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PPP Excess or Success? 2005-03-27

Posted by clype in Money, Scotland.
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Scotland’s controversial Public Private Partnership (PPP) projects will have cost taxpayers 8 000 million GBP by 2018/2019, according to ‘The Scottish Executive’s’ own figures.

[Picture fo Tom Mccabe]

The MSP for Finance, Mr.Tom Mccabe, has released information showing that the burden on the taxpayers of the PPP schemes has risen from just 13.8 million GBP in 1997/1998 and will eventually reach a projected 555 million GBP annually by 2018/2019. Last night 2005-03-25, ‘The Scottish National Party’ (SNP) claimed that the real figure will be more than 13 000 million GBP, and condemned ‘The Scottish Executive’ for allowing the banks to make ‘excessive’ profits out of the projects.

But a spokesman for ‘The Scottish Executive’ said that PPP had delivered a massive programme of modernisation of schools, colleges, hospitals, and water infrastructure for Scotland over a short period of time. The figures The Finance MSP gave to MSPs show that, from a slow start in the first years of The New Labour Party government (when PPP emerged from ‘The Private Finance Initiative’ [PFI]), the amount spent on these programmes — which usually run for 20 or 25 years — increased rapidly.

By 2000/2001 it was 108.9 million GBP/year. From this coming 2005-04, it is projected to be 413.5 million GBP, and it rises steadily over the next 13 years to the projected 555 million GBP. Mr.Stewart Stevenson, the SNP MSP who uncovered the figures in a parliamentary answer from The Finance MSP, last night 2005-03-25 said there would be a huge burden placed on future generations. Mr.Stevenson claimed last night that the actual sum would be higher. He said:

[Picture of Stewart Stevenson]
‘These figures relate only to projects up to 2004.

‘Since then there have been a number of new schemes begun and — by my calculations — it could end up with a total bill of thirteen point eight “billion” pounds — which is a huge burden on the taxpayers of today and tomorrow’.

Mr.Stevenson, the SNP MSP for ‘Banff & Buchan’ said that his figures would put the annual burden at 1 257 million GBP by 2018-19, adding:

‘This is a substantial commitment which this “Executive” has made — but which “binds the hands” of future generations of politicians of whatever political colour.

‘This is not about denying private companies profit.

‘The logic that you can get everything built by The State does not wash. ‘But the structure of PFI deals delivers unreasonable profits to people like the banks. ‘And whatever “The Executive” may say, the ultimate risk is still with The State; what happens if a firm running a school or a hospital “goes bust”? ‘“The Executive” will not let them close, that is for sure.

‘Instead of paying silly interest rates — way above what the rate the government itself could get — we could be getting much more for our money.

‘We should be making this money work harder for us, helping to build up our infrastructure — rather than helping to build up excessive profits’.

The MSP said that the SNP’s plan for a ‘Scottish Trust for Public Investment’ (STPI), where the finances would be pooled and so lower interest rates could be negotiated, was a better scheme for the taxpayers.

But last night ‘The Scottish Executive’ ‘hit back’ emphatically, citing the rebuilding of most schools in Glasgow since 1998 as an example of the scale of work which would not have happened without PPP. The Finance MSP’s spokesman said that — across Scotland — PPP already had delivered 3 major new hospitals — including the new 184 million GBP Royal Infirmary of Edinburgh — 80 or so new or refurbished schools, 3 further education colleges, 9 water & sewerage schemes, and a road.

The spokesman said that one of the main sectors in which PPP is active is in schools where some 300 new or refurbished schools will be provided by 2009. This represented the largest single investment ever made in school buildings, with long-term maintenance locked in to the contracts and project funding. He added:

‘The benefits of PPP are well recognised.

‘They deliver large capital projects of quality and they deliver them quickly with the risk being borne by the private sector — not the public sector.

‘The way PPP works is similar to a mortgage — but with the maintenance costs built in.

‘Of course, you will pay more than you would with cash, but the public also gets a well-maintained building at the end of the period.

‘It is a moot point whether it would be maintained as well if it were not under a PPP scheme’.

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