Scottish Spending Review 2011 and Draft Budget 2012-13

Chapter 13 Infrastructure and Capital Investment

PORTFOLIO RESPONSIBILITIES

The Infrastructure and Capital Investment portfolio is responsible for transport policy and delivery, housing and regeneration, digital infrastructure, European Structural Funds, Scottish Water, Scottish Government procurement and the Scottish Futures Trust.

In line with the Government Economic Strategy the majority of the portfolio spend is focused on investment in transport and water infrastructure, providing good quality, sustainable and affordable housing, tackling homelessness and helping regenerate our communities. Overall, the portfolio will look to support a renewed focus on cities and their regions, given the critical contribution they make as drivers of economic growth.

SUPPORTING RECOVERY AND INCREASING SUSTAINABLE ECONOMIC GROWTH

An efficient transport system is essential for enhancing productivity and delivering faster, more sustainable growth in a low carbon economy. It can help open up new markets, increase access to employment and help build a critical mass of business that can drive up competitiveness and thereby deliver faster sustainable economic growth.

Ongoing investment in transport also connects regions and people to economic opportunity, whether through business, leisure travel, or tourism, thus contributing to national social cohesion and reducing the disparity between the regions of Scotland.

Our investment in Scotland's transport infrastructure therefore plays a key role in creating the best possible conditions for business success. It also directly supports business. In 2010-11, 95 per cent of Transport Scotland's £1.8 billion budget was invested back into the private sector, supporting 25 per cent of civil engineering contracts in Scotland and 11,000 jobs.

Housing is a key part of our physical, economic and social fabric. Whilst housing quality is a key factor in the quality of individual and family life, it has important economic impacts as well. In the shorter term, government funded house construction can be an extremely valuable support to industry in times of economic downturn and typically around two jobs are supported for each house constructed. A significant programme of enhancement of the energy efficiency of the existing housing stock, including renewable energy, is required to meet our climate change targets and will also assist in tackling fuel poverty. This programme of work will also provide a valuable boost to local economies.

As well as this immediate contribution to economic growth, the availability and affordability of housing is a key factor in the existence of flexible and deep labour markets. In the longer term, a well functioning housing system is a key component of society's infrastructure and a large stock of good quality, appropriate housing will help us achieve the country's full potential through better educational and employment opportunities, healthier lives and a more prosperous and equal society.

Alongside this, we will produce a regeneration strategy which responds to the challenges faced by our most disadvantaged communities and helps create a Scotland where all places are sustainable and where people want to live, work and invest. It is clear that regeneration makes an important contribution to growing Scotland's economy, creating jobs and prosperity and improving the life chances of Scotland's people. Continued investment in physical regeneration projects will play an important part in supporting delivery of key infrastructure across Scotland, particularly in areas that need additional support. Wider infrastructure investment decisions need to be considered alongside regeneration outcomes and as part of a wider economic and social plan. Successful delivery can help improve the economic performance of areas which have historically suffered from market failure.

As set out in Scotland's Digital Future: A Strategy for Scotland ^[1], we want to ensure that all of Scotland's citizens, regardless of age, health, income or location, are equipped to take advantage of the digital revolution. Improving connectivity across Scotland will support future innovation in the digital economy and ensure Scotland's business base can remain competitive in the global digital environment. It will also play a critical role in driving economic growth and competitiveness, creating more and better jobs. It will shape public service delivery, increasing the number of services to be delivered online which can be more effective and lower cost. It will support the transition to a low carbon economy, opening up new opportunities for a different way of living and working that encourages strong and growing rural towns and villages and respects and protects our environment.

European Structural Funds provide significant support for improving business infrastructure and creating new employment and higher skills in Scotland, helping us to reach our full economic potential. The programmes follow the seven-year cycle set by the EU budget, and run until the end of 2013 with some activity continuing through 2014. By 2013, the current European Structural Funds programme will have secured training and improved skills for 135,000 individuals and will have delivered 30,000 new jobs for Scotland. It will also have invested over £10 million in upgrades to harbour infrastructure, in preparation for, and in support of, a larger and stronger renewables industry in Scotland.

Scottish Water provides nearly two billion litres of high quality drinking water every day to 2.4 million homes and 130,000 businesses. Nearly one billion litres of wastewater is taken away from homes and businesses and treated before being returned to the rivers and seas. With an annual turnover of £1.1 billion, it is one of Scotland's twenty largest businesses. It employs some 3,500 staff and sustains a further 20 per cent of the Scottish civil construction industry.

We are committed to ensuring that Scotland's drinking water meets stringent quality standards and that the environment is protected from the effects of pollution from our wastewater networks and treatment works. Modern, efficient and affordable services are key to driving economic growth, ensuring competitiveness and ensuring that Scotland's environment is protected for future generations.

We set out the investment required for the current regulatory settlement period 2010-2015 in October 2009. This is available on the Scottish Government's website ^[2] and sets out the improvements that Scottish Water is required to make with regard to drinking water quality, the environment, customer service, enabling new connections, and mitigating and adapting to climate change. The cost of this programme has been determined by the economic regulator, the Water Industry Commission for Scotland, at £2.5 billion. This will be financed by customers and by government lending.

With an annual spend of around £9 billion each year, public sector procurement in Scotland can help support sustainable economic growth and contribute to many of the Scottish Government's strategic priorities. For example, thinking creatively about how we develop procurement strategies and set up specific contracts can help ensure a level playing field for small and medium enterprises ( SMEs). We can also encourage innovation by, wherever possible, specifying the outcomes we want to achieve through our procurement, rather than a particular method of achieving them.

The Scottish Futures Trust ( SFT) was established in 2008 with the central aim of helping the Scottish Government to achieve better value for money from public infrastructure investment in Scotland. The importance of this work has grown, given the speed and scale of planned reductions in capital budgets.

SFT is active across the public sector and is delivering innovative new ways of working that will result in improved value for money, including:

• the Non-Profit Distributing ( NPD) pipeline of infrastructure projects;
• the hub initiative for collaborative procurement of community infrastructure;
• the National Housing Trust, releasing much needed affordable housing;
• Tax Incremental Financing ( TIF), which will lever significant additional investment for regeneration; and
• smarter procurement through the schools programme, enabling more schools to be built across Scotland for less money.

