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Scotland set to trial replacement for PFI
12:02 09 Aug 2002
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Exclusive by Ross Pearman
Scotland could be about to abandon PFI if a not-for-profit system, due to be piloted in Falkirk in December, is successful.
The Scottish National Party (SNP) has pressured the Scottish Executive into re-evaluating its use of PFI. A decision on whether to walk away from PFIs should be made late next year.
News of the move comes after an Audit Scotland PFI finance report found that the Glasgow schools PFI project will cost an extra £6.75m a year - £200m over the lifetime of the contract. Edinburgh's school projects will cost an extra £2.7m a year - a total life cost of £81m.
"The feeling of distaste to PFI is increasing as it costs between £35m to £80m a year from higher interest charges alone," said an SNP spokesman.
"Already Argyll and Bute council is putting the feelers out for a not-for-profit system across its schools and hospitals. Scotland has a £2bn backlog of schools repairs and is working on an annual capital investment of £200m. It has to turn to the private sector, but PFI is not the alternative."
Under the new scheme, unveiled by SNP leader John Swinney last week, a not-for-profit Scottish Trust for Public Investment made up of private investment companies will be put in place by SNP-led Falkirk Council to take control of public services. The first £20m of profit will be handed back to the government's coffers, with any further profit being divided between trust members.
The Scottish Executive is due to make a decision in December on whether to give the green light to the scheme, but the decision is rumoured to be very positive because of "increasing pressure".
An Executive spokesman would only comment that the not-for-profit proposal is "under consideration".
Under the pilot project, a £55m four-school construction project for Denny, Falkirk, Grangemouth and St Mungos schools has been earmarked to test the system, while several unknown private investment companies have been shortlisted to comprise the trust. Tenders for works will be put out early in the new year.
The spokesman added that the new system would increase opportunities for smaller contractors.
Scotland could be about to abandon PFI if a not-for-profit system, due to be piloted in Falkirk in December, is successful.
The Scottish National Party (SNP) has pressured the Scottish Executive into re-evaluating its use of PFI. A decision on whether to walk away from PFIs should be made late next year.
News of the move comes after an Audit Scotland PFI finance report found that the Glasgow schools PFI project will cost an extra £6.75m a year - £200m over the lifetime of the contract. Edinburgh's school projects will cost an extra £2.7m a year - a total life cost of £81m.
"The feeling of distaste to PFI is increasing as it costs between £35m to £80m a year from higher interest charges alone," said an SNP spokesman.
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"Already Argyll and Bute council is putting the feelers out for a not-for-profit system across its schools and hospitals. Scotland has a £2bn backlog of schools repairs and is working on an annual capital investment of £200m. It has to turn to the private sector, but PFI is not the alternative."
Under the new scheme, unveiled by SNP leader John Swinney last week, a not-for-profit Scottish Trust for Public Investment made up of private investment companies will be put in place by SNP-led Falkirk Council to take control of public services. The first £20m of profit will be handed back to the government's coffers, with any further profit being divided between trust members.
The Scottish Executive is due to make a decision in December on whether to give the green light to the scheme, but the decision is rumoured to be very positive because of "increasing pressure".
An Executive spokesman would only comment that the not-for-profit proposal is "under consideration".
Under the pilot project, a £55m four-school construction project for Denny, Falkirk, Grangemouth and St Mungos schools has been earmarked to test the system, while several unknown private investment companies have been shortlisted to comprise the trust. Tenders for works will be put out early in the new year.
The spokesman added that the new system would increase opportunities for smaller contractors.
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