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Andrew Bruce 24 February 2012

Andrew Bruce 24 February 2012. CIPFA Scottish Treasury Management Forum Workshop. Who we are and what we do..... Established by the Scottish Government in late 2008, SFT has the responsibility for improving value-for-money across all public sector investment

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Andrew Bruce 24 February 2012

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  1. Andrew Bruce 24 February 2012 CIPFA Scottish Treasury Management Forum Workshop

  2. Who we are and what we do..... Established by the Scottish Government in late 2008, SFT has the responsibility for improving value-for-money across all public sector investment SFT operates at arm’s length from the Government but works closely with the public and private sectors to seek and deliver improved value for taxpayers In 2010-11, SFT delivered £129 million of net future benefits and savings and since it was established, SFT has delivered savings of circa £250m SFT currently leads on or manages a project portfolio to the value of £9bn Scottish Futures Trust

  3. The market today.... “Investment in infrastructure north of the Border means Scotland is ‘stealing a march’ on regions outside of London.” Mike Peasland, chief executive of Balfour Beatty Construction Services “New infrastructure puts spades in the ground now and gives businesses a chance to do new things in the future – it’s a real game changer.” John Cridland, director general of CBI “It is well-proven that investing in key infrastructure can not only support recovery but also drive it.” David Tonkin, managing director of Atkins’ UK Scottish Futures Trust

  4. The Challenges We Face

  5. Our Response £14bn TIF Prioritisation NHT NPD £4bn Regulated Asset Base Efficiency measures Increased buying power

  6. Needs -V- Wants

  7. A Joined Up Approach Lasswade High and Eastwood High

  8. A Joined Up Approach Lasswade High

  9. A Joined Up Approach Eastwood High

  10. A Joined Up Approach Lasswade and Eastwood High Schools - targeted common approach

  11. Good Procurement In Action ‘working together to build better buildings for improved Public Services for the benefit of communities across Scotland’ hub is a more efficient, quicker and sustainable procurement methodology for public sector bodies hub increases the scale of joint service working and integration across Scotland resulting in better outcomes at the point of service delivery hub provides for enhanced community benefits

  12. Corporate Structure Shareholders Agreement Private Sector Development Partner Local Public Sector shareholders Scottish Futures Trust 30% share of Equity 60% share of Equity 10% Share of Equity Financial Return Financial Return Financial Return hub Co

  13. SFT leads the way in the following areas: £2.5bn NPD programme – SFT is helping to deliver one of the largest and most innovative investment programmes in Europe £470m TIF programme – SFT is leading the development of Tax Incremental Financing in Scotland which will help attract private sector investment in excess of £2.2bn £150m NHT Programme – SFT is leading the way in delivering 1,000 affordable homes for rent across Scotland helping to protect over 800 jobs Innovation

  14. Transport - NPD programme worth £1bn The M8, M74 and M73 improvements and the Aberdeen Western Peripheral Route Innovation - NPD

  15. Innovation - NPD • Education - NPD programme worth £750m • Inverness, Glasgow and • Kilmarnock colleges

  16. Royal Hospital for Sick Children in Edinburgh And the Dumfries and Galloway Royal Infirmary Innovation - NPD • Health - NPD programme worth £750m

  17. Long Term Financing

  18. Innovation TIF Edinburgh Waterfront Buchanan Quarter, Glasgow Ravenscraig

  19. TIF - Revenues to hypothecate  Non-Domestic Rates  Council Tax  Stamp Duty ? Car Parking ? Others

  20. The Redline – Pre-TIF £ NDR Local Authority: Enabling Infrastructure

  21. The Redline – Post-TIF £ Increment £ NDR Private Sector Investment Incremental NDR: Repay LA Funding

  22. The TIF Mechanism ‘Virtuous Circle’ Inception Less Displacement

  23. TIF - Key Risks Local Authority is the borrower and primary risk taker; Other parties are Scottish Government and principal land owner(s) / developer(s); - All must bear some risk for TIF to work; Risk that NDR does not flow: “Flash to bang” risk (Local Authority); mitigated/ shared with developers by parallel investment / land sacrifice Risk that NDR through movement not growth: “Displacement” (Government); Mitigated through agreement up-front allowance

  24. Innovation - NHT Construction well underway at 11 sites across Scotland to build 600 homes with many more to come

  25. NHT – The Mechanics Scottish Government Guarantee Management & Maintenance Provider Local Authority Funding Developer NHT SPV Future Sale Repayment & Return Tenants www.scottishfuturestrust.org.uk

  26. NHT – Phase 2 Procurement Timetablethe NHT Initiative • OJEU Issued: November 2011 (with PQQ and IM) • Notice Published: OJEU and Public Contracts Scotland • PQQ submission: January 2012 • ITT Issued: January / February 2012 • ITT Submission: March 2012 • Contract Award & Review of CoT: April 2012 • Contract Signature: May 2012 onwards • SPV formation and houses entering the initiative: June 2012 onwards

  27. Any questions?

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