Wednesday, 14 December 2011

PPP/PFI in Scotland

Scottish Government ministers talk of Scotland being "set free from the shackles of PFI." Sadly as UNISON Scotland's latest briefing shows this is far from the case.  

The Scottish Futures Trust (SFT) – the quango that was originally proposed by the SNP as an alternative to PFI - is currently in charge of a £2.5 billion Scottish Government PPP pipeline of PPP projects rebranded as NPD and hub DBFM projects. One of the biggest programmes of its type in Europe. Ministers talk mainly about NPD, arguing that it removes the "excessive profits and financing costs" of PFI, although officials admit it is still a PPP scheme. DBFM is a traditional PPP model.

The SFT says they differ from PFI in various ways including that profits are capped to prevent "super profits". However, Mark Hellowell, of Edinburgh University and expert adviser to the House of Commons Treasury Committee for its summer 2011 PFI inquiry, says that the long-term cost to taxpayers of NPD is "similar" to that of the classic PFI model and that it "makes PFI a bit more politically acceptable without changing any of the economics."

There is no doubt that the new models are an improvement on the original PPP schemes. Officials have learned some lessons from the mistakes of the past. However, for schools in particular PPP has returned "as the only game in town" for councils who want Government support.

So why have the SNP abandoned their opposition to PPP? Probably for the same reason the last administration continued with it - keeping the costs off the balance sheet. The problem is that in the real world you still have to pay the bills and PPP bills are always bigger.

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