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Publication - Publication

Infrastructure Investment Plan 2015

Published: 16 Dec 2015
Part of:
Economy
ISBN:
9781785448683

This plan sets out why the Scottish Government invests, how it invests and what it intends to invest in up to 2040 by sector.

163 page PDF

6.1MB

163 page PDF

6.1MB

Contents
Infrastructure Investment Plan 2015
Chapter 3: What We Will Invest In

163 page PDF

6.1MB

Chapter 3: What We Will Invest In

3.1 EARLY LEARNING AND CHILDCARE

Objectives and purpose of investment

The Scottish Government is committed to putting children and families at the heart of policy making as a key element of our vision, as captured in the PfG and Children and Young People (Scotland) Act 2014 to "make Scotland the best place in the world to grow up in by improving outcomes and reducing inequalities for all babies, children, mothers, fathers and families across Scotland to ensure that all children have the best start in life and are ready to succeed". Our stated ambition is to develop a high quality, flexible early learning and childcare ( ELC) system which is accessible and affordable for all.

We see the revolution in ELC as the flagship infrastructure project of the next parliament and as such we have pledged to almost double the existing ELC provision to 30 hours a week over 38 weeks (term time), or 1,140 hours a year. Planning for delivery of this '1,140 hour commitment' is underway.

ELC can be delivered in a range of settings, but is predominately delivered through local authority run and partner provider nurseries. Around 60 per cent of nursery providers are local authority nurseries, with 40 per cent in partnership nurseries (private or third sector run), although this varies widely depending on the local authority.

We plan to fully fund the capital required to deliver this commitment. We are currently working closely with the SFT and local authorities to develop an estimate for the capital requirements for this expansion, with associated expenditure expected to be smoothed over several years.

Progress

In August 2014, we increased the entitlement to free ELC from 475 to 600 hours per year (equating to just under 16 hours a week over 38 weeks), and have pledged to increase this entitlement to 1,140 hours per year by the end of the next parliament - equivalent to around 30 hours per week.

To facilitate the expansion from 475 to 600 hours a year, local authorities were awarded £90 million to fund capital projects over three years. A further £80 million for capital was awarded over two years for the expansion to two year olds. Funding was allocated based on a national cost metric approach adopted from our school building programme for primary schools, Scotland's Schools for the Future ( SSF). This funding was allocated for the expansion of the 60 per cent of nurseries that are local authority run, not private partnership nurseries.

Sector plans

An initial step will be working with SFT to undertake a survey of the existing local authority ELC estate. This will include looking at where existing nurseries have additional capacity and where other local authority buildings or public sector assets may provide suitable accommodation. For instance, there are examples of nurseries being located in high school buildings and other parts of the local authority estate.

We are also currently gathering information from various local authorities about current delivery; including any existing flexibility in the system that will help us better understand the demand for places. Once this preparatory work has been undertaken we will better know requirements for revolutionising the delivery of ELC in Scotland, and the associated costs for delivering this flagship programme.

We are committed to delivering the 1,140 hour commitment by August 2020, and the capital investment is forecast to be spread over three years from 2017-18 to 2019-20.

Delivery partners and structures

As with the SSF programme below, a number of partners will be involved in delivering the capital element of this commitment.

We have begun discussions with SFT to explore how they can contribute to this work given their delivery of the SSF programme. We believe their considerable experience in managing and delivering a major programme investment in schools infrastructure could add value and derive significant efficiencies, as they have done for the school building programme. The precise working and governance arrangements are still being developed.

Local authorities will also be a key stakeholder of the capital expansion and ongoing operation of projects.

3.2 SCOTLAND'S SCHOOLS FOR THE FUTURE

Objectives and purpose of investment

According to our national school estate statistics, collected every year from local authorities, of the 2,543 schools in Scotland, there are investment plans across national and local government to rebuild or refurbish 258 schools from 2015-16 to 2019-20, comprising 176 primary, 53 secondary and 29 special schools. This includes the £1.8 billion SSF programme, which is part of the Scottish Government's and local government's shared commitment to improve the learning environment for Scotland's children by replacing or refurbishing the worst condition schools in Scotland. This, in turn, will contribute to the Government's vision of improving the life chances of Scotland's children and young people. A well-managed, sustainable school estate will help the implementation and delivery of the Curriculum for Excellence and help meet climate change targets through the construction of modern, energy efficient school buildings.

A key objective of the school building programme is to help local authorities deliver good quality, well designed, sustainable schools at a competitive price. The programme will support the implementation and delivery of the vision, aspirations and principles of the 2009 joint Government and COSLA school estate strategy, Building Better Schools: Investing in Scotland's Future. The strategy sets out a joint long term commitment to increase the proportion of pupils being educated in schools which are in good or satisfactory condition to over 90 per cent, with firm plans in place to address a significant number of the remaining schools. This will require national and local government to continue to prioritise investment in education to ensure the learning environment is fit for the delivery of curriculum for excellence.

Our aspiration is to fully deliver the SSF programme by end March 2020, ensuring that all projects are delivered on time, to budget and open to pupils as soon as possible. This is underpinned by the current manifesto commitment on removing the number of children and young people from poor condition schools as quickly as possible, a key objective of the SSF programme.

This key objective of removing children and young people from poor condition schools will remain a long term commitment as our firm view is that no matter what a child's socio-economic circumstances or background, every child deserves the right to an equal good start in life and to be provided with a good quality education in modern, state of the art learning environments.

Progress

Over the last eight financial years, 607 school building projects have been completed during the current administration - this equates to almost a quarter of the entire school estate in Scotland. By comparison, this is 279 more schools than the 328 completed over the preceding eight years.

The proportion of schools reported as being in 'good' or 'satisfactory' condition has increased to 83 per cent in 2014, substantially higher than the 61per cent reported in April 2007. The proportion of pupils educated in schools in 'poor' or 'bad' condition has fallen from 37 per cent (around 257,000 of all pupils) in 2007 to 16 per cent (around 109,000 of all pupils) in 2014.

Total capital expenditure by local authorities, excluding the value of PFI or NPD funded investment, on the school estate was £601 million in 2012-13, £478 million in 2013-14 and £265.5 million in 2014-15.

We continue to build new schools and improve existing schools through our SSF programme. More than 20 per cent of the school estate has been transformed since 2007. However, there is more to do. We must also ensure there is an even greater focus on learning and teaching being firmly embedded in, and led by, evidence of what works. We know that there is already excellent practice in classrooms across the country and we will ensure that excellence is spread more widely and that we learn from local and international practice.

Sector plans

Significant additional investment in schools of around £330 million was announced through the extension to the NPD programme over the summer of 2014 and confirmed in the budget statement in October 2014, the Scottish Government announced that the SSF programme would be increased and expanded with funding now at £1.8 billion delivering 111 new or refurbished schools. This compares to £1.25 billion delivering 55 new schools when the Programme was announced in June 2009.

The Scottish Government is funding 67 per cent of the construction cost of secondary schools, and 50 per cent of the cost of primary and special schools. The funding contribution is calculated by an agreed formula which provides a notional capital value, from which Government's 67 per cent or 50 per cent contribution is calculated. Funding is restricted to the replacement of existing facilities on a 'like for like' basis. Any additional facilities such as adding a new community centre or swimming pool are funded by the authority.

To date, 93 school building projects have been announced: 38 secondary, 49 primary, 2 nursery and 4 Additional Support Needs ( ASN) schools, with at least one project in every local authority area. The funding is expected to support another 18 school building projects, which will be identified in due course.

A secondary schools pilot project involving Eastwood High School in East Renfrewshire and Lasswade High School in Midlothian was undertaken with the aim of pushing the boundaries of joint working and establish a best practice model that can be adapted for use across the programme. The pilot project saw SFT and the two local authorities working together to jointly procure both schools in a £65 million ground-breaking collaborative initiative that saved around £4 million as a result of the partnership approach. This was the first time two Scottish local authorities have come together to procure new schools. Construction on Eastwood and Lasswade High Schools commenced in autumn 2011, and both schools opened to pupils in August 2013.

To date, 22 schools are operational (14 primaries, 7 secondaries, and 1 ASN), benefiting almost 11,000 pupils. In addition, there are currently 31 schools currently in construction (13 secondaries, 16 primaries and 1 ASN) - benefiting up to 22,500 pupils.

The SSF programme aims to deliver sustainable schools. Projects are expected to aim for a BREEAM rating of 'Excellent', where practical, and achieve an Energy Performance Certificate rating of B+, prior to renewable technology introduction to help promote higher levels of carbon reduction and energy efficiency as the programme progresses.

Delivery partners and structures

A number of partners are involved in delivering the school building programme.

  • SFT co-ordinates, manages and facilitates the programme on the behalf of the Scottish Government and work closely with local authorities on individual procurement processes and provide a challenge function to ensure efficient and effective procurement, as well as sharing good practice across the sector. SFT are also developing the revenue funded models which will be used to deliver part of the programme.
  • Local authorities are responsible for the delivery of education and own the school buildings. They are also contributing at least 33 per cent or 50 per cent of the funding for each of the projects.
  • Architecture and Design Scotland work with local authorities and SFT to promote the value of user participation and collaboration to help ensure the school estate is fit for purpose, so that it supports and enhances delivery of Curriculum for Excellence.
  • The Carbon Trust works with local authorities and SFT to develop and promote low carbon, energy efficient buildings which will help contribute towards the Government's climate change targets.
  • The joint Scottish Government and COSLA school estate strategy, Building Better Schools: Investing in Scotland's Future, which was published in 2009, sets out national and local governments shared vision for the future of the school estate. The Strategy is underpinned by a set of aspirations and nine guiding principles and objectives for future planning and action to be taken into account when considering changes to the school estate.

Asset management

As part of the SSF programme, local authorities are expected to demonstrate how the investment in their school building project supports the delivery of, and is consistent with, the nine guiding principles and objectives of the school estate strategy, which emphasise the need for efficient and co-ordinated management of assets across the local authority estate. Local authorities already have well established School Estate Asset Management Plans, which help in the planning, organisation and management of the school estate. The plans include information about the value, extent, condition, suitability, sufficiency and financial performance of the school estate, information which is also collected and published by the Government to provide an annual snapshot of progress in improving the school estate.

All local authorities participating in the SSF programme will be expected to carry out post occupancy evaluations of the projects completed as part of the programme. These will assess the extent to which the investment has met the programme objectives and will provide a platform for continuous improvement.

3.3 FURTHER AND HIGHER EDUCATION

Objectives and purpose of investment

Both the college and university sectors have a central role to play in ensuring that Scotland has a highly skilled, highly motivated workforce, capable of contributing to, and growing, Scotland's economy.

Colleges are key to delivering educational opportunities that support people into jobs. For their part, as well as producing skilled graduates, Scotland's universities are a primary source of innovation and it is vital that they remain internationally recognised and respected for the quality and impact of their teaching and research.

It is important that capital funding allocated to both sectors is aimed at supporting and enabling institutions to deliver in high quality learning and research environments which are fit for purpose and deliver realistic learning opportunities and, for universities, support world class research.

The Scottish Funding Council ( SFC) is responsible for distributing capital funding to both the college and university sectors to deliver these aims. In doing so, the SFC is responsible for working with both sectors to support development of business cases and capital plans which make sense strategically and educationally. The SFC is therefore in a strong position to use its capital allocation to contribute to a number of Scottish Government's key strategic policy objectives as set out in SES - including developing the economy, tackling inequality, being a catalyst for innovation, and attracting international investment.

Progress

Since 2011 the Scottish Government has provided the SFC with over £150 million in capital funding to the college sector, and over £160 million to the university sector to support infrastructure investment. In addition to providing support for specific infrastructure projects, this funding has also provided capital support across both sectors to enable them to maintain their existing estates.

Specific projects which were identified in, and have been completed since publication, of the 2011 plan include:

  • £15 million to support the development of the Technology and Innovation centre at the University of Strathclyde - completed in 2015;
  • £21 million to support major campus refurbishment at Banff and Buchan College - completed February 2012; and
  • £50 million to support the redevelopment of the Glasgow School of Art Garnethill campus - completed March 2014.

Alongside these projects, a number of new capital commitments have been identified and supported by the SFC since 2011 including:

  • £6 million development of a joint school/college facility in Levenmouth which is due to open in summer 2016;
  • £8 million to install a Combined Heat and Power ( CHP) District Energy Network at Strathclyde University - due for completion in early 2018; and
  • £10 million to support construction of a biomass energy centre at the University of St Andrews Guardbridge campus - due for completion during the summer of 2016.

Non-Profit Distributing Model

The 2011 plan outlined that delivery of three new college campuses would be taken forward through the Non-Profit Distributing ( NPD) model. All three projects have now been taken forward, supporting investment of over £300 million in the college sector:

  • £53 million Ayrshire College (Kilmarnock campus) is currently in construction and is due to complete by summer 2016;
  • £228 million City of Glasgow College 'supercampus' is progressing well - the Riverside campus was officially opened by the First Minister in October 2015 and the City Campus is in construction and due to open in summer 2016;
  • £52 million Inverness College campus was officially opened in November 2015.

All three of these projects will provide state of the art learning environments in which students will be given the opportunity to learn skills which will better prepare them for work.

In October 2014, it was announced that a further £140 million of support has also been made available to deliver two additional projects at Fife and Forth Valley colleges. These projects are currently in development.

Sector plans

As set out in the SFC's Strategic Plan Ambition 2025: Scotland - The Best Place in the World to Learn, to Research and to Innovate, SFC has identified its task as 'caring for and developing the whole system of colleges and universities and their connections and contribution to Scotland's educational, social, cultural and economic life.' In delivering this ambition, SFC will ensure that future, strategic capital investments support a broad range of partner agencies including local authorities and communities.

Additionally, subject to other priorities and budget availability, the SFC will focus its future investment on the following:

  • significantly improving the learning and teaching environment across both sectors, recognising that colleges' and universities capacity to address their own capital investment needs varies;
  • using available funds to leverage in match funding from the Department for Business, Innovation and Skills to support the university sector to improve research space, facilities and infrastructure;
  • making strategic investments in partnership with other agencies, that are of national and international significance and which fully exploit the opportunity for funding leverage;
  • match funding universities' research equipment needs, particularly in STEM subjects, and continue to support collaboration and the sharing of national facilities;
  • aligning strategic, smaller scale capital investment in the college sector with Scottish Government and SFC's own wider policy objectives such as developing school/college partnerships and providing teaching facilities for Scotland's most deprived communities; and
  • continue to work with the Scottish Government, SFT and others to fund and design low carbon technology into new buildings across both sectors, and to retrofit low carbon into existing estates.

This approach to future investment will feature in the SFC's ten year infrastructure investment plan which will set out its strategic approach to capital investment until 2025. In determining its strategic approach, the SFC will take into account a number of factors including the current condition of estates, the project's strategic fit with Scottish Government priorities, the project's ability to reduce the carbon footprint and opportunities for leveraging in additional funding from other sources. This plan is currently in development and is due to be published in spring 2016.

Delivery partners and structures

SFC will continue to work with a number of partners to deliver future investment projects. These include:

  • Institutions: universities contribute significantly to their own redevelopment and renewal programmes. In the college sector a strategic approach to supporting capital investment is vital. Close working with institutions individually and the sectors as a whole will help to identify how SFC can better target its funding.
  • Scottish Futures Trust ( SFT): SFC is currently working with SFT to progress five major college redevelopments.
  • Department for Business, Innovation and Skills ( DBIS): Leading research universities in Scotland benefit from additional capital funding from DBIS to support infrastructure investment. This funding is focussed on maintaining excellent departments with the critical mass to compete globally and the expertise to work closely with business, charities and public services.
  • In addition, the SFC is exploring a number of alternative funding options including ways in which funds can be leveraged in from sources such as the European Investment Bank, and the Green Investment Bank, particularly in relation to delivery of low carbon projects.

