Jo Armstrong

The Fraser of Allander Institute profile of Jo Armstrong states:

'After almost 20 years working as a business economist, holding senior posts in the UK's financial and government sectors, Jo is now operating as an independent consultant. She was a Policy Adviser to the First Minister of the Scottish Parliament providing both financial as well as economic advice. Whilst an employee of the Royal Bank of Scotland plc, she established two new analytical units. The Business Economics Unit provides microeconomic analysis in support of bank lending and the Project Finance Analysis Unit is responsible for undertaking cashflow and risk analysis in support of major project finance deals world-wide. Jo was project manager to the Allander Series team and was one of the contributors to the accompanying book'.^[1]

As illustrated succinctly in her Fraser Of Allander profile Jo Armstrong is well connected in political, financial and academic circles. Despite her being an advisor to the Labour First Minister, she recently advocated the Privatisation of Scottish Water in book co-published by the Fraser of Allander Institute and the Scottish Council Foundation. The central assertion of her argument was that as the Barnett consquentials system of calculating the block grant of funding from the UK government to the Scottish Executive did not include Scottish Water it meant that the Executive could not continue to fund Scottish Water over the long term. This was because at some point the block grant would decrease and if the Executive was to continue giving loans to Scottish Water the money would have to come out of other budgets like health and education ^[2]. This is refuted by other authorities on the Scottish Water Industry. For instance Jim Cuthbert stated this was 'nonsense', saying even if the Executive did face a decrease in funding from the UK government they would still be able to give enought loans to cover the investment costs required by Scottish Water. This is in no small part due to Scottish Water acquiring most of its funding from charges ^[3].

PPP

Jo Armstrong has also involved herself in other areas of concern to the Scottish people. For instance she professes that the area of Public Private Partnerships (PPP'S) is one that she is an authority on. She certainly seems to be a proponent of them despite evidence piling up that they are a bad deal for the people of Scotland.

For instance she says that she has had,

'Key roles:

• advising on the development of partnerships and projects
• ensuring financial viability & acceptability to the private sector
• assuring value for money & public sector affordability'

This advice has been given to both the Scottish Executive and the Royal Bank of Scotland; one of the main beneficiaries of PPP's. Her relationship with the Royal Bank of Scotland encompassed,

'The provision of analysis and advice in support of the Royal Bank of Scotland’s Structured Finance deals covering

• PFI/PPPs for UK hospitals, roads, prisons and housing
• gas and coal-fired power projects worldwide
• oil, mineral and petrochemical installations world-wide
• leisure and hotel projects in the US and the UK'^[4]

Despite this business relationship with the Royal Bank she also took on an, 'an initial review of the Scottish Executive’s experience of, and role in Public Private Partnerships (PPPs) in Scotland reporting to the Scottish Cabinet through the Minister for Finance'^[5]. There is no signal that she percieves there to be a potential conflict of interest in doing so. Given that the Scottish Executive has commissioned Armstrong to do this work it is perhaps more worrying that they see no issue with doing work for both them and the Royal Bank of Scotland. Especially since the Royal Bank of Scotland are looking to profit from PPP contracts that the Scottish Executive will be putting out to tender.

Glasgow Housing Stock Transfer

Another contentious issue that Jo Armstrong has been involved in is the Glasgow Housing Stock Transfer from the council to the Private Glasgow Housing Association, an organisation that is effectively financed by the Banks. This plan met with serious opposition from a great deal of people in Glasgow. Not least because of a bafflement of why the debt write off and the soft loans and grants could not have been provided to a council landlord. Unlike Armstrong, who will not nor never be affected, they also worried that this would lead to a deterioration of the housing stock and a loss of democratic control over housing in Glasgow.

According to Armstrong her role incorporated;

'Negotiating the Scottish Executive’s funding package with the Glasgow Housing Association (GHA) and its private sector banks to secure the transfer of 80,000 houses from Glasgow city council’s ownership. The funding packaged secured the write-off of £900 million of public sector debt, raised £700 million of grants and soft loans and £700 million of private sector debt to contribute to a £6 billion redevelopment programme. This involved extensive liaison and negotiations with the Scottish Executive’s law officers and senior counsel, the funders’ lawyers and the many technical advisors working on the project of this complexity' ^[6].

References

1. ^Fraser of Allander Institute, Profile of Jo Armstrong
2. ^ See 'Raising the Return: Scotlands Public Assets' [7]
3. ^Quoted in 'Scottish Water The drift to privatisation and how democratisation could improve efficiency and lower costs' Public Interest Research Network October 2006 [8]
4. ^ Financial Management, Jo Armstrong's personal website
5. ^ PPPJo Armstrong's personal website
6. ^ Jo Armstrong's personal website http://www.jo-armstrong.co.uk/