Refund plan casts doubt over new Forth bridge

DOUBTS about whether a new Forth crossing will be built have emerged after the Scottish Government said it wants to introduce a cashback scheme for companies who bid to build the bridge.

In evidence to Holyrood's finance committee yesterday, civil servants asked MSPs to agree to an unprecedented money-back guarantee for businesses in the event that the £2 billion project does not go ahead.

The government wants to be able to pay back up to £10 million of a successful bidder's tendering costs if the project falls through and £5m back to each of the failed tenderers.

But the request prompted questions from MSPs as to why such a contingency would be needed unless there were doubts about the project's viability.

MSPs on the committee have now demanded that transport minister Stewart Stevenson appear in person to explain why a financial parachute for bridge companies would be required.

The Forth Bridge is the first project in the ten-year history of devolution in Scotland where such "contingency liability" has been requested. Other high-profile transport projects, such as the M74 extension and the Borders rail line, had no such clause.

The Scottish Government last night insisted that in asking for contingency liability, it was following Treasury guidelines for major projects.

But the move has prompted growing questions over whether the Scottish Government will be able to complete the complex project, given the current financial constraints. The SNP administration has asked the Treasury if it can borrow against future spending, but this was rejected. SNP ministers have said they will find the money, but have not specified from where.

Civil servants yesterday claimed that contingency liability was required as legislation had not been passed yet to allow the project to go ahead.

However, committee members pointed out that every MSP in Holyrood, except the two Greens, support the bridge, which is being built because of long-term concerns about the viability of the existing one. This means that there is no doubt about the necessary legislation being passed by parliament.

Further doubt was created after MSPs were told that there were 39 expressions of interest in the project but, without the contingency liability, there might only be one or even none.

Afterwards, committee members said that the move by the Scottish Government made it clear there were doubts about the project.

Labour MSP Jackie Baillie told The Scotsman: "This request has to be taken in the context of the confusion over the finances of the bridge. It is unprecedented and sends out a message that ministers believe it might not happen."

Liberal Democrat finance spokesman Jeremy Purvis said: "This is an indication of the lack of confidence within the Scottish Government about being able to handle this project and that they believe it might not happen at all.

"If it is meant as an incentive for companies to bid, the behaviour of the Scottish Government does not help to build up confidence in the project."

There was so much doubt about the request that a member of the governing party, Linda Fabiani of the SNP, moved the motion for the issue to be brought back next week.

During the committee hearing, Ainslie McLaughlin, the director of major transport and infrastructure projects at the government agency Transport Scotland, explained: "Ministers are seeking approval from parliament for reimbursement of bidders' costs in the event that the contract for the Forth replacement crossing doesn't go ahead, either because of failure of the bill or a further collective decision of the Scottish Government not to proceed with the contract."

Pointing to an article in yesterday's Scotsman reporting City of Edinburgh Council doubts over the project, he claimed coverage in the media was putting tenderers off. He said also that previously cancelled projects, such as the M8 extension in 1997, were a factor.

John Howison, project director for the Forth replacement crossing at Transport Scotland, told MSPs: "The information we have leads us to believe that we are not secure in getting a competition, or even necessarily a single bidder, without making this commitment to meet these costs on this contingency basis."

Concerns about the bridge were raised earlier this week by the Edinburgh local authority. It had asked for the project to be delayed so that money could be prioritised on other major transport schemes.

A spokesman for the Scottish Government said that it would "deliver a new Forth Crossing on time and on budget using our own resources by 2016 at a cost of between £1.7 and £2.3 billion".

He added: "This is a world-class, prestigious project and these standard industry provisions will ensure we maximise competition."

Crossing row

A ROW over the Firth of Forth has broken out on the need to progress with a replacement road bridge.

Alan Russell, Chief Executive of Fife's Chamber of Commerce has hit out at comments from Edinburgh City Council suggesting that the bridge should be delayed.

"This is a completely ridiculous, very short-sighted and insular viewpoint that does not take into account the fact that the new Forth bridge is a vital project for Scotland's infrastructure and a lifeline for businesses and residents north of the Forth," he said.