Group expresses outrage at spiralling cost of past PFI schemes and danger on current agreements
OPPONENTS of PFI schemes have called for all existing projects under its structure to be nationalised by the Scottish Government.
Campaigners were responding to the news that yearly payments made to private contractors by the Scottish Government for PFI projects rose to £1.004bn in 2015 to 2016.
The figures, which come from Tuesday's publication of the government expenditure and revenue report (GERS), additionally show a full breakdown of PFI debt owed by each sector in the Scottish economy, with, for example, 50 per cent of PFI liabilities being invested in schools.
"The Scottish Government could nationalise existing PFI's, giving investors a haircut in line with what the assets are actually worth and refinancing the remaining debt using government sources at less than half the interest rates of bank-financed PFI." Joel Benjamin
People vs PFI (PPLvsPFI) is a group that has campaigned against the introduction and continuation of private finance initiative (PFI) and public private partnership (PPP) schemes and the debts they incur on the public accounts.
Joel Benjamin, spokesperson for the group, told CommonSpace: "Scotland was the first country to trial PFI, and to buy out the Skye Bridge PFI project from Bank of America when it proved a financial disaster for local taxpayers. Scotland needs to take no advice from England about how to get rid of PFI – quite the opposite, in fact.
"The first question people in Scotland need to ask themselves is why should we continue to pay 30-year mortgages for overpriced infrastructure that falls apart in less than a decade, and only serves to enrich foreign investors based in offshore tax havens?"
"Should it choose to do so, the Scottish Government could nationalise existing PFI's, giving investors a haircut in line with what the assets are actually worth and refinancing the remaining debt using government sources at less than half the interest rates of bank-financed PFI.
"The only institution blocking this action is the UK Treasury which coincidentally is where PFI originated in the 1990s.
"It would seem in order to abolish PFI, we need to reform the neoliberal attitudes within HM Treasury."
PFI now accounts for over 15 per cent of all capital spending.
Under PFI or PPP schemes, a private firm recieves contracts to construct and maintain public buildings, usually for 30 years in return for what's called an 'annual unitary charge' that covers the initial spend of capital and future running costs.
The recent increase stated above, was from £969bn in the previous year and the GERS figures projected indicate the bill is still rising.
PFI has come under renewed scrutiny since April when a group of Edinburgh schools that were upgraded under the scheme were forced to close as a result of safety concerns.
Media outlets then revealed how the total bill for the privately built and managed public projects in Scotland will climb above £36bn and how there are links between the PFI schemes and opaque offshore companies.
Unitary charge payments related to PFI projects rose to £1.004bn in 2015 to 2016.
When the SNP came into power in 2007, it dropped the PFI system and in its place set up a scheme that caps the profits private firms can make.
The mechanism used for infrastructure building in the public sector under the Scottish Government now is non-profit distributing (NPD), in association with the Scottish Futures Trust (SFT).
The structural difference between NPD and PFI is that in the former all assets remain in public hands and returns for private bidders and investors are, in theory, only defined after the signing of agreements.
In relation to Scottish deficit spending, according to GERS Scottish capital expenditure in 2015-16 was £6. bn, meaning that PFI now accounts for over 15 per cent of all capital spending.
"Labour and Lib Dem enthusiasm for ruinously expensive, Tory-style PFI deals is still costing the public purse way over the odds – and won’t be forgotten in a hurry." Ivan McKee MSP
In response to the news, the SNP has called on the Labour Party and the Liberal Democracts to apologise for their actions while they were in government.
Emphasising in his view the culpability of Labour and Lib-Dem coalition administration, SNP MSP Ivan McKee, who sits on the Scottish Parliament’s finance committee, said: "The scale of PFI repayments are now absolutely staggering – showing the sheer incompetence and damaging legacy of the previous Labour and the Lib Dem executive which is holding Scotland back to this day.
"Deals like the PFI contract for Addiewell Prison, recently revealed as costing the public purse nearly £1bn in total for an £80m building, will leave taxpayers paying way over the odds for years to come.
"Labour and Lib Dem enthusiasm for ruinously expensive, Tory-style PFI deals is still costing the public purse way over the odds – and won’t be forgotten in a hurry.
"Rather than indulging in over-the-top rhetoric on Scotland’s public finances, Kezia Dugdale and Willie Rennie would do well to reflect on how their own party’s failures are costing Scottish taxpayers a fortune – and apologise for landing Scotland with a billion pound bill."
Labour and the Lib Dems were unavailable for comment.
Picture courtesy of Kay S Geog
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