Infrastructure Investment Plan 2021-22 to 2025-26: progress report - 2021 to 2022

Overview

Infrastructure Investment Plan 2021-22 to 2025-26

The Scottish Government's Infrastructure Investment Plan for Scotland 2021-22 to 2025-26 was published on 4 February 2021. The Plan covers the five financial years from April 2021 and includes details of around £26 billion of major projects and national programmes with more to be confirmed in future years.

The Plan sets out how we will deliver the National Infrastructure Mission and sets a long-term vision of infrastructure supporting an inclusive, net zero carbon economy in Scotland. It provides a pipeline of public sector infrastructure delivery, giving confidence to the construction sector and supporting our economic recovery from COVID-19. It shows how we will enhance our approach to choosing the right future investments and introduces a new infrastructure investment hierarchy.

This is the first progress report relating to our five-year Infrastructure Investment Plan (IIP). Key achievements within the first year include the opening of the A9 Dualling: Luncarty to Pass of Birnam and the A77 Maybole Bypass as well as two new Community Hospitals in Aviemore and Skye and the new Clydebank Health & Care Centre. Major projects which commenced construction in 2021-22 included the Barrhead Rail Enhancement which will decarbonise the corridors and provide improved access to rail network, the Levenmouth Rail Link which will re-open the disused rail line between Thornton junction and Leven in Fife and the North East Hub in Parkhead, Glasgow which will be Scotland's first net zero carbon health and social care facility.

Progress of projects to March 2022

During the first year of the IIP, infrastructure improvements were delivered and in total over the course of 2021-22, the following projects worth £232.2 million completed construction and opened to the public:

Transport

• A9 Dualling: Luncarty to Pass of Birnam (£96 million)
• A77 Maybole Bypass (£46 million)

Health

• NHS Highland - Broadford Hospital which forms main element of Redesign of Services for Skye, Lochalsh & South West Ross (£24.8 million)
• NHS Highland - Badenoch & Strathspey Community Hospital which forms main element of Redesign of Services for Badenoch and Strathspey (£23.6 million)
• NHS Greater Glasgow and Clyde - Clydebank Health & Care Centre (£21.7 million)
• NHS Tayside - Ninewells Electrical Infrastructure Zone 1 - Polyclinic (£12.9 million)
• NHS Tayside - Neonatal Intensive Care Unit (£7.2 million)

Project activity through to March 2023

• Our project reporting shows that infrastructure projects totalling almost £1.8 billion are currently in construction or are estimated to commence construction during 2022-23
• Those major projects estimated to commence construction during 2022-23 include the A9 Dualling Tomatin to Moy, East Kilbride Rail Enhancement, Dunfermline Learning Campus and Royal Botanic Garden Edinburgh – Biomes
• Major projects planned to complete construction and open to the public in 2022-23 include the A92/A96 Haudagain Junction Improvement, Inverness Airport Station, NHS Highland - National Treatment Centre, NHS Fife - Elective Orthopaedic Centre and the National Facility for Women Offenders

Infrastructure Investment Plan Reporting

The IIP includes both programmes and projects. Programmes co-ordinate, direct and oversee the implementation of a set of related projects. Projects have defined start and end points (usually time-constrained and often constrained by funding or deliverables) and are undertaken to meet unique goals and objectives. Projects can be part of a programme but are not always.

The IIP Project Pipeline is updated and published on a six-monthly basis. It includes those projects with a capital value of £5 million or more for which the Scottish Government has a lead role in funding and where an Outline Business Case (or equivalent) is not yet approved.

The IIP Major Capital Projects Progress Update is published on a six-monthly basis. It provides information on the progress of those projects with a capital value of £5 million or more that the Scottish Government has a lead role in funding and which are at Outline Business Case (or equivalent) approved stage or beyond.

Annex C of this progress report includes information relating to those projects within the IIP Major Capital Projects Progress Update and their accompanying climate change targets, strategic outcomes and their contribution made to local economic development.

The IIP Programme Pipeline Update is published on a six-monthly basis. It includes information relating to key major infrastructure programmes with an investment of £20 million or more that the Scottish Government has a lead role in funding.

