:00:15. > :00:21.Tonight on Newsnight Scotland, while the Edinburgh trams are mired
:00:21. > :00:25.in crisis, the M74 extension opened. The government said it is ahead of
:00:25. > :00:30.time and under budget, as is the work on the M80. Do they tell us
:00:30. > :00:35.something about how public projects should be managed?
:00:35. > :00:42.There is a new road in town, you can just about see and 74 extension
:00:42. > :00:52.from the BBC headquarters in Glasgow. -- see and 74 extension.
:00:52. > :01:26.
:01:26. > :01:29.This project was eight months ahead of schedule and under budget. Where
:01:29. > :01:32.did this have projects succeed where others have failed?
:01:32. > :01:39.happened with a really good partnership between the public
:01:39. > :01:44.bodies. Principe transport Scotland and Glasgow City Council, and the
:01:44. > :01:48.private sector -- principally transport Scotland. There has been
:01:48. > :01:54.an open book Accounting. The private sector opened up the books
:01:54. > :02:00.and said, there is our costs, have a look. No stone is unturned, so
:02:00. > :02:05.that the costs are the actual costs and they will share in the profit.
:02:05. > :02:08.The public and private sector have shared in the profits. A good idea.
:02:08. > :02:13.This type of partnership is a relatively new but has been tried
:02:13. > :02:18.in other parts of the UK and the world. Proponents say it works.
:02:18. > :02:21.Raising funding is still an issue, when governments and councils are
:02:21. > :02:27.seeing budgets cut. There is an argument that this is money well
:02:27. > :02:32.spent. This has been an expensive project. It cost around �8,000 for
:02:32. > :02:36.every metre of this road. But many people point to the economic
:02:36. > :02:42.benefits. It has created jobs and Boyd's the construction industry
:02:42. > :02:50.during the recession. -- buoyed up the construction industry. Many
:02:50. > :02:54.others point to the benefits. might take 45 minutes to get to a
:02:54. > :03:00.sight. With this new road, it would take it down to about 10 or 15
:03:00. > :03:05.minutes. A substantial saving. economic benefit is something the
:03:05. > :03:11.government wants to replicate across the country. The transport
:03:11. > :03:17.review is a wish-list of products it wants to tackle. There are 29 of
:03:17. > :03:22.them. Only a few are likely to be started, like the Forth Road
:03:22. > :03:27.replacement building. Others could be years away. The problem is
:03:27. > :03:32.finding the money. Accountants have come up with one solution. It is
:03:32. > :03:38.called tax increment or funding. You borrow money, you build on a
:03:38. > :03:41.new site, you put some business units, some housing. That the
:03:41. > :03:46.tracks new business into your area, and they pay more rates. Your rate
:03:46. > :03:49.has got to pay for it -- your rate goes up to pay for it. You are
:03:49. > :03:53.borrowing on the base of the investment and growth you're going
:03:53. > :03:57.to have. It makes sense for those wanting to grow the economy and
:03:57. > :04:07.drivers are not likely to object to new roads being built. But few
:04:07. > :04:10.people want them in their backyard. And 74 development is no different.
:04:10. > :04:14.-- the M74 development is no different. What is it going to be
:04:14. > :04:18.during the night? We have had disturbances or long time, what is
:04:18. > :04:22.it going to be like when it is up and running? I don't know, we have
:04:22. > :04:27.to wait and see, but we have been put up with an awful lot, it has
:04:27. > :04:30.been a living hell. Then there is the wider environmental impact. The
:04:30. > :04:35.Greens say that all this road will increase is congestion and carbon
:04:35. > :04:38.emissions. As for Glasgow's economy, we will have to see if it has been
:04:39. > :04:43.money well spent. The Transport Minister, Keith Brown,
:04:43. > :04:47.came into the studio earlier. I asked him if he expected the new
:04:47. > :04:50.road to have a real effect on the economy in the area. We already
:04:50. > :04:55.have 700 jobs announced for the Clyde gateway. Many businesses are
:04:55. > :04:58.telling us they have much more reliability for the deliveries,
:04:58. > :05:01.getting goods to the right people, people getting to work. You can
:05:01. > :05:05.imagine it is difficult to guarantee getting a delivery on
:05:05. > :05:10.time through Glasgow. Yes, it will have a real impact on the economy.
