Roads built by the SNP are UK’s most expensive costing taxpayers nearly £3bn

The only two roads completed by the SNP Government using the now-ditched Non-Profit Distributing (NPD) model are the most expensive ever to be built in the United Kingdom, the Scottish Daily Express can reveal.

NPD was supposed to replace the infamous Private Finance Initiative (PFI), which saddled taxpayers with decades of payments to cover the cost and ongoing management of new infrastructure such as schools, hospitals and bridges. This was one of the key pledges made by the Nats when they came to power in 2007.

However, critics always warned that NPD was simply a rebranding exercise and it was dropped following an outcry about millions of pounds in public money being funnelled into offshore firms. In 2020, a damning report by Audit Scotland said in some cases it would’ve been up to 50% cheaper simply to borrow the money from the Treasury.

The NPD debt burden stands at £10billion and almost one-third of this relates to just two projects – the M8/M73/M74 motorway improvements and the Aberdeen Western Peripheral Route (AWPR). The unitary charge payments are the highest in the UK for any road-building project, even going back to the heyday of PFI under the Tories and New Labour in the 1990s and 2000s.

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The M8/M73/M74 scheme, which was opened in June 2017, has a ‘capital value’ of £310million but over the course of the 30-year contract, Scots taxpayers will pay a colossal £1507.6m. According to Transport Scotland, the scheme saw 12km of new motorway and 10km of new dual carriageway constructed and a further 15km of carriageway upgrades.

With 37km of new or upgraded roads in and around Lanarkshire and the eastern fringes of Glasgow, that works out at a cost of £40.7m per kilometre. Incidentally, the work provided a much easier link to the national motorway network for Nicola Sturgeon and Peter Murrell’s home in the city’s Broomhouse suburb.

Speaking at the official opening in August 2017, Ms Sturgeon said: “The M8 is a vital link in the central belt and this newly completed section will help connect people to business, leisure and education opportunities and also creates a better environment for companies to do business.”

The AWPR, opened in February 2019, has a capital value of £469m but over the course of its 30-year NPD contract, repayments will add up to £1421.3m. The bypass itself is 34.8km in length, with a further 23.5km of new road connecting to Stonehaven and Tipperty. With 58km of new or upgraded roads, the total cost will be £24.5m per kilometre.

It was opened in a much more low-key fashion, with Transport Scotland locked in a costs dispute with construction firms Galliford Try (Morrison Construction) and Balfour Beatty. The AWPR was also a key reason behind the collapse of the construction giant Carillion.

What about similar contracts in England?

There are only two PFI roads contracts that will cost more, and neither of them are strictly road construction jobs. In England, Wales and Northern Ireland, PFI has also rebranded as Design, Build, Finance and Operate, or DBFO.

The 30-year DBFO contract to operate and manage the M25 and its key arterial link roads is worth a colossal £10,018.4m. This includes widening the orbital route around Greater London to four lanes in both directions.

And the Sheffield Highways Maintenance contract will cost council taxpayers in South Yorkshire an eye-watering £1682.5m over 25 years. The Streets Ahead project with Amey was supposed to rid the city of its pothole-ridden streets but has proved controversial.

How much did other roads cost to build?

There are only six PFI/NPD roads in Scotland, with other major contracts such as the Queensferry Crossing or the delayed section-by-section dualling of the A9 paid for by direct borrowing.

According to our analysis, the one that offers by far the best value for money was actually agreed by the old Scotland Office before devolution began and when the Scottish Parliament didn’t even exist.

The M6 DBFO saw the old A74 upgraded to motorway all the way from the English border to junction 12 at Millbank in South Lanarkshire, a distance of 92km. The capital cost when it was completed in 1999 was £96m and payments add up to £849.9m – or £9.2m per kilometre. The contract is due to finish in 2027, as the earliest PFI deals from the 1990s finally reach their expiry dates.

Two 30-year PFI road-building deals were signed off by the old Labour-Lib Dem Scottish Executive under Jack McConnell in 2005. The Angus A92 between Dundee and Arbroath will cost £232.4m and the M77 (inc Glasgow Southern Orbital) will cost taxpayers £414m.

Both these schemes seem cheap, however, compared to the M80 Stepps to Haggs agreed by the SNP in 2011, with PFI payments adding up to a whopping £918.2m for just 18km of carriageway – or £51m per kilometre.

Who gets the money?

For the M8/M73/M74 scheme, the ‘equity’ is split between four different owners – ‘PIP Infrastructure Investments (No 5) Ltd’ and ‘Meridiam Infrastructure Finance II SARL’, which both own 30%, are investment funds based in London and Luxembourg respectively. ‘Amey Ventures Asset Holdings Limited’, a subsidiary of the British construction and engineering giant, and ‘Cintra Infrastructure UK Limited’, an offshoot of the Spanish firm Cintra, both own 20%.

Equity in the AWPR is split three ways equally between ‘Galliford Try Investments Limited’, ‘Semperian PPP Investment Partners No. 2 Limited’ and ‘BBGI Global Infrastructure SA’. The former is part of Galliford Try, the British firm, while the latter two are investment firms (BBGI stands for Bilfinger Berger Global Infrastructure).

What did Audit Scotland say?

In late January 2020, Audit Scotland released a devastating report about the SNP’s NPD replacement for PFI – although it may not have been given the coverage it deserved in those the early weeks of the Covid pandemic.

The public spending watchdog said the additional costs of using NPD for public infrastructure “may have been underestimated” and said a “lack of transparency” made it difficult to know if the projects offered value for money.

The review came after NPD suffered a near-fatal blow when it was ruled that NPD projects couldn’t be kept off the government’s books and investigations revealed that millions of pounds were ending up in the bank accounts of offshore-registered companies.

The Scottish Government confirmed it was ditching NPD but announced that its investment arm, the Scottish Futures Trust, was exploring yet another option – the Mutual Investment Model (MIM), developed by the Labour administration in Wales.

But Audit Scotland said MIM “weakens public sector controls”, adding: “The financing costs associated with MIM are likely to be more expensive than alternative options for capital investment, such as capital grants, borrowing and some forms of innovative financing.”

At the time, Dexter Whitfield, a private finance expert at the European Services Strategy Unit, said: “Finally a government audit office has identified the fundamental flaws in NPD projects with clarity and straight talking. The lack of transparency and the failure to undertake comprehensive impact assessments, rigorous economic, social, equality and environmental cost benefit analysis, coupled with the lack of monitoring, is a scandalous failure to carry out basic public management functions.”

He added: “This audit should be the nail in the coffin for NDP/MIM and all variants of privately financed public infrastructure projects. The Scottish Parliament should immediately ban any further contracts.”

The Scottish Government said: “NPD and private financing through hub companies has enabled £3.3billion of additional investment in Scotland’s infrastructure that would not otherwise have been possible.”

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