Welcome Finance Refunds

The story of the Skye Bridge is one with many twist and turns. The state-owned signed it’s own death warrant in the early nineties, when it allowed the Skye crossing to develop delays of hours with the removal of one if its ferries for repair. Locals had to leave their cars on the island and travel by foot. #links#

The Scottish Office approached local politicians with a possible scenery destroying but quick solution to the apparent disconnection from the mainland: a toll bridge. Not the best option, but the only one. A publicly funded bridge was so far down the list of priorities that it might be 20 years before a toll-free bridge could be constructed. From this we can se that the objective is simply to solve the problems of getting across the river, and congestion and delays associated with the ferry service. How could the tourist-dependent economy of Skye cope with no tourists? It couldn’t, hence the bridge was born.

As discussed above, financially the bridge is without doubt a success, being the only way to reach the island from the mainland or (visa versa). But we are also interested in the social benefits of the bridge. Visit #links#

The social present-value of an individual project indicates is a good indicator of which project to choose among a choice of several alternatives. The aim of the SNVP is to maximise the marginal social benefits, which is an obligation that any government has to its public. It enables the decision makers to rank-order the alternatives and select the option so that marginal social benefits are maximised per (sterling) pound of marginal social cost.

As we can see the percentage from 1997 to 1998 has increased, number of tourists has increased. This has led to an increase in money spent and the main of the Skye economy is increasing.

However, with this increased tourism, increased traffic, increased pollution will lead to a poorer quality of life for locals. Due to the complexity of this externality, it is beyond our scope to put a value on this. #links#


A cost, which will directly affect all residents, is house prices. From the below table we can see that the population in Skye has increased more than the Scotland average and more demand for housing will lead to higher house prices. Skye is already one of the poorer regions of the country so this cannot be welcome news for the locals.

Those businesses that rely on mainland links are likely to see revenues increase a lot quicker than other businesses. However, those companies in the exporting sector have no viewed the bridge as a positive. This was not expected but many attribute this to the growing unrest regarding the tolls of the bridge.

More than 200 people have been fined and arrested for not paying and this causes unrest in the local community. Their view is that the bridge is long over due and that they shouldn’t have to pay for a service, especially not as much are they are being charged. They are winning their case and as the table of prices above shows that locals (frequent users) are paying 50% less than others.

From the above arguments for and against the involvement of the private sector, it seems that government has seemed to lose sight of the cost benefit analysis. Quite rightly so, they want the entrepreneurial spirit embedded in the public sector to get it done. They have, however, forgot one point; the whole of point of our taxes is to make our nation a better and easier place to live. Even the right to cross a bridge which is 60% public is not free to cross. Over the hill prices for one of the poorer regions is not creating a marginal social benefit. Business and morale is down in the North-west Scotland. What is even worse is that the collection of these tolls may be illegal. What then of the 496 people who have been prosecuted? What action will they be allowed to take for wrongful prosecution? It seems that the Scottish Government has been left with egg on their face on this particular case.

It does not mean to say that other PFI schemes will be as disastrous. Let’s hope the government has learnt from its mistakes (Railtrack and Skye Bridge) and move on to provide a service for its voters.

In the government’s defence, it will take a further 20-30 years when the first contracts have me complete before the real cost of PFI can be judged.