:05:10. > :05:14.What would you say to people who are already complaining
:05:14. > :05:19.vociferously, who live within earshot of this and it doesn't look
:05:19. > :05:24.very attractive to them, and it is noisy, and they don't see any
:05:24. > :05:27.benefits. I heard the vox pops this morning on BBC radio. Many people
:05:27. > :05:31.locally thought it would be a great benefit because it would take
:05:31. > :05:34.traffic away from the surrounding streets. Down sides are inevitable
:05:34. > :05:37.in a modern economy where you are building large structures, but
:05:37. > :05:44.there will be major benefits from people seeing less traffic on their
:05:44. > :05:49.streets. We know the environmental arguments, but leaving that to one
:05:49. > :05:55.side, but has a feeling of being one of these gigantic projects from
:05:55. > :06:01.the past. If we were starting from here, is it something you would
:06:01. > :06:05.actively want to build? It comes down to the design of the M8 back
:06:05. > :06:15.in the 1960s. When this was first proposed. That is when it should
:06:15. > :06:19.
:06:19. > :06:22.Would in the 60s, it was a It would have been easier to do at
:06:22. > :06:28.that time, but it would have to be done to make the connection between
:06:28. > :06:33.the M74, right through to the heart of Glasgow. The way this was
:06:33. > :06:39.financed, this is a standard contract? That's right. Whereas the
:06:39. > :06:44.M80 upgrade is a PPP project. an MPD project, run by a contractor.
:06:44. > :06:48.The funding is the Scottish Government. The Glasgow M74 was
:06:48. > :06:50.managed by the council but the Scottish Government along with
:06:50. > :06:57.Glasgow City Council, Renfrewshire and South Lanarkshire paid for the
:06:57. > :07:01.project. Ultimately the Government would pay for anything, but the M80
:07:01. > :07:05.is a different project, a PPP style deal and the ownership of it has
:07:05. > :07:08.been sold while it has been constructed, at least part of it.
:07:08. > :07:13.They will not only build the road but will look after it for many
:07:13. > :07:19.years to come under that contract. If you are right, that both of
:07:19. > :07:24.these projects are coming in ahead of schedule, and under budget,
:07:24. > :07:28.doesn't it rather show that these arguments about PPP versus doing it
:07:28. > :07:33.in the way that the M74 has been done are actually pretty artificial,
:07:33. > :07:38.as long as the project is managed properly, it it doesn't matter how
:07:38. > :07:42.it is done. Our argument against PPP wasn't that it couldn't be done
:07:42. > :07:47.efficiently, it was that it was the level of profit going to the
:07:47. > :07:51.companies involved. That is why we have gone... For example, on the
:07:51. > :07:55.M80, are you saying there will be excessive profits going to the
:07:55. > :07:59.company about to complete that? is a well-managed projects are it
:07:59. > :08:03.is possible to do that. It is possible to have good PPP for it is
:08:03. > :08:09.possible to limit the profit if you can strike a good bargain. That has
:08:09. > :08:13.not been the history of PPP contracts. That is why we have
:08:13. > :08:17.developed to the MPD model, to restrict the model. How many
:08:17. > :08:21.projects have been completed using the MPD model? We are in the
:08:21. > :08:26.process of doing that. The Borders rail project will proceed according
:08:26. > :08:32.to that. The M8 will proceed according to that. This is the
:08:32. > :08:37.first of the transport projects which will go according to M p D.
:08:37. > :08:45.When is that due to start? It has all been agreed, the road orders
:08:45. > :08:50.have do be laid, it would take some months. You have been going on
:08:50. > :08:56.about... The SNP have been going on about this idea for years. You set
:08:56. > :09:00.up the Scottish booters Trust. You have been in power since 2007 --
:09:00. > :09:04.Scottish futures trust. It has got nowhere so far. It is well
:09:04. > :09:11.developed and accepted. It will be the basis of the Borders railway,
:09:11. > :09:15.the M8 interchanges. It is well developed. It was piloted a long
:09:15. > :09:23.time ago by the previous administration in relation to some
:09:23. > :09:28.It is PPP by any other name, there is isn't any other fundamental
:09:28. > :09:34.difference. I think there is. If you look at the hair Myers hospital,
:09:34. > :09:37.the level of profit going to private companies was excessive.
:09:37. > :09:43.You have said you have already managed to do it on the M80. It can
:09:43. > :09:48.be done. So you don't need your model, it really needs PPP projects
:09:48. > :09:53.that are negotiated properly and sensibly from the start. It is
:09:53. > :09:59.still possibly do have a well- organised, efficiently run PPP
:10:00. > :10:03.project which has profits evenly distributed. Some people in the SNP
:10:03. > :10:07.say there is a principal difference but they are the same thing with
:10:07. > :10:17.CAB profits. It is not that you don't have private companies making
:10:17. > :10:21.
