What assessment it has made of the use of the not-for-profit trusts as a vehicle for increasing investment in public services.

The Executive has been supporting developing work by Partnerships UK for some time with Argyll and Bute Council. Good progress has been made with the council in developing a variant model, founded on the standard public private partnership model, but dealing with the issues of internal distribution of surpluses (ie non-profit distributing) and stakeholder involvement. The 25 June announcement of over £1 billion in schools infrastructure by Cathy Jamieson supported this project with revenue support for an investment value of £80 million. However, the test of whether this model will work lies in a live procurement situation, and the funding announcement now allows Argyll and Bute, supported financially by the Executive and with the continued expertise of Partnerships UK, to enter the procurement stages. It will take about a year for that process to reach the stage where we can properly assess whether this variant model has been successful as a new delivery vehicle.The Executive evaluated the SNP's Scottish Investment Trust proposal last year. Whilst it had in principle the advantage of aggregating borrowing to lever in more competitive lending rates, the proposal was flawed in claiming that a private sector trust would be able to access borrowing rates at the same low rates as Government itself. If to achieve this the Government had to act as guarantor to the trust, then loans to the trust would count as public expenditure and assets created would score as on the public sector balance sheet. If that were the result, then some key advantages of PPP would be negated. Also, there were unanswered questions about issues such as control over appointments as trustees, and accountability over such a powerful funding body influencing public infrastructure investment.Other trust models claiming to be based on not-for-profit objectives have been publicised. However, to date none has been submitted for consideration of revenue support from the Executive. Unless new issues emerge, and until it is ready for wider application in due course, the Executive will continue to focus its interest in new developments efficiently and with strong technical support in the Argyll and Bute model.