Scotland has been particularly successful in the field of PPP.  Projects are numerous and varied. The list currently consists of 111 projects representing almost £2.8 billion capital value, which include 76 signed and operational projects (“done deals”) worth £2 billion, and 35 deals in procurement stages worth £0.8 billion.  The average deal is worth about £25 to £30 million .

PPPs are making a significant contribution to public services in Scotland – around 10 per cent of conventional capital investment.  Additionally, conventional capital investment is expected to rise by 25 per cent over the period 2000-04.  The revenue commitments related to PPP projects are running at about 2 per cent of the total budget of the Scottish Executive.

Figures 1 and 2 show the level of activity over the various sectors – a challenge in itself for the sharing of best practice and knowledge. The first chart shows the distribution of projects by sector according to the number of deals signed for each sector. Hospital projects represent the largest category by number of projects signed with 28 per cent. The heterogeneous nature of the second largest category reflects the extent to which PPP has been adapted to different situations to deliver better services and infrastructure.

The relative size of the projects in term of capital value is represented in Figure 2. When capital value is considered, the diagram shows that the largest sector is waste water, an indication of the relatively large value of these projects, especially since they only account for 9 per cent of the total number of projects. At the same time, hospitals and schools still appear as priorities jointly worth 40 per cent of the total. 

All Deals by Capital Value

EducationSchools represent a large part of the capital value of PPP projects with 22 per cent (£623 million).  Signed projects are varied and include large projects such as The City of Glasgow’s Project 2002 which is worth £230 million and is the largest educational deal to date in the UK to smaller projects ranging from £13 million to £80 million in capital value.  Schools deals have been signed by the following local authorities: Aberdeenshire, East Renfrewshire, City of Edinburgh, Falkirk, Fife, City of Glasgow, Highland, Stirling and West Lothian.  Deals are due to be signed shortly by East Lothian and Midlothian.  All the schools deals will produce 78 new or refurbished schools.

Glasgow’s Project 2002 represents a rationalisation of 38 schools to 29 – the entire secondary school estate.  There will be 11 new buildings and the remainder will be extended and/or refurbished and a managed information and communications technology service will also be provided.  The accommodation element of the scheme has a contract term of 30 years, while the technology element will run for 12 years.

In contrast, Highland Schools PPP Project, signed at the beginning of June 2001, will provide 4 new schools - 2 primary and 2 secondary.  The 4 new schools will provide much needed improvements in accommodation.  At present, pupils on the Ardnamurchan and Morvern Peninsula have to undertake a round trip of 175 miles to attend the nearest secondary school.  During the week, pupils stay in hostels and only return home at the weekend.  It will make a huge difference to the pupils and their families being able to attend a local school.

The Scottish Executive is committed to improving the school estate and has invited local authorities to submit Outline Business Cases (OBCs) for school buildings under PPP projects.  A first round of OBCs was submitted in December last year and is currently being analysed, a second round is expected in September this year.  Funding which can support capital investment of around £500 million is available from the Executive.  Almost all local authorities have or intend to submit OBCs to bid for a share in the funding.  This is a testament to the way local authorities have embraced PPP as a means of improving the estate.  The quality of the OBCs received has also shown that local authorities are increasing their knowledge base of PPP.

In addition to schools projects, the education sector in Scotland has delivered the first PPP further education teaching facility in the UK when Falkirk College opened its Stirling Centre in 1998.  Two more colleges followed Falkirk’s lead and James Watt College and West Lothian College signed PPP contracts in 1999 worth a total of over £25 million.

All Deals by Numbers

HealthHealth PPP projects vary considerably; signed contracts include elderly care beds, IT, clinical waste disposal, equipment, community hospitals, major acute and teaching hospital developments, mental health facilities and geriatric facilities.  The three major hospital deals are Hairmyres Hospital, Wishaw General Hospital and the New Royal Infirmary of Edinburgh giving a total contract value of £348 million.  They will provide the NHS Scotland with three state of the art hospitals for the 21st century.