OUR NATIONAL OUTCOMES

The portfolio contributes to all National Outcomes and to the following in particular:

• We live in a Scotland that is the most attractive place for doing business in Europe.
• We realise our full economic potential with more and better employment opportunities for our people.
• We value and enjoy our built and natural environment and protect it and enhance it for future generations.
• We live longer, healthier lives.
• Our public services are high quality, continually improving, efficient and responsive to local people's needs.
• We reduce the local and global environmental impact of our consumption and production.
• We live in well-designed, sustainable places where we are able to access the amenities and services we need.

OUR ACHIEVEMENTS

Transport

We have invested in improving transport infrastructure and services across Scotland, bringing benefits to the economy and supporting the construction sector and its supply chains; improving journey times, reliability, safety, accessibility and quality of public transport; and addressing climate change mitigation and adaptation challenges.

This has included unblocking constraints on the strategic road network by completing the missing links of M74 and M80.

We have invested in the new rail lines of Stirling-Alloa-Kincardine and Airdrie to Bathgate, connecting communities, expanding labour market catchments and providing an alternative to road based travel for passengers and freight.

We have connected communities and improved accessibility through our support for lifeline ferry and air services; by removing unfair tolls on the Tay and Forth bridges; and by fully supporting the concessionary fares scheme.

The results of the most recent Scottish Household Survey show that nearly three quarters of adults are very or fairly satisfied with public transport - up 5 percentage points since 2007. The percentage of people who are very satisfied (26.8 per cent) has increased by 8.2 percentage points since 2007.

We have also supported approaches that contribute to the climate change agenda, such as the promotion of active travel with investment in cycling and walking networks; investment in more fuel-efficient trains and buses; the 'Smarter Choices, Smarter Places' demonstration programme promoting sustainable transport in communities; support for the development of the low carbon vehicles agenda; and modal shift through support for the bus and freight sectors, including the Bus Service Operators' Grant and freight grants that have removed over 40 million lorry miles from Scotland's roads over the last four years.

Housing and Regeneration

Over the period 2008-11, the Scottish Government invested a record £1.7 billion in affordable housing and achieved its target to approve around 21,500 new or improved affordable homes.

£100 million has been invested to reverse decades of decline in council house building and support the construction of almost 4,000 new council homes across Scotland.

In 2009 the Energy Assistance Package was launched, which has delivered over 20,000 heating installations, and two area-based home insulation schemes have been developed offering a package of energy efficiency measures to over half a million Scottish householders to help householders reduce their fuel bills and cut carbon emissions.

In 2011-12 our £400 million housing investment budget will generate around £850 million of economic activity estimated to support over 15,000 jobs directly and indirectly across the Scottish economy, and a new Innovation and Investment Fund (£50 million in 2011-12) is ensuring that government funding levers in the maximum possible investment from other sources to maximise new supply.

Procurement of new affordable homes for rent has been progressed through the groundbreaking National Housing Trust ( NHT) initiative working with local authorities, housing associations and private developers across Scotland - generating around £100 million of investment and support for over 1,000 jobs from every 700 homes built.

Over £90 million has been invested in Urban Regeneration Companies ( URCs) since 2008, which has delivered a wide range of regeneration outcomes, and a £50 million Scottish Joint European Support for Sustainable Investment in City Areas ( JESSICA) fund has been developed in conjunction with the European Commission and European Investment Bank ( EIB), to assist the delivery of regeneration projects in Scotland. The JESSICA fund may also be a source of investment capital or loan finance for housing providers who are developing innovative emissions reductions and renewables measures.

Over £45 million of funding has been provided through the Vacant and Derelict Land Fund ( VDLF) since 2008 to tackle vacant and derelict land in five local authority areas.

Digital

Basic broadband availability in Scotland is now over 99 per cent. This is following completion of the Broadband Reach Project in 2010, which provided over 2,400 broadband connections using satellite and wireless technology. This is a major increase from only 43 per cent availability in 2001, when Scotland lagged behind the UK level of 63 per cent.

In partnership with BT, over 2010-11 we secured upgrades to 81 telephone exchanges across Scotland for improved broadband connectivity.

In October 2010, we secured the Highlands and Islands region as one of the first areas of the UK to benefit from a share of £530 million of UK Government funding for broadband. This project will deliver next generation broadband to around 50 towns and communities geographically spread across the Highlands and Islands. The project entered procurement in June 2011 and delivery of connectivity improvements is expected to begin within 12 to 18 months.

To date, we have secured £68.8 million for Scotland from the UK Government for next generation broadband roll-out. We will continue to work with the UK Government to ensure that we get the best possible deal for Scotland.

European Union Funds

We have capitalised the Scottish Investment Bank's Loan Fund with a total investment of £50 million, including £20 million of European Structural Funds, ensuring better access to finance and creating a better environment for business.

We have worked with the European Investment Bank to create a JESSICA fund, with £50 million aimed at unlocking the delivery of Integrated Urban Development Plans, creating strong, resilient and supportive communities, and helping to tackle the inequalities in Scottish society.

We have invested significantly in transport hubs, with £10 million committed to harbour improvements and upgrades at Scrabster, Lyness, Campbeltown and Hatston to prepare these sites for private sector investment in the renewable energy sector, and cementing the legacy of the Commonwealth Games in East Glasgow by supporting the upgrade to Dalmarnock Station.

Scottish Government advice on state aid issues has ensured that key projects can proceed without the risk of complaint to the European Commission - for example, Scottish Investment Bank, Edinburgh Bioquarter, Saltire Prize, Road Equivalent Tariff and Community Jobs Scotland.

Scottish Water

We have shown that a public sector utility can be incentivised to deliver services at the levels of efficiency and effectiveness of those companies operating in the private sector. We are therefore committed to retaining Scottish Water in public hands.

Since its formation in 2002, Scottish Water has made major strides in improving efficiency and customer service. It has made efficiencies, resulting in a saving of £105 on the annual average household water and sewerage bill. As a consequence, average household water and sewerage charges in Scotland during 2011-12, at £324, are nearly ten per cent lower than in England and Wales.

We invested some £2.4 billion in the period 2006-10. This produced dramatic improvements to services including:

• a 76 per cent improvement in the standards of service provided to customers;
• 400 million litres of water a day saved through leakage measures - enough to supply half of Scotland's households each day;
• additional capacity made available to serve new developments;
• 69 per cent of Scotland's population benefiting from improvements to drinking water; and
• significant improvements made to the environment as a result of investment in wastewater treatment works and combined sewer overflows.