The latest updated three reports relating to the IIP can be found on the Scottish Government website at Infrastructure Investment Plan.

National Infrastructure Mission

The Scottish Government is firmly committed to infrastructure investment as a key factor in securing inclusive economic growth and our focus is on stimulating growth, protecting and creating jobs and promoting Scotland as a great place to do business. In recognition of the importance of infrastructure investment to the economy, the 2018 Programme for Government set out our commitment to a National Infrastructure Mission to increase annual investment by 1% of 2017 Scottish GDP (Gross Domestic Product) by the end of the next Parliament.

The National Infrastructure Mission announced as part of the 2018 Programme for Government, is a commitment to increase annual investment by 1% of 2017 Scottish GDP (£1.5 billion) by the end of this Parliament. The National Infrastructure Mission was introduced with an aim of raising Scottish infrastructure investment to internationally-competitive levels, boosting broadband, transport and low carbon energy, and supporting inclusive economic growth.

The targeted review of the Capital Spending Review (CSR) and Medium Term Financial Strategy (MTFS) demonstrate that the Scottish Government in on target to successfully deliver against the National Infrastructure Mission with £34 billion of investment over the 5-year spending review period. The documents relating to these can be found on the Scottish Government website at Targeted Review of CSR and MTFS,

Funding

Just under 85% of the Scottish Government capital budget, including Financial Transactions funding, flows from UK Government decisions and allocations. The remaining sums arise from income and receipts, deployment of Scottish Government capital borrowing powers, from innovative financial and revenue finance models, and from recycling repayments from earlier Financial Transaction loans.

The Scottish Government is committed to sustainable deployment of revenue financed investment and capital borrowing to ensure there is no undue financial burden on future policy choices. That is why the Scottish Government has a self-imposed revenue finance investment limit of 5% of the Scottish Government resource budget excluding social security. The latest modelling suggests that over the remaining capital spending review period these costs peak in 2025-26 with planned and committed projects and borrowing costs estimated to be 2.61% of the resource budget excluding social security.

There were no private finance projects taken forward during 2021-22. Details of the estimated annual NPD and PFI unitary payment charges for the services agreed over the length of each ongoing associated contract in Scotland, can be found on the on the Scottish Government website at NPD and PFI projects.

The options appraisal developed by Scottish Futures Trust (SFT) which resulted in the adoption of the Mutual Investment Model, the current model for private finance projects, can be found on SFT's website at Scottish Futures Trust.

Infrastructure Commission for Scotland

We established a new Infrastructure Commission for Scotland (ICfS) to provide long-term strategic advice to us on national infrastructure priorities. The Commission advised on our National Infrastructure Mission by identifying key strategic priorities in Scotland to be made to boost economic growth and support public services.

The Infrastructure Commission for Scotland started work in 2019 and reported its findings in two phases. Phase 1: recommendations on the vision, ambition and strategic priorities for infrastructure were published in a Key Findings Report in January 2020. Phase 2 involved providing further advice on the delivery of infrastructure. This advice was published in the Delivery Findings Report July 2020.

The Commission's recommendations helped inform the development of the new IIP and Capital Spending Review. In these strategic forward-looking plans, we set out our commitment to delivering infrastructure to help us to create the conditions for Scotland's resilience and enable inclusive, net zero, and sustainable growth. Work is ongoing across government to progress with the further implementation of these recommendations as we work towards the next IIP, which we will publish in 2025.

The Commission's recommendations, most of which were published before the lockdown policy response to COVID-19, suggested timescales for delivery against the recommendations of 2023 or earlier. Given the impact the pandemic has had across Scotland; we do not intend to deliver against all recommendations by the Commission's dates. That does not diminish the Scottish Government commitment to improving the infrastructure policy landscape and implementing the recommendations.

Annex A includes an update on the progress against the broad themes of the Commission's recommendations.

Supply chain and inflation issues

The global supply chain and inflation issues reported within the September 2021 six-monthly Major Capital Projects Progress Update to the Public Audit Committee, have continued through the subsequent six months, resulting in both delays and / or cost increases for a wide range of projects. A full note on the continued impact of the issues around supply chains and the availability of construction materials along with inflation which are affecting the delivery of infrastructure projects and programmes is included at Annex B.