Asset management

SFC reviews institutions' estate strategies on an annual basis and is in regular discussion with colleges and universities on estates matters. In the immediate future SFC will continue to focus on supporting institutions to maintain their existing estates to ensure building life is maximised.

Where institutions are seeking to rationalise surplus properties across their estates to ensure they are operating as efficiently as possible, SFC will continue to work closely with institutions to ensure sites are marketed appropriately and the best price is received.

The SFC's property support service works with institutions across both sectors, but especially colleges, to deliver major capital projects and to improve knowledge and understanding of asset management. In the future the role of the service will broaden to include more sector wide research and best practice analysis.

3.4 HOUSING

Objectives and purpose of investment

Making sure that everyone has a safe, warm and affordable home that meets their needs is central to our drive to make this country fairer and more prosperous. Housing is central to a wide range of outcomes including social justice, health and the environment. Investment in housing, particularly affordable housing, is key to achieving inclusive economic growth.

As recognised in the PfG, communities flourish when people have good quality, warm, comfortable homes to live in. Despite challenging economic times and cuts to budgets, we are clear that increasing the scale and pace of the supply of the right new homes in the right areas is a priority, particularly in the affordable rented and private rented sectors.

The Scottish Government's Strategy and Action Plan for Housing in the Next Decade: 2011-2020 is set out in its February 2011 publication Homes Fit for the 21 st Century.

Progress

The Scottish Government continues to progress towards our vision that all people in Scotland live in sustainable homes which they can afford and that meet their needs. We pledged to deliver 30,000 affordable homes over the lifetime of this Parliament, including 20,000 social homes of which 5,000 would be council homes. Despite a challenging financial environment, we have invested in excess of £1.7 billion to meet the target, reintroduced council house building and protected existing housing stock through abolishing the right to buy.

By the end of September 2015, a total of 29,779 affordable homes had been delivered - 99 per cent of the 30,000 target. This includes 20,174 homes for social rent - exceeding the social homes target, and within that 5,256 council homes exceeding the council homes target by 256. Further management information from the Affordable Housing Supply Programme has shown that we have now met and exceeded our full commitment to deliver 30,000 affordable homes ahead of our target date of March 2016.

To achieve this we and our partners across the housing sector have collaborated in new ways. The sector is continuing its recovery from the effects of the international financial downturn which impacted on both housing developers and would-be home buyers and increased pressures on living standards across households generally. UK government decisions to curb public expenditure and reform aspects of the welfare system have added to challenges in the housing sector.

Other key achievements include:

  • Despite the challenging environment the proportionate total number of new homes across all tenures built in Scotland has remained significantly above that in England over the past 10 years.
  • Continuing to support households that have struggled to get a foot on the property ladder through our shared-equity schemes, and to protect home-owners at risk of losing their homes due to financial distress through our home-owners support fund.
  • £305 million investment in Help to Buy (Scotland), supporting larger and smaller developers by sustaining effective demand by offering a shared equity product to tackle the crisis in affordability and increased deposit levels required through lenders following the financial crisis. By April 2016 this will have supported people to buy 7,500 new homes, supported developers and employment in the sector and contributed to longer term sustainable economic growth. Ministers' commitment to £195 million of successor funding will support a further 6,500 new home sales, bringing total funding of over half a billion pounds over six years and supporting 14,000 new home sales in total.
  • £80 million has been allocated this year to the Open Market Shared Equity Scheme to help around 2,000 households. Between 2007-08 and 2014-15, our shared equity schemes for first-time buyers have helped almost 10,000 people to buy a home.
  • We are also maintaining Scotland's leadership in financial innovation and harnessing increased levels of private finance in innovative ways. Approaching 4,000 new affordable homes have been approved through a range of innovative financing mechanisms, unlocking up to half a billion pounds of housing investment. Hundreds of more affordable homes are in the pipeline.

Sector plans

We believe in a fairer Scotland for all and good quality affordable housing is central to making that a reality. The right housing investment is also crucial to sustainable economic growth and we will work with our partners to give sufficient certainty on future funding in order to collectively plan and deliver the necessary increase in housing supply

We will invest over £3 billion to deliver our target of 50,000 affordable homes over the life of the next Parliament. The new target is a 67 per cent increase in affordable housing supply with 70 per cent of the new target being for social rent. The extra homes are expected to support between 15,000 and 20,000 jobs per year and generate in excess of £10 billion in economic activity over the course of the Parliament.

A new shared equity scheme will help around 6,500 households buy a new-build home over the next three years. This successor to the existing Help to Buy (Scotland) scheme will focus more on affordable home ownership and supporting smaller developers. Eligible buyers will receive an equity loan towards the purchase price of a new-build home. By targeting resources, the new scheme will widen access by providing a helping hand to individuals and families who need support to buy a new-build home.

We will take forward further plans with delivery partners in 2016 to help address the development, financing, infrastructure and collaboration issues constraining increased housing supply.

Delivery partners and structures

The Joint Housing Delivery Plan for Scotland was published in May 2015. It was developed by the Joint Housing Policy and Delivery Group with membership drawn from a wide range of housing stakeholders, including COSLA and the Scottish Government. The Plan identifies the priority actions that the housing sector agree need a specific focus to ensure we are collectively able to deliver the strategic objectives set out in Homes Fit for the 21st Century, and other subsequent Scottish Government strategies with a bearing on housing.

All of the work feeding into the Joint Housing Delivery Plan for Scotland was based on the principle of co-production. This approach encourages participation by as many people and organisations as possible. The plan will be used to drive forward agreed priority actions for the next five years.

Fostering innovation is noted as one of the four priorities of SES. Collaboration through this approach will help maximise the opportunities for innovation to achieve more of the right homes, more quickly. This is essential given the financial constraints facing the Scottish Government and its partners.

3.5 DIGITAL

Objectives and purpose of investment

The Scottish Government has long recognised the benefits of world class digital connectivity across the whole of Scotland, and its vital role in enabling a vibrant digital economy. Ongoing improvements to Scotland's digital infrastructure are essential for the future generation of digital public services. Digital public services will provide services, which are easier, quicker and more convenient for people to use, and at a lower cost than other methods. This will bring about public sector efficiencies and savings. Such connectivity will support future innovation in the digital economy and ensure Scotland's business base can grow and remain competitive in the global digital environment. It will help the transition to a low carbon economy by enabling people to travel less and work from home. It will also play a critical role in driving rural economic growth and competitiveness, creating more and better jobs and opening up new opportunities for different ways of living and working that encourage strong and growing rural towns and villages and respects and protects our environment.

The NPF3 has identified the provision of digital connectivity as a national development priority and the SPP is clear that plans should encourage developers to explore opportunities for the provision of digital infrastructure to new homes and business premises as an integral part of a development.

A digitally enabled Scotland underpins our commitment to create opportunities for all to flourish, through increasing sustainable and inclusive economic growth.

A world class digital Scotland will be one in which:

  • people choose digital first, having access to digital technology and being capable and confident in its use at home, at work and on the move. They no longer worry about access to the internet, caps on usage, slow upload or download speeds, patchy mobile coverage or mobile signal dropout;
  • Scotland's businesses have the skills and the confidence to exploit digital technologies, an economic environment that encourages digital innovation and supports the creation, growth and digital transformation of businesses;
  • Scotland is recognised as being seen as an attractive place for inward investment in digital technologies;
  • all appropriate public services are delivered online, with partnerships being encouraged and valued as a source of innovation and service improvement. Healthcare, education, energy supply and provision, transport, and waste and environmental management have been transformed through the adoption of new technologies, information and ubiquitous access;
  • the 'internet of things' enables local government to manage congestion; maximise energy efficiency, enhance public security; allocate scarce resources and support education through remote learning. Data is being collected and turned into information and knowledge that is further transforming service delivery; and
  • there is a future-proofed digital infrastructure supporting any device, anywhere, anytime connectivity across Scotland. The increasingly seamless interaction between fixed and mobile networks will be less visible to people, because a majority connect to the internet wirelessly on mobile devices (tablets, smart phones.) or through wireless platforms ( PCs and laptops through home or public space WiFi).

We are currently on a journey towards becoming a world class digital nation. For digital infrastructure the key priorities are to:

  • continue to deliver a step change in digital connectivity by extending next generation broadband coverage to as close to 100 per cent of homes and businesses as soon as possible so that no-one is left behind;
  • ensure a co-ordinated approach at Scottish, UK and EU level to investment (both private and public sector), public policy and regulation that delivers fit for purpose digital infrastructure and services that support a world leading digital economy; and
  • eliminate mobile 'not-spots' across Scotland so that people can make calls and connect their devices seamlessly whenever they want and wherever they are.

Progress

The Scottish Government and its partners are making significant progress. In 2013, we launched the Digital Scotland Superfast Broadband ( DSSB) Programme as a vital first step in delivering a step change in digital connectivity and reducing the digital divide. For many people, improving digital connections can contribute to improving their quality of life.

The DSSB programme is being taken forward as two key inter-linked projects - one covering the Highlands and Islands led by Highlands and Islands Enterprise ( HIE); the second covering the rest of Scotland ( RoS) led by Scottish Government. Both underwent procurement exercises and awarded contracts to BT during 2012-2013.

DSSB is investing over £410 million to extend next generation or fibre broadband infrastructure into non-commercial areas. Alongside commercial coverage, the programme has already met its target of providing access to 85 per cent of homes and businesses across Scotland and is on track to reach 95 per cent of premises by end 2017. The Rest of Scotland project value is £264 million, with the public sector investing £157 million. The Highlands and Islands project value is £146 million, with the public sector investing £126 million. Funding partners include the Scottish Government, HIE, the UK Government through Broadband Delivery UK ( BDUK), local authorities and the European Regional Development Fund as well as BT.

To date, DSSB has connected over 475,000 homes and businesses across Scotland from a total target of around 750,000. On average, the programme is connecting 7,000 new homes and businesses every week.

As well as deploying infrastructure, both DSSB projects are focusing efforts to ensure that end users are aware of the new infrastructure and that there is high take-up of services. Demand stimulation is important to ensure that the benefits enabled by the programme are realised. It also delivers commercial benefits for the projects by increasing revenues and providing opportunities for re-investment to increase coverage. Higher than anticipated take-up has already generated around £18 million for early re-investment in both the HIE and RoS project areas.

The Scottish Government also established Community Broadband Scotland ( CBS) to support community-led projects in areas least likely to benefit from a superfast broadband solution under the DSSB programme. It aims to transform the way communities live, work and learn by empowering them to develop and deliver their own superfast broadband solutions.

CBS is a £7.5 million initiative and is currently supporting 90 pipeline community organisations through project development and has approved grant funding for 62 projects with a value of over £2.4 million. A total of 13 community broadband projects are now building or delivering broadband services covering over 3,500 premises and 6,700 beneficiaries.

CBS is developing an innovative approach to aggregating communities of interest to deliver the scale required to attract commercial suppliers to build a broadband network. The GigaPlus Argyll project is the first of these which will bring superfast broadband to more than 1,400 homes and businesses across eight island and mainland communities on the west coast of Scotland - Colonsay, Mull, Iona, Jura, Lismore, Islay, Luing and the peninsula of Craignish. In August we announced a further £9 million funding from the SRDP programme to extend the aggregated approach to more communities.

Sector plans

DSSB and CBS will take us a long way to delivering next generation broadband across Scotland, however, we are determined to ensure that no-one is left behind and that we have a plan in place to deliver next generation broadband to all by 2020.

Scotland has been allocated an additional £21 million by UK Government to further extend next generation broadband coverage, which we have indicated we will match with £21 million. In early 2016, we will set out how we plan to utilise this funding to deliver improved connectivity to the remaining premises.

We will continue to work closely with the UK Government to ensure that the regulatory framework addresses Scottish needs. We welcome the recent UK Government announcement to introduce a universal service obligation for broadband of at least 10Mbps, giving the public a legal right to an affordable connection.

Scottish Planning Policy is clear that the planning system should support development which helps deliver the Scottish Government's commitment to world class digital connectivity. The planning process has also been simplified to encourage greater utilisation of existing infrastructure and to facilitate the provision of services such as superfast broadband to areas not previously accessible or where the costs of development were prohibitive.

World class connectivity

The public investment already being made to deliver a step change outlined above, alongside commercial roll-out of next generation broadband and 4G networks, will be important in improving connectivity and driving further demand for high bandwidth services. However, if Scotland is to have a truly future-proofed digital infrastructure, further investment will be required, both in core ( e.g. fibre and internet exchanges) and access networks ( e.g. ultrafast and 5G).

During 2012-13, the Scottish Government undertook key pieces of research and carried out extensive stakeholder engagement to help define and develop the vision of, 'Scotland as a world class digital nation where people living, working and visiting can communicate and connect instantly using any device, anywhere, anytime'.

The next stage of development has been to translate this vision into a comprehensive delivery road map for world class digital infrastructure in Scotland. SFT is leading this activity, working alongside SG, key public sector stakeholders and industry. Working with SFT provides an opportunity to apply their expertise in infrastructure investment to digital, and to build and retain that knowledge within Scotland.

The work considers how digital can deliver a seamless experience for consumers in Scotland regardless of where they are or what they are doing, and how efficient, accessible networks (both fixed and mobile) will ensure the quality of this experience and services. The vision also understands that there will be an exponential growth in demand for data, services and content and therefore must ensure a digital divide does not exist in Scotland going forward. Detailed analysis is currently underway through a number of work streams:

  • Baselining Scotland: Understanding the current digital infrastructure footprint of Scotland and its capabilities, including how far current projects will take us in delivering a world class service.
  • Infrastructure Future Needs: An assessment of the future needs and configuration of Scotland's digital network to deliver the vision, including considering how factors such as convergence, data demand and experience will drive this.
  • Market Analysis: Working with key stakeholders developing an understanding of the drivers, aims and aspirations of the wider private sector telecoms market and how that translates to activity in Scotland.
  • Financing and delivery structures: Assessing alternative financing, commercial and delivery structures that could allow the public sector to stimulate the market in a more sustainable and cost effective way, and accelerate the deployment of infrastructure.
  • Regulation and Policy: Considering how current and future policy can be used to lever further digital capability, and the way in which it can support the wider industry to invest and grow. Ofcom's recent Strategic Review of Digital Communications will play an important role in setting the future direction of the telecommunications landscape.

Over the next 12 months, we will set out a detailed digital infrastructure road map to deliver world class connectivity. Alongside the analysis and development of the road map, SFT is also delivering a number of prototype projects aimed at trialling innovative technologies and alternative sustainable business models. This is known as the Demonstrating Digital programme and its purpose is to test approaches that could be replicated more widely across Scotland. Examples of projects include:

  • supporting housing associations in both Glasgow and Edinburgh to prototype affordable broadband services to digitally excluded tenants;
  • partnering with Strathclyde University to demonstrate white space technology as alternative solution for wireless broadband services; and
  • facilitating a partnership between Coll Development Trust and Vodafone to develop a sustainable business model for the delivery of 4G mobile services to a remote island community.

Mobile

In parts of the country, poor mobile coverage - both voice and data - remains a concern. Responsibility for mobile coverage remains reserved and, due to the nature of mobile networks, public sector intervention is less straightforward.

