PPP – alive and kicking in Scotland

IT’S unfashionable to admit but I was always a supporter of Public Private Partnerships to fund much-needed infrastructure.

The principle was right; what then mattered was the detail of each deal negotiated with the private sector.

You could sum up the reasons for my support in this quote: “The additional investment programme allows schools, colleges, hospitals and roads to be built that would otherwise have to wait many years before construction could start.”

Who could disagree with that?

Strangely, however, the quote is taken from the website of the Scottish Futures Trust, created in 2008 by the incoming SNP Scottish Government, as “an alternative to the costly and flawed PFI/PPP”.

The Scottish Futures Trust was going to act as an “infrastructure bank”, issuing bonds to fund public projects.

That idea was promptly abandoned.

Instead, the Scottish Futures Trust became administrator of what, to most observers, looks remarkably close to “costly and flawed PFI/PPP” dressed up in cosy language.

The mis-named Not for Profit Model was adopted and Scotland divided into “hubs” - including Hub North which covers the North-east – which sounds vaguely like a public body, but isn’t.

The Scottish Government’s repackaging efforts came to grief in 2014 over the AWPR package, when the National Audit Office told them bluntly they couldn’t have their cake and eat it – if there was to be an element of public control, then they could not keep the project off the Scottish Government balance sheet.

Since then, the model has moved even closer to the old PPP/PFI.

The leading academic on the subject, Dr Mark Hellowell of Edinburgh University, said: “These things are basically the same.

“There’s lots of profits involved, just like PFI contracts, because the investors are also picking up the operational work.

“If you’ve artificially forced down one element of their profit, because that’s politically salient, then the mark-ups on the other elements will just increase.”

None of the hard-nosed companies involved, all with their in-house PFI divisions, is coming to Scotland for less return than they get elsewhere. It is all in the packaging.

The reality is that PFI/PPP is alive and kicking in Scotland.

In fact, for most public sector construction projects, it is the only show in town.

The most recent local example is the new High School for the south of Aberdeen which, for the next 25 years, will be operated by a consortium headed by Balfour Beatty, one of the biggest PFI players.

To go back to my initial point, I actually support the PPP principle for the reasons so helpfully set out by the Scottish Futures Trust.

But we need to know what it is going to cost and for how long.

The Accounts Commission has already expressed concerns about the massive debts being accumulated in Scotland by this approach.

The SNP has avoided the political flak with which it bombarded its predecessors on this issue because it has skilfully re-packaged the wolf in sheep’s clothing.

But that doesn’t make the debt go away or remove the right for communities to know who is actually operating their local school or health centre, and on what terms.

It’s time we had a conversation.