S3M-1549 Borders Railway [Closing Speech]

Scottish Parliament

Thursday 13 March 2008

[THE PRESIDING OFFICER opened the meeting at 09:15]

Borders Railway

The Presiding Officer (Alex Fergusson): Good morning. The first item of business this morning is a debate on motion S3M-1549, in the name of Jeremy Purvis, on transport.

09:15
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10:13

Stewart Stevenson:





The debate has been slightly more interesting than I thought it might be when I read the amendments. Although it has covered a reasonable range of topics in relation to the Borders rail link, it has brought little light to the subject and it has certainly brought some confusion and uncertainty. That came in particular from the previous speaker, who is being unhelpful by introducing a synthetic uncertainty that need not be present.

I will respond to one or two matters that arose during the debate. There is no stall in the decision-making process, whatever Mr Purvis asserts on the subject. The non-profit distributing vehicle is, of course, established as part of the bid process when the project is put together, and members should realise that that is when it takes.

The special-purpose vehicle is a model with which we are entirely familiar. The point of the model is that it reduces dramatically the interest rates at which Government can borrow. Any benefit from the resulting profits is delivered back to the public sector. The core interest rate over the life of a Scottish Water PFI project in the late 1990s was set at 8.5 per cent; the mezzanine finance rate for the project was set at 13.75 per cent. It is absolutely clear from the interest that has already been expressed that the interest rates via which we will be able to fund the Borders rail project are of an entirely different character. The high level of interest rates has always been the central objection to the way in which things were done in the past.

Jeremy Purvis: Last week, the minister announced costs of £235 million to £295 million. How much of that sum is budgeted for interest payments?

Stewart Stevenson: The member must put on his financial thinking hat. The figure that we announced refers to borrowing, which must be repaid over a period of time. The important point is that we have given certainty to the councils that are involved—certainty on the future of the railway, on the financial structure of the project and on the price. The financial model that we have chosen over the life of the project will deliver a cost-effective solution for the people of the Borders.

Des McNulty: If the figure of between £235 million and £295 million refers to the capital cost of the Borders rail project, what is the total cost—capital cost plus interest repayments—over the 60 years of the project?

Stewart Stevenson: The member knows perfectly well that it is important for us to have a negotiation that delivers appropriate value for the public purse. We will, and we will be accountable to Parliament and the people of Scotland for that. No one will respect the concerns that Opposition members raise if they continue to introduce a synthetic uncertainty into the project; that is in no one's interest. Opposition members failed to address the issue during the recent debates on the budget.

Mr Johnstone raised the issue of journey times, which we have managed to reduce. I would also like to see freight on the railway. In the near future, I will speak at a major rail freight conference in London; I will also speak to the all-party parliamentary rail group at Westminster. I will not hesitate to take those key opportunities to raise the issue.

Reference was made to those who have supported the project since it began to be debated. I welcome the fact that Donald Dewar, Sarah Boyack and many others of different political persuasions accepted that the project was vital for the Borders. That is why some of the remarks that have been made today are distinctly unhelpful.

This year we have spent £14 million on land, site investigation and topical surveying. We started the outline design in 2007, without even waiting for the due diligence to be completed. The financial issue that has been raised is synthetic. I direct members to page 60 of the Liberal Democrat election manifesto, which states:

"I want to involve the private sector in financing and delivering priority transport facilities".

As we are into websites, I point out that the statement is available at www.nicolstephen.org.uk. Ms Grahame put her very substantial political finger on the nub of the issue. Under the Liberal Democrats, the Borders have been in the economic doldrums for years.

Charlie Gordon suggested that the minister had something to hide. He is correct—it is my humility.

10:19