Further details of the improvements are available in the Scottish Government report Investing in Scotland's water industry: Improvements delivered in 2006-10.

Procurement

Through the Public Procurement Reform Programme we have generated savings of more than £800 million since 2006. We are mindful, however, that work to generate savings should not exclude SMEs from public sector work. Indeed, threequarters of all suppliers winning contracts through Public Contracts Scotland, the online advertising portal, are SMEs.

Collaborative contracting has enabled us to maximise the buying power of the public sector. For example, the national contracts for electricity cover 99 per cent of the public sector and deliver benefits of some £10 million a year. They also ensure that power is available from renewable sources, provide access to energy reduction technology, and allow for significant improvements in data quality for public bodies to help them meet carbon reduction commitments.

Scottish Futures Trust

In its first two years of operations, SFT has delivered net future benefits and savings of £240 million. It does this by working in partnership with public sector organisations. It is committed to delivering at least £7 of benefits for every £1 of cost of the organisation.

MANAGING PRESSURES AND CUTS IN PUBLIC EXPENDITURE

The scale of the total reduction in the Scottish Government budget for 2012-13 to 2014-15 has required tough decisions to be taken about expenditure across government and careful consideration of pressures and priorities in all portfolios.

We have undertaken a comprehensive equalities impact assessment of all of our options and, in taking these tough decisions, have looked to ensure that wherever possible, our priorities protect and meet the needs of the most vulnerable.

MAXIMISING VALUE FOR MONEY FROM CAPITAL INVESTMENT

We will lead action across the Scottish Government to drive improved value for money in capital spending, tight management of contingency funds and better asset management, including the sale of surplus assets. Savings released from these actions by 2014-15 will be used to support the Government's investment programme.

Transport

Key transport pressures within the portfolio include the impact of long-term contracts, such as the rail franchise and lifeline ferry services, which generally include provision for new or improved services and escalation in costs; demand-led services such as concessionary fares and air service discounts; the cost of bringing in new services, such as the Airdrie to Bathgate rail link, and new improved roads such as the M80 Stepps to Haggs, and maintaining Scottish Ministers' single biggest asset, the trunk road network, in a safe and serviceable condition. With a sharply declining budget, these pressures have been exceptionally hard to manage and have put very considerable pressure on the other elements of the Infrastructure and Capital Investment budget.

With a few notable exceptions such as the Forth Replacement Crossing, on capital spend we will prioritise consolidation over new projects. We will, however, exploit the opportunities afforded by funding via Network Rail's Regulatory Asset Base ( RAB) and the NPD model to take forward major projects such as the Edinburgh Glasgow Improvements Programme, Borders Railway, the Aberdeen Western Peripheral Route ( AWPR) and Balmedie project, and the M8 Baillieston to Newhouse motorway upgrade, together with improvements to the M74 Raith Interchange and the M8 associated improvements (M8 bundle).

Housing and Regeneration

Key pressures within housing include maintaining a forward programme for new housing to continue progress towards our 2012 homelessness target, to support the economy and Scottish jobs, and to provide a range of housing options, particularly for people unable to access the housing market.

Recent price rises by energy companies have also increased the pressure on household budgets already being squeezed through rising inflation, placing increasing numbers of Scots in fuel poverty. Investment in domestic energy efficiency to mitigate fuel poverty is a key priority and this should also help draw in support from energy companies under their regulatory obligations. We will also continue to engage with the UK Government and the Office of Gas and Electricity Markets ( OFGEM) to ensure the energy market works effectively for consumers.

Pressures on the regeneration budget hasten our intention to bring together available sources of funding to secure better alignment of strategic regeneration objectives and greater strategic match between Scottish Government and other potential sources of funding. We are also considering a range of innovative models to finance regeneration activity, such as JESSICA.

Digital

Key pressures in digital economy and infrastructure include delivering the ambition as set out in Scotland's Digital Future for next generation broadband to all by 2020, with significant progress by 2015. Scotland has some of the most challenging and rural geography, and public sector action will be required to facilitate and extend the roll-out of next generation broadband across the whole of Scotland to ensure that rural and remote communities are not left behind.

Achieving this ambition with more limited funding will be challenging. That is why our Next Generation Digital Fund will seek to optimise public sector investment in broadband infrastructure and leverage maximum levels of private sector investment to improve broadband coverage in Scotland. We are also assessing the potential for innovative procurement and financing models, and other sources of investment. As much of the investment will be targeted in rural areas, the spending plans for the Next Generation Digital Fund are set out in the Rural Affairs and Environment portfolio chapter.

We have already made significant investment in high-speed broadband across the public sector in Scotland with the Pathfinder, Interconnect and Joint Academic Networks ( JANET) projects. The Scottish Government is investing £90 million in Pathfinder alone (over the period 2007-08 to 2013-14). This provides an ideal opportunity to ensure the impact of existing public sector investments in networks and services is maximised so as to deliver benefits across the wider community, particularly in rural areas.

We will explore how to achieve greater alignment between the deployment of broadband infrastructure and other policy and infrastructure investments which may provide greater efficiencies and reduce overall costs. We will develop a national plan that will bring together the ambition and actions in the digital strategy and our respone to the McClelland recommendations on broadband. We will consider the options available to us when we bring together our digital ambition for Scotland as a whole with our purchasing power as a consumer of digital services. We are determined that the approach we take will deliver the best outcomes for Scotland in the most cost effective manner. The private sector has an important role to play too, and we need to find new ways of working effectively together to achieve the shared benefits of a digital age.

Between now and the end of March 2012, we will investigate different roll-out options (including technical specifications, financing and procurement models) and consult with a range of industry and public sector stakeholders on those options to ensure we bring forward the right delivery solution for Scotland. Before the end of this year we will set out the main components of the plan.

European Union Funds

We will put EU funding to work for Scotland, working with the European Commission to focus the remaining funds so that they can help deliver on major investment priorities, such as the roll-out of rural broadband access, an investment potentially worth £25 million over the next two years.

Scotland is already leading the way in using European Union funding to lever in private investment to major projects. For example, we have capitalised the Scottish Investment Bank's Loan Fund with a total investment of £50 million, including £20 million of European Structural Funds, ensuring better access to finance for Scottish businesses. We have also set up a £50 million fund aimed at delivering the Integrated Urban Development Plans, and will continue to use European money in financial engineering funds to increase their value to the Scottish economy.

