Hopes dashed as Scottish Government opts for PFI-lite

by Fiona Montgomery

Hopes that the Scottish Government would provide a genuine alternative to the scandal of PFI/PPP were dashed when plans for the Scottish Futures Trust (SFT) were unveiled in December.

A distinct ideological shift appears to have taken place since the SNP's original proposals in opposition.

The consultation document on the SFT talks of creating a huge private company to run Scottish PFI schemes.

It is only critical of standard, or 'traditional costly', PFI, which made "the most extreme and unwarranted profits". It will continue, while the SFT is under development, with PFI schemes set up as 'Non Profit Distributing' (NPD) models.

The consultation document does not even completely rule out standard PFI, saying that it may still be used where the risks in a project are deemed "exceptionally high". This seems incredible given the highly publicised failings of so-called risk transfer in the case of the collapse of Metronet, the London Underground contractor.

In essence, the Scottish Government is simply putting a gloss of public accountability onto PFI and PPP instead of addressing the scandalous waste of public funds these policies represent.

The SFT is set to be a private limited company run on non-profit distributing principles, which will raise funds from bonds, from commercial banks and private investors, with a structure almost identical to current PFI schemes.

It will have a membership "representative of the Scottish public interest" and will potentially operate right across the public sector, including housing, not previously part of PFI in Scotland.

This means the SFT would design, build, finance, operate, manage and own the new facilities created. Councils, health boards and other public bodies would pay a charge to the SFT to use them.

Dave Watson, UNISON's Scottish Organiser said, "We don't think a private company can have a genuine public interest ethos. It won't take a profit, but the banks and private firms contracted to run the services certainly will!"

UNISON has long argued that NPD models of PFI are basically window dressing. They retain the higher borrowing costs, private profit at the contractor level and elements of the risk transfer costs, which lead to the same profiteering and inflexibility inherent in PFI - and they retain the secrecy and accountability deficit inherent in PFI schemes.

The public sector can secure cheaper borrowing rates, and UNISON has devised a set of proposals for the Scottish Government which would allow PFI/PPP to wither on the vine.

These are:

• review existing contracts, with buyouts where cost-effective and not approve any new PFI/PPP contracts
• offer Scottish Government grants for new capital projects irrespective of procurement method
• give health boards prudential borrowing powers
• ensure that new procurement arrangements exclude staff from transfer and bring in a strengthened PPP staffing protocol across the public sector.

These proposals would create a level playing field whereby public bodies would, we believe, choose the cheaper conventional funding route. They offer the real alternative to PFI.

UNISON Scotland has produced a briefing on the Scottish Futures Trust* and will be submitting a detailed response to the consultation. *UNISON Scotland's SFT Briefing is at: www.unison-scotland.org.uk/briefings/briefingsft178.pdf

The At What Cost report is at: www.unison-scotland.org.uk/comms/atwhatcostoct07.pdf

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