Wishaw General opened its doors in May last year having successfully transferred all inpatient, day case and outpatient services from two separate sites.  The new hospital includes 633 inpatient beds and 56 day case beds with day hospitals for the elderly and mentally ill.  There is a fully managed contract for all radiological equipment.  Hairmyres falls within the same NHS Trust as Wishaw General and opened its doors in March last year.  The new hospital is located on the same site as the old hospital.  The new hospital has 364 inpatient beds and 52 day case beds, an integrated radiology imaging system and a full range of inpatient, outpatient, diagnostic and clinical support services.

In August 1998, the contract was signed for the development of a £180 million hospital under PFI on a Greenfield site in the South East of Edinburgh consisting of 869 beds and 24 theatres.  The new facilities will replace those that are currently spread over four sites within the city.The hospital is being opened for occupation in two phases.  The first phase incorporated the transfer of Elective Orthopaedics and Productive Medicine (Gynaecology, Obstetrics/Maternity and Neonatology) in January and March 2002 respectively (Elective Orthopaedics will relocate during an interface from its temporary Phase 1 accommodation to its permanent accommodation in Phase 2 in early February 2003).  The second phase will take place with the planned building handover in late 2002, with clinical service entry in early 2003.  All services will have relocated from the original site of the main hospital to the new hospital in summer 2003.

The use of PPP in the health sector in Scotland has expanded considerably from the initial interest in construction projects.  There is now activity across the market place including IT and equipment.

Waste ManagementWaste Management is an area that has the potential for increased activity due to the introduction of new European legislation and the development of the National Waste Strategy: Scotland (NWS).  Local authorities will play a key role in implementing the NWS and PPP may be one way of taking this forward.

The Strategic Waste Fund has been established to assist local authorities in the implementation of their Area Waste Plans.  Support from the Strategic Waste Fund is only available for proposals that are in line with the relevant Area Waste Plans.  Development of each Area Waste Plan is being done collaboratively involving the key players in each area.  Allocations to local authorities can be made as either capital grants, revenue grants, PPP support or a combination of these grant types.

There are currently 4 Waste Management PPP projects at various stages of procurement:  Argyll & Bute, Dumfries & Galloway, Highland and Midlothian.

Other PPP projectsOther PPP projects that are operational include waste to energy plant, ICT services, office accommodation, a prison, and a road.  Two more roads projects are in the procurement phase.

Perth and Kinross Council signed an office accommodation PPP deal in 1999 with a capital value of £25 million.  The site is located in the centre of Perth and houses 700 Council staff.  In addition, a new multi-story car park facility adjacent to the offices provides 555 car park spaces.  Services provided by the Council were housed in a variety of scattered locations and the Council took the decision to centralise the majority of its staff in the belief that there would be significant economies of scale and considerable improvements in the quality of service provided to the community.

Kilmarnock Prison became operational in March 1999.  There was an urgent requirement for additional accommodation to reduce pressures within the existing prison estate.  The contract was for design and construction, as well as to maintain, finance and operate the prison for a period of 25 years. It has produced considerable savings relative to the traditional procurement route in both capital and operational costs.  Fast track construction meant that much needed prisoner accommodation was delivered earlier than under traditional methods.

The futureAn area of more general development is looking at alternative funding models for projects.  One local authority is looking at the possibility of a non-profit distributing organisation approach to schools estate management.  In other cases a joint venture approach might be more appropriate.  The Scottish Executive is constantly reviewing evolving methods of PPP and will continue to examine different forms to see if more efficient and successful forms of PPP can be developed.

PPP is here to stay in Scotland.  Ministers have firmly underlined the Government's commitment to partnerships with the private sector as a key tool in modernising public services.  PPP has evolved and has been improved over the years.  It is a means not an end, and so will continue to be developed and be made to work better, which will benefit the people of Scotland.