The Treasury Minister has unveiled a radical change to the way government capital projects are funded.

’We are ripping up the credit card,’ Alfred Cannan told reporters ahead of this week’s Budget.

Currently, capital schemes are funded by way of a loan from the capital fund with departments paying the interest out of their revenue budget.

Mr Cannan told the Manx Independent that the lines have become ’incredibly blurred and repayments had ’never been properly accounted for’.

Under the new arrangements, Tynwald will vote separately for funding for each scheme.

Plans for a major capital projects board to be set up in the Cabinet Office have already been announced.

This will oversee infrastructure projects worth more than £3m. This is a recognition that some departments have struggled to deliver projects on time and on budget.

Asked if the change would see an end to capital spending being approved ’on the nod’ when Tynwald members vote for the Budget, Mr Cannan replied: ’Certainly there will be much more transparency around this.’

Among capital spending for which there has been no Tynwald vote is the multi-million pound bus replacement programme.

Bus Vannin continues to buy replacement buses and minibuses each year without any political debate on the merits of the strategy.

Mr Cannan said: ’There will be much more recognition from Tynwald members about the actual projects they will be voting for because they will vote very specifically rather than for the whole budget.

’They will have a chance to look at a direct figure coming from revenue into the capital funding.

’So effectively what we are doing is we are ripping up the credit card and saying we are going to pay it from the cheque account or the current account and you will now vote directly on that as part of revenue funding.

’How that actually works in terms of what Tynwald are likely to do in terms of the questioning that is going to go into each individual project potentially remains to be seem.

’But I would suggest that politicians now will have a keener interest and desire for a greater understanding of what they are actually voting for.’

Mr Cannan added that capital spending will now clearly be set alongside other commitments such as health and education.

He said that ’perhaps we will have a greater balance and a greater desire to challenge some of the capital spending versus what is being spent in other areas’.

The current system of financing capital relies on annual repayments for internal ’loan advances’ made to departments.

revenue

It was designed to ensure that an amount of government revenue was allocated to the capital account each year, repaying the monies spent in the past.

But Treasury says the system is inflexible, complex and hugely bureaucratic, especially as it relates mostly to purely internal transactions rather than external loans.

The new system is designed to make the funding of most capital schemes a simple annual vote.

Government will plan its capital requirements, assess the cost of them and ask Tynwald to approve the appropriate amount to be moved into the capital fund to pay for it.

It will fund money for the present rather than the past.

The current system will remain for any funding where external borrowing is needed or where monies have been lent outside of central government.