Scottish Water

We recognise that effective economic regulation is key to ensuring that Scottish Water operates with maximum efficiency thereby ensuring that charges to customers are the minimum necessary.

In its Performance Report ^[3], the economic regulator, the Water Industry Commission for Scotland, calculated that efficiency measures implemented by Scottish Water have generated around £1 billion of savings in operating costs and a further £2 billion in capital costs since 2002.

Going forward we recognise that there is less scope for further significant savings but will expect Scottish Water to remain at least as efficient as its private sector counterparts.

In 2009, we set the investment priorities for the period 2010-15. In doing so, we recognised the need to set a programme that would optimise the efficiency of delivery and that was affordable. As a consequence, we reduced the capital programme to £500 million from £600 million per year in 2006-10. This reduced the need to increase charges for customers and reduced the Government's contribution.

We have examined the cash reserves held within the Scottish Water group and the scope for further exploiting additional cost savings over the remainder of the regulatory period. We have concluded that we are able to reduce our original contribution of £560 million over the spending review years by £120 million. In doing so, we accept that there are risks - in particular to the pace of delivery of the capital programme. With the Board of Scottish Water, we will monitor the situation closely and will make adjustments if necessary.

OUR PRIORITIES

Transport

By taking these difficult decisions and maximising the level of efficiencies that can be achieved, we are able to protect expenditure that supports economic growth and the delivery of key priorities within the Infrastructure and Capital Investment portfolio.

Our key infrastructure priority, central to Scotland's long term economic success, is to progress the construction of the Forth Replacement Crossing, the largest civil engineering project in a generation in Scotland, worth up to £1.6 billion and securing economic turnover of more than £1.3 billion and over 3,000 jobs.

To improve journey times and connections, we will take forward rail programmes such as the Edinburgh Glasgow Improvements Programme and Borders Railway; progress trunk road schemes such as the AWPR and M8 bundle; contribute to Glasgow's Fastlink in support of the Commonwealth Games; and continue to invest in the maintenance and safe operation of the trunk road network.

To support the most vulnerable elderly people and to keep money in people's pockets when they need it most we will spend £745.8 million to fund the Concessionary Fares scheme and the Bus Services Operators' Grant.

To improve quality, accessibility and affordability, we will invest £19 million in airport infrastructure at ten airports in the Highlands and Islands and at Dundee and in lifeline air services to Barra, Campbeltown and Tiree. We will maintain spending on ferry services to ensure the retention of existing services and progress the construction of the next generation of vessels and essential pier and harbour works, and we will roll out the Road Equivalent Tariff ( RET) fares scheme in line with manifesto commitments.

Scottish Futures Fund

We will also act to reduce the impact of transport on our environment, reducing congestion and supporting better public transport, active travel and low carbon vehicles. The Scottish Futures Fund will deliver these priorities through the creation of a Future Transport Fund.

With rises in energy prices likely to continue in the future driven by the fluctuations in world fuel markets, many households in Scotland are vulnerable to fuel poverty. The Scottish Futures Fund will support the creation of a Warm Homes Fund to increase the impact we are already making through our fuel poverty and energy efficiency programmes.

Housing and Regeneration

In regeneration, we are engaging with key stakeholders to ensure that our new regeneration strategy will deliver a long term sustainable approach to improving the wellbeing of all our communities. We will provide the leadership and direction needed to enable key players at national and local level to respond to and address the decline in our cities, towns and communities. A key part of the strategy will consider how our funding streams can best support this work.

We will also look towards innovative funding models which can further augment this.

In housing, our vision is for a housing system that provides an affordable home for all. We are committed to increasing the supply of housing across all tenures, to provide homes for our growing population and to boost economic recovery through the construction industry. We have made a decisive change in the way we support new housing developments, using government funding to lever in the maximum possible investment from other sources. We recognise the vital role of social housing in providing people with an affordable home and a platform for getting on in life, and we will also support intermediate products such as shared equity and homes for intermediate rent. Overall, our commitment is to deliver 30,000 affordable homes over the life of this parliament, including 5,000 new council homes over the next five years. The growth

in numbers of older people poses particular issues for housing, and we will publish a national strategy on housing for older people.

We will also continue to improve the quality of Scotland's housing stock. This will include investing in initiatives to improve energy efficiency, which will help reduce carbon emissions and reduce household fuel bills. We will continue to tackle fuel poverty through the Energy Assistance Package ( EAP), Universal Home Insulation Scheme, and Boiler Scrappage Scheme. Households receiving assistance through EAP have together seen annual fuel bill savings of £12 million since its introduction. In addition, our £50 million Warm Homes Fund will deliver renewable energy and energy-efficient homes in those communities worst affected by fuel poverty. Our Boiler Scrappage Scheme has also proved very popular and we shall continue to fund the scheme, providing support for 30,000 new boilers over the course of the next parliament.

Digital

Our key priorities for the Spending Review period are:

• to deliver the ambition for next generation broadband to all by 2020, with significant progress by 2015, as set out in Scotland's Digital Future: A Strategy for Scotland; and
• to ensure that businesses across Scotland have the skills and aspiration to enable them to innovate and compete in the global digital economy.

European Union Funds

The bulk of the European Structural Funds allocation for 2007-13 is already committed, and the projects benefiting from this funding have supported economic recovery by delivering more jobs and better skills. We are now seeking to allocate the remaining funding towards key priorities which can contribute to our long-term economic prospects and creating opportunities throughout Scotland, such as the potential £25 million investment in rural broadband, which we are working with the European Commission to deliver within the current programme.

The next European programmes will start in 2014, and it will be critical for Scotland to be able to access this funding as early as possible, so that this important additional funding can help with the economic recovery. We will ensure that all European funding is better integrated, and that we have a strong focus on key priorities which can help drive a transformational change in the Scottish economy and society, including renewable energy, research and innovation, digital connectivity, social inclusion, access to finance, business support and urban and rural community development.

Scottish Water

The delivery of the 2010-15 investment programme is already underway and is delivering further improvements to water and wastewater services. Monitoring reports on Scottish Water's progress are published quarterly on the Government's website. ^[4] The report for the fourth quarter of 2010-11 shows that Scottish Water's capital programme is ahead of schedule and that, in 2010-11, levels of service improved and levels of leakage reduced by a further 39 million litres a day (leakage is now 37 per cent less than in 2006). Further details of the improvements delivered in 2010-11 are available in Scottish Water's Annual Report 2010-11 ^[5].