:10:21. > :10:26.All public projects in the past had private profit. When councils built
:10:27. > :10:33.in as private profit. We know that, the point I am getting is there is
:10:33. > :10:38.no real difference between NPD and a well done PPP. In that sense, you
:10:38. > :10:47.seem to agree with organisations like the IPR, who have always
:10:47. > :10:50.argued it is not PPP. It is whether it is managed properly. I disagree.
:10:50. > :10:58.B M P D model has been developed to stop that happening. We will have
:10:58. > :11:08.to leave it there. I am joined now by Ben Thompson and
:11:08. > :11:09.
:11:09. > :11:16.Ross Martin. Are we, Ross Martin, to take these assurances that these
:11:16. > :11:20.projects are under budget and ahead of Schedule entirely? I think with
:11:20. > :11:27.their little pinch of salt, the argument isn't really about the
:11:27. > :11:32.intricacies of whether it is her PPP or any of the other things are.
:11:32. > :11:40.It is a dramatic contrast. We have been talking about the Trans
:11:40. > :11:44.project in Edinburgh. This could not be more of a contrast. They
:11:44. > :11:46.want to make that linked to the finance structure because in
:11:46. > :11:51.Edinburgh that they had the opportunity with the congestion
:11:51. > :11:55.charge to pay for the tram project and with the road building projects,
:11:55. > :12:00.what they have done is pay for the projects within part of the
:12:00. > :12:04.contracts. So I the you pay for it through user charging in some
:12:04. > :12:13.formal mechanism, or you pay for the cost of the construction
:12:13. > :12:16.through the contract itself. Right. Ben Thompson, D take entirely
:12:16. > :12:20.seriously this on time or ahead of time and under budget claimed?
:12:20. > :12:24.think it will depend on where you stop the calculation. Whether you
:12:25. > :12:30.look at it when the project first came on the drawing board or
:12:30. > :12:35.whether you look at it when the project began to take shape again.
:12:35. > :12:39.I think different people will argue differently. It is undoubtedly a
:12:39. > :12:45.greater success in project management then the trams or
:12:45. > :12:51.perhaps the Holyrood parliament building. What about this point
:12:51. > :13:01.about the financing. What would your answer be to the question I
:13:01. > :13:02.
:13:02. > :13:05.asked the minister, which is that if the M80, which is a PPP project,
:13:05. > :13:11.and the M74 extension can both coming successfully compared with
:13:11. > :13:17.things like the trams, yet they are financed in different ways, are not
:13:17. > :13:22.all these arguments about PPP verses none PPP artificial? I agree
:13:23. > :13:27.with a lot of what you said in that it comes down a lot to the
:13:27. > :13:32.management of the project and that can be in the public sector or the
:13:32. > :13:37.third sector owl the private sector. I think there are some real flaws
:13:37. > :13:40.with PPP and there have also been some good things about PPP. The
:13:40. > :13:44.major flaws were that you were borrowing money from the private
:13:44. > :13:49.sector and paying private sector cost of funds when the government
:13:49. > :13:59.was taking the risk on a lot of the debt. So you were vastly overpaying
:13:59. > :13:59.
:14:00. > :14:03.on the financing costs. Isn't that the case also with MPD -- N P D.
:14:03. > :14:09.The money there is borrowed from the private sector as well, or
:14:09. > :14:14.isn't it? A I agree with you. I think that for these sorts of
:14:14. > :14:19.projects, the funding is much better done through the public
:14:19. > :14:23.because I do not think the risk is transferred to the banks. But what
:14:23. > :14:28.I am asking you, am I right in thinking that the non distributive
:14:28. > :14:33.model, the money is raised from the private sector and therefore
:14:33. > :14:38.private sector interest rates are not from their public sector?
:14:38. > :14:41.the course of the 30 years of the project, the costs are
:14:41. > :14:46.significantly higher because you pay higher amounts on private
:14:46. > :14:51.sector borrowing than you do on public sector borrowing. In that
:14:51. > :14:59.sense do you see any advantage in this end DP model over the PPP
:14:59. > :15:03.model or is it just the same thing? It is the same thing. The important
:15:03. > :15:07.thing is that the people who use these pieces of infrastructure do
:15:07. > :15:10.not care about the financing model as long as the infrastructure is
:15:11. > :15:19.putting place, there is a fair funding mechanism and that people
:15:19. > :15:23.pay a fair share. What about deals whether charges were punitive?