We believe that mobile broadband will increasingly become a sustainable alternative for fixed broadband in the future, particularly as we move towards the development of future technologies beyond 2020, such as 5G. The mobile pilot project in Coll is an example of how delivering 4G services to a remote island can provide access to mobile broadband and is helping to transform lives of the people within the community.

The Scottish Government is currently working with mobile network operators to develop a joint plan to improve mobile coverage 'not-spots' and put in place the building blocks for world class connectivity. We will set out our plans for action in early 2016. These will include examining business rates charges for masts in remote areas, further changes to planning, and access to land and buildings .

Wi-Fi

We are committed to promoting access to free public Wi-Fi, with up to £1.5 million funding provided in 2015-16. This commitment is central to our world class vision, helping to increase digital participation and tackling connectivity issues in hard to reach communities that are either digitally or geographically excluded.

During August 2015, we outlined how we will invest in both public building and public space Wi-Fi. The approach will contribute to town centre revitalisation, urban and rural regeneration, community empowerment and digital participation. It is also supporting the recommendation to extend Wi-Fi to those libraries that are currently without services.

Alongside the delivery of public building and space Wi-Fi projects, a strategic framework is also being developed that aims to: build greater capacity and capability across the public sector in designing and delivering public wireless projects; and that is adaptable to the needs and opportunities present locally and nationally across Scotland.

Delivery partners and structures

DSSB is delivered through a partnership with Scottish Government, HIE, local government and BT, who won both contracts. Local government is playing a crucial role, both as a funder and a delivery partner. The public funding includes funding from all local authorities as well as additional funding from 14 local authorities in the RoS project area who are investing around £51 million to increase coverage, meet local priorities and address the digital divide in their areas.

CBS is managed and delivered by HIE across the whole of Scotland, in partnership with SG, SE, COSLA, SLAED, Carnegie UK Trust and Scotland's National Park Authorities. The aggregated approach that CBS is taking forward will test innovative delivery and funding models.

3.6 HEALTH

Objectives and purpose of investment

The strategic agenda for healthcare services in Scotland is set by The Healthcare Quality Strategy for NHSScotland. This is the overarching strategic context for the direction, development and delivery of all healthcare services for years to come both in terms of securing improvement in the quality of healthcare services, and in achieving the necessary efficiencies. Getting the right assets and facilities services in place is central to achieving the '2020 Vision' and requires major change to the type and distribution of assets and facilities services and the way in which we prioritise investment in the future.

Investment in NHSScotland infrastructure supports modern, effective and high quality patient care; it also directly supports the effective diagnosis and treatment of patients.

The effective acquisition, maintenance and disposal of these assets is a fundamental responsibility of management in supporting the efficient delivery of clinical and support services. The ultimate aim is to deliver the highest quality healthcare services to people in Scotland and through this to ensure that NHSScotland is recognised by the people of Scotland as amongst the best in the world. The strategy clearly sets out the way in which NHSScotland will work with its partners across the public and third sectors, and with patients, carers and the public to deliver health improvement, tackle health inequality and improve the quality of health care.

In order to deliver the highest quality, best value healthcare services for every person in Scotland, we need to maximise the existing NHS estate and 'future proof' new developments to allow for service redesign and technological advances. The settings in which healthcare is being provided are changing, becoming more local, with large acute settings focusing on specialised care. The focus of our healthcare strategy is on outcomes, community-based services and the facilitation and support of joint planning and delivery of services, through programmes such as hub.

Crucially, the infrastructure programme supports the implementation of the three quality ambitions in the strategy, which are that healthcare will be:

  • patient-centred, respecting individual needs and values;
  • safe, ensuring no avoidable injury or harm and an appropriate, clean and safe environment at all times; and
  • effective, with the most appropriate treatments, interventions, support and services will be provided at the right time to everyone who will benefit.

Key infrastructure priorities:

  • New diagnostic and treatment centres - The centres will allow people to be treated more quickly for planned surgery and the facilities will help the NHS meet increasing demand from a growing elderly population, taking pressure off unplanned and emergency treatment, reducing the use of the private sector and allowing the delivery in full, and on a sustainable basis, Scottish Government guarantees on inpatient/day case waiting times.
  • New-build community health centres and improvements and reconfiguration in existing community facilities - In order to achieve the Scottish Government's policy of shifting care out of hospitals and into local communities, we need to build the capacity to enable general practice to provide this care. Integration of health and social care is the Scottish Government's ambitious programme of reform to improve services for people who use health and social care services, and requires fit-for-purpose accommodation.
  • Effective management of the existing estate to address backlog maintenance, ensure statutory compliance and ensure that these are safe, fit-for-purpose and efficient - NHSScotland's currently identified estate backlog maintenance expenditure requirement is the base cost required to bring those parts of the existing estate which are currently not in satisfactory condition, back to Condition B (satisfactory). It is an ongoing challenge for the NHS to balance investment between that which is focussed on service improvement and development, and that which is necessary to maintain buildings in a good condition and ensure that they are safe, reliable and fit for purpose.
  • Renewables, energy efficiency and climate change - Considerable overall energy price rises are expected over the next decade, if there are no changes in the current levels of energy consumption, NHSScotland is likely to see a doubling of energy costs to around £140 million per annum by 2020. Three NHS Boards are planning to invest in the Carbon Energy Fund which would provide reliable and efficient energy supplies, improve the energy infrastructure, minimise energy consumption, reduce greenhouse gas emissions through improved energy generation efficiency, distribution improvements and control system upgrades and fulfil statutory requirements.
  • Completion of the delivery of the £1.15 billion pipeline of revenue-financed infrastructure investment - Over £500 million of the initial £750 million pipeline is now either complete or under construction. The focus will now be on achieving financial close on the remaining projects and developing the projects in the £400 million extension of the pipeline, including the Baird Family Hospital and ANCHOR Centre in Aberdeen and the completion of the programme of investment at the Royal Edinburgh Hospital.

Progress

Over the period from 2011-12 to 2015-16, there will be net capital investment of £1.8 billion in the property, equipment, information technology and other assets. Investment in infrastructure through the capital budget has been supplemented over this period by a commitment to £1.15 billion of revenue-financed investment in health infrastructure through the NPD and hub programmes. From 2013-14 to 2015-16, these programmes will deliver estimated investment of over £500 million.

Since 2008, investments have ranged from large acute hospitals to smaller primary care premises, a number of which were funded through the Primary Care and Community Premises Modernisation Programme. In all cases projects have been rigorously assessed for value for money and to ensure that they contributed to improvements in the quality of the estate and service delivery. Projects included the following:

  • West Scotland - The Queen Elizabeth University Hospital and Royal Hospital for Children was officially opened by Her Majesty The Queen on 3 July 2015. Construction of this £842 million project commenced in February 2011 and was delivered in March 2015. The new adult acute and children's hospitals were both delivered under budget and ahead of schedule which allowed NHS Greater Glasgow and Clyde to build a separate office building to house all the clinical and administrative staff needed to run the hospitals. Space within the hospitals was therefore maximized for delivering patient care.
  • East Scotland - Following the completion in 2012 of the £172 million new wing at Victoria Hospital in Kirkcaldy, which provides specialist and acute services to patients across Fife, the Scottish Government has supported the continuing redevelopment of hospital services in Fife, including diagnostic and treatment services at Queen Margaret Hospital.
  • South Scotland - The Dumfries and Galloway Acute Mental Health Unit, is a mental health facility for in-patient care. Opened in 2012 it replaced the accommodation previously provided by Crichton Royal Hospital. It provides a modern, stable and secure environment for patients requiring specialist care; the hospital has six wards and 85 beds.
  • North Scotland - The Aberdeen Community Health and Care Village (£23 million) was opened in 2013 and is an urban community hospital without beds and has provided a diagnostic and treatment centre for the people of Aberdeen.
  • Highlands and Islands - A new care centre for Mull and Iona was completed in 2012 featuring inpatient beds, outpatient and community casualty facilities and supported living flats managed by West Highland Housing Association. Tain Health Centre was completed last year and a new health centre for Scalloway opened in 2015.

Sector plans

The need for investment continues to exceed the available budget, therefore, there will be a continuing need to prioritise spend; to work collaboratively with partners through hub in both the procurement of new and management of existing assets; and to test the suitability of new developments for delivery through innovative financing mechanisms.

Over the next five years it will be necessary to ensure sufficient capital funding is made available:

  • for all legally committed projects;
  • to maintain the quality of the existing estate;
  • to ensure statutory compliance of buildings, plant and equipment (including re-equipping hospitals built over the last ten years); and
  • to make contributions towards the costs of development ( e.g. feasibility, planning, design), advice ( e.g. legal, financial, technical) and enablement ( e.g. land purchase or preparatory works) for NPD schemes and towards similar costs for hub-led schemes.

Beyond the next five year period, it is anticipated that there will be increasing emphasis placed on the following areas of investment:

  • procuring medical equipment technology that supports the Healthcare Quality Strategy and in particular reinforces the need to diagnose and treat early stage disease; offer a range of treatments that befits a world class health service and reflects the needs of an ageing population;
  • ensuring blueprints for the future at major health campus sites are translated into infrastructure that support healthcare services to achieve more efficient patient pathways;
  • promoting major service redesign in community and primary care facilities to reflect changes in treatments, and technology; trends in demographics, epidemiology and access to services as well as making sure the care and services that are being provided are affordable, sustainable and tackle inequalities; and
  • providing fit-for-purpose facilities to support integrated health and social care services, and through this support the Scottish Government's policy of shifting care closer to people's homes.

Despite the challenges associated with falling capital budgets over the coming years, the Scottish Government is committed to taking forward projects to increase service efficiency, effectiveness and sustainability in the health sector, including:

  • West Scotland - Major projects are underway in Ayrshire, upgrading 'front door' services at Ayr and Crosshouse hospitals and delivering a new integrated mental health and community hospital.
  • East Scotland - We are investing £150 million to redevelop services from the Royal Hospital for Sick Children, Child and Adolescent Mental Health Service and the Department of Clinical Neurosciences in a single building adjoining the Royal Infirmary of Edinburgh at Little France. The new co-located building will see services from the Royal Hospital for Sick Children, Department of Clinical Neurosciences and Child and Adolescent Mental Health Service brought together in a modern and high-quality setting at Little France.
  • South Scotland - The new £274 million Dumfries and Galloway Royal Infirmary will facilitate the provision of services in a high quality environment which is fit for purpose for staff, patients and visitors. The project is now under construction and due to become operational in March 2018.
  • North Scotland - Investment of £120 million for a new women's hospital, which will include a replacement for the maternity hospital, and a cancer centre on the Foresterhill site in Aberdeen.
  • Central Scotland - NHS Lanarkshire Health Centres (£43 million), these three revenue financed projects involves the delivery of three health centres located in Kilsyth, East Kilbride and Wishaw which are due to be opened in 2015-16.
  • Highlands and Islands - NHS Western Isles have a proposed investment in health and social care services for the populations of Barra and Vatersay. The aim is to develop a model of care to facilitate improvements in quality and efficiency, by creating a 'joined up' approach between the two organisations through the creation of a 'community resource hub' which would include social care as well as primary, community and hospital healthcare services.

To support investment in major hospital developments, the Scottish Government has made available revenue funding to support construction costs of £1.15 billion. The major NPD projects are:

In construction:

  • NHS Ayrshire and Arran - North Ayrshire Community Hospital.
  • NHS Dumfries and Galloway - re-provision of services at Dumfries and Galloway Royal Infirmary.
  • NHS Lothian - re-provision of services for the Royal Hospital for Sick Children and Department of Clinical Neurosciences in Edinburgh.
  • NHS National Services Scotland - Scottish National Blood Transfusion Service - rationalisation of five properties sited in Edinburgh and Glasgow.

In development:

  • NHS Orkney - re-provision of services at Balfour Hospital in Kirkwall.
  • NHS Grampian - The Baird Family Hospital and ANCHOR cancer centre in Aberdeen.

The hub initiative is the key vehicle in health to deliver revenue funded and public capital funded investment in community based facilities. Community projects currently being explored for delivery through the hub initiative include:

  • NHS Forth Valley - Stirling Care Village
  • NHS Grampian - Aberdeen Health Village
  • NHS Grampian - Newmachar, Balmedie Blackburn and Elsick
  • NHS Grampian / NHS Highland - Forres / Tain / Woodside
  • NHS Greater Glasgow and Clyde - Gorbals and Woodside Health Centre
  • NHS Greater Glasgow and Clyde - Maryhill, Eastwood and Inverclyde Health Centre Bundle
  • NHS Greater Glasgow and Clyde - Health and Care Centres in Greenock and Clydebank
  • NHS Highland / NHS Grampian - Logiliphead Mental Health / Inverurie Health Centre
  • NHS Highland - Skye, Lochalsh, south west Ross-shire and in Badenoch and Strathspey
  • NHS Lanarkshire - Health Centres in Wishaw, East Kilbride and Kilsyth
  • NHS Lothian - Health Centres in Blackburn, Firhill and Muirhouse
  • NHS Lothian - Royal Edinburgh
  • NHS Lothian - East Lothian Community Hospital
  • NHS Scotland - Access to Unlicensed Medicines

Delivery partners and structures

NHS Boards

NHS Boards have a distinct role and prescribed statutory duties conferred upon them by Scottish Ministers under the Functions of Health Boards (Scotland) Order 1991 . Specific functions are specified with reference to the provisions of the National Health Service (Scotland) Act 1978. Legislation requires that primary day-to-day responsibility for safeguarding NHS property rests with the Chief Executive of each NHS Board. This is a significant responsibility and they are answerable to the Accountable Officer for NHSScotland, its Chief Executive.

Across all NHS Boards five year plans have been produced aligning capital programmes to strategic and service objectives. These are articulated within Local Delivery Plans covering service targets and financial plans (including the capital programme). The overall service strategies are supported by board-wide property strategies.

All projects with a capital investment in excess of the delegated limit for NHS Boards (which range between £1 million and £5 million) are subject to approval of the Scottish Government's Capital Investment Group. All capital investment is subject to the guidance and principles set down in the Scottish Capital Investment Manual which is consistent with HM Treasury's Green Book principles.

In line with current policy, the majority of capital resources have been allocated by formula to NHS Boards for them to identify their capital spending requirements and prioritise these in line with available resources. The remainder is held centrally and allocated to NHS Boards for specific projects above their delegated limits.

Scottish Futures Trust ( SFT)

SFT is managing the hub programme, which is an innovative and collaborative approach to the funding and delivery of community assets on behalf of the Scottish Government. Facilities are delivered by selected private sector partners working in partnership with public sector bodies through joint venture companies across five hub territories covering the whole of Scotland. Investment may be a mix of capital and revenue funding provided by the public and private sectors.

SFT also has a key role in providing a centre of expertise and advice on the development, funding, structuring, procurement and management of NPD projects. Procuring bodies will therefore be working closely with SFT throughout the development of their projects and seeking SFT approval at specific points, in order for the project to proceed to delivery.

Finally, SFT supports the wider health investment programme, providing advice and expertise in project development, asset management and strategic property disposals.

Asset Management

The high-level priority of asset management is to improve efficiency and effectiveness of asset management to support delivery of high quality healthcare services by ensuring that assets are:

  • safe - meeting statutory and regulatory requirements;
  • fit for purpose - meeting patient and clinical requirements; and
  • efficient - delivering best use of resources through strategic management of disposals, maximising opportunities to rationalise estate, making efficient use of space, reducing running costs, targeted maintenance and capital works investment.