Together with Scottish Water's regulators we will ensure that the investment programme is delivered to time and to budget. Furthermore, we will start work to define the investment programme for the next regulatory period 2015-20, providing clarity to Scottish Water, its regulators and the construction industry of the scale and type of investment that will be required.

Procurement

The public sector in Scotland spends around £9 billion each year buying goods, works and services, and can, through its procurement policy, exert a significant influence on delivering the Purpose framework. We will continue to lead the Public Procurement Reform Programme, and to deliver efficiency savings from collaborative procurement. Improved Scottish Government-led procurement is intended to deliver savings of £61 million in 2011-12, and over the next three years some £200 million from the Scottish Government family, and £400 million from the wider public sector procurement. More detail can be found in Efficiencies from Procurement.

Our actions will include:

• using public procurement to maximum effect so that the public sector makes better use of its purchasing power to help deliver sustainable economic growth. Specifically, whilst European Commission rules do not allow us to discriminate in favour of Scottish firms, we will help public bodies to design their contracts in a way which gives Scottish firms, particularly SMEs, a fair chance to compete;
• continuing to develop the suite of e-commerce shared services which underpin procurement reform. We are working closely with the private and third sectors to introduce improvements - for example, to allow increased use of Quick Quote (an electronic system which allows buyers to ask for competitive quotes for low value purchases, without the need to go through a full European-style procurement exercise). Further improvements will include a standard prequalification system for use across the Scottish public sector;
• using public procurement to encourage innovation in both the public and private sectors - allowing bidders for work to come up with new ideas wherever possible;
• encouraging a broad consideration of sustainability in contracting, for example by using community benefit clauses in contracts to provide training opportunities for local people, or by reserving contracts for supported businesses; and
• lobbying for changes to the European Commissions procurement rules which will allow public bodies to consider local economic impact in their contract award decisions.

Scottish Futures Trust

Maximising investment to support the economy and getting better value for money from capital spend are key priorities for the Government. SFT has a key role to play in this, developing and helping to deliver innovative new financing mechanisms such as the Non-Profit Distributing model, National Housing Trust and Tax Incremental Finance. SFT also plays an important role in driving value for money in capital spend, supporting collaborative procurement through hub and more standardised and cost-effective design through the schools programme.

Spending plans for 2012-13 are set out below.

Table 13.01: Detailed Spending Plans (Level 2)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Air Services	35.3	34.5	30.4	30.5
Concessionary Fares and Bus Services	255.3	248.6	248.6	248.6
Ferry Services	109.0	107.1	109.0	114.7
Motorways and Trunk Roads	557.6	655.4	664.2	700.2
Other Transport Policy, Projects and Agency Administration	67.1	57.7	66.3	55.9
Rail Services	779.4	780.9	837.6	836.3
Scottish Futures Fund	-	6.5	15.5	37.5
Housing and Regeneration	389.6	300.8	265.0	272.7
Digital Economy	11.6	10.6	4.0	1.0
European Regional Development Fund - 2007-13 Programmes	-	-	-	-
European Social Fund - 2007-13 Programmes	-	-	-	-
Other Expenditure	10.4	10.2	10.0	(15.1)
Scottish Water	(89.2)	12.7	49.7	105.5
Total Level 2	2,126.1	2,225.0	2,300.3	2,387.8
of which:
DEL Resource	1,120.7	1,168.0	1,233.6	1,296.2
DEL Capital	1,005.4	1,057.0	1,066.7	1,091.6
AME	-	-	-	-
Central Government Grants to Local Authorities	158.8	159.6	148.1	152.1

Table 13.02: Detailed Spending Plans (Level 2 real terms) at 2011-12 prices

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Air Services	35.3	33.7	28.9	28.2
Concessionary Fares and Bus Services	255.3	242.4	236.2	230.0
Ferry Services	109.0	104.5	103.5	106.1
Motorways and Trunk Roads	557.6	639.4	631.0	647.7
Other Transport Policy, Projects and Agency Administration	67.1	56.3	63.0	51.7
Rail Services	779.4	761.9	795.7	773.6
Scottish Futures Fund	-	6.3	14.7	34.7
Housing and Regeneration	389.6	293.5	251.7	252.2
Digital Economy	11.6	10.3	3.8	0.9
European Regional Development Fund - 2007-13 Programmes	-	-	-	-
European Social Fund - 2007-13 Programmes	-	-	-	-
Other Expenditure	10.4	10.0	9.5	(14.0)
Scottish Water	(89.2)	12.4	47.2	97.6
Total Level 2	2,126.1	2,170.7	2,185.2	2,208.7
of which:
DEL Resource	1,120.7	1,139.5	1,171.9	1,199.0
DEL Capital	1,005.4	1,031.2	1,013.3	1,009.7
AME	-	-	-	-
Central Government Grants to Local Authorities	158.8	155.7	140.7	140.7

Air Services

Table 13.03: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Highlands and Islands Airports Limited	26.6	22.9	22.9	22.9
Support for Air Services	8.7	11.6	7.5	7.6
Total	35.3	34.5	30.4	30.5
of which:
DEL Resource	25.3	25.5	25.4	25.5
DEL Capital	10.0	9.0	5.0	5.0
AME	-	-	-	-

What the budget does

The budget supports Highlands and Islands Airports Limited ( HIAL), which operates 11 airports at Barra, Benbecula, Campbeltown, Dundee, Inverness, Islay, Kirkwall, Stornoway, Sumburgh, Tiree and Wick. The budget includes resources for capital investment required by the regulatory authorities. It sustains the operation and development of airport services throughout the Highlands and Islands, supporting the economic and social development of remote and island communities. The budget also supports the Air Discount Scheme ( ADS) which provides discounted fares on eligible routes to people whose main residence is in Orkney, Shetland, the Western Isles, Islay, Colonsay and Jura, Caithness and north-west Sutherland. In addition, the budget supports lifeline Public Service Obligation ( PSO) air services between Glasgow and Barra, Campbeltown and Tiree, which cannot be provided commercially.

In 2012-13 to 2014-15 we will:

• ensure that HIAL has the necessary resources to maintain its 11 airports at current levels of operational ability;
• continue to fund the lifeline PSO air services to Barra, Campbeltown and Tiree; and
• continue to fund the ADS.

