The Scottish Parliament's Finance Committee has called on the Scottish Government to improve the way it costs and assesses all the options for capital investment projects, dealing a major blow to the Scottish Futures Trust (SFT).

The committee warned that the Scottish Government's alternative to PFI had yet to prove that it was a better way for funding public projects like schools and hospitals, and that instead there should be no further delay in building programmes and that a "broad range" of payment options be made available.

Responding to the committee's recommendations, Labour's deputy finance spokesperson David Whitton said: "The SNP thought this inquiry would back up their claims that public infrastructure projects built using the PPP/PFI funding model were all over budget and making excessive profits for the private sector. That has not shown to be the case.

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"Indeed, the evidence revealed that many projects funded through PPP/PFI were delivered on time and on budget and were good value for money."

"Although the committee agreed that there was not enough information to make a proper judgement on SFT, Labour believes it should be shelved as it lacks credibility in the present economic climate. Urgent investment is needed in Scotland's schools, hospitals and roads. This should be commissioned now using currently available funding models such as the Public Works Loan Board or PPP/PFI schemes."

However, Conservative spokesperson Derek Brownlee argued: "Labour and the Lib Dems could have killed off the Scottish Futures Trust by voting against the funding given in the Autumn Budget Revision, which both the Finance Committee and Parliament supported unanimously in recent weeks. Their behaviour on the Futures Trust shows that they are happy to criticise the Government but terrified to vote against it, just as they are on the Budget."

Stating his party's position, he commented: "Unlike the SNP, Conservatives believe that all options - including PPP - should be on the table, and that the public sector should pick the one best suited to delivering the project in question.

"Unlike Labour and the Liberal Democrats, we don't believe that PPP can never be improved upon, or is always the best option, and we don't believe that the Scottish Futures Trust should be scrapped before it has had a chance to demonstrate whether it offers anything better."

The Scottish Government has insisted that the introduction of the SFT scheme will release up to £150m annually for capital investment projects.

(GK/JM)