Public organisations should be given a choice over the method for procuring capital, basing decisions on those which offer the best outcomes and value for money, according to CIPFA Scotland.

The Government’s consultation paper on the Scottish Futures Trust acknowledges that the public sector can borrow more cheaply than the private sector.

In its submission to the consultation, CIPFA says: “In order to secure the additionality of private sector investment, the trust would need to be positioned in the private sector. The paper’s conclusion is to introduce a body which is private sector classified.

“On the narrow aspect of ‘cost of borrowing’, our view is that the trust will cost more. We fail to see how, as claimed in the consultation, that the trust will provide opportunities for securing cheaper funding costs.”

CIPFA points to Audit Scotland’s examination of the overall financing cost for the private sector which generally varied between 8 per cent and 10 per cent a year, 2.5 per cent to 4 per cent higher than a council would pay if it borrowed money on its own account for a similar project. This higher cost of capital adds between £0.2m to £0.3m a year for each £10m invested in a project, it said.