Concessionary Fares and Bus Services

Table 13.04: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Smartcard Programme	9.5	2.8	2.8	2.8
Concessionary Fares	185.0	192.0	192.0	192.0
Support for Bus Services	60.8	53.8	53.8	53.8
Total	255.3	248.6	248.6	248.6
of which:
DEL Resource	245.8	246.6	246.6	246.6
DEL Capital	9.5	2.0	2.0	2.0
AME	-	-	-	-

What the budget does

The budget provides support for the development and delivery of concessionary travel schemes for older, disabled and young people. The funding provides for bus infrastructure systems to recognise Smartcards, which is essential to effective

implementation of our fraud strategy. Access to national concessionary travel is through Smartcards issued as part of the Scottish Citizens' National Entitlement Card project.

Bus Service Operators' Grant ( BSOG) provides support to the bus industry across Scotland. Its aim is principally to benefit passengers by helping operators to keep their fares down and enabling operators to run services that might not otherwise be commercially viable, thus contributing to the maintenance of the overall bus network. It helps sustain the economy, reduces the environmental impact of increased car travel and reduces the cost to local authorities of supporting non-commercial socially necessary services.

In 2012-13 to 2014-15 we will:

• contain payments under the concessionary travel scheme as a result of a negotiated settlement with the bus sector; and
• continue to make efficiency savings in the operation of the scheme and the validation of bus operator claims.

Ferry Services

Table 13.05: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Support for Ferry Services	94.4	97.4	99.0	104.9
Vessels and Piers	8.1	5.2	5.5	5.3
Road Equivalent Tariff	6.5	4.5	4.5	4.5
Total	109.0	107.1	109.0	114.7
of which:
DEL Resource	100.9	101.9	103.5	109.4
DEL Capital	8.1	5.2	5.5	5.3
AME	-	-	-	-

What the budget does

The Support for Ferry Services budget line covers the subsidy paid for the:

• Clyde and Hebrides Ferry Services ( CHFS) contract;
• Northern Isles Ferry Services contract;
• Northern Isles Lift-On Lift-Off Freight Services contract; and
• Gourock-Dunoon Ferry Service contract.

The Vessels and Piers budget line provides for loans to Caledonian Maritime Assets Ltd ( CMAL) for the procurement of vessels used on the CHFS network and grants to ports (other than those owned by local authorities) for improvement works to piers and harbours that support lifeline ferry services.

The budget line for Road Equivalent Tariff ( RET) funds this approach to ferry fare setting on the services to the Western Isles, Coll and Tiree.

In 2012-13 to 2014-15 we will:

• maintain ferry services on the Clyde and Hebrides, Gourock-Dunoon and Northern Isles routes;
• bring in to service the first of a series of innovative new low carbon small hybrid vessels and complete pier and harbour works at Ullapool and Brodick; and
• roll out the RET in line with manifesto commitments.

Motorways and Trunk Roads

Table 13.06: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Structural Repairs	30.0	30.0	30.0	30.0
Network Strengthening and Improvement	15.0	27.0	30.0	31.0
Private Finance Initiative ( PFI) Payments	58.9	74.5	76.8	84.7
Routine and Winter Maintenance	61.5	68.5	70.5	72.5
Other Current Expenditure	4.8	4.8	4.8	4.8
Roads Improvements	24.2	19.2	14.2	14.2
Capital Land and Works	60.2	42.4	56.7	3.2
Forth Replacement Crossing	200.0	282.0	281.0	359.0
Roads Depreciation	80.6	89.0	89.0	89.0
Forth and Tay Road Bridge Authorities	22.4	18.0	11.2	11.8
Total	557.6	655.4	664.2	700.2
of which:
DEL Resource	212.6	268.3	247.9	257.8
DEL Capital	345.0	387.1	416.3	442.4
AME	-	-	-	-

What the budget does

In addition to major roads construction projects and other road improvements, the budget delivers routine, cyclical and winter maintenance to maintain the safety, environment and amenity of the trunk road network. It includes road safety improvement programmes, information for road travellers and an emergency response facility to deal with emergencies and incidents on the network.

The budget also covers the construction of the Forth Replacement Crossing.

In 2012-13 to 2014-15 we will:

• continue construction of the Forth Replacement Crossing as programmed;
• continue to invest in the completion of the central Scotland motorway network and bring forward the procurement of the M8 Baillieston to Newhouse motorway upgrade, together with improvements to the M74 Raith Interchange and the M8 associated improvements;
• continue to progress the Aberdeen Western Peripheral Route ( AWPR) and Balmedie projects and bring forward to procurement as soon as the legal issues surrounding the AWPR are resolved;
• continue to progress the A82 Crianlarich Bypass, A82 Pulpit Rock Improvement and A96 Inveramsay Bridge;
• focus on essential improvements and on safety and congestion relief improvements that offer value for money;
• utilise lower cost repairs alongside safety critical work until funding allows renewal of life expired roads and strengthening of bridges to take place;
• maximise value in the routine and winter maintenance budgets by identifying savings in the work delivered by the Trunk Road Operating Companies;
• defer some of the work to further expand the Traffic Scotland infrastructure and delay investment in small road improvement schemes; and
• continue to maintain the safe operation of the Forth and Tay Road Bridges.

Other Transport Policy, Projects and Agency Administration

Table 13.07: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Transport Information	2.2	1.2	1.2	1.2
Agency Administration Costs	14.8	17.7	17.3	16.9
Strategic Transport Projects Review	4.6	3.6	3.6	3.6
Support for Freight Industry	2.9	1.1	1.1	1.1
British Waterways Scotland	10.0	10.0	10.0	10.0
Support for Sustainable and Active Travel	25.1	16.0	25.0	15.0
Travel Strategy and Innovation	5.1	5.1	5.1	5.1
Road Safety	2.4	3.0	3.0	3.0
Total	67.1	57.7	66.3	55.9
of which:
DEL Resource	43.8	43.7	44.0	44.2
DEL Capital	23.3	14.0	22.3	11.7
AME	-	-	-	-

What the budget does

The Transport Information budget funds the provision of impartial travel information services such as Traveline and Transport Direct.

The Agency Administration budget funds the running costs of Transport Scotland.

The Strategic Transport Projects Review ( STPR) budget is designed to ensure the robustness of the appraisal and analysis tools that enable decisions to be made on individual projects, as well as supporting the wider business case development and appraisal.

