New Forth Bridge plan in disarray

PLANS for a new Forth road bridge were in disarray last night after the UK Government threw out a request to give the SNP administration a multimillion-pound cash advance.

Scottish finance secretary John Swinney had asked Westminster for the cash injection during construction of the £2.3bn project between 2012 and 2016, claiming the huge cost of the bridge justified such an arrangement.

But Scotland on Sunday can reveal that Chief Secretary to the Treasury Yvette Cooper has rejected the Holyrood Government's plea to get an advance on the money it receives in its annual £30bn budget.

In a move sure to escalate tensions between Alex Salmond and Gordon Brown, she declared that the Treasury could not provide credit to any Government department when its budget plans for the coming years have not even been set.

The move means the Scottish Government will have to pay for the bridge using existing funds.

The SNP insisted last night it would honour its pledge to build the bridge by 2016, but warned this would divert funds from new schools, hospitals, roads and rail services. Many projects might now be delayed for years.

The impasse sparked a fierce political fight last night as Labour accused the SNP of "incompetence" for failing to guarantee funding for the bridge alongside its other plans. But the SNP hit back, saying the Treasury's decision was "ridiculous and totally unnecessary".

The need for a new crossing was identified after it emerged that the road bridge is corroding. Last month SNP ministers unveiled plans to build a new crossing, which will carry cars, vans and lorries, with buses allowed to keep using the existing bridge.

Ministers ruled out using a controversial public-private partnership to fund the project, claiming such deals line the pockets of private financiers. Meanwhile, its favoured funding method – the not-for-profit Scottish Futures Trust – has yet to produce results.

In a letter to Swinney obtained by Scotland on Sunday, Cooper tells the SNP that the Treasury cannot fill the breach by advancing cash from future budgets, declaring that the idea is not a "credible option".

She adds: "The UK-wide public spending framework does not allow for bringing forward spending in this way to fund major infrastructure projects."

However, Cooper says that UK ministers want to respond "constructively" and suggests several options for the SNP.

She recommends that the Scottish Government saves cash over the next few years, diverts funds from its other spending priorities or uses PPP.

Last night a leading independent expert said the SNP should now back PPP, previously known as the private finance initiative (PFI). Public finance expert Professor Irvine Lapsley, director of the Institute of Public Sector Accounting at Edinburgh University, said: "The SNP were always on a hiding to nothing with this plan. It was never going to happen, particularly with the amount of borrowing that the Treasury is taking on at present.

"I think PFI is now the most obvious road to go down. The SNP has had some big reservations about money going to private financiers, but the Treasury has recently tightened up the rules on PFI, aware that in a time of recession it didn't want to see excessive profits being made, so the reasons for the SNP to be so dogmatic about PFI have now weakened somewhat."

But the SNP Government yesterday insisted that a PFI/PPP deal was dead in the water, and said that the bridge plan would go ahead using cash from planned budgets and reserves. But officials conceded the decision would have a knock-on effect on other projects.

An aide to Swinney said: "Obviously, the implication of refusing this commonsense request is that other projects must take their place in the queue, which is ridiculous and totally unnecessary.

"This negative response is a spectacular own goal by the Treasury – it provides a compelling argument for the Scottish Government to have borrowing powers and full financial responsibilities. It is a crass blunder following the planned £1bn cut in Scotland's budget, and also suggests that the Treasury have only a vague understanding of the issues."

Officials declined to say which other projects might be delayed as a result of the bridge plan. However, projects the Scottish Government is committed to include the building of the new Southern General Hospital in Glasgow, the £4bn dual carriageway from Perth to Inverness and a major upgrade of the A82 between Glasgow and Fort William.

Swinney admitted last month there was a possibility the new bridge might "eat into other capital areas". Shadow finance secretary Andy Kerr last night called for a guarantee from the SNP that the new Forth road bridge would go ahead.

He said: "The Scottish Government's failure to deliver a credible funding model for the new bridge, which necessitated their appeal for help from the Treasury, calls their basic competence into question.

"The SNP's problem is that they have ruled out PPP for ideological reasons and they can't make their Futures Trust work. Mr Swinney is out of his depth and blaming the UK won't wash; this is a problem made in Scotland by the SNP."