Date: 17 June 2009

Schools PPP will cost taxpayers dear, UNISON warns

UNISON Scotland today rejected Scottish Government claims that its schools building announcement represents better value for money than previous PFI/PPP projects.

Instead, the union warned that taxpayers will once again be charged massively over the odds for the Scottish Futures Trust continuing with PPP through the so-called Non Profit Distributing (NPD) model.

Dave Watson, UNISON’s Scottish Organiser, said:
“The initial plan for the Scottish Futures Trust was to replace PFI/PPP. Early proposals proved to be merely window-dressing changes, or PFI-lite. Now we are told that the NPD model is to be used for schools building and the SFT chairman Sir Angus Grossart has not ruled out full-blown PFI/PPP.

“Yet research by Edinburgh University this week confirmed UNISON’s argument that NPD maintains most of the flaws of PFI/PPP, and it highlighted rates of return to investors similar to PFI schemes. The Scottish Government is continuing with a policy the SNP criticised for mortgaging future generations to the hilt.”

In today’s Herald newspaper* Mark Hellowell, of Edinburgh University’s Centre for International Public Health Policy, said that NPD was “a relatively minor variation... despite political rhetoric which suggests there has been more substantive change.”

Dave Watson added:
“It is clear to the general public that PFI/PPP has been an immensely costly way to build new schools and hospitals. Supporters have said people understand that if they include replacement carpets every five years and other maintenance costs in their mortgage, then it would cost more.

“But even the most financially illiterate home-buyer recognises that they will be ripped off if they charge those costs to their mortgage. PFI costs are high because it costs more to borrow privately than conventional borrowing.

“At a time of financial crisis, when the UK Government has been forced into bailing out PFI/PPP schemes, the Scottish Government should be using far less costly conventional funding for schools, as it is doing with the new South Glasgow hospitals complex.”

* http://www.theherald.co.uk/politics/news/
display.var.2514776.0.Trust_unlikely_to_cut_costs_report_finds.php

ENDS

Note for editors:

1. UNISON opposes PFI/PPP for reasons including service quality, costs, accountability and inflexibility.

The union has argued to the Scottish Government and to the Scottish Parliament Finance Committee's inquiry into the funding of capital investment projects that five simple steps would provide an immediate alternative to PPP/PFI.

They include: a review of existing contracts, with 'buyouts' where that benefits the taxpayer; Scottish government grants for new capital projects, irrespective of the method of procurement; health boards should be given Prudential Borrowing powers; staff should be excluded from transfer and the PPP staffing protocol should be strengthened.

The Calman Commission’s recommendation that the Scottish Government should have borrowing powers for capital investment would also allow the SNP’s original plan for the SFT to proceed, without using PFI/PPP.

2. Further UNISON Scotland PFI information is at
http://www.unison-scotland.org.uk/comms/pfi.html

3. UNISON’s report ‘Putting the Public Back into PFI’ was published on 15 June.
http://www.unison.org.uk/asppresspack/
pressrelease_view.asp?id=1450

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