The Support for the Freight Industry budget focuses on measures which encourage the freight industry to reduce emissions and by transferring freight from road to rail and water, where practicable.

The grant to British Waterways Scotland supports the maintenance of Scotland's canals and their contribution to economic regeneration.

The budget for Sustainable and Active Travel delivers support for more sustainable travel choices, including support for the actions in the Cycling Action Plan for Scotland. It includes funding for the Park and Ride scheme at Halbeath and the core Fastlink scheme in Glasgow.

The budget for Transport Strategy and Innovation provides running cost support for Regional Transport Partnerships, the Mobility and Access Committee for Scotland ( MACS) and Passengers' View Scotland ( PVS).

The Road Safety budget covers Road Safety Scotland's delivery of road safety research, education and publicity, as laid out in their annual business plan, and support for partnership working under the Road Safety Framework to 2020. Scotland currently has the third lowest rate of road fatalities in Europe and we will continue to strive to make the roads safer.

In 2012-13 to 2014-15 we will:

• continue development of a route strategy and improvements for the A9 and A96;
• continue development of the schemes comprising the Forth Replacement Crossing Public Transport Strategy;
• operate the Mode Shift Revenue Support and Waterborne Freight Grant schemes and promote best practice in the freight industry;
• continue to contribute to economic regeneration through British Waterways Scotland's involvement in the Helix project;
• continue to support the operation of Regional Transport Partnerships and mobility and accessibility interest groups such as MACS;
• contribute funding for Glasgow's Fastlink, in support of the Commonwealth Games;
• complete funding for a Park and Ride for the Forth Replacement Crossing; and
• continue to support road safety initiatives in support of the Road Safety Framework.

Rail Services

Table 13.08: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Rail Franchise	299.5	447.4	511.5	530.9
Rail Infrastructure	426.1	290.7	283.2	277.7
Rail Development	0.8	3.0	3.5	9.0
Major Public Transport Projects	53.0	39.8	39.4	18.7
Total	779.4	780.9	837.6	836.3
of which:
DEL Resource	420.4	450.4	515.0	539.9
DEL Capital	359.0	330.5	322.6	296.4
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What the budget does

The budget supports the delivery of ScotRail passenger rail services in Scotland, the maintenance and safe operation of the Scottish rail network and investment in service upgrades. The rail infrastructure costs paid to Network Rail relating to rail services are set by the Office of Rail Regulation ( ORR).

Funding is provided under Major Public Transport Projects for the delivery of major rail public transport projects such as the Edinburgh Glasgow Improvements Programme ( EGIP), the Borders Railway and the City of Edinburgh tram project.

In 2012-13 to 2014-15 we will:

• increase expenditure on rail services and maintain the current rail network;
• continue advanced works and procurement for the Borders Railway to open in 2014;
• continue design and development of the Edinburgh Glasgow Improvements Programme;
• let the next contract for the provision of Scotland's rail passenger services; and
• continue to meet the Scottish Government's funding obligation to make a £500 million contribution to the City of Edinburgh Council's tram project.

Scottish Futures Fund

Table 13.09: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Warm Homes and Future Transport Funds	-	6.5	15.5	37.5
Total		6.5	15.5	37.5
of which:
DEL Resource	-	6.5	15.5	37.5
DEL Capital	-	-	-	-
AME	-	-	-	-

What the Budget Does

The Future Transport Fund will enable us to reduce the impact of transport on our environment, reducing congestion and supporting better public transport, active travel and low carbon vehicles.

The Warm Homes Fund will support addressing fuel poverty in the most vulnerable communities. The Fund will support take up of renewable energy and energy efficiency measures to reduce energy costs and provide the opportunity to generate energy and income to support local community projects. It will be designed to help maximise leverage of all funding sources to support energy efficiency and renewables.

Whilst the budget is resource in nature, over the Spending Review period up to £50 million is likely to be transferred to capital to increase investment.

In 2012-13 to 2014-15 we will:

• develop the low carbon vehicle technology agenda, including progress to deliver vehicle charging infrastructure through the UK Plugged in Places initiative;
• continue to promote active travel choices, through support for cycling and walking initiatives;
• continue to support freight modal shift; and
• take forward our commitment to our £50 million Warm Homes Fund announced in the manifesto, which will deliver energy efficiency, district heating, and other measures to the fuel poor over the next five years.

Housing and Regeneration

Table 13.10: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Supporting Economic Growth/Housing Supply*	268.5	155.3	133.5	160.0
Supporting Sustainability	83.9	118.3	114.0	95.0
Supporting Transitions	57.2	32.2	22.5	22.7
Less income	(20.0)	(5.0)	(5.0)	(5.0)
Total	389.6	300.8	265.0	272.7
of which:
DEL Resource	149.7	101.2	115.0	118.9
DEL Capital	239.9	199.6	150.0	153.8
AME	-	-	-	-

*Additional funding for Housing Supply is contained within the local government budget

What the Budget Does

The budget enables us to meet the commitments for housing and regeneration capital investment and continue to support the economy and protect the supply of new homes. This can be achieved with partners by using less taxpayer investment for each new home and leveraging more funding from other sources.

In addition there is further funding for housing supply within the local government capital settlement.

In 2012-13 to 2014-15 we will:

• take forward out commitment to deliver 30,000 affordable homes over the life of this parliament (including 5,000 new council homes);
• maintain our successful Energy Assistance Package and Home Insulation Scheme;
• use the £50 million Scottish Joint European Support for Sustainable Investment in City Areas ( JESSICA) Fund to target sustainable investment in the most disadvantaged areas and then recycle gains into further projects in the future; and
• give transitional support to tenants and homeowners to improve their options in the economic downturn.

Digital Economy & Infrastructure

Table 13.11: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Digital Economy & Infrastructure	11.6	10.6	4.0	1.0
Total	11.6	10.6	4.0	1.0
of which:
DEL Resource	1.0	1.0	1.0	1.0
DEL Capital	10.6	9.6	3.0	0.0
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What the Budget Does

The digital economy and infrastructure budget will provide high bandwidth services to rural local authorities and support innovation and growth in the digital economy and ensure Scotland's business base can remain competitive in the global digital environment.

