Infrastructure Investment Plan 2021-22 to 2025-26: progress report 2022 to 2023

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.

The Infrastructure Investment Plan (hereafter IIP) 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 second annual progress report for our five-year IIP and further highlights within the last year included the record level of funding for Active Travel infrastructure and Behavioural change programmes which was provided, including £52 million of grant funding for the Places for Everyone programme to deliver infrastructure projects across Scotland, £35 million across all 32 local authorities for safer walking, wheeling and cycling routes, and a record investment of £10.6 million for the National Cycle Network. We invested over £10 million on behaviour change initiatives in our schools, workplaces and communities to support people to make a modal shift towards safer walking, wheeling and cycling for short everyday journeys.

Further activity which supports the transition to net zero emissions and environmental sustainability include our £70 million Recycling Improvement Fund, which continues to invest in local authority recycling infrastructure. Since it was launched, over £53 million has been awarded to 17 local authorities to increase the quantity and quality of recycling. As one of the biggest investments in recycling in Scotland in a generation, we are funding more frequent recycling services and collections of new materials, the expansion of food and garden waste collections to new areas, boosting Scotland's capacity to recycle soft plastics and films, and local service redesigns to align with Scotland's Household Recycling Charter.

A new £30 million water treatment works has started supplying water to Peebles improving water quality and resilience and the associated works were built using low carbon construction techniques. In addition, in North Lanarkshire, a £11.5 million project to help reduce sewer flooding in Craigneuk was delivered and a £6.4 million investment to help protect homes from sewer flooding in Annan, in Dumfries and Galloway was completed June 2022.

The ChargePlace Scotland network grew to over 2,500 public charging assets, making it the fourth largest such network in the UK and now boasts over 80,000 registered members with around 45,000-50,000 charging sessions taking place each week, compared to 30,000 per week in summer 2021. In the last year, over £600,000 worth of grants were offered to charities, and those living and operating in rural areas, for the installation of EV charging infrastructure at homes and business premises.

Our Reaching 100% (R100) Programme continues to deliver at pace across Scotland and in 2022-23 we extended the investment and reach of the programme which will enable us to deliver to more premises in some of the most rural parts of Scotland. By the end of February 2023, the three R100 contracts for North, South and Central had delivered over 20,000 contracted premises and an additional 5,200 non-contracted "overspill" premises driving inclusive economic growth.

Key major project achievements within the second year included the opening of the A92/A96 Haudagain Junction Improvement project in Aberdeen which will deliver benefits for the local community and road users by reducing congestion, improving journey time reliability, as well as providing a safer route for pedestrians and cyclists. The opening of the new Inverness Airport Rail Station and accompanying wider rail network infrastructure investment will build resilience and additional capacity and will make rail a more attractive option encouraging more people to choose this sustainable transport option as an alternative to the car. Reston Station which forms part of the Reston and East Linton Rail Stations project, became operational - the new fully accessible station will improve access to rail services in the Scottish Borders and allow connectivity options to local public transport services, active travel provision and 70 park and ride car parking spaces, including over 20 electric vehicle charging stations.

Supporting the IIP theme of building resilient and sustainable places, NHS Highland's new National Treatment Centre and NHS Fife's new Elective Orthopaedic Centre, both of which form part of the National Treatment Centres Programme, were completed and opened to patients. The new centre in Inverness will transform the experience for patients undergoing a range of orthopaedic and ophthalmology procedures and is equipped with 24 beds, five operating theatres and 13 consulting rooms. The new state of the art centre in Kirkcaldy will make Fife the first NHS region in Scotland to carry out hip and knee replacements as day cases not requiring overnight stays with the centre having 3 theatres, 7 bedded recovery areas, a 34-bedded inpatient ward and a dedicated Orthopaedic Outpatient Department.

Two new community custodial units specifically designed with the needs of women in mind and which continue the Scottish Government vision of managing female offenders in a way that better supports their rehabilitation, opened in Glasgow (Lilias Centre) and Dundee (Bella Centre).

Major projects which commenced construction in 2022-23 included the Dunfermline Learning Campus which will house teaching facilities and learning spaces for students, staff, and business clients and bring together about 4,500 school pupils and college students from Fife College, St Columba's RC High School, and Woodmill High School. Foxgrove, the new National Secure Adolescent Inpatient Service facility for Scotland in North Ayrshire, commenced construction and the purpose-built facility will mean that children will be cared for nearer to home and will receive appropriate care, treatment, therapies, security, and on-going education.

Progress of projects to March 2023

In total over the course of 2022-23, the following projects worth £221 million completed construction and opened to the public as reported within our six-monthly major capital project updates:

Transport

• A92/A96 Haudagain Junction Improvement (£49.5 million)
• Inverness Airport Station (£41.8 million)

Health

• NHS Highland - National Treatment Centre - Highland (£48.6 million)
• NHS Fife - Elective Orthopaedic Centre (£33.4 million)
• NHS Tayside - Children's Theatre Suite Project including the Multi Storey Plant Room (£12.8 million)

Justice

• Community Custodial Unit E - Lilias Centre, Maryhill (£13.6 million)
• Community Custodial Unit D - Dundee (£12.3 million)
• HMP Barlinnie Programme of Works (£9.0 million)

Project activity through to March 2024

Major infrastructure projects planned to complete construction and open to the public during 2023-24 include:

• Barrhead Rail Enhancement,
• East Linton Rail Station which forms part of the Reston and East Linton Rail Stations project,
• Phase 2 of the Golden Jubilee Hospital Expansion Programme,
• NHS Lothian's Oncology Enabling Projects, Edinburgh Cancer Centre,
• NHS Forth Valley's National Treatment 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 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 Project Pipeline is updated and published on a six-monthly basis. It includes planned 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 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 was introduced to protect and create jobs in the short term and support inclusive economic growth and productivity in the long term.

Our commitment to infrastructure investment was renewed in the 2023 Policy Prospectus, which highlights that we will prioritise capital investment to reach net zero and to maintain high quality public infrastructure and services across Scotland.

The Medium-Term Financial Strategy published on 25 May 2023, sets out the current economic challenges that are facing the capital programme, including construction supply chain issues, sustained high inflation levels, and labour shortages which have resulted in an increased cost of borrowing and revenue financed investments being more expensive than forecasted. Alongside this, the trajectory for the capital grant allocation from the UK Government (excluding Financial Transactions) is expected to fall by 7% in real terms between 2023-24 and 2027-28, significantly eroding the Scottish Government's spending power. In combination, these issues mean that it is likely to take longer than expected to achieve the National Infrastructure Mission target. We will continue to keep the National Infrastructure Mission under review, looking to maximise the impact of our infrastructure investment.

These challenges also mean that we cannot deliver all of the Scottish Government's capital commitments within the funding available and to the original timescales. To address this, we will publish a refreshed multi-year spending envelopes for capital alongside the 2024-25 Budget and extend the Capital Spending Review and Infrastructure Investment Plan period by one year, to 2026-27. This will allow us to reflect the new economic reality, while prioritising capital spend to support employment and the provision of high-quality public infrastructure as we move towards achieving net zero.

Funding

The Scottish Government has a range of financing options available to fund capital investment in infrastructure including the UK Government capital grant, deployment of Scottish Government capital borrowing powers, innovative financial and revenue finance models, and 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 2.7% of the resource budget excluding social security.

There were no private finance projects taken forward during 2022-23. 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 short life 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. 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 previous year, 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.