A Private finance initiative (PFI) consortium faces financial penalties after the shock closure of 17 Edinburgh schools last Friday.
The schools, with some 9,000 pupils, were shut after the discovery of serious structural defects at one school undergoing repairs and fears over others built by the same consortium.
The penalties could run into millions of pounds.
Edinburgh Schools Partnership (ESP), which built and manages the schools, failed to give guarantees to Edinburgh council officials that the buildings were safe.
This prompted their immediate closure. Local authorities across Scotland are now scrambling to make safety checks on buildings constructed under similar deals.
Neil Baxter, secretary of the architects’ professional body RIAS, was scathing about the reality of PFI and public private partnership (PPP) contracts.
He said, “The fundamental flaw in much PPP procurement is that there’s always been too much focus on the private profit of the building company and a bias in favour of their making money, rather than an extremely high-quality job.”
Baxter added, “There are shocking instances elsewhere where PPP has created very bad buildings which are then on a long-term maintenance contract at a premium price.”
The affair underlines the utter bankruptcy of the idea that private firms should be involved in public infrastructure projects. The mainstream parties all support privately financing public projects.
Politicians seem to have been slow to raise the schools issue for fear of opening themselves up to attack.
Debt for PFI and PPP deals in Scotland is currently running at £22 billion—and won’t be paid off for nearly 30 years. The schemes were started by the Tories, accelerated by New Labour and rebranded by the Scottish National Party (SNP).
Edinburgh City Unison union called them “wasteful and grossly expensive ways of providing public services”.
It added, “They reap massive profits for the private sector with little risk to them and are much more expensive than direct building.”
The SNP often likes to claim that it is not as bad as Westminster. But its version of PFI—Non-Profit Distributed (NPD) contracts—is not much better.
Its Scottish Futures Trust development body boasts about “one of the biggest PPP programmes in Europe”.
Unison said, “The current government’s NPD scheme means that Scottish councils, colleges, the NHS, government departments and Transport Scotland are committed to paying a further £6 billion for 20 Scottish Futures Trust privately financed and managed projects.”
The SNP obsession with big business investment has seen it look to unusual sources.
It has courted the oil-rich Qatari regime which it sees as having a “great potential to help Scotland meet its aims and purpose”.
A recent £10 billion deal with Chinese investors should provide a reality check for fans of SNP leader Nicola Sturgeon. She signed the deal with a firm mired in a corruption scandal.
Many had asked why her government kept quiet about the agreement. It later emerged that billionaire homophobe and major SNP donor Brian Souter brokered it.
Souter founded and is chair of Stagecoach, which was found guilty of dodging some £11 million in tax just weeks before the deal was signed. Of course, this had nothing to do with the SNP’s silence.