In 2012-13 to 2014-15 we will:

• provide support to business to up-skill and encourage better use of the internet through a programme delivered by Scottish Enterprise, Highlands and Islands Enterprise and Business Gateway;
• continue to honour our existing legal commitments for the delivery of high bandwidth connectivity services to nearly 1,200 local authority and schools sites in rural areas across the Highlands and Islands and South of Scotland; and
• work with the Rural Affairs and the Environment portfolio to establish a Next Generation Digital Fund, as part of the Scottish Futures Fund, to accelerate the roll-out of superfast broadband across Scotland, with a particular focus on rural areas. The fund will seek to optimise public sector investment in broadband infrastructure and leverage maximum levels of private sector investment to improve broadband coverage in Scotland. We will develop a roll-out strategy with funding proposals by the end of March 2012. Responsibility for the fund rests with the Infrastructure and Capital Investment portfolio; however, as much of the investment will be targeted in rural areas, the spending plans for the Next Generation Digital Fund are set out in the Rural Affairs and the Environment portfolio chapter.

European Regional Development Fund - 2007-13 Programmes

Table 13.12 More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Grants to Local Authorities	13.3	9.0	10.0	10.8
Central Government Spend	40.0	78.5	75.0	97.0
Grants to Local Authorities - EC Income	(13.3)	(9.0)	(10.0)	(10.8)
Central Government - EC Income	(40.0)	(78.5)	(75.0)	(97.0)
Total	0.0	0.0	0.0	0.0
of which:
DEL Resource	-	-	-	-
DEL Capital	-	-	-	-
AME	-	-	-	-

These figures net to zero because of matching receipts from the European Union

European Social Fund - 2007-13 Programmes

Table 13.13: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Grants to Local Authorities	8.4	16.0	15.2	18.9
Central Government Spend	25.3	26.0	26.0	33.0
Grants to Local Authorities - EC Income	(8.4)	(16.0)	(15.2)	(18.9)
Central Government - EC Income	(25.3)	(26.0)	(26.0)	(33.0)
Total	0.0	0.0	0.0	0.0
of which:
DEL Resource	-	-	-	-
DEL Capital	-	-	-	-
AME	-	-	-	-

These figures net to zero because of matching receipts from the European Union

What the Budget Does

We have responsibility for implementing the 2007-13 European Structural Funds programmes in Scotland, principally through the European Regional Development Fund and the European Social Fund, as well as other cross-border and transitional programmes. It is not possible to split out the grants to local government at this stage, as they are dependent on project proposals; however, the bulk of European Social Fund spending is directed at the Community Planning Partnerships.

Amounts are based on the estimated spend likely to be required. European Structural Funds contribute to the improvement in Scotland's economic competitiveness through support for business research and innovation, infrastructure, skills improvement and the promotion of lifelong learning across a wide range of sectors, underpinning a number of our Strategic Priorities in delivery of the Scottish Government's Purpose. The 2007-13 programmes are administered by two intermediate administration bodies under three-year contracts to the Scottish Government.

Scottish Water

Table 13.14: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Interest On Voted Loans	(89.2)	(87.3)	(90.3)	(94.5)
Voted Loans	-	100.0	140.0	200.0
Total	(89.2)	12.7	49.7	105.5
of which:
DEL Resource	(89.2)	(87.3)	(90.3)	(94.5)
DEL Capital	-	100.0	140.0	200.0
AME	-	-	-	-

What the Budget Does

In 2012-13 to 2014-15 Scottish Water will continue to deliver the improvements required by Ministers. This will be financed through customer charges and new loans from the Scottish Government as set out above. The budget also recognises the receipt of interest to the resource budget from the loans issued to Scottish Water.

In 2012-13 to 2014-15 Scottish Water plans to deliver the outputs as set out in Chapter 10 "Monitoring Performance" of its Delivery Plan and as agreed with Ministers. The Delivery Plan and its updates may be viewed on Scottish Water's website. ^[6]

We have set up a specific group, the Output Monitoring Group ( OMG), to ensure that the improvements that we require are delivered. The OMG brings together all major stakeholders in the Scottish water industry including the Scottish Government, Scottish Water, Water Industry Commission for Scotland, Drinking Water Quality Regulator, Scottish Environment Protection Agency and Consumer Focus Scotland. This group is chaired by the Scottish Government. It produces quarterly reports summarising the progress made by Scottish Water in each quarter of the financial year. The report summarises progress in delivering Ministers' objectives by reference to the targets and milestones shown in Scottish Water's Delivery Plan.

Other Expenditure

Table 13.15: More detailed categories of spending (Level 3)

	2011-12 Budget £m	2012-13 Draft Budget £m	2013-14 Plans £m	2014-15 Plans £m
Scottish Housing Regulator	4.2	4.0	3.8	3.7
Scottish Futures Trust	4.7	4.7	4.7	4.7
ESF Programme Operation	1.5	1.5	1.5	1.5
Asset Management				(25.0)
Total	10.4	10.2	10.0	(15.1)
of which:
DEL Resource	10.4	10.2	10.0	9.9
DEL Capital	-	-	-	(25.0)
AME	-	-	-	-

What the Budget Does

The Scottish Housing Regulator, the new independent body established by the Housing (Scotland) Act 2010, has the statutory objective of safeguarding and promoting the interests of the 600,000 households in social rented housing. The budget will allow the Regulator to continue to drive up the quality of services delivered to tenants, homeless people and other service users.

In 2012-13 to 2014-15, the Scottish Futures Trust will continue to work to enhance value for money for infrastructure investment across the public sector in Scotland. It will, in particular, progress delivery of the pipeline of new investment through the Non-Profit Distributing model, working in partnership with others in transport, education and health; support innovative new ways of working, including through collaborative procurement and management of assets through the hub initiative; support the National Housing Trust to create affordable housing; and use Tax Incremental Financing pilots to lever in additional investment for regeneration.

European funds have been used to support economic recovery and future growth. By the end of March 2012, we will have committed nearly €820 million in support of over 600 projects across Scotland. The European Social Fund is supporting the expansion of apprenticeship places, ScotAction and other learning opportunities for young people, as well as expanded programmes to help people find and enter work. The European Regional Development Fund is helping to improve access to business finance, and is supporting innovation and urban regeneration.

We will lead action across the Scottish Government to drive improved value for money in capital spending, tight management of contingency funds and better asset management, including the sale of surplus assets. Savings released from these actions by 2014-15 will be used to support the Government's investment programme.