projects to be completed on time and on budget – as they are currently on track to do.

IPQ response

To ask the Scottish Government whether it will provide an update on the non-profit distributing (NPD) pipeline of infrastructure investment.

I advised Parliament in February that recent updates to relevant Eurostat technical guidance on Statistical Accounts (the European System of Accounts – ESA 10), which came into effect in September 2014, could have implications for the NPD and Hub investment programmes.

In December 2014 the UK Office of National Statistics (ONS) decided to review the classification of the Aberdeen Western Peripheral Route (AWPR) project. The ONS has now reported and I am in a position to update Parliament.

The ONS has advised that, in light of the new guidance, the AWPR will be classified to the public sector. This is based on their interpretation of the degree of public sector control over the Special Purpose Vehicle established to deliver the project and the balance of risk and reward between the public and private sector partners that effectively caps the profits that can be achieved by the private sector.

I have instructed the Scottish Futures Trust to engage with the ONS and other parties to clarify the basis of this interpretation and the potential implications for the future contractual arrangements for the AWPR, with a view to securing private sector classification.

The ONS’ conclusions will have no effect on the timetable or cost of the AWPR project.

The ONS has also confirmed that it will review two other NPD projects signed since September 2014 – the Dumfries and Galloway Royal Infirmary (DGRI) and the Edinburgh Royal Hospital for Sick Children (ERHSC) – with a view to providing a classification opinion on these projects later in the year. Scottish Government and the Scottish Futures Trust will consider the implications of the AWPR opinion for these projects.

The ONS review will not affect the delivery timetable or cost for either of these signed projects.

In light of today’s opinion on an NPD project I am considering whether further changes are required to the Hub model. There is likely to be some further impact on the delivery timetable for Hub projects that are in the current pipeline. The Scottish Futures Trust will engage closely with project partners to discuss the implications for them.

As the ONS review has opined that the AWPR will be classified to the public sector, Scottish Government officials are engaging with HM Treasury officials to address the timing and nature of budget treatment. Parliament will recall that I indicated in my earlier statement in February that I had secured an additional £300million in Budget cover from HM Treasury to deal with potential consequences that may arise from this ruling.

I will report further to Parliament early in the next term. I can assure Parliament that I am taking all appropriate action to protect vital capital investment in Scotland and to manage the implications of the latest guidance on classification on the NPD programme and the Scottish Budget.