Private Finance Initiative

Train journey to London today. Compared to air travel, I love the train. Glasgow to central London in under 5 hours, none of the hassle, normally on time, environmentally friendly and you get real work done. No competition in my view.


My reading included the latest edition of Scottish Left Review. As usual this is an interesting collection of articles setting out the best of radical opinion in Scotland today. My prize for the best article is a piece by Margaret and Jim Cuthbert summarising their latest research on PFI schools in Scotland. The key points are:

 Scotland has 40% of the UK’s PFI school schemes and they are generally larger than similar schemes in England.


 There was minimal competition. Only 7 of the 37 contracts had the recommended three bidders. Even this is generous as councils counted bids that were never going to be realistic.


 The vast majority of the work goes to companies outside Scotland and there is a strong bias towards new build rather than refurbishment,


 There are long and expensive bidding processes costing upwards of £1.5m per project all of which has to be recouped in the contract costs. Costs also escalate during the bid process. The Clackmannan scheme went from £35.8m to £72.7m at financial close. £10m of that took place after the preferred bidder had been selected.

The consequence is that PFI costs will capture an increasing proportion of council school budgets as we enter a period of overall cuts. Scotland’s greater dependency on PFI is one possible explanation for the scale of education cuts we are seeing at local level, when the Scottish Budget is not reducing at the same rate.

The article concludes by lamenting the fact that the Scottish Government’s new PFI arm (Scottish Futures Trust) is not learning the lessons from these past mistakes. No doubt the bankers and consultants will have moved on by the time the next generation has to pick up the bill.