Rip it up and start again

There is nothing the burd likes better than a wade through a pile of data.  It is best served in a highly dense policy document, with lashings of impenetrable jargon and government speak on the side.

The Spending Review, therefore, is my idea of a gourmet feast.  There is enough in here to blog on for weeks.

But one wee section tucked right at the back caught my attention for now.   Given that this SNP Government is not exactly fond of private finance initiatives and is doing what it can, within current fiscal constraints, to move away from this eye-wateringly expensive finance vehicle, it is bound to want to get the devilish detail out in the open.

For this is Labour’s legacy to Scotland – not only are there issues about the life cycle of buildings thrown up under PFI initiatives, not only are there real question marks over how so many were allowed to compromise on legal building requirements relating to room size, light and disabled access, but there are also huge concerns over the mortgage we have bequeathed our children and in some cases, our grandchildren.  They will still be paying for obsolete buildings that will require to be refurbished and renewed into their adulthood.  If it didn’t cost so much money, it would be funny.

And it is costing us a lot – this year, Scottish Government payments for PFI contracts will total £903 million.  By 2015, that figure will have risen to £998 million.  So nearly a billion pounds of Scottish public expenditure will be handed to private companies to cover all unitary charges – that’s upfront building costs, maintenance charges and facilities management.  A nice little earner then.  Especially when most other budget streams in the Scottish budget will decline over the same period, some quite sharply.

Like Margo Macdonald MSP and Jim Sillars, I have long called for the Scottish Government to rip these contracts up and start again.  In these tough financial times, all bets are effectively off.  Savings could be found from re-negotiating some of these deals, savings that could be put into other more deserving services.  We should be looking at bringing repairs and maintenance, and facilities management – things like cleaning, security, car parks, catering for some buildings – back under public sector control.

Some of these costs are nonsensical in the current climate.  Take hospital car parking.  It is free in all but the PFI constructed hospitals like Edinburgh Royal Infirmary and Hairmyres hospital in East Kilbride.  Not only are we continuing to pay for the privilege of allowing private firms to run these car parks, but they get to charge the sick and make even more money out of the deal.

We also pay firms handsomely for cleaning contracts but to compensate for the poor state of cleanliness in our hospitals, there is now £28 million spent annually on a Clean Hospitals/MRSA Screening Programme.  In both cases, the taxpayer is effectively having to pay twice.

The consortia behind many of the PFI contracts include some of the now taxpayer-owned banks, leading corporate law firms and big multi-national construction firms.  These are not small, local businesses which would go to the wall if the Scottish Government refused to cough up.  No doubt, government legal advisors would be apopleptic at the suggestion of refusing to pay out under current arrangements, but realistically, in the court of public opinion if not in the legal courts, these firms would lose.

Quite simply, these firms should not be coining it in, when front line services are being squeezed elsewhere.  And I for one hope that Margo Macdonald continues to harry the Scottish Government until it is prepared to renegotiate these contracts.

10 thoughts on “Rip it up and start again

  1. Excellent post on a subject i’ve been on about for a while.

    I see that a Westminster committee has come to the same conclusions (In England this is the key reason for the NHS going to the dogs, up here the impact is on Education. Thanks a bunch Jack McConnell).

    No wonder Gordon Brown was very keen for PFI to remain off-sheet…

    http://humbug3.blogspot.com/2008/05/snplib-dems-to-run-renfrewshire-1-year.html

  2. Could a list of annual payments,total cost to us (the taxpayer) and the companies involved be published.We could then see any interconnection betweemn these companies. I would not be surprised by the results.

  3. You’d have to think there must be some way of breaking/renegotiating these contracts. After all, who makes the laws – the government, or big businesses?

    I don’t understand how anyone ever thought PFI was a good idea. Some of the stories in Captive State by George Monbiot are absolutely horrendous – not only are they most expensive way imaginable to build a new hospital or school, but often it would have been more frugal to just renovate the building, and often, to get the developers interested, they had to site buildings far away from where they were really needed, so the developer could also buy up adjoining land.

    I’ve never really understood the idiom that building more schools and hospitals = good government anyway; surely it’s what goes on inside that is important, rather than where it happens and how brand, spanking new it is?

    • “You’d have to think there must be some way of breaking/renegotiating these contracts. After all, who makes the laws – the government, or big businesses?”

      If we’re going to start unilaterally ripping up contracts without making contracted exit-payments, can we also dispense with redundancy payments for public sector workers?

      There is a reason why Governments should not mess around with contract law – they are not above the law themselves.

  4. Excellent post Kate, couldn’t agree more.

    By challenging the PFI pirates the Scottish government would have the perfect issue to illustrate the ‘why’s’ and ‘what for’s’ of Independence AND provide a massive stick with which to beat Labour & their Unionist allies.

  5. Sorry for the double post.

  6. I agree, however the bibles covering these contracts have very expensive exit and non payment clauses. The pfi consortia ken how to write a good contract to protect themselves blossom.

    We fooked in the short term. SLAB Barstewards!

    • No doubt they would because they could – see the insurance companies challenging the asbestiosis compensation act in the Supreme Court but think of the damage that would be done to their reputation. A run on RBS by outraged taxpayers? Would be worth exploring no? £98 million is hardly loose change…

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