PFI Madness Costs Taxpayer £22.3billion

First blog in a wee while, but managed to make the front page of the Herald today. You can see the article at http://www.theherald.co.uk/news/news/display.var.1646070.0.0.php

Basically, I got an answer to a written question that I lodged with the Scottish government which indicates that the combined cost of Private Finance Initiative (PFI)/Public Private Partnerships (PPP) over the course of their contractual life is a quite astonishing £22.3billion.

This is a staggering amount of money to have lavished on the private sector at public expense; and the evidence indicates that it isn't the most cost effective mechanism. The National Audit Office studied the PFI-PPP tendering process earlier this year and stated that the long tendering process involved with PFI-PPP could have been avoided or mitigated in the public sector. Furthermore a 2002 Audit Scotland report into PFI-PPP contracts for renewing schools found that the cost of the scheme was generally 2.5% to 4.0% higher than a local authority might have paid if it had borrowed the money on its own account, resulting in roughly £200,000 to £300,000 a year for each £10million invested.

And Allyson Pollock established that in the NHS PFI-PPP led to a diversion of resources from clinical services, staff and supplies. In other words, money being syphoned from front line services into private pockets.

Thankfully the new SNP administration is working away to come up with a not for profit model of financing infrastructure projects, which will result in greater financial efficiency for the public purse and an end to the private profiteering at the hands of public services. Indeed, Kenny MacAskill, the Cabinet Secretary for Justice served notice of SNP intentions when he announced that the proposed new prison at Low Moss will not be privately run.

Ensuring that public services are maintained by the public sector was a priority for the voters during the Scottish Parliament election campaign - as determined in a BBC opinion poll. It is a priority for the SNP too.

If you want to see details of the answer to the question I lodged that sparked today's Herald article then have a look below:

S3W-2233 - Jamie Hepburn (Central Scotland) (SNP) (Date Lodged 18 July 2007) : To ask the Scottish Executive what the total cost to the taxpayer will be of all existing PFI/PPP projects over the course of their contractual life.

Answered by John Swinney (2 August 2007): The total estimated unitary charges for all existing PPP projects over their contractual life is £22.3 billion. This covers 102 PPP projects and spans the years 1999-2000 to 2040-41, a period of 42 years.

It's Time to Win Back Our Schools and Hospitals

The SNP has long called for the replacement of the Private Finance Initiative (PFI) scheme used by the Labour government to fund public projects. Our argument was lent some additional weight by the recent publication of a report undertaken by the respected Allyson Pollock of Edinburgh University that appeared in the Public Money and Management Journal. Professor Pollock states in the study that government claims that PFI delivers projects more quickly and more efficiently than other methods of borrowing are "either non-existent or false" and that comparisons are "rigged in favour of PFI and that Treasury policy is not evidence based". Government claims that PFI represents best value for money are therefore utter baloney.

This is particularly pertinent for people in Cumbernauld and Kilsyth, whose local authority and local health board are big on PFI. North Lanarkshire's schools modernisation project cost £280.7 million. Meantime the cost to the taxpayer of NHS Lanarkshire's projects to build the Hairmyres and Wishaw General hospitals will be almost £1,200 million over the coming years, despite these two schemes only costing around £260million to build. This means that Cumbernauld and Kilsyth residents, in common with those across Scotland, are paying through the nose for PFI to line the pockets of private businesses.

Polling data compiled for the BBC also indicates that the number one priority for the electorate in the Scottish Parliament election is building and running schools and hospitals through public bodies. The public are wakening up to the PFI con. People wouldn't accept it if they paid up a mortgage and didn't own their house at the end of it, yet we are meant to accept this type of arrangement for our schools and hospitals.

The SNP plans to introduce a not for profit trust to finance future projects. This means that millions of pounds of taxpayers money will no longer find its way into private hands and will be much better value for money. This also chimes with the message people are sending out to pollsters, and that is that our schools and hospitals should be built and run through public bodies. The SNP will respond to that concern and deliver just that.