:15:23. > :15:28.People did care on the Skye Bridge when they were being asked to pay
:15:28. > :15:32.huge tolls. But they did not care on the original M74 when the Tory
:15:32. > :15:36.government put in a six-lane link to England. That was done with a
:15:36. > :15:40.similar model. People did not care about that because it was a
:15:40. > :15:46.properly managed project. There is a difference between fair and
:15:46. > :15:51.unfair funding. The general public, as long as they see good quality
:15:51. > :15:55.infrastructure, paid for either through the public purse or other
:15:55. > :16:00.mechanisms, as long as it is there, they are not concerned about the
:16:00. > :16:06.financing mechanism. The obvious elephant in the room is the Forth
:16:07. > :16:12.Bridge. Powell is that going to be financed? The government took a
:16:12. > :16:17.step on removing tolls from bridges and remove that funding mechanism.
:16:17. > :16:20.At some point in the future, a road user charging, whether it is a
:16:20. > :16:24.motorway tolling, congestion charging, will be back on the table
:16:24. > :16:30.because it is one way of bringing in external funding for these
:16:30. > :16:36.projects. The Forth Bridge, at some point, charges will be there again.
:16:36. > :16:43.This is because you could do a PPP styled deal where tolls will be the
:16:43. > :16:48.Revenue's? That can attract finance at a decent rate and that will
:16:48. > :16:54.enable you to build it economic league. What do you think about the
:16:54. > :16:58.Forth Road Bridge? How is it likely to be finance? Just stepping back,
:16:58. > :17:04.I question that we have a proper transport policy. You said earlier
:17:04. > :17:07.that we just have a list of transport projects, we do not have
:17:07. > :17:12.a transport policy that looks forward and says what transport
:17:12. > :17:16.infrastructure do we need for the next generation, the next 25 years,
:17:16. > :17:20.and how we are going to do that. That means linking together our
:17:20. > :17:29.cities with faster road and rail than we have at the moment. I think
:17:29. > :17:32.we should look at these projects rather than individually... But in
:17:32. > :17:38.practical terms, what would that mean? Are you saying that you do
:17:38. > :17:42.not think building there have also bridge would be a priority? I do
:17:42. > :17:45.not think it fits and I do not think people are clear on their
:17:45. > :17:50.overall vision in terms of a transport policy going forward for
:17:50. > :17:55.Scotland. How do we plan to link our main cities. One of the most
:17:55. > :18:02.important links is to have between... OK. We are running out
:18:02. > :18:06.of time. I wonder if you agree with that? It is a laugh that it is
:18:06. > :18:11.called the replacement crossing because it is not a replacement, it
:18:11. > :18:16.is an additional Bridge. It would not even be a low priority because
:18:16. > :18:21.we do not need it. We will have to leave it there. A quick look at the
:18:22. > :18:29.front pages tomorrow. The Scotsman about the Christie Commission
:18:29. > :18:36.report tomorrow. Ministers will be urged to shake-up Caerphilly
:18:36. > :18:40.outdated public services reforms. The Independent is about the
:18:40. > :18:45.strikes should vote for Thursday. The Daily Telegraph - strike
:18:46. > :18:50.threatens holiday chaos because of passport control staff being on
:18:50. > :19:00.strike. That is all we have time for tonight. I will be back again
:19:00. > :19:10.
:19:10. > :19:18.Good evening. The hot weather finally left our shores. A drier
:19:18. > :19:26.start to Wen stay. A little on the call side for most of the eve.
:19:26. > :19:30.Shell was will brew up into the Big gaps between the showers
:19:31. > :19:39.further south. Temperatures near- normal for the time of year around
:19:39. > :19:44.21 or 22 degrees. We have seen this shower clouds break early in the
:19:44. > :19:49.morning here. Decent dry and sunny weather between the shell was.
:19:49. > :19:55.Northern Ireland will see the showers heaviest in the morning. If
:19:55. > :20:00.you like to showers expected. The 17 or 18 degrees. A scatter of
:20:00. > :20:05.showers in Scotland into the afternoon.
:20:05. > :20:09.The differences between Wednesday and Thursday, not a huge amount.
:20:10. > :20:14.Temperatures roughly the same values. A few showers will continue,
:20:14. > :20:19.but they will become lighter. Dry weather across the country on