Throughout NHSScotland, Boards keep under review their asset management plans which include the option of disposing of assets. We are continuously seeking to improve the strategic management of disposals to ensure best value for taxpayers' money is secured.

At a strategic level the asset management policy mandates collection of asset management data. Data is input to a new national asset management system and will feature in annually updated asset management plans for each NHS Board. Further assurance will be provided by a national asset management survey programme which will look at building condition on a rolling three year basis.

NHS performance has been made more open and transparent by a new performance framework set out in an annual State of the Estate Report. This document reviews and serves to highlight performance improvement. Evaluation of performance will provide an evidence base for identifying best practice.

3.7 TRANSPORT

Objectives and purpose of investment

Investment in Scotland's transport is a key enabler for delivering sustainable growth by increasing competitiveness, supporting employment and opportunity across all of Scotland: we all use transport, or rely upon it for the movements of goods, services and people, as part of our daily lives. This supports the vision of Scotland as a connected place where we make better use of our existing infrastructure, and have improved internal and international transport links to facilitate our ambition for growth and our commitment to an inclusive society. Transport investment is across all modes, on roads, railways, buses, ferries, inland waterways, air services and active travel.

The NTS sets out three key strategic outcomes for transport:

  • improving journey times and connections - to tackle congestion and the lack of integration and connections in transport which impact on our high level objectives for economic growth, social inclusion, integration and safety;
  • reducing emissions - to tackle the issues of climate change, air quality, noise and health improvement which impact on our high level objective for protecting the environment and improving health; and
  • improving quality, accessibility and affordability - to give people a choice of public transport, where availability means better quality transport services and value for money or an alternative to the car.

The transport investment hierarchy of maintaining and safely operating, making better use and then lastly promoting targeted improvements, makes best use of limited resources and ensures that new infrastructure is identified only after other approaches have been considered. It promotes and supports a more sustainable transport network by encouraging efficient use of existing road and rail resources, encouraging sustainable mode choices through targeted rail enhancements and providing better opportunities for strategic public transport and freight movements.

The NTS and our investment priorities also reflect the geographic dispersal of our population and the importance of transport in supporting our rural and island communities through the stimulation of social and economic growth.

The diverse geography of Scotland means a critical part of our maintenance of the existing networks is to continue to provide opportunities for everyone to access transport. This includes ensuring that ferries are able to operate, that airports remain open and that lifeline services and connections for remote and rural communities are maintained. Beyond investing in the right infrastructure this requires continuing investment in schemes including roll out of the Road Equivalent Tariff scheme as the basis for ferry fares, the Air Discount Scheme, Bus Service Operators Grant, the evolution of the concessionary fares scheme, contracts for ferry operation as well as the ScotRail franchise.

Progress

Transport Scotland continues to deliver the three Key Strategic Outcomes on the strategic road and rail networks through the work of the five Operating Companies for the Trunk Road and through Network Rail and Abellio ScotRail for the rail network. For other modes and networks, this delivery has taken the form of the Road Equivalent Tariff fares now rolled out to all routes covered by the Clyde and Hebrides Ferry Services contract, continuation of the Air Discount Scheme, and the Concessionary Fares scheme for everyone over 60 on buses across Scotland. These all require the infrastructure they use to be maintained and safely operated.

Roads

We have completed targeted improvements to the trunk road including A9 Crubenmore, A96 Fochabers Bypass, improvements on the A75 at Dunragit and Hardgrove, A77 Symington to Bogend Toll, and improvements on the A82 at Pulpit Rock and Crianlarich.

The Forth Replacement Crossing ( FRC) project is the biggest transport infrastructure project in Scotland for a generation. It includes the Queensferry Crossing and remains on programme to open in December 2016 and at a cost of £1.325 to £1.350 billion, £245 million under the original budget set in June 2011. The FRC project is vital to the economy of Scotland and is delivering significant economic contribution through the average level of employment during construction and the additional benefits through the supply chain for Scottish businesses. When complete, the Queensferry Crossing will help maintain essential links across the important cross-Forth transport corridor in the East of Scotland. Whilst the Queensferry Crossing is the project's centrepiece, the project also involves a major upgrade to the road and public transport networks in eastern Scotland. The British Chamber of Commerce has estimated that the FRC project would deliver economic benefits worth around £6 billion to Scotland's economy.

Scheduled for completion in spring 2017, the M8 M73 M74 Motorway Improvements Project is a £500 million investment in the motorway link between the country's two largest cities and is pivotal to Scotland's sustainable economic growth.

Construction is underway on the long awaited Aberdeen Western Peripheral Route ( AWPR) Balmedie Tipperty with completion scheduled for winter 2017. It has been procured through a NPD Model form of contract and combining the two projects into one contract delivers better value for money. It is estimated that the AWPR will generate over £6 billion additional income for the North East, at reducing costs to business and providing opportunities for increased sales. Over 14,000 jobs are expected to be generated over the first 30 years after the scheme opens.

Scottish Ministers have made available the necessary funding to complete the Inveramsay Bridge worth around £10 million. Completion of this scheme in spring 2016 will help to cut congestion, improve journey time reliability and traffic flows, as well as reduce the likelihood of bridge strikes which can cause disruption to road and rail users alike.

The Scottish Government has given a commitment to complete to dual the A9 between Perth and Inverness by 2025 and the A96 between Inverness and Aberdeen by 2030. These are ambitious targets but underline the commitment to connecting Scotland's cities with a high quality transport system that will generate economic growth and will ensure the road network between all Scottish cities is of dual carriageway standard. Since the announcement in December 2011, over £33.7 million has been spent on the design process.

Our key trunk roads are to be improved and access to our international gateways, ports and airports is essential if Scotland is to remain competitive internationally. We have designated Grangemouth and more broadly the Firth of Forth as national developments for container freight improvements.

Rail

A safe, punctual and sustainable rail network is vital to the success of any modern economy and investment in our rail infrastructure and services remains a key priority of the Scottish Government. Over £6 billion has been invested in Scotland's railways since 2007, supporting growth through new and better services, new trains, new tracks, new and improved stations, and policies aimed at improving affordability and accessibility by keeping fares down.

The capacity and capability of the rail network in Scotland has been significantly enhanced through a rolling programme of electrification that has seen the £12 million Paisley Canal, £80 million Cumbernauld and £35 million Whifflet routes electrified, supporting faster, greener and more efficient passenger journeys.

The £27 million redevelopment of Haymarket Station, completed on time and on budget, opened to passengers in December 2013 and was followed by the new Dalmarnock station which successfully supported huge volumes of passengers during the Commonwealth Games in summer 2014 and Gleneagles station which was remodelled and substantially renovated to facilitate visitors to the Ryder Cup.

The Borders Railway was opened in September 2015 and, with seven new stations, represents the longest domestic railway to be constructed for over 100 years in the UK. The project was completed on time and on budget. Passenger services commenced in September 2015, with 192,000 passenger journeys being taken in the first 6 weeks of service.

As part of the £742 million Edinburgh to Glasgow Improvement Programme ( EGIP) a £250 million contract for electrification of the main Edinburgh-Glasgow line is on site and making good progress. The electrification contract includes preparatory works for the installation of overhead electric wires over the 45 mile line, lengthening station platforms to accommodate longer trains and track improvement. A key milestone was reached in July 2015 with the Winchburgh tunnel works successfully completed on time and within budget.

After successful procurement exercises, new franchise contracts for the operation of ScotRail and Caledonian Sleepers were awarded in 2014 and started in April 2015. The award of both contracts confirms the Scottish Government's commitment to transform Scotland's rail services.

Ferries

We have invested in our ferry services with the deployment of the new MV Loch Seaforth on the Stornoway-Ullapool route, the delivery of the first hybrid ferries to operate in Scotland, MV Hallaig and the MV Lochinvar, and the launch of the third, MV Catriona, on 11 December 2015. Contracts worth £97 million for two new major ferries for Clyde and Hebrides services have been awarded to Ferguson Marine Engineering Ltd of Port Glasgow.

The Scottish Government is committed to supporting Scottish remote and fragile island communities with recent investments at Ullapool and Stornoway harbours of approximately £30 million. In addition, around £30 million will be invested in Brodick harbour redevelopment over the next two years to secure a safe, efficient and reliable ferry terminal and service. The Scottish Government will support the project by providing £17.8 million.

Sustainable and Active Travel

Our work on the low-carbon economy and promoting sustainable travel choices has proved effective in contributing to our challenging climate change obligations, and will continue to be developed further, including air and noise emission improvements that can also be realised by such action.

Our electric vehicle ( EV) roadmap, Switched On Scotland, published in 2013, sets out Scottish Government's ambitious vision: to free Scotland's towns, cities and communities from the damaging emissions of petrol and diesel fuelled vehicles by 2050.

To support the delivery of this vision, since 2011 we have invested more than £11 million in the development of the ChargePlace Scotland network of over 900 publicly available EV charging bays (over 450 units).

We are also supporting EV uptake through our Switched On Fleets initiative that offers free, evidence-based analysis of public sector fleets, identifying new opportunities for the cost effective deployment of EVs. A total of £2.5 million of grant funding is being offered to each of the 32 Community Planning Partnerships over 2014-15 and 2015-16 to help them buy or lease EVs. Through this scheme we expect to introduce over 250 new EVs into the public sector fleet, reducing fuel use and emissions in the process.

In addition, the Scottish Government has been a key funding partner in the Aberdeen Hydrogen Project which has seen Europe's largest fleet of hydrogen powered buses entering service on two routes within the city. The project is also supported by the Scottish Cities Alliance and has delivered a state-of-the-art green hydrogen production and refuelling station in the city. A second station is now being developed in the city and Fife Council is a partner in a Scottish Government funded project which will establish a hydrogen production and refuelling facility in Levenmouth.

Scottish Government investment in active travel supports these objectives and in both 2014-15 and 2015-16 was at record levels of over £39 million. Since 2007, 215 miles have been added to the National Cycle Network in Scotland, whilst, since 2011 when the Community Links Programme was opened, 131 miles of new walking and cycling paths have been created in and around our urban areas.

Local authorities and Regional Transport Partnerships are being supported to prepare active travel strategies for their areas - identifying the key trip generators and destinations, the existing network and priorities for improvement or extension. Local authorities and their partners principally deliver improvements, utilising Scottish Government grant funding distributed through Sustrans Scotland. Local authorities and individual landowners are responsible for maintaining infrastructure, other than that associated with the trunk road network which is the responsibility of Transport Scotland.

We have invested nearly £13 million over the last five years to support bus operators bringing into service new low emission buses, helping to tackle climate change and improve urban air quality. These capital grants towards the costs of new buses have been complemented by Bus Service Operators Grant, which contributes towards the financial sustainability of the overall bus network, helping provide the conditions for private investment by bus operators and providing additional incentives for low carbon vehicles.

Through two rounds of the Bus Investment Fund, we have supported a range of local and regional projects during 2013-14 to 2015-16 aimed at delivering improvements to bus and other local public transport services.

We have continued to work with the Scottish Road Works Commissioner and the wider road works community to promote better management of road works across Scotland's trunk and local roads network, balancing the interests of road users, utilities and their customers, and road authorities.

Sector plans

The Transport sector plan is closely aligned to the investment hierarchy, with the majority of Transport Scotland's budget being directed to maintain and safely operate the existing networks and seeking to make a real contribution to climate change targets. By 2020 we aim to continue having well maintained transport networks, with their capacity optimised, and with a clear investment plan for improvements where these go beyond maintenance or optimisation in line with the recommendations of the Strategic Transport Projects Review ( STPR).

We are conducting a review of the current system for regulating the planning and execution of road works to enable essential infrastructure located under roads to be maintained and improved while minimising disruption to road users and the risk of impairment to the roads network. The review is due to report in spring 2016. The concessionary fares schemes, support for green buses, contracts for ferry operation as well as the ScotRail franchise. Transport Scotland is providing substantial funding towards the Strathclyde Partnership for Transport ( SPT) programme to modernise Glasgow's subway, a system that carries some 13 million passengers every year.

Trunk Roads

Maintaining and safely operating our trunk road and rail networks, as well as implementing our strategic road safety plans requires some £400 million every year. This provides for essential services including ensuring the networks are available throughout the winter, and addresses the most urgent maintenance of the trunk road. The trunk road network is 3,429 km long, and the rail network some 2,759 km, of which 24 per cent is electrified. The backlog of structural maintenance schemes is increasing and remains challenging.

On the roads we will continue to seek to realise the benefits that can be gained by using Intelligent Transport Systems ( ITS) to make our trunk road network as safe and efficient as possible. There will be a new ITS 10 year strategy document which will map out options such as further managed motorways like the current Fife ITS scheme. Work will also continue towards achieving the casualty reduction targets set out in Scotland's Road Safety Framework to 2020. This will be supported by the refresh of the Strategic Road Safety Plan and continued effective deployment of safety cameras. A recent example is the £2 million plus spend on average speed cameras on the A9. This has achieved not only notable casualty reductions but also improved journey time reliability.

Investment and research will continue into making the trunk road network even more resilient to the effects of adverse weather. For example, for winter season 2015-16 152 state of the art gritters operating on the trunk roads are less than three years old.

We also plan to invest in technology to assist the optimisation of the trunk road network through providing clear and helpful information. The recently published smartphone app allows users to access information from Traffic Scotland wherever they need it. This is in addition to a programme of managed motorways, including ramp metering, active signage and measures like the bus hard-shoulder running being implemented during construction of the Forth Replacement Crossing.

Rail

Demand for rail travel in Scotland continues to boom with over 93 million passenger journeys last year and a further £5 billion programme of investment in the network was committed for the five year period to 2019, helping to better connect communities and support sustainable economic growth and jobs across the country.

The Final Business Case for the EGIP was published January in 2014 based on a capital outturn cost of £742 million for the current phase which will be fully delivered by March 2019. It remains predicated on delivery of Edinburgh-Glasgow electrification by December 2016 and will deliver additional electrified routes between Glasgow and Edinburgh via Shotts and to Stirling, Dunblane and Alloa. New Hitachi electric trains will help exploit the benefits of this investment, with faster journey times and increased capacity helping transform the passenger experience.

The Contract for the first phase of the Scottish Government funded Aberdeen to Inverness Improvement Project (£170 million) to upgrade the rail line between Aberdeen and Inverness was awarded by Network Rail to BAM Nuttall Ltd in October 2015. Phase One of the project is due to be completed by March 2019. Works include redoubling of track between Aberdeen and Inverurie, signalling enhancements, platform extensions at Insch and Elgin, Forres station relocation and track improvements and infrastructure to support two new stations at Dalcross and Kintore.

This investment will also help deliver substantial improvements in services between Aberdeen and Inverness, supported by the introduction of fully refurbished high speed trains. Future phases of the project will help support an hourly service between Aberdeen and Inverness, with an average journey time of around two hours. The exact scope and timing of works to achieve this is still to be determined and will be dependent on sufficient resources being available to support their delivery during Control Period 6 (2019 to 2024).

Investment in the rail infrastructure between Aberdeen and the central belt will support improved connectivity and journey times for passenger services and an improved capability for rail freight.

Improved station environments will also be delivered at Glasgow Queen Street, Dundee, Inverness, Motherwell, Stirling, Perth and Aberdeen.

Increased capacity through additional tracks and longer passing loops, network electrification, gauge clearance, and other infrastructure works will support new and improved opportunities for rail freight across the country. In addition to the major rail enhancements programme, a £30 million Strategic Rail Freight fund is supporting further investment on strategic infrastructure enhancements to encourage growth in the sector and support safer and more sustainable ways of transporting products and materials.

Growth in passenger numbers is forecast to continue, placing further demands on capacity across the rail network particularly between our cities and at major terminal stations, including Glasgow Central and Edinburgh Waverley. Planning beyond 2019 is well underway in accordance with the priorities set out in the Strategic Transport Projects Review and informed by analysis and options developed by the rail industry and part of the regulatory planning processes.

The Scottish Government commissioned, jointly with the UK Government, HS2 Ltd to undertake a Broad Options study of how high speed rail could be extended to Scotland. The way forward in the light of the study's findings will be determined by the Scottish and UK governments in 2016.

Delivery partners and structures

The very nature of transport networks requires working with partners and different levels of government. The strength of such partnerships has been evident and essential in the successful delivery of major events such as the Commonwealth Games and Ryder Cup in 2014 as well as the completion of major projects such as the Borders Railway in 2015.

Transport Scotland is an active member of the Scottish Government's Key Agencies Group promoting earlier engagement between Developers, Planning Authorities and bodies including Transport Scotland, SNH, SEPA, Historic Environment Scotland and Scottish Water. This has had real benefits in delivering planning reform outlined in the 2006 Planning Act, and sets the agenda for improved land use and transport integration.

The backdrop of constrained capital expenditure means other models for delivering schemes and measures have been explored. The continued construction of the Queensferry Crossing funded from Transport Scotland's capital budget leaves little funding room for additional capital expenditure. This has led to the use of alternative models for major roads projects as well as the continued use of the Network Rail RAB for rail infrastructure projects such as EGIP.

We have strong contractual relationships to deliver schemes, including with our five Operating Companies for the trunk road network. These contracts have been running in some form since 1995, are currently in their fourth generation, and with the support of the Performance Audit Group, set clear performance targets. This is felt most strongly when the network is under greatest stress, and the major efforts during severe winters or landslide events ably demonstrate the ability of all involved.

The Scottish Government strongly believes that a more integrated approach across the whole industry is in the best interests of Scotland's railways. The emergence of the ScotRail Alliance, formed between Abellio ScotRail and Network Rail Scotland, will put the needs of passengers at its heart through the delivery of better, more reliable services, increased innovation, and a more efficient management and operation of the rail network in Scotland.

Network Rail's reclassification as a central government body has resulted in direct accountability to the UK Government although a memorandum of understanding has been agreed to set out the role of the Scottish Ministers in relation to Network Rail's formal governance. Separate funding arrangements are also in place, which includes the ring-fenced loan agreement for Scotland designed to cover the funding requirements through to the end of the current five-year regulatory control period in March 2019.

Transport Scotland published Scottish Ferry Services: Ferries Plan (2013-2022) in December 2012 as a basis for the shape of all of Scotland's ferry services until 2022 and it underpins the development of the Vessel Replacement and Deployment Plan ( VRDP) as it applies to the Clyde and Hebrides Ferry Services network. The VRDP is intended to complement the Ferries Plan by also considering historical and projected customer demand and the ongoing provision of capacity to meet that demand.

Asset management

The Scottish trunk road network is estimated to have a construction value of £20 billion (April 2015 valuation), making it the highest value single asset for which Scottish Ministers are responsible. To provide the service that Scotland requires from the trunk road network, while at the same time providing best value for public money, we apply recognised best practice in asset management. Asset management practices include road user surveys (aiding our understanding of their concerns and priorities), tools and techniques for identifying and planning works that provide best value for money, procedures for assessing and mitigating risk, and tools and techniques for assessing the short (one to three year) and long term (up to 20 years) maintenance needs of the trunk road network. The Road Asset Management Plan ( RAMP) is one of our key asset management documents which sets out the level of service we intend to provide on the trunk road network alongside the work and investment required to achieve this. It is used by us and our service provider staff to provide full visibility of trunk road management and maintenance activities and to drive continual improvement.

We are committed to the sharing of knowledge and experiences in implementing asset management with other local, national and international road authorities. We continue to work with partners to deliver the recommendations from the 2012 National Roads Maintenance Review which aims to improve the management and maintenance of Scotland's roads.

Network Rail continues to own and operate the railway infrastructure in Scotland within defined regulatory and control framework. The requirements of the Scottish Government for the current regulatory control period ( CP5) were set out in the June 2012 High Level Output Specification. In summary, this required Network Rail to manage the railway assets in a way that supported a growing railway - carrying more passengers and more freight in a safe, reliable, efficient and environmentally sustainable way.

Working with Caledonian Maritime Assets Ltd, independent harbour trusts and the ferry operators, Transport Scotland is providing safe ferries, harbours and port infrastructure for operators, communities and users that support Scotland's lifeline ferry services.

Highland and Islands Airports Ltd is a public body wholly owned by the Scottish Ministers which operates and manages eleven Airports which are vital to the social and economic welfare of the areas they serve. Its strategic plan informs its three year corporate plan and a one year operating plan. The Scottish Government acquired Glasgow Prestwick Airport in November 2013. Investment is provided in the form of interest bearing loan funding to assist the airport to return to profitability, to help cover operational requirements, essential backlog maintenance and ongoing repositioning capital.

NPF3 is clear that our five strategic airports act as international gateways to and from Scotland. Maintaining and enhancing air connectivity is essential for Scotland.

Scottish Canals is the public body which maintains and operates our canals. The canals are Scheduled Ancient Monuments, and have seen considerable regeneration over the past 15-20 years. They are not only navigation assets but also contribute a wide range of priorities, including housing, regeneration, water management and drainage, sustainable transport and tourism. We will continue to build on the benefits and value that these assets can bring to Scotland.

3.8 ENERGY AND ENERGY EFFICIENCY

3.8.1 ENERGY

Objectives and purpose of investment

Our approach to energy is an important contributor to our efforts to promote growth, tackle inequalities and deliver on our climate change ambitions, showing strong leadership in the transition to a low-carbon economy.

The Scottish Government has a well-established framework for energy policy including ambitious renewable targets, clear plans to boost energy efficiency and the most stretching emissions-reduction targets in the world.

The Scottish Government's policy on electricity generation is set out in the Electricity Generation Policy Statement, published in 2013. The objectives of the policy are to deliver:

  • a secure source of electricity supply;
  • at an affordable cost to consumers;
  • which can be largely decarbonised by 2030; and
  • which achieves the greatest possible economic benefit and competitive advantage for Scotland including opportunities for community ownership and community benefits.

The transition to a low carbon economy requires significant investment in energy infrastructure including power generation, energy transmission and distribution grids, energy storage, interconnection to facilitate international trade in energy and port infrastructure. However, the majority of capital infrastructure investment in these sectors is delivered by UK Government policies and paid for through Great Britain's consumers' energy bills.

Progress

Over the last decade there has been notable consistency to the Scottish Government's approach to energy, leading to dramatic changes to Scotland's energy system.

  • Scottish renewable electricity output has more than doubled since 2007 and now supplies half of the electricity consumed in Scotland;
  • we have already met our 2020 target to install 500 MW of community and locally owned renewable generation capacity;
  • there has been unprecedented investment in the Scottish transmission network, permitting substantial flows of power to the rest of the UK;
  • renewable heat output has increased; and
  • there have been reductions in final energy demand in Scotland, driven by ongoing improvements to energy efficiency.

While energy remains a reserved issue, the Scottish Government's power to effect change in line with all the aims of the strategy is limited. So long as this is the case, the Scottish Government will continue to make representations to the UK Government on the most appropriate policy and regulatory environment for the development of the Scottish energy system.

Sector Plans

Renewable Electricity Generation

The Scottish Government helped to capitalise the Green Investment Bank ( GIB) through a deal with Treasury using £103 million from the Fossil Fuel Levy account, held on behalf of Scottish Ministers by Ofgem. GIB announced in November 2015 that it committed £2.3 billion to 58 green infrastructure projects across the UK. Projects supported in Scotland include:

  • £5 million funding in total is being made available (half from GIB and half from private investors) for funding energy efficiency projects in Scottish distilleries
  • GIB has committed a Green Loan worth £6 million to Glasgow City Council to support its plans to convert 70,000 streetlights to low energy;
  • £4 million for a programme of sewage heat recovery system installations across Scotland with SHARC Energy and Scottish Water. First development of its kind in Scotland.

Capital from the Fossil Fuel Levy account was also deployed by the Scottish Government to set up the Renewable Energy Investment Fund ( REIF). To date around £45 million has been offered by REIF to support investments notably in community energy, marine energy, and innovative offshore wind. REIF support has been vital to the success of most major community energy projects commissioned in Scotland over the past three years, including the largest community-owned wind farm in the UK, (on Lewis) and early exemplars in the drive towards shared ownership between commercial developers and community groups - which is a policy priority under our Programme for Government. REIF also fills an identified funding gap for marine energy and is regarded by the European Union and other member states as a model to emulate to lever in private sector support for that and other high-risk nascent technology sectors. To date REIF has achieved financial leverage of nearly two-to-one.

In addition to direct support for renewable electricity generation in Scotland, there are a range of processes which provide a wider supportive framework for development of renewables in Scotland; including Scottish Planning Policy (2014) which has a presumption in favour of sustainable development. The Scottish Government is also responsible for the consenting process for electricity generation over 50 MW, and for transmission infrastructure, and in setting the levels of Renewables Obligation Certificates ( ROCs) in Scotland. The Renewables Obligation is due to close in 2017 (and a year earlier for onshore wind).

Community and Local Energy

The Scottish Government has been supporting community energy for over a decade. We published our first Community Energy Policy Statement in September 2015, which profiles current activity and policy mechanisms, and sets a clear statement on the our ambition for the sector, including the benefits we want to see accrue from commercially-owned renewable schemes and our vision for a shift to local energy economies.

Comprehensive support is available under CARES and REIF, with over £50 million available under CARES and REIF for community and locally owned projects in 2015-16 alone.

In 2014, we launched the CARES Local Energy Challenge fund, with up to £20 million available for major demonstrator projects providing transformative innovative local energy solutions. Five projects were successful in the first round. A second round was announced in March 2015 in partnership with the Low Carbon Infrastructure Transition Programme, and £500,000 was awarded to support 23 projects at the early development stage.

Successful projects are at the cutting edge of innovation, and fit with our drive to create an energy policy focusing on a holistic, local energy system, which could stimulate economic renewal. Projects had to show collaborative working, innovation, and value for the local community. Value can be demonstrated by:

  • linking local energy demand with local renewable energy generation
  • overcoming barriers relating to grid capacity issues
  • applying energy storage and active network management
  • delivering renewable heat and electricity to local consumers
  • encouraging local finance solutions

This approach will demonstrate community energy systems and will encourage further replication in other areas of Scotland.

In September 2015, we reached our target for community and locally owned renewable capacity of 500 MW by 2020, five years early. As at the end of September 2015, an estimated 508 MW of community and locally owned energy capacity was operational in Scotland. Our target, which has been independently assessed, has the potential value of up to £2.2 billion to Scottish communities and local businesses over the lifetime of projects. We will review the target to make sure we don't lose momentum and our commitment to community energy remains undiminished.

Future policy support will be designed to encourage the growth of local energy economies, with community energy groups working in partnership with other local bodies, including businesses, to build local solutions to local energy needs.

Low Carbon Infrastructure Transition Programme

The £76 million Low Carbon Infrastructure Transition Programme ( LCITP), supported by European Structural Funds was established in March 2015. The LCITP is a working partnership between Scottish Government, Scottish Enterprise, Highlands and Islands Enterprise, Scottish Futures Trust and Resource Efficient Scotland to support over 100 low carbon infrastructure projects by 2018. It offers a range of support mechanisms including project development, expert advice and funding, to support the acceleration of projects to develop investment grade business cases allowing them to secure existing streams of public and private capital finance.

LCITP will also collate evidence on recurring barriers and challenges to project development and share this intelligence with investment communities to help with refinement of all parts of the system to support the transition to a low carbon economy. LCITP has already completed a call for Geothermal Energy Projects. This resulted in four projects being awarded total feasibility funding of £185,000. There is also currently a Water Source Heat Pump Challenge Fund running with funding of £2.3 million available subject to suitable projects coming forward.

Offshore Wind

With 25 per cent of Europe's offshore wind potential, the development of offshore wind in Scotland is an exciting opportunity both for Scotland's economy and climate change agenda. The Scottish Government is keen to maximise this potential and has granted planning consent for just over 4 GW of development. Publication of Scotland's Marine Atlas, Information for the National Marine Plan, which assessed the condition of Scotland's Seas for the first time and will inform such scoping exercises for all offshore renewable developments in Scotland's seas in the future, such as the opportunity floating offshore wind could bring to Scotland. The introduction of an Enhanced Renewable Obligation Certificate scheme for test and demonstration and innovative floating structures, has acted as a catalyst to entice developers such as Statoil's Hywind pilot to our waters which will enable us to evaluate this technology viability for future commercial deployment.

Wave Energy Scotland

The Scottish Government is committed to supporting the development of both the wave and tidal energy sectors. We strengthened our support for the wave energy sector by creating Wave Energy Scotland ( WES) in November 2014. This new body, unique in the UK, brings together the best engineering and academic minds to collaborate in a research and development programme to accelerate wave technology further.

WES has attracted global interest since its launch and has already awarded over £7 million to 16 technology innovators to develop the best power take-off systems for wave energy devices and over £2.25 million to eight technology developers and consortia for novel wave energy converters. Scottish organisations are involved in the majority of the projects, which is testament to the expertise existing in Scotland.

Low Carbon Technology and Innovation

In order to catalyse and accelerate Knowledge Exchange activity between academia and SMEs, increasing innovation, and advancing the development of the low carbon technologies, the Scottish Government has continued to co-fund the Energy Technology Partnership's ( ETP) Knowledge Exchange Network for the financial year 2015-16. Other co-funders are ERDF, Scottish Funding Council, Scottish Enterprise and ETP Member Universities. The Scottish government is actively engaged with the ETP and co-funders to develop a comprehensive 3 year KEN II programme commencing 2016.

The Scottish European Green Energy Centre ( SEGEC), part of Scottish Enterprise, has delivered €162.86 million in European funding since mid-2009, leveraging an additional €425.92 million of investment, primarily from the private sector. In total, SEGEC has supported over 75 projects seeking EU funding, helping Scottish partners to understand opportunities, make new partners in new markets and further develop their project concepts.

The SEGEC team covers all of Scotland and helps Scottish SMEs and potential inward investors secure EU grant funding for low carbon demonstration projects by identifying EU funding calls and matching them with Scottish and European partners and innovations. Its priority areas are integrated energy systems and offshore renewables.

Energy Grid Infrastructure

As Transmission Network Owners ( TNOs) of Scotland's high voltage electricity transmission network, Scottish Power and SSE are responsible for maintaining and investing in transmission infrastructure in their respective areas. The low pressure gas distribution network infrastructure in Scotland is owned and operated by Scotia Gas Networks.

TNOs are regulated by Ofgem with regulatory policy set by the Department of Energy and Climate Change. In 2013 Ofgem introduced the " RIIO-T1 price control" that is set to run over an eight-year period from 1 April 2013 until 31 March 2021. Alongside ensuring a fair price for consumers, the new mechanism was expressly designed to secure investment to maintain a reliable and secure network, stimulate network innovation and encourage the TNOs to meet investment challenges arising from the transition to a low carbon economy. The price controls earmark around £7 billion of investment in the period for Scotland's high voltage network. This will deliver investment to replace ageing infrastructure and help to enable renewable energy to connect to the grid in areas where the resource is best.

A focus for the Scottish Government when working closely with Ofgem, DECC and the TNOs is to ensure development and reinforcement of the Scottish network is cost-effective, fit for purpose and that increases in Scottish network capacity enables and supports the development of new renewable electricity generating capacity in Scotland.

Recent developments:

  • Completion of the 400kv replacement Beauly-Denny power line designed to upgrade grid capacity in the area and support Scotland's onshore and offshore renewables potential.
  • Caithness-Moray Firth subsea cable and on-shore substations in construction. This will have 800 MW capacity on completion with potential to link to a future cable for Orkney and Shetland. It is a £1 billion project scheduled for completion in 2018.
  • In 2013 National Grid and SP began construction on the £1 billion Western Link 'bootstrap' project. The project, including the construction of two converter stations, is expected to conclude in summer 2017. The new HVDC link will support the transmission of renewable energy in Scotland to England and Wales. SP report the link will increase Scotland's import and export capacity by 2.2 GW.

Carbon Capture and Storage

Scotland's North Seas are the largest carbon storage resource in Europe and this coupled with our existing oil and gas capabilities, ready supply chain and existing pipeline and platform infrastructure means that Scotland is currently the best placed country in Europe to realise CCS on a commercial scale.

The Scottish Government supports Carbon Capture Storage ( CCS) as a critical new technology that if implemented on a commercial scale could drive a significant reduction in carbon emissions from fossil fuels, increasing our security of supply, compliment future hydrogen infrastructure and present enormous supply chain and first-mover opportunities for Scotland.

The Committee on Climate Change ( CCC) advice on UK's 5th Carbon Budget highlights that meeting the UK's 2050 emissions target is likely to require very low power sector emissions. The Committee says that carbon capture and storage is very important in meeting the 2050 emissions target at least cost. The International Energy Agency has estimated that by 2050, the cost of tackling climate change without CCS could be 70 per cent higher than with CCS.

However in November 2015, without consultation, the UK Government withdrew all funding for the £1 billion Carbon Capture and Storage ( CCS) programme. This measure formed part of the autumn 2015 spending review. The Peterhead Carbon Capture Storage Project proposed by Shell and SSE was the frontrunner in this competition.

The detailed design studies for the Peterhead project were completed this year at a cost of around £50 million (funded by UK Government) and onshore planning consent was given by Aberdeen council in June 2015. Shell and SSE were on target to make a final investment decision on this project in December 2015 and the UK Government had planned to make the final investment decision in March 2016.

The Scottish Government's long held position regarding the UK's CCS Competition is that for a fully-developed CCS industry to flourish in the UK and Scotland we are going to need more than the projects in the competition. This means that we also need follow-on projects like Summit Power's Caledonia Clean Energy Project (a full-chain 570 MW CCS coal-gasification power station in Grangemouth) to be supported by the UK Government with a Contract for Difference.

In October 2015 the Scottish Government signed a grant offer letter of funding of £4.2 million for the Summit Power CCS project. The funding, £2.5 million from Scottish Government and £1.7 million from the UK Government, is allowing the Seattle-based Summit Power Group to undertake substantial industrial research and feasibility studies with the ultimate objective of designing, siting, financing, and building their proposed CCS Clean Energy Project in Grangemouth.

Offshore Oil and Gas

A successful oil and gas sector will be a key component in the transition to a more resource efficient, lower carbon economy. Whilst this sector is currently facing a range of challenges, it continues to support employment opportunity across Scotland. At this challenging time, it is essential the correct policy framework is in place to support continued capital investment in the sector.

Like much of energy policy, offshore oil and gas policy is a matter reserved to Westminster.However, economic development matters are devolved and, therefore, the Scottish Government has a significant interest in the oil and gas supply chain and wider economic activities. As such, the Scottish Government retains a legitimate and significant interest in reserved matters relating to the North Sea oil and gas industry, such as fiscal and regulatory policy, given the direct effects this can have on the business base.

The North Sea oil and gas industry has undergone significant changes since 2011. At that time, it was reported that investment levels in the industry were increasing, with significant field developments being proposed. Accordingly, the period from 2011 to mid-2014 was characterised by record levels of investment, culminating in £14.8 billion being spent in 2014. However, during that time the industry was also characterised by a very tight labour market, rapid operating and capital cost inflation and poor production efficiency.

In June 2013, the UK Government commissioned Sir Ian Wood to conduct an independent review of oil and gas recovery from the North Sea. His recommendations were accepted by the UK Government and supported by the Scottish Government's own Independent Oil and Gas Commission. The Wood Review recommended UK Government follow a Maximising Economic Recovery strategy and the setting up of a well-resourced, arms-length regulator. The Oil and Gas Authority is now in place and is developing the MER- UK strategy, taking into account a recommendation of the Independent Oil and Gas Commission to consider wider Total Value Added from all North Sea oil and gas activities.

These activities gained even greater significance in summer 2014, with the global oil price dropping significantly to a 6 year low. This has exacerbated the issues already being felt by the industry and has necessitated concerted action from all stakeholders.

The Scottish Government is doing all it can through devolved powers to help the industry during these challenging times. The First Minister set up the Energy Jobs Taskforce ( EJTF) in January 2015. The EJTF is chaired by Lena Wilson (Chief Executive of Scottish Enterprise) and brings together the industry, Governments, the public sector and trade unions to help and support workers and families facing redundancy, but also to look at structural issues affecting the industry.

The Scottish Government believes there are still significant opportunities for the oil and gas industry and the wider supply chain. This is evidenced by the Oil and Gas UK Economic Report 2015, which estimates there are still up to 22 billion barrels of oil to be extracted from the North Sea. However, in order to secure this economic prize, the industry must be supported to ensure the required investment is secured.

The fiscal levers to do this are held by the UK Government and we have called on them repeatedly to consult with industry and other stakeholders on further measures to protect critical infrastructure, incentivise exploration and promote the most efficient operation of late life assets. This can only happen with the right fiscal and regulatory framework in place, which needs to be both fair and stable.

3.8.2 ENERGY EFFICIENCY

Objectives and purpose of investment

Our vision is to reduce overall energy demand in the system, and we will place actions to reduce demand at the centre of Scotland's new Energy Strategy.

Scotland's Energy Efficiency Programme ( SEEP) will set a vision that achieves a substantive improvement to the energy efficiency of our building stock, investing in the majority of our existing buildings to make them fit for Scotland's low carbon future over the next 15 to 20 years. It will build on our existing successful energy efficiency programmes which are shaped around local delivery projects that meet the needs of business and communities. Through SEEP, we will:

  • continue to provide support to households suffering from fuel poverty, helping to tackle inequality and improve broader outcomes such as health and wellbeing;
  • seek to leverage in private investment to support the development of loan schemes to enable households and businesses to spread the upfront costs of investment in energy efficiency;
  • take forward standards and introduce regulatory frameworks that give certainty to consumers and make it as easy as possible and the norm to invest in energy and heat efficiency;
  • introduce for the first time multi-year funding which will give our delivery partners the certainty they need to deliver ambitious energy efficiency projects; and
  • include the development of supply chains, education and awareness raising opportunities so that people value energy efficiency and look to make improvements

This delivery programme will help grow the economy and ensure long-term stability of energy efficiency funding and policy to give home and business owners, and our private sector partners, the certainty to invest in improving the energy efficiency of Scotland's buildings. Successful delivery of our ambitions on energy efficiency will mean that the majority of buildings across Scotland will have upgraded their fabric to make them easier to heat and more affordable to run. The exact measures that need to be installed must be determined at the building level, but are likely to include significant take up of wall and loft insulation, draught proofing and upgrades to heating systems and controls where they are appropriate.

Work to develop SEEP is underway and we will work with stakeholders over the next two years to set objectives and design the new programme to ensure it is tailored to Scotland's needs. We will pilot new and different models of delivery where industries and communities want them. It is important that the new programme achieves the necessary reduction in greenhouse gas emissions to help avoid dangerous climate change and so the programme and its targets must reflect and be developed alongside the RPP3. The new programme is now in its first phase, which involves delivering existing programmes more effectively, developing new pilot schemes and preparing for the effective implementation of the powers that are set to be devolved through the Scotland Act. The second phase of SEEP - a new integrated national programme to improve the energy efficiency of domestic and non-domestic buildings across Scotland drawing in public and private finance and acting in tandem with supporting activity on standard, regulation and behaviour change - will commence around 2018 when the new powers come into effect and we are able to tackle fuel poverty and enhance energy efficiency more comprehensively than ever before.

The Scottish Government sets the policy framework for spending on energy and heat efficiency in Scotland and provides financial support for key priorities across the domestic and non-domestic sectors, including the public sector estate. This spending helps leverage further investment in energy efficiency under the Energy Company Obligation and from householders, business owners, Local Authorities and social landlords.

The investment supports key actions to deliver on Scotland's world leading Climate Change targets, set out in statute in the Climate Change (Scotland) Act 2009 and will support actions to eradicate fuel poverty by November 2016 as far as is reasonably practical as required by the Housing (Scotland) Act 2001. Implementation of our approach to energy is set out in the Energy Efficiency Action Plan, the Renewable Heat Action Plan, the Heat Policy Statement and Scotland's Sustainable Housing Strategy.

Progress

Since 2009 the energy efficiency of Scotland's homes, commercial properties and public sector estate has significantly improved driving a reduction in energy demand and greenhouse gas emissions. We have allocated over half a billion pounds on a raft of fuel poverty and energy efficiency programmes; nearly 1 in 3 households have installed energy efficiency measures, and over a third of homes now have an energy efficiency rating of category C or above - an increase of 56 per cent since 2010 and signifying that there are proportionately 60 per cent more homes with a good energy efficiency rating in Scotland than in England. We have also invested and recycled over £60 million since 2007 to support energy efficiency, district heating and renewables in programmes supporting businesses, the public sector and householders.

Despite our record levels of investment and the significant improvements in energy efficiency, above-inflation increases in energy prices have meant that more households (39 per cent in 2013) now fall within the definition of fuel poverty. Moreover, successive targets for greenhouse gas emission have been missed. We recognise that we must improve this situation.

District heating, is a core priority within the Scottish Government, and when appropriately sited and maintained, can result in affordable heat. A number of housing providers are using district heating along with wider energy efficiency measures to tackle fuel poverty. For example typical fuel costs to tenants receiving heat from Aberdeen Heat and Power reduced by up to 50 per cent over the previous heating system.

The main opportunity for large-scale heat networks is in our towns and cities where there is concentrated high heat demand, such as high density housing estates and campus sites such as universities, large hospital sites and industrial complexes.

A number of these projects represent a step change in the scale of district heating, located in major urban areas with significant potential for long-term development of integrated networks connecting households, public, commercial and industrial buildings and potential for future expansion.

Moving forward district heating will be an integral part of the considerations under energy efficiency as infrastructure investment priority and the development of SEEP

Sector plans

The Scottish Government is committed to achieving greenhouse gas emissions reduction targets and to tackling fuel poverty. We support and encourage investment in heat and energy efficiency through the following strategies and policies:

  • Scotland's Sustainable Housing Strategy outlines our framework for and approach to improving the energy efficiency of Scotland's housing stock. It includes ensuring that the right incentives are in place and supported by appropriate regulations and standards, as well as identifying actions to encourage wider behaviour change, in order to encourage investment in domestic energy efficiency;
  • our Home Energy Efficiency Programmes for Scotland ( HEEPS) were launched in April 2013 and use Scottish Government funding to lever in additional investment to tackle fuel poverty, reduce carbon emissions and support jobs. We invested £99 million in 2014/15 and we have made available £119 million in 2015/16. HEEPS includes area-based schemes delivered by local authorities and a national fuel poverty scheme - Warmer Homes Scotland - providing help to vulnerable households across Scotland. It also includes a low cost loan scheme to help with the upfront cost of investing in energy efficiency;
  • we will continue to work with NHS Health Scotland and other national partners within the advice and fuel poverty sectors to develop new partnerships to improve collaborative working. This includes working on the development of an improved model of advice and support for the NHS to access for patients;
  • energy efficiency, heat and low carbon revolving loans encouraging 'spend to save' energy demand reduction measures, district heating and lower carbon forms of heat for businesses, public and third sector organisations. We have invested and recycled over £60 million since 2007 to support Scottish households, businesses and organisations finance the implementation of energy efficiency and renewable measures and the development of district heating schemes;
  • The Heat Network Partnership established by the Scottish Government in 2013, has developed a wide range of support for district heating projects including:
    • a local authority strategy programme to support the development of district heating strategies targeting opportunities that offer best value, and maximise delivery against for fuel poverty, carbon emissions reductions and economic development.
    • supporting project feasibility studies and options appraisals for potential district heating; Training sessions and practical guidance on delivering district heating projects and networks;
  • establishing a non-domestic energy efficiency ( NDEE) procurement framework for the Scottish public sector in 2015, which will facilitate investment of up to £300 million over the next 4 years; sustain around 2,400 jobs; and create energy cost savings of £30 million p.a. for the public sector; and
  • a low carbon infrastructure programme ( LCITP) with £76 million over the first three years, £33 million from ERDF. LCITP is a Scotland wide, cross-sector project development unit; and Develop Scotland's Energy Efficiency Programme, working with stakeholders over the next two years to set objectives and design the new programme to ensure it is tailored to Scotland's needs. Delivery is set to commence in 2018, subject to new powers over energy efficiency being devolved.

Delivery partners and structures

To be successful every business and household will need to take action to improve their energy efficiency. In order to maximise the effectiveness and impact of our schemes we work with:

  • local authorities, community organisations and advice providers to ensure they have the right resources and the capacity to deliver this ambitious new programme;
  • SFT and private sector partners to create the right conditions for investing in energy efficiency to create new innovative funding mechanisms to help home and business owners overcome the upfront cost of investing in energy efficiency improvements; and
  • the UK Government, including the Department of Energy and Climate Change and Ofgem, and the other devolved administrations to ensure that UK-wide schemes deliver maximum benefits in Scotland.

3.9 WATER

Objectives and purpose of investment

The Water Industry Commission for Scotland, Scottish Water's independent economic regulator, has confirmed that in the last regulatory period 2010-15 it outperformed its regulatory settlement, delivering more improvements for customers than demanded by Scottish Ministers and regulators. It now provides one of the best value for money water and sewerage services in the UK.

Our vision is a successful and high-performing Scottish Water - one that is good for customers; good for the environment; and good for our economy. Scottish Water has already signed up to deliver a £3.5 billion investment programme over the next six year period 2015-21 - a programme that supports our vision. This is to be achieved with charges reducing in real terms.

Improvements in Scotland's water and sewerage infrastructure are expressed as the Ministerial Directions to Scottish Water and cover the length of a regulatory period. The regulatory period is now 6 years. It was changed in response to requests from the industry, Scottish Water's supply chain and regulators to have a longer planning period and to align these with key legislative drivers of investment - the Water Framework and Flood Risk Management Directives in particular.

Investment plans are developed through the Quality and Standards process which facilitates better business planning and secures cost-effective compliance with longer term legislative requirements. The Quality and Standards process brings together all of the main stakeholders in the water industry.

Progress

In the last regulatory period, 2010-15, significant improvements were made. Some £2.5 billion was invested in the water and sewerage infrastructure. Key achievements include:

  • a 31 per cent improvement in the standards of service provided to customers. Service levels are now comparable to the leading water companies in England and Wales;
  • a 25 per cent reduction in leakage - enough to supply 600,000 households every day;
  • additional capacity - new capacity was made available to serve new developments;
  • improvements to the look, taste and quality of drinking water - 950,000 customers have benefitted; and
  • improvements to 81 waste water treatment works to comply with existing licence requirements or to meet new and more stringent requirements.

The Water Industry Commission for Scotland, Scottish Water's independent economic regulator, published a report on Scottish Water's performance during the period 2010-15, which confirmed that during the period 2010-15, Scottish Water delivered the improvements required by Ministers for £122 million less than it was allowed. In addition, it provided higher levels of service than demanded - a monetary value has not been placed on this outperformance.

Since 1 April 2015, Scottish Water has started to deliver the improvements required for the period 2015-21. Quarterly monitoring reports are published by the Outputs Monitoring Group. These summarise the progress made by Scottish Water in delivering the improvements required and as set out in its Delivery Plan.

Sector plans

Ministers have directed Scottish Water to deliver a defined set of improvements in the period 2015-21. The directions specify the required improvements to services and are underpinned by a list of outputs (also known as a Technical Expression). This list specifies the locations at which Scottish Water's regulators require improvements to be made. The list has been agreed with the key industry stakeholders, including SEPA and the Drinking Water Quality Regulator ( DWQR).

During the 2015-2016 regulatory period, Scottish Water is taking forward thousands of projects - some small, others large and complex. Priority areas for investment include:

  • improving drinking water - over £500 million will be invested in 2015-21 to improve and protect drinking water supplies. This includes upgrades to 26 supplies that do not comply with current standards, improvements to 71 supplies to improve reliability of drinking water quality, improvements to the resilience of supplies and tackling visible leakage (water running down the street).
  • improving the environment - over £400 million will be invested in 2015-21 to protect and enhance our environment. The 2011 Plan identified that improving Glasgow's drainage and sewerage network was a key priority. In the period 2010-15, a study was completed that has identified the improvements required. Work has begun and includes large projects to upgrade Dalmarnock and Daldowie Wastewater Treatment Works, upgrades to many parts of the sewerage network and the construction of the £100 million Shieldhall Tunnel which will address large-scale water quality problems in the River Clyde and its tributaries. This programme also includes upgrades to 20 small wastewater treatment works and a number of other improvements to meet a range legislative requirements.
  • reducing the risk of flooding - some £170 million will be invested in reducing the risk of flooding from sewers. This is known to be a key priority for customers.
  • supporting economic growth - over £200 million will be invested in providing additional capacity to support new housing developments and the domestic requirements of new business customers.

Given the length of the regulatory period and the likelihood that investment requirements will be identified following the completion of the many studies that are included for the early part of the programme, we have agreed that some flexibility is necessary. For this reason the 2015-21 investment programme will be updated on a rolling basis every three years. The next review is in 2018.

In building the investment programme for 2015-21, cognisance was taken of the lessons that were learnt during the 2006-10 period as described in the Output Monitoring Group's report. Account has also been taken of those noted in the Output Monitoring Group's recent on delivery in 2010-15. This report has identified that there is further scope for improvements in relation to:

  • Continuity of investment - limiting the size of the programme and ensuring that project delivery is planned in a manner so as to avoid excessive peaks and troughs is key to delivering effective and efficient investment.
  • Improving monitoring arrangements - ensuring that monitoring arrangements are transparent and link to Scottish Water's Delivery Plan and to Ministerial Directions by using common categories and wording
  • Delivering Greater Innovation - using innovative solutions to lessen the requirement for new investment and/or use of expensive treatment
  • Communications - increasing efforts to communicate and engage with customers to explain how their actions can impact on water and sewerage services and why behavioural change would be beneficial.

Delivery partners and structures

Scottish Water is a public corporation - accountable to Scottish Ministers and through them to the Scottish Parliament. It is mainly regulated by three independent regulators:

  • The Water Industry Commission for Scotland - is the economic regulator and is responsible for determining customer charges necessary to deliver Ministers' Objectives at the lowest overall reasonable cost.
  • Drinking Water Quality Regulator - is responsible for ensuring that Scottish Water complies with drinking water quality regulations.
  • Scottish Environment Protection Agency - is responsible for ensuring that Scottish Water complies with environmental legislation.

Scottish Water is also answerable to Consumer Advice Scotland and the Scottish Public Services Ombudsman.

Scottish Water will deliver its £3.5 billion programme with the assistance of its supply chain - through framework contracts and delivery partners. A number of contracts are in place reflecting Scottish Water's need for specialist and local skills. Further details on its contracting arrangements are provided in its delivery Plan.

Scottish Water's progress in delivering the improvements specified by Ministers is monitored by the Output Monitoring Group. This group was established by Ministers and brings together key water industry stakeholders. Its reports are published on the Scottish Government website.

Asset management

The levels of customer service that Scottish Water must achieve are specified in the directions to Scottish Water. For the period 2015-21, Scottish Water will be expected to maintain upper quartile performance as compared with other UK water and sewerage providers. Ensuring adequate funding for capital maintenance is of key importance. Over the next six years, provision for capital maintenance will rise reflecting the need to maintain the increasing numbers of assets built or adopted by Scottish Water to meet more stringent quality standards. To achieve this level of performance Scottish Water will ensure that it has systems in place to monitor and manage the condition of its assets so that they remain fit for purpose.

Scottish Water is free to dispose of assets should these become redundant or no longer able to provide the levels of treatment demanded by legislation. Any sums generated from disposals are reinvested in new infrastructure. All disposals are made in accordance with the Scottish Public Finance Manual.

3.10 RURAL AFFAIRS, FOOD AND THE ENVIRONMENT

Objectives and purpose of investment

Investment in Scotland's Rural Affairs, Food and Environment portfolio is intended to create a more successful country with opportunities for communities, nature and our economy flourishing together through delivering sustainable economic growth, whilst increasing competitiveness and tackling inequality. In particular investment is designed so that it will:

  • deliver the reformed Common Agricultural Policy ( CAP) to obtain the best results for Scotland's rural economy, environment and communities;
  • continue support for the food and drink sectors to help sustain the dramatic increase in economic activity in recent years and provide impetus to Scotland's journey to becoming a Good Food Nation;
  • manage the transition to a more resource efficient, lower carbon economy (principally our focus on the circular economy);
  • supporting employment and opportunity across Scotland: principally investment in areas such as the National Parks - providing employment, stimulating tourism growth and creating more opportunities for people to enjoy a healthier lifestyle - and investing in the National Forest Estate, including Forest Enterprise Scotland's repositioning programme, aimed at increasing economic, social and environmental benefits of the Estate.
  • improve environmental quality and attract investment and development through the Central Scotland Green Network ( CSGN) which is a national development. As the biggest greenspace project in Europe, the CSGN has the potential to benefit 3.5 million people (around two thirds of Scotland's population), and with 86 per cent of Scotland's most deprived areas located within the CSGN area it has a vital role in tackling inequalities and strengthening communities by prioritising action in disadvantaged communities. It also delivers cross-portfolio benefits by developing active travel routes, supporting remediation of vacant and derelict land and promoting physical activity; and
  • maximise sustainable development and economic growth within the marine sectors we oversee and through the devolution of the Crown Estate achieving greater control of Scotland's assets.

Infrastructure investment is delivered through a number of bodies and programmes including the Scotland Rural Development Programme ( SRDP), Forestry Commission Scotland and the Rural and Environment Research Programme.

Progress

Since 2011 significant progress has been made, as set out below:

  • as part of the Forestry Commission Scotland's repositioning programme over £48 million of assets have been sold, with the proceeds reinvested in acquiring land for woodland creation and subsequent planting;
  • Forestry Commission Scotland has also invested £21.8 million in visitor facilities on Scotland's National Forest Estate, benefiting the visitor economy and getting Scotland more active;
  • The Rowett Institute merged with University of Aberdeen in July 2008 to become the Rowett Institute of Nutrition and Health, embedded within the College of Life Sciences and Medicine. The Scottish Government contributed £12 million towards the £40 million cost of a new building for the Institute at Foresterhill which is due to be open in early 2016;
  • the capital investment in Scotland's two National Parks recognises them as important 'generators for growth' in helping to create new employment opportunities and deliver fresh stimulus to their local economies. Since 2011 £8.6 million has been invested in a wide range of capital projects across both National Parks that have helped improve visitor infrastructure, support green tourism, and provide better recreational opportunities and community facilities;
  • since October 2011 in excess in excess of £200 million has been invested through the SRDP. Capital grants are being tightly targeted in order to make best use of the limited budget available. Grants are focussed towards those starting up in farming, crofters and small farmers, the food and drink sector, and the capital elements of environmental projects;
  • the Scottish Government is undertaking a significant programme of work to re-engineer the business and IT processes which underpin the delivery of rural payments and inspections and to deliver the Common Agricultural Policy Reform, being implemented from 2015. This long-term programme of activities will deliver improvements to the services customers receive and comply with EU requirements in order to maintain our level of funding from EU; and
  • £32.3 million of capital awards have been made through the European Fisheries Fund since 2011; this has enabled £83 million of investment to be made in support of the fisheries, aquaculture and fish processing sectors. The successor programme, the European Maritime and Fisheries Fund will bring an increase in funding for Scotland and further support employment at a national level whilst empowering rural economies through supporting activity planned and delivered at the local level.

Sector plans

Scottish Land Fund

The Programme for Government in 2014 made a commitment that we would increase the Scottish Land Fund to £10 million a year until 2020. It is aimed at funding and enabling communities to acquire assets and is administered jointly by BIG Lottery Scotland, and Highlands and Islands Enterprise. With the changes brought in through the Community Empowerment (Scotland) Act 2015, it will be available to communities across the whole of Scotland, where previously it was only available to rural communities.

Waste and Circular Economy

Scotland is focusing on changing to a more circular economy where goods and materials are kept in use for as long as possible extracting the maximum value from them whilst in use. A circular economy is an alternative route to a traditional economic model of "make, use, dispose". This means promoting redesign of goods and services, alongside greater reuse, repair, remanufacture and recycling, therefore, reducing our reliance on, and use of, new products and raw materials.

In 2013 Scotland produced 12.3 million tonnes of waste down from 13.2 million tonnes in 2011. Although progress is being made in reducing waste and recycling key materials, with less than 50 per cent of household waste being sent to landfill in 2014 the resource value of much of Scotland's waste remains untapped.

This shift will demand a change in infrastructure: new reprocessing facilities that can restore old products, parts and materials back into goods and commodities for the domestic or global market; more sophisticated material sorting facilities that ensure that the value of materials collected from business and households can be retained; and facilities to recover value, in the form of heat and electricity, from those materials that cannot be recycled.

As part of moving towards a low carbon, resilient circular economy there will need to be more closed-loop use of resources within the Scottish economy - both recyclable materials like metals and plastics as well as bio-resources like food waste and by-products. This will mean the development of domestic reprocessing capacity. Scotland has already started on this journey with the development of organics reprocessing capacity - anaerobic digestion facilities that can reprocess food waste to produce energy and a sustainable fertiliser.

The Scottish Materials Brokerage Service was established in 2014 to improve the opportunity for investment in waste infrastructure. Working in areas covering non-recyclable waste, mixed recyclates and separate recyclates (starting with glass) the brokerage will bring together materials from the public sector to provide the scale to support investment in sorting and reprocessing.

Flood and coast protection

Funding for flood and coast protection is part of the local government capital settlement. The first ever round of flood risk management strategies will be published by Scottish Environment Protection Agency ( SEPA) in December 2015. These will include a prioritised set of flood risk actions, e.g. flood protection schemes, and flood warning, for the period 2016-21.

Forestry Commission Scotland

The Scottish Government is committed to creating up to 10,000 hectares of new woodland each year as part of its climate change programme. The Scotland Rural Development Programme ( SRDP) is the main mechanism for achieving this target. Since 2011, over £140 million has been invested through SRDP 2007-13 as capital grants and the new SRDP 2014-20 has improved grant rates and a structure aimed at further stimulating the level of woodland creation.

Other strategic investments include : Funding for assistance for modernising and diversifying farm, forestry and other rural businesses and improving food production and processing capacity through the Scotland Rural Development Programme.

Delivery partners and structures

The Scottish Government has a wide range of delivery partners for rural affairs, forestry and the natural environment. These include local authorities, the Scottish Environment Protection Agency ( SEPA), Scottish Natural Heritage, the National Park Authorities, Zero Waste Scotland, the Crofting Commission, and Quality Meat Scotland.

Asset management

Forestry Commission Scotland

The Forestry Commission Scotland repositioning programme, currently approved to the end of 2015-16, targets those areas for disposal delivering least in terms of social and environmental benefits, whilst the properties acquired typically have some or all of the following characteristics that they be:

  • capable of producing productive woodlands making a significant contribution to net carbon sequestration and the delivery of the Scottish Government's climate change targets;
  • suitable for the creation of new native woodlands contributing to the delivery of native woodland Habitat Action Plans; or
  • located near to centres of population and capable of contributing to the delivery of the Woods In and Around Towns initiative.

3.11 CULTURE AND HERITAGE

Objectives and purpose of investment

As a nation we treasure and are rightly proud of our cultural heritage and historic environment. Our vision is one in which we support the PfG and SES by ensuring that the culture and heritage sector in Scotland:

  • continues to create high quality, diverse cultural works that support a stronger fairer Scotland, strengthening our place in the world. Scotland values its creative talent and provides opportunities for that talent to develop and thrive. Scotland's culture reaches a wide audience at home and abroad and the cultural sector's strength and resilience is increased;
  • contributes to sustainable economic growth. Scotland's cultural and creative industries make a growing contribution to employment and economic output, the sector has increased capacity for innovation and competes effectively in UK and international markets. We maximise the opportunities our cultural resources and assets provide for our economy and future generations;
  • ensures that our diverse and evolving cultural heritage thrives and is celebrated. Scotland's national and international collections and historic environment are cared for and enjoyed now and by future generations. Cultural heritage infrastructure is strengthened and we continue to expand digital and online capability, supporting delivery of efficient, high quality public services; and
  • supports our people and communities to enjoy and engage in culture. Scotland's places have accessible opportunities to engage in culture and heritage, with engagement widened and sustained throughout lives. All children and young people are encouraged to, and have the chance to, engage in culture.

Participation in cultural activities delivers positive impact across a wide range of outcomes, including health and wellbeing, justice and education. Maintaining capital investment in the culture and heritage sector, which supports the continued delivery of these outcomes, remains strategically important and often successfully leverages significant additional investment from other sources across the public, private and third sectors.

Key priorities for investment will include capital funding for the new Historic Environment Scotland ( HES) Properties in Care. Investment in the historic properties that HES cares for not only brings significant benefit to the Scottish economy through cultural tourism but also provides economic support to local areas through job creation and locally sourcing materials during construction and refurbishment projects and will assist in the achievement of Scotland's carbon reduction targets.

Investment will also be targeted to fund digital initiatives for the culture and heritage sector which support the expansion of on-line public access systems and expand the potential contribution and impact of our cultural assets, in many cases expanding their reach across the wider Scotland and internationally.

Progress

Since 2011, there has been significant investment in this sector directly contributing to our overall purpose of sustainable economic growth, through cultural and heritage tourism and international promotion. Ongoing capital investment is required to maintain the offering in a competitive and demanding market.

The most significant investment since 2011 has been the ongoing development of the V&A Dundee, where our capital commitment is £25 million towards this iconic £80 million development, which also supports the regeneration of Dundee Waterfront. As the anchor development for the Dundee waterfront regeneration, V&A at Dundee will act as a catalyst for a significant proportion of the enhancements to the local area and wider city. Its delivery is expected to result in a number of tangible and intangible benefits, including the creation of a new sense of civic pride across the city; the attraction of additional investment to the city, the wider region and Scotland; whilst also supporting social inclusion.

We have also been significant funding partners for projects undertaken by the National Performing Companies, in conjunction with Glasgow City Council, at the Glasgow Royal Concert Hall and the Theatre Royal, which have delivered world class rehearsal and performance space, and learning and engagement spaces which stimulate engagement with a wide variety of communities and the welcoming of schools and community groups into their buildings for exciting and unique music-making experiences, which will be, among other things, aligned to the Curriculum for Excellence.

Current projects include contribution to the redevelopment of Kelvinhall in Glasgow, a major refurbishment project in conjunction with Glasgow Life and the Hunterian Museum, which will see the National Library's Scottish Screen Archive become much more accessible for the Scottish public.

We are also providing £5 million for Historic Environment Scotland's Engine Shed project in Stirling - to help and sustain the skills we need to secure the future of Scotland's historic environment. This sector contributes more than £2.3 billion to the economy and supports around 41,000 jobs.

Also completed within the period is a new £11 million storage and conservation facility at National Museums Scotland's Granton Collections Centre, through which provision NMS has been able to release sites at Port Edgar and Leith Customs House, consolidating its operations and decreasing the ongoing repairs and maintenance bill.

Sector plans

Our priorities for investment focus mainly on maintaining and enhancing the cultural and historic estate, both in terms of securing our national collections and maintaining the estate and completing existing projects. Examples are also given below of the pipeline of projects that will continue to be developed into 2016 and beyond.

We will continue to contribute to:

  • economic growth, for example through completing our £25 million capital commitment to the V&A at Dundee project. This ambitious project has great potential to boost the Dundee Waterfront regeneration project, cultural tourism and our capacity to design through innovation;
  • the development of skills for young people through investment from the Young Scots Fund with the completion of the Engine Shed project;
  • efficient use of public resources through addressing storage requirements across our national cultural and heritage bodies and renewing important assets through tackling maintenance priorities. Protecting the nation's collections in effective storage and maintenance of the estate is important for their future use in exhibitions, education and research and, equally importantly the efficient storage of these is critical in underpinning the bodies' ability to bring exhibitions out to museums and galleries across Scotland through touring, which the National Galleries have done very successfully with Artists Rooms. Specific projects include completion of the major Causewayside building refurbishment for the National Library and addressing the National Records of Scotland's continuing need to maintain Scotland's archives;
  • delivery of improved public facilities including further new investment at the Scottish National Gallery and enhanced digital access to collections; and
  • widening and increasing engagement in culture through direct investment in public-facing projects where significant national or international impact can be stimulated.

Delivery partners and structures

Priority projects in the culture and heritage sector are generally managed by our delivery partners (core-funded bodies) through the award of grant and grant-in-aid, rather than direct delivery by the Scottish Government.

Other projects in this sector often comprise mixed finance packages, including in many cases substantial fundraising by the relevant bodies. For example, the V&A project in Dundee is a collaboration among several partners, including universities, the City Council and Scottish Enterprise as well as the V&A in London. This project is led by Dundee City Council with the capital cost being met through contributions from Scottish Government, Heritage Lottery Fund, Creative Scotland and Dundee City Council, £15 million targeted by way of private fundraising and philanthropy and finally through an application for access to Growth Accelerator Funding as part of the wider Dundee Waterfront Regeneration Project.

Asset management

The cultural and heritage sector depends on the quality and range of its assets, both physical and digital. To maintain visitor numbers and international reputation these assets need to be of high quality and a magnet for the twenty first century visitor. This is why our Sector Plans focus on both the longer term priority of maintaining and renewing the historic estate under Historic Environment Scotland and maximising the scope for essential maintenance to help provide the cultural bodies with a sustainable environment from which to take up new opportunities. Plans continue to be developed for addressing these issues in a strategic and efficient way, with a focus on opportunities for rationalisation and sharing.

3.12 JUSTICE

Objectives and purpose of investment

Investment in justice aims to help communities to flourish, becoming stronger, safer places to live, offering improved opportunities and a better quality of life.

Our vision is of a justice system that contributes positively to a flourishing Scotland, helping to create an inclusive and respectful society in which all people and communities live in safety and security, where individual and collective rights are supported, and where disputes are resolved fairly and swiftly. The justice system plays a key role in tackling inequality, growing the economy and reflecting the views and priorities of local communities.

The justice portfolio includes the administration of criminal justice and civil law, operation of the courts, provision of legal aid and liaison with the legal profession. It also covers the operation of the police, prison and fire services and an overview of preparations for potential civil emergencies.

Specifically, such investment will:

  • support maintenance and improve capacity across our prisons, courts and emergency response estate;
  • help to modernise the delivery of criminal, civil and administrative justice services through the use of digital technology;
  • contribute, along with other portfolios, to ensuring that Scotland has the resilience to respond to natural or man-made crises;
  • improve the condition, quality and capability of existing facilities to ensure they are more resource efficient, contributing to a lower carbon economy;
  • deliver new, and strengthen existing assets, that strengthen Scotland's ability to tackle and respond to crime, fire, and other emergency incidents;
  • support economic growth by investing across the country and supporting construction, engineering and other public safety sector supporting jobs; and
  • continue to support the delivery of high quality public services, for example through continued support for the reform of the police and fire services, which will help to drive out significant savings in the medium and longer term and deliver improved outcomes to the public.

Progress

Prisons

The Scottish prison estate has been modernised and improved in recent years, with the completion of HMP Shotts (Phase 2) in 2012 and HMP Grampian in 2014. HMP Grampian provides the first custom built community facing prison in Scotland, including a unit for women offenders.

The Cabinet Secretary for Justice announced in January 2015 the decision not to proceed with previous proposals for a large new prison for female offenders in Inverclyde, as this did not fit with the Scottish Government's vision for meeting the needs of female prisoners and reducing female offending. In June 2015, the Cabinet Secretary confirmed proposals to build a new 80-place prison at the Cornton Vale site, near Stirling, and five community custody units, each accommodating up to 20 women, at various locations around Scotland. Work to identify the final locations for the community units is proceeding in dialogue with local partners.

A feasibility study is currently being progressed on a potential site for HMP Highland, to ascertain if it would provide a viable option as a replacement for the current HMP Inverness, and discussions are ongoing with the site owners. Work to identify suitable potential sites for a replacement for HMP Glasgow is also ongoing.

Courts

The Scottish Courts and Tribunals Service ( SCTS) (prior to 2015-16, the separate Scottish Court Service and Scottish Tribunals Service) has continued to invest in essential maintenance of its court and tribunal estate, including providing new court and jury facilities within existing buildings and improved energy efficiency.

The SCTS has been exploring with key partners the potential development of a new collaborative Justice Centre model, combining courts with other justice and support services, in locations across Scotland.

The SCTS has invested in necessary upgrading of court-based ICT, including the development of a new civil case management system.

The Scottish Crime Campus at Gartcosh

Completed in 2014 at a capital cost of £73 million the Scottish Crime Campus supports the Serious Organised Crime strategy's aim to reduce the harm caused by serious organised crime and embed a multi-agency approach to deterring, detecting, disrupting and diverting from serious organised crime, as well as the UK CONTEST strategy for countering terrorism. The Campus co-locates the five main agencies involved in leading the implementation of the Serious Organised Crime strategy and a range of counter-terrorism resources.

Reducing the harm caused by serious organised crime has a positive impact on disadvantaged communities which are disproportionately affected by criminal activity and by businesses run by crime groups. The outcomes of the strategy will help to reduce inequalities and create a level playing field for legitimate enterprises. The Campus itself facilitates effective collaborative working between different public agencies: Police Scotland, Crown Office, National Crime Agency, HMRC and Scottish Police Authority Forensic Services.

The Campus has been fully operational since April 2014 and is delivering benefits in terms of increased co-ordination of law enforcement activity, joint planning and tasking, information-sharing and joint operations. In addition to the five main partner organisations in the Campus another 10-12 organisation have seconded staff there to enhance the effectiveness of activity to address serious organised crime and terrorism.

A new West of Scotland Policing Hub at Dalmarnock

The purchase and fit out capital cost of the new west of Scotland policing hub at Dalmarnock was £10.76 million. The rationale for the facility being based in the west is the significant level of policing demands falling to Local Policing West Command. Creation of a hub allows the provision of additional support more readily. Particular functions located are: the Alcohol and Violence Reduction Task Force, the Football Co-ordination Unit, the Public Protection Unit and Emergency, Events and Resilience Planning Units. In addition, it is planned to incorporate a Strategic Coordination Centre into the building, to improve co-ordination between emergency services and local authorities and enhance the capability in dealing with major events. The location also compliments the Scottish Crime Campus nearby at Gartcosh, and will ease liaison between the various police activities in the West of Scotland .

The choice of placing a significant police facility in Dalmarnock supports the Scottish Government's Regeneration Strategy and, in particular, the ongoing investment in Clyde Gateway's regeneration plans. It is also a visible demonstration of Scottish Ministers' commitment to the legacy of the Commonwealth Games. For Police Scotland, the move to Dalmarnock is consistent with the rationalisation of the Police Scotland estate as set out in its Estates Strategy.

Reform of Police and Fire

The reform of police and fire services is delivering the following benefits: protecting and improving local services, despite financial cuts, by stopping duplication of support services and not cutting the frontline; creating more equal access to specialist support and national capacity where and when it is needed; and strengthening the connection between police and fire services and local communities.

To assist with the transition to the new single services, reform budgets for police and fire were established to meet the additional costs of bringing the services together including investment in major ICT projects.

Scottish Police Authority/Police Scotland - Capital Grant

Capital investment has been used to establish and progress the infrastructure of the new single service. Police Scotland has developed an Estates Strategy and ICT, Fleet and Procurement Strategies are being progressed. These will impact on future major infrastructure investment proposals/plans necessary to support the continued delivery of an effective and efficient service to our communities across Scotland.

Capital grant investment has and will continue to focus on the following areas.

  • ICT - i6, C3, ICT Blueprint;
  • Fleet - Rolling replacement of the fleet transport;
  • Building Works - Custody suite upgrades as required by the Criminal Justice Bill; and
  • Other - Forensics and other new projects to upgrade and enhance service delivery.

SFRS Capital Grant

The Scottish Fire and Rescue Service ( SFRS) was created in 2013, following the merger of the eight former fire and rescue services.

Capital investment has been used to establish the infrastructure of the new single service by supporting the delivery of a range of SFRS key strategies including Property, Specialist Resources, Environment, and Digital, to most effectively serve the communities of Scotland.

More specifically, in relation to maintaining and enhancing community and fire fighter safety the SFRS capital grant has been invested in the following priority areas which are essential for maintaining and enhancing community and fire fighter safety:

  • frontline fleet, which is central to the SFRS emergency response capability;
  • training facilities, adopting a Scotland-wide approach, to enable fire fighters to develop and maintain the wide range of skills and capabilities required of them in a modern fire and rescue service;
  • standardisation of operational equipment across Scotland; and
  • new ways of working and new technologies including a new command and control system and modern asset resource centres.

The SFRS will continue to prioritise asset performance standards, and will continue to work with partners to ensure the maximum possible public value from capital investments.

Emergency Services Telecoms

The Firelink system, delivered under a GB-wide PFI contract, is fully in-service and is now due to remain in place until 2019. In accordance with EU Procurement Law and taking account of developments in the telecommunications market, work is underway to identify appropriate options for procurement of a successor system.

Sector plans

Police

Police Scotland has developed an Estates Strategy and this may impact on future infrastructure investment proposals and plans.

Fire

The SFRS is in the process of rationalising its estate and this may impact on future infrastructure plans - there is a requirement for an accommodation block to enhance the SFRS national training centre at Cambuslang. SFRS will look to continue its investment in: maintaining and enhancing community and fire fighter safety; the infrastructure of the SFRS; and maintaining acceptable standards for fleet and property.

Prisons

The SPS will continue to modernise and improve the prison estate, and will look to draw on lessons from the development of new community facilities for female offenders. The SPS will also look at the needs of an increasing population of older and frail prisoners. Following progress with the new prison for female offenders, as well as HMP Highland and HMP Glasgow, consideration will be given to HMP Greenock and HMP Dumfries.

Courts

The SCTS will develop with key partners a new Justice Centre in Inverness, replacing the existing Inverness Sheriff Court and freeing up the historic Inverness Castle building for other potential uses. The Justice Centre model would bring together justice services in modern, accessible purpose-built facilities, alongside partner organisations including social work, victim and witness support.

Justice Digital Strategy

The Scottish Government and Justice agencies published the Digital Strategy for Justice in Scotland (August 2014), setting out a bold vision for how digital technology will transform the way in which justice services are delivered in the civil, criminal and administrative justice systems in Scotland. This will build on the positive developments that have been delivered in for example, on-line applications and payments and the use of video links for appeals and hearings.

The Emergency Services Mobile Communications Programme ( ESMCP)

ESMCP is the planned replacement for Airwave for the emergency services. Currently, Emergency Services in Scotland and the rest of Great Britain utilise mobile radio communications capability. In 2020 the Airwave contracts expire and will be replaced with ESMCP. The ESMCP is a Home Office led programme and is jointly sponsored by four other UK Government Departments, including the Scottish Government. ESMCP is predicting the GB wide 15 year cost to be around £4.9 billion. Scotland's share will be around 10 per cent, alongside the ongoing costs for the existing Airwave system for the first four years of the programme.

Delivery partners and structures

Scotland's justice system and justice agencies rely on a vital set of key infrastructure, including police and fire facilities and specialist equipment, courts, prisons and digital technologies. The Scottish Government works with its core delivery partners across the Justice portfolio - SPS, SCTS, SFRS, SPA, and Police Scotland. Projects are delivered by these organisations through their grant-in-aid funding, rather than through direct delivery by the Scottish Government.

To maximise the value of the investment our justice delivery partners work with a range of stakeholders including, Scottish Government, local authorities, community planning partnerships, and the Scottish Futures Trust. The SPA, Police Scotland and SFRS are actively looking for opportunities to work together, as well as with other potential partners, to ensure best value from infrastructure investments.

There are positive examples of joint use of resources, such as the West Lothian Civic Centre, in Livingston, which brings together accommodation for Police, Fire, Courts, Crown Office, Children's Reporter, local authority and the local Health and Care Partnership, assisting efficiency and joint working. The Scottish Courts and Tribunals Service is engaging with local partners to test the potential for further local Justice centres in a number of locations across Scotland.

The Emergency Services Mobile Communications Programme ( ESMCP) is a partnership procurement initiative, seeking to provide next-generation telecommunications capability for the Emergency Services. The programme - which is co-funded by the Scottish Government, the Welsh Government and three Departments of the UK Government - is hosted by the Home Office. The Emergency Services Network ( ESN) will involve a number of contractors, with its Home Office-based Management Team acting as prime contractor and system integrator.

Asset management

Our Justice delivery partners keep their asset management plans under review - including the options to rationalise their estates and to dispose of surplus assets. Working through the Justice Board the portfolio seeks to deliver best use of assets and investments to ensure